Preventing Improper Payments: Insights from the Field

In the latest episode of Compliance Conversations, CJ Wolf welcomes Nancy Clark, a seasoned expert in healthcare coding and revenue cycle management. Nancy shares insights from her extensive experience as the Senior Manager, Health Care Services as EisnerAmper, where she works to educate providers and prevent costly compliance errors. 

Improper payments can have serious consequences for healthcare organizations—from revenue loss to regulatory penalties. Nancy emphasizes the importance of proactive measures, such as conducting internal coding audits, staying updated with Medicare guidelines, and educating providers on accurate documentation.  

Tune in to learn: 

• The top three compliance risks that healthcare organizations face 

• Key documentation tips that support accurate billing 

• How practices can leverage Medicare data for better compliance outcomes 

Don’t miss this episode! For anyone invested in the financial health of their practice, Nancy’s advice is a must-listen. 

Episode Transcript

CJ: Welcome everybody to another episode of Compliance Conversations. My name is CJ Wolf with Healthicity and today our guest is Nancy Clark. Welcome to the podcast, Nancy!  

Nancy: Thank you so much, CJ. It's a pleasure to be here!  

CJ: We appreciate your willingness to take some time and share your expertise. I know you have a lot of experience in the area we're going to talk about today, but Nancy, you may be aware that before we start on our topics, we'd love to have our guests tell us a little bit about themselves or professionally or whatever you want to share. We'd love to hear a little bit about you.  

Nancy: Well, certainly. Thank you! So, I've worked in coding for, it's been a few decades now! I've worked in different specialties and different settings. I do a considerable amount of chart auditing reviews and provider education. That's my love is educating providers, coders, and staff. Right now, I'm working at Eisner Advisory Group. I've been here over 10 years with a fabulous healthcare team. And I'm fortunate to have a wide variety of projects, from payer audit support, interim revenue, cycle management, due diligence for M&As, and strategy work. So, the topic today is one that I've seen come up an awful lot and I thought would be of benefit to our listeners.  

CJ: Yeah! Well, thank you so much! You know, with that kind of experience, I'm sure you're seeing things from clients all over the country. So, you know, those of us, I spent most of my, the first part of my career in-house, so I got really in tune with how, you know, the four or five organizations that I worked with, how they worked. But as I was doing some consulting later and like, whoa, there's like this vast array of how people try to tackle this and you get to see a whole lot more examples of how people may or may not be practicing, best practice, if you will.  

Nancy: Absolutely!  

CJ: So, we're going to talk a little bit about today about kind of improper payments, right? And I think it's probably what puts a lot of compliance programs and coding programs on the map. You know, the reason a lot of us have jobs is because when people make mistakes, either it's, you know, outright fraud, or maybe it's waste, maybe it's abuse, when there's overpayments, that has to be taken care of and you get to get it right. And so, let's talk a little bit about it.  

In your experience and all the work that you do, can you maybe just kind of give us a high-level overview of what programs measure improper payments? What do you see? Where do you see those programs coming in and what might they be?  

Nancy: Absolutely! So, the compilation that I refer to most often is the CMS data, the Medicare fee for service, supplemental improper payment data. And I understand that there are a lot of commercial audits out there. Medicare is beautifully transparent; we see what they know. There's nothing hidden. And this year's data, so it comes from Health and Human Services, from their annual agency finance report. This year's was 2023, and it was two years behind the calendar year claims submission. So, we're looking at a bit of a lag time.  

CJ: Sure!  

Nancy: It's a compilation from different sources, so CERT is the primary program. That's the Comprehensive Error Rate Testing program most of us have heard of the MACs run them when they do the CERT, they analyze the error rate, but they do have independent contractors review the claims so there is that objectivity and that covers a lot of the fee for service data to part A&B.  

CJ: Right!  

Nancy: As well as DME, the Durable Medical Equipment; prosthetics or orthotics. The other data that's out there, which is just as valuable depending on your practice's needs, is the PERM data. So, the Payment Error Rate Measurement and that covers Medicaid and CHIP; the Children's Health Insurance Program. And then there's programs that are not used as much, but just as valuable; Medicare's Part C&D have improper payment measurements, IPMs, C will look at the diagnosis and we know that's kind of been a hotbed topic lately.  

CJ: Yes, it has!  

Nancy: And Part D is looking at prescription drugs and error management. So, depending on what our practices do, and what the organizations need, the data is there and even though it's two years behind, it's extremely transparent and this supplemental data is just broken down into areas that we can utilize and learn from.  

