In the September 2013 edition of the Cleveland Bar Journal, Colin Jennings and Tom Zeno described the government’s determination to challenge medical decision making as medically not necessary.   To read the article, visit Uncle Sam Becomes a Doctor:  Government Challenges to Medical Necessity. Recent prosecutions have been born out of their prediction.
In October 2013, a Texas Physician, Dr. Daniel Leong, was sentenced to 48 months in a federal prison and required to pay almost $900,000 in restitution for conspiring to defraud Medicare and Medicaid. Leong falsely represented office visits and diagnostic procedures as medically necessary, although he and his co-conspirator were prescribing controlled substances to patients so they would submit themselves to the diagnostic testing. Leong also ordered tests, like electromyograms (EMG), which receive high reimbursement rates, without reading or having the proper training to interpret the results. As these procedures were medically unnecessary and fraudulently reimbursed, the government pursued a successful case against the doctor.
In the same month, the Department of Justice garnered a civil success against a physician who billed a federal program for medically unnecessary procedures. Connecticut-based physician Jun Xu, M.D. entered into a $300,000 settlement agreement to resolve accusations of False Claims Act (FCA) violations. The allegations included fraudulent Medicare billing for certain physical therapy services which were medically unnecessary and did not conform to Medicare requirements. Specifically, Xu allegedly provided group physical therapy services while billing Medicare for one-on-one treatments, and used massage therapists to render these reimbursed services despite an explicit prohibition in Medicare regulations.
These examples underscore the government’s growing interest in challenging the medical necessity of federally reimbursable treatments and procedures.  In their article, Colin and Tom describe three categories of such challenges:

  1. Medically unnecessary claims: provider rendered services that are not needed by the patient (examples include motorized wheel chairs and stents);
  2. Medically excessive claims: provider rendered services that may be needed by the patient but are delivered excessively, in a quantity that is not in accord with standards of care (examples include pediatric dental work and pain management); and
  3. Failure of care claims: provider rendered services that fail to supply necessary services and/or supply inadequate/worthless services (examples include nursing homes and home health care).

The government increasingly uses data mining to identify outliers, or a provider “who treats patients very differently than his/her peers,” to target for a specific audit or investigation.  Frequently the government will use one of the various kinds of subpoenas available to it during an investigation to obtain necessary documentation.  Not only does the government examine documents, but agents interview nurses, office staff and even patients in order to evaluate the treatment provided by the outlier.  After the investigation, as demonstrated through the examples above, a false claims civil action, or, even worse, a criminal prosecution can result and have terrible consequences.
To help avoid such situations, Colin and Tom recommend that health care providers create a compliance program that includes:  “(a) careful, informed listening, (b) detailed data and chart analysis, and (c) proactive compliance.”  It’s important that documentation shows not only “that care was provided, but now also explain why this particular level of care was necessary.”  As recent outcomes indicate, the government will increasingly judge medical decision-making by examining records against external standards of care, as opposed to accepting the individual physician’s treatment preference.