Recently, the Department of Community Health, Program Integrity Section (“DCH”), issued recoupment letters regarding alleged billing errors for outpatient rehabilitation services. In these letters, the Department contends that hospitals are providing outpatient physical therapy services in excess of what is authorized by Section 903.5 of Part II Policies and Procedures for Hospital Services.
Though the Department’s letters state that is has “identified what appears to be potential billing errors,” we have learned that these letters have been sent to nearly all of the hospitals in the state that have billed outpatient therapy services, regardless of whether there is any evidence that the hospital billed those services improperly. Even with this lack of evidence, DCH is encouraging hospitals to audit themselves and self-disclose any overpayments. Providers should note that the self-disclosure process, formalized by DCH in October of 2006, will be handled differently by the Department than in the past. Hospitals should also note that while many times the Department accepts and verifies a provider’s self-disclosed numbers, if DCH disagrees with any of the subjective interpretations made by the provider, the self-disclosed information can be used against the provider on administrative appeal.
The Department’s request for hospitals to self-audit is purely voluntary. It is important to note that hospitals will not face adverse consequences if they do not respond to the DCH letter. The Department has consistently stated it will be willing to negotiate more favorable terms with providers if they self-disclose overpayments than if the Department discovers those overpayments through its own review process, but DCH is quick to note in its Part I Manual, Section 304.10, that “self disclosure will not absolve the provider of criminal culpability. If the Medicaid Fraud Control Unit or any other federal, state or local agency determines a crime was committed, any information shared with the Department will be forwarded to the appropriate agency.” (Emphasis added.) It is critical that providers should consult an attorney knowledgeable in this area of the law before submitting any self-disclosure information.
A brief review of the information required for self-disclosure clearly demonstrates that providers take a substantial risk in admitting billing errors. The required documentation includes:
- The Form SDA 1 – SDA Analysis Worksheet that lists all affected claims;
- A report that includes a full description of the matter being disclosed, the person who identified the overpayment and the manner in which the individual discovered it;
- A detailed account of the provider’s investigation of the overpayment, including a list of all persons interviewed regarding the violation, the documentation reviewed, and a summary of any audit activity that was undertaken;
- A statement disclosing whether the provider is under investigation by any government agency or contractor;
- A statement detailing the provider’s theory regarding the cause of the violation;
- A certification that the information submitted to the Department is based upon a good faith effort to disclose a billing inaccuracy and is true and correct under penalty of perjury, and;
- The methodology used the provider in determining the amount of the overpayment (if the overpayment amount was determined using a sampling method).
The materials listed above would provide the Department with verified documents, witnesses and theories that it could use against a provider in any legal proceeding. The primary risk faced by providers in providing this information is that the self disclosed matters are not subject to appeal rights as outlined in Part I, Policies and Procedures for Medicaid/PeachCare for Kids Manual, Chapter 500. Further, if the self-disclosed matters lead to other billing errors outside the scope of what was self-disclosed, the Department may initiate a new adverse action on those matters.
Though there are some benefits to self-disclosure, there are also substantial legal risks that must be weighed before any action is taken. Consulting a qualified attorney before determining your strategy will help to ensure you will find the best solution for your organization. DCH officials agree and encourage providers to seek legal counsel before self-disclosure.