CJ: So, are you proactively gathering that data and analyzing it or are you mostly doing it in response to a client's need? or just kind of, what's your workflow a little bit?  

Nancy: 100% proactive, once somebody needs help now that becomes, it's an expense. I would much rather give people the tools to prevent audit recruitment. So many times, even in the best functioning revenue cycle areas, we're looking at denied claims. We're looking at AR, you know, dates of a payment, but we forget that just because we received the money. It's not guaranteed that the documentation supports the codes, so I like to get ahead of the game. I review the data as soon as it comes hot off the presses. It's like the new CPT book I can't wait to open it!  

CJ: Right!  

Nancy: And I look in general, but at about 100 pages, I can't absorb everything. So, it's also there as a reference. And immediately I go out and I begin to educate and talk to my clients; this is what they're now looking at.  

CJ: And I like what you said about, you know, because I've heard it, you know, I've been doing this a long time as well, 25 years or so. And I often hear; "Well, we're getting paid, so there must not be a problem!" No, that's one of my nervousness goes up is because you got paid if it's an overpayment because your documentation doesn't support it, that makes me more nervous. I almost, like to hear what we got denied, so we haven't been paid. Okay, well, then I can work through the revenue cycle stuff there, you don't have a risk of an overpayment if you haven't been paid. And the interesting comments, so we both kind of hear that a lot.  

Nancy: And you know to your point, overpayments? Yes, but what about underpayments?  

CJ: That's right! 

Nancy: You know, so many physicians want to just fly under the radar. Well, I'm going to go low because they won't bother me. Well, let's think about that.   

Your documentation has to support the codes billed, so if you're intentionally underbilling you are non-compliant. You're also losing revenue and I don't think in today's economic situation any of us can afford to lose what we've already earned or have earned.  

CJ: Exactly! We need to do it right. You don't want to get underpaid; you don't want to get overpaid. So, what kind of things do you see? What are some common causes of improper payments when you start to look at some of this data or when you're working with clients?  

Nancy: The number one and it's been number one for years, is insufficient documentation.  

CJ: Right! 

Nancy:  So, what's in the documentation does not support either the Medicare guidelines or the local coverage national coverage, local coverage articles. You know all the guidance that is so clearly there. And some of that is just not checking. But what's funny is sometimes it's there, but it's not signed. It's dated, you know, there are some very simple things, but insufficient documentation. It was well over 60% this year, and I'd like to call that out because, you know, I'm a career coder biller, and it's very easy to point the finger at this type of organization and say; "Well, it wasn't coded right!" We can only do what the documentation tells us, so I'd like to focus education on these physicians who I'm preaching to the choir but in medical school, how much training on coding, if any, did they really get? And now they're held accountable. So, that's where I like to target the efforts, at least the primary efforts, let's work on the documentation.  

CJ: I think that's so important. I was just teaching a physician group last week, and their questions were; "Tell me how to code for this type of patient." So, it's like; Okay, this type of patient comes in. They're telling me their presenting problem that's worsening. It's a chronic condition. They're doing this much data and these were E&M codes. Doing this much data this much risk and I said; "Well, if what you just said gets documented, then the following, because we're the disconnect sometimes is, yeah, this is what the patient's problems are, and I'm not discounting clinically that that's what they are." I'm like, I don't distrust you because it's doctor. I know that what you're telling me is true, but the disconnect is what you're telling me has to get on paper, or on electronic paper nowadays! And so, I think your point about insufficient documentation, it's not necessarily saying that you know you woke up and said I want to over-code today it's the patient's necessity probably is there, but it didn't get documented enough to demonstrate it. So, that's such a big point.  

Nancy: And I have an interesting analogy hearing you say that, I can count on one hand how many physicians I know who are also coders.  

CJ: Yeah! 

Nancy: And I have heard that because in medical school you have to move so quickly, you have to take notes, hence the old adage of the handwriting being scribble scrabble. Your thought process in your brain when you're being trained automatically computes. So, it doesn't make it to paper, it's just not integral to the clinical process as you were taught it.  

CJ: Yeah! 

Nancy: So, it's almost reteaching, and the longer we've incorrectly documented, the harder it gets to fix that.  

CJ: Absolutely! That's what I told these doctors. I said; "You're so adept clinically at making these decisions and your colleagues, more or less know what you're talking about. But the people who are reviewing the record can't assume that. So, you have to sometimes spell out the cognitive work that you do so quickly." And it frustrates them a little bit because they have to slow down to do that. But I said; "Look, that's what you need to do in order to make sure that that the documentation." 

