What is upcoding?

Whistleblowers with inside knowledge of fraud involving government funded healthcare programs have the ability to use the False Claims Act to bring the fraud to the government’s attention and possibly earn a reward. Individuals can file lawsuits on behalf of the United States using the qui tam provisions of the False Claims Act when they are aware of healthcare providers (such as doctors, hospitals, assisted living facilities, and others) fraudulently receiving reimbursements from taxpayer funded programs such as Medicaid and Medicare. One of the most prevalent methods of fraud perpetrated to receive such reimbursements is known as “upcoding.”

Upcoding is a method of fraud where health care providers seek more reimbursement from the government than they are entitled to. Government funded health care programs, like Medicaid and Medicare, have adopted specific billing codes, known as Current Procedural Terminology or CTP codes. Specific CTP codes exist for all the different medical services, devices, and other items provided by health care providers which are reimbursable by the government programs. Each billing code corresponds to a set rate schedule which determines the exact amount of reimbursement the government then pays the health care provider. Treatment of more severe conditions often provide higher reimbursement rates. As the government relies on the truthfulness of the CPT codes submitted by health care provides (who must certify that truthfulness when submitting the codes), it is imperative that the codes accurately reflect the actual services rendered.

Where does upcoding occur?

Upcoding occurs when a health care provider seeks reimbursement using a fraudulent CTP code that provides a higher reimbursement than the CTP code which corresponds to the services actually rendered to a Medicaid or Medicare patient. An example of upcoding would be if a doctor saw a patient for a routine check-up (which has a CTP code with a reimbursement of say $60), but when billing Medicare the doctor provides the CPT code for an extended check-up, which provides a reimbursement of $100. By upcoding, the doctor just fraudulently received $40 from taxpayer funded Medicare. The submission of the higher CPT code to the government to fraudulently receive the $40 extra is a violation of the False Claims Act.

Upcoding can also occur when healthcare providers submit CPT codes that accurately correspond to the services provided if the services provided were medically unnecessary. Using the example above, if a doctor knows that a Medicare patient only needs a routine check-up, but intentionally gives the patient an extensive check-up for the purpose of receiving a higher reimbursement for the government, submitting the CPT code for the extensive check-up is still fraudulent and in violation of the False Claims Act.

What is Unbundling?

Another variation of upcoding involves so-called “unbundling” when submitting CPT codes. Medical procedures often are bundled together when they are related or usually performed together, such as incisions and closures incidental to surgeries. The bundled CPT codes for such services are often reimbursed at a lower rate by Medicare or Medicaid than if each service was submitted under its own separate CPT code. Thus, unbundling occurs when a health care provider submits individuals CPT codes for each service provided when an applicable bundled CPT code could have been used which covered the entire procedure. Unbundling, like upcoding, can serve as the basis for False Claims Act liability.

How to Report Upcoding or Unbundling

Whistleblowers who have inside knowledge of a healthcare provider engaging in upcoding or unbundling have several options to report the fraudulent activity. A whistleblower can report fraud internally to a hotline (which we highly recommend against), bring their concerns to the Health and Human Services Office of the Inspector General, as well as to members of Congress. However, there is only one avenue of reporting that provides for a potential reward for the whistleblower, using the qui tam provision of the False Claims Act. Additionally, many states have their own versions of the False Claims Act which allow for recovery of state funds fraudulently paid out due to upcoding. The federal government is extremely concerned about Medicare and Medicaid fraud and has consistently made going after those defrauding taxpayer funded health care programs a top priority. Whistleblowers how bring Medicare and Medicaid fraud to the attention of the government under the False Claims Act’s qui tam provisions have consistently recovered some of the most substantial whistleblower rewards paid out by the government.

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