Nancy: I was going to say once we get that documentation then the staff, whatever the process in that revenue cycle is, then we have to start looking at medical necessity because that's the second cause. And again, to your point, I have no doubt that a physician is doing something that he or she believes is medically necessary, no doubt. What is that documentation supporting it? Does it have the specific diagnosis code from say the LCD or did you in today's EHR world look at the first word and oh is it unspecified at the end? And what about the other criteria, the frequency? The pre-existing requirements may be conservative treatment.  

CJ: Exactly! 

Nancy: There's a reason these policies are there, and it may vary between different payers, but if we want to be paid in contract with these payers, that is our responsibility to check.  

CJ: Yeah, exactly. So, let me ask you this, what are some of the types of services? So, you mentioned that one of the major causes was insufficient documentation. Are there specific types of services that have these higher improper payment rates?  

Nancy: Yeah! Oh, gosh! So, in the fee-for-service world, which I thrive in, we had a swap last year's number one became number two, and this year's number one, it's kind of a drum roll, please!  

CJ: Okay! 

Nancy: So, this data is from 2021 to 2022. Any coder in our group is going to say; "Oh, I remember that's when the E&M guidelines changed." So, number one is established office visits.  

CJ: Wow!  

Nancy: Says that during this transition, which happened to be during a little thing called the COVID pandemic, we were all very busy. During this time, we didn't learn the new guideline, so that's number one, and it's significant with actually a 99214 stopping the game.  

So that's something I hear providers say; "We're going to fly under the radar! I'm not going to bill five, I'll bill a four nobody else would think to do that!" So, that's the number one.  

Number two, lab tests and lab is broad, and all-encompassing, including pathologies and something that you did an excellent article on earlier this year; urine drug testing.  

CJ: Yes, that's hot right now.  

Nancy: It is, it is. And yes, it's a lot of reading, but once we get that data out there, the rules are pretty clear. And then the third thing, after labs; minor procedures and those types of things. So, anything from zero to ten global days. Very heavy on physical, occupational, and speech therapy, no plan of care, progress notes, signatures, providers. Very, very interesting how simple it would be to prevent these types of errors.  

CJ: Yeah, exactly. Well, that's fascinating. That's a good top-three list to be aware of. We're going to take a quick break everybody and then we're going to come back and we're going to dive a little bit deeper into improper payments. So, hang tight, everyone. We'll be right back!  

Welcome back, everyone from the break! We've been talking with Nancy Clark about improper payments and we've kind of talked about some high-level things. Let's kind of dig a little bit deeper. You were mentioning kind of those top three types of services. Let's talk a little bit more about kind of outside of the office or clinic setting. Are there any drivers of improper payments that are outside of the office because you had mentioned 99214, you had mentioned kind of minor procedures which may be taking place in an office setting. Anything outside of that office or clinic setting?  

Nancy: Yeah, that's a great question. Very high on the list this year with skilled nursing facility sniffs. Missing documentation, missing orders, physician certifications, re-certifications, and even signatures. And you know when you think about a missing signature before we submit that documentation, if it's missing, Medicare gives us, it's really like a free pass from jail is submit a signature attestation form. But if you don't do that the first time, now we're saying we didn't sign it, we don't know we were supposed to, and that's a tough one. And then another area hospital outpatient services. Similar issues, missing orders, medical necessity, lack of following coverage determinations. And I also saw Hospice claims, so Hospice for both office and hospital, slightly different issues. The beneficiary consent form, the approval for Hospice wasn't always complete, and inpatient rehabilitation.  

CJ: Yes, I saw a lot of that too.  

Nancy: So, which medical necessity, you know, Medicare is very straightforward. Improvement of body function, not maintenance.  

CJ: Yeah! And that makes a lot of sense, right? It's like a patient might, if a patient is and this is sad, but if they're so bad off that they aren't expected to have any improvement, then the services you're providing, you're kind of know that there's going to be no improvement, that's not fair to bill Medicare for that type of stuff. And so, got to stop and think and say; "Okay, is this actually possibly going to benefit the patient? If not, I better maybe reevaluate that."  

Nancy: Right, right! And durable medical equipment, I think I think it's always going to be there, you know, some of the reports are happy that the numbers went down yet within the past I'd say two months, two more OIG work plans popped up on DME. One is a rerun and one is for duplicate billing, both in the hospital and the part B situation. So again, you know, we're all so busy, I'm not pointing fingers. There's so much to do, but miss a step or don't check a step and that revenue is at risk.  

CJ: Yeah, and in any of those areas, are you familiar with any maybe a percentage of error or a dollar amount? Are these high error rates low or all across the board? Any thoughts on that?  

Nancy: The dollar amount is pretty significant. The entirety of the government overpayments, the improper was 235 billion. But Medicare fee for service, that's over 50 billion, Medicaid over 50 billion. And the percentage rate, it's 7% give or take for the Part B services. Now, the government's fine with that, relatively speaking, in that they have to keep the improper payments under 10%. When I'm thinking 7% of the revenue of some of the practices, I work with that's a make or break.  

CJ: Exactly!  

Nancy: That's a higher those extra staff, people, promotions, vacations, data system upgrades, you name it.  

CJ: Exactly! Those operating margins are so narrow, right, that 7%, it makes a big difference to a lot of organizations or it can. So, thank you for sharing that. That's really interesting. So maybe that leads us kind of to this next topic of what are some of the ramifications a provider may face with these types of outcomes. 

Nancy: Even in a purely clean eye eye-passed audit, you're still paying for your staff's time to go through the record, the administrative burden, the stress. I mean the stress that providers go through is quite hefty, but if you do come back and Medicare is, I believe they're fair in many ways in that, it's two or three claims it's 10 claims, you look at the TPE website, you know exactly how many claims are coming next.  

CJ: Exactly!  

Nancy: If we get to the point where we're not improving and it appears intentional. We're looking at prepayment reviews, that's the first thing that I see done where everything you submit, whether it's in a category or across the board goes out with medical documentation, that is, it's an administrative nightmare!  

CJ: I was going to say that's so burdensome.  

Nancy: And the payment rate of coming back, you have to wait for someone to review it. So that's horrendous. But then we can go into civil or even criminal actions if it's determined that False Claims Act is violated, you go into civil monetary penalties, 10 to 50 grand each. It's steep and I think the worst, in my opinion, is exclusion; being excluded from Medicare or any other payer.  

CJ: Yep!  

Nancy: Essentially, it cuts your ability to treat patients, which is why I have to believe many physicians went into this field.  

CJ: Yeah, exactly! If you're excluded and we see that exclusion list every year grow and it's unfortunate if you're excluded, you're not going to be able to take care of patients in federal healthcare programs and that's most patients nowadays, right? It's at least half for most people. Good point. And then let me ask you too on the ramifications. There are scenarios too, where Medicare, if they suspect kind of fraud, they can just stop payment. I think they have to meet a certain threshold of evidence or suspicion, right? But have you ever seen that happen?  

Nancy: Yes, yes. So, I've seen it most recently, I'd say within the past three months, one of my clients stopped receiving payment for DME. They were under a TPE target probe and educate, they either didn't respond or didn't improve. And totally lost payment. Was it remedied? Yes, eventually. But there is a lot of learning, a lot of payment, you know, from that practice, because now you need a healthcare attorney. Now, I'm not going to face Medicare without legal support, you need a certified coder, you need an auditor. So, yes, it does get lifted, but I have seen stop payments entirely.  

CJ: Yeah! So, with all of this said that we've talked about so far, it makes sense that we would want to prevent, right? We'd want to and we kind of talked a little bit about prevention is a lot better than getting to the point where you have these ramifications. What steps do you recommend that practices take to kind of address revenue leakage or revenue compliance or integrity, any thoughts? 

Nancy: Yeah, so this is where your revenue cycle team really needs to come together as a whole, because everything from the front desk from the time you answer that phone to the time the claim is paid, everyone has a part in this. The first thing is to identify your risk areas, one of the easiest ways to do that is to run a billing report, a CPT productivity report. Do a quick pivot table. See what procedures are high. Look at combinations, look at those .9 unspecified diagnosis codes and very quickly you get a snapshot of where your risk areas are and it's objective. 

CJ: Exactly! 

Nancy: You hear a lot of people say; "Why just ask the docs what they do the most?" and that can be helpful. I'm a data person, if I don't see it, I can't prove it.  

CJ: That's right.  

Nancy: So, figure out where your risk areas are. And then take those five CPT codes. Do your deep dive diligence, your LCDs, your LCAs, if it's, you know, a commercial payer coverage. Get into your CPT manual. Look at CPT assistant, read everything you can, and then consolidate it so that you can share this with the rest of your revenue cycle team.  

Next, let's look at the documentation. So, from that billing report, randomly select a handful of charts, where are our risk areas? And you'll know whether it's you, whether it's an external code or you know there's so many options to do it if you don't have the internal skill set or the bandwidth.  

CJ: Exactly!  

Nancy: And then you want to educate and this this could be providers documentation; it could be staff, it could be front desk, it could be whoever's responsible for getting permission before an injection into a knee, for example. Let's not just do this doc, let's hide the syringes and make sure the conservative treatment was there, the diagnosis is there. And look at the claim going out, are the modifiers correct? Does the carrier accept these modifiers? So, right here we're talking front desk internal, maybe your MA, your support staff in the clinic room, physician documentation, coders, billers and then any AR or denial staff, you're really educating everyone, and then you're reassessing, you know, remember the OIG work plan and now a stronger compliance plan, come back in a couple months if it's clean come back in six months or a year. But prove that we're not intentionally making these errors. If one gets through, we'll pay it back. It's an error, but we're not trying to gain them because, at the end of the day, you don't want that appearance.  

CJ: Right! Yeah, no, exactly cause that is a headache, for sure. And that then costs you money and reputation, all sorts of bad things. You've mentioned LCDs quite a bit and I think your point is well taken and you mentioned kind of making sure you're reading the details of that because Medicare pays off of the trust system, right, they trust you. So, when you submit CPT code or a frequency, and I'm thinking of like pain management, for example, either like epidural joint injections or steroid injections or spine injections, facet joint injections, a lot of MACs have policies that say; "You have to have three months of documented conservative treatment that has failed before we consider it medically necessary." Well, the payer is just they're getting numbers on a claim, they're not getting your records, showing that you had three months or more of conservative treatment that has failed. And so, it's on audit after the fact that you run into those troubles. And so, I think that's why there are coders. That's why there are revenue cycle professionals to read those policies, to alert their physicians because the docs are busy. But to say; "Hey guys, we did the, just like you mentioned you kind of do a spot check of the practice you know these injections hit up high in our total volumes, let's make sure and there's an LCD on those codes. Let's go in and make sure that all our documentation supports what we're billing." 

Nancy: And your point is so well stated, Medicare has to pay a clean claim in a specified period of time. So, in that two-week or so turn around they can't ask for documentation. It's our claim adjudication system that's causing the order. Medicare is responsible to the government and the US payers. So, we have to make sure it's clean. Same with commercial, whether you're reporting up to the government or to your owners, we have to prove that what we're paying is correct and in the current system, the only way to do that is retroactively.  

CJ: Exactly!  

Nancy: So, if we're proactive, we hold off on any risk during that retroactive review.  

CJ: Exactly! And you know, Nancy, we're getting kind of close to the end of our time, but I feel like kindred spirits here because everything you've said is like; "Yes, okay, I've experienced that myself!" So, I feel validated that; "Okay, I'm not the only one who sees these same types of things over and over again!"  

Do you have any last-minute thoughts? Maybe something I didn't ask you or any parting guidance on improper payments and payment integrity, anything in that regard?  

Nancy: You know, just to sum up, hearing that you with your years of experience are also a kindred soul, think about that to our listeners, and if you have a small amount of money, don't hold back and not have a proactive coding audit, or revenue cycle assessment because it costs money because I can guarantee you, if you don't have it you're rolling the dice and at the end of the day when you do have to hire someone, it's going to cost you a lot more than you would have laid out.  

CJ: Right! That is so true! Sometimes people only learn the hard way. I've worked with organizations like that where they're like; "No, I'm not going to pay a penny on this until we get, you know, some sort of investigation." Okay, and then you're going to pay 10 times the amount if you had just kind of, you know, prevention, you know, it's worth it, it's better than the cure, right? So, I love that comment. I think that's a good kind of strategy and vision statement, is to do the prevention.  

Well, thank you, Nancy so much for being with us today! We really appreciate your time and expertise.  

Nancy: Thank you, CJ! It's been a pleasure speaking to you and thank you for your time as well.  

CJ: And to all our listeners, thank you for listening to another episode. We always ask in parting that if you have any other topics, you'd love to hear us discuss, please send those our way. If you know of guests that like Nancy, who have expertise in a certain area, please recommend them as well. We'd like to make sure you're hearing what you'd like to hear. So, thanks, everybody! And until next time, take care!