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Podiatrists are Being Investigated for Billing Fraud in Connection with Grafts and Other Wound Treatment Procedures

Male doctors looking at x-ray of foot

As a podiatrist, you know that promptly treating a patient’s wounds can be critical to mitigating the risk of infection and other potentially-debilitating complications. However, you likely also know that obtaining authorization for these treatments and the skin substitutes used during these treatments can be extremely challenging. Obtaining authorization can take days or weeks, if not months; and, in many cases, the authorizations that eventually come fall far short of covering patients’ needs.

While Medicare generally should cover all aspects of grafts and other wound treatment procedures, this is not always the case. The same is true for Veterans Affairs (VA), Tricare, and other government health care benefit programs. Unfortunately, due to the complexities and challenges involved with billing for varying procedures and brands of skin substitutes – even setting aside the enormous burdens of general program billing compliance – podiatrists are increasingly finding themselves at the center of federal health care fraud investigations.

Common Issues in Federal Health Care Fraud Investigations Targeting Podiatrists

Although there are numerous issues that can potentially trigger, health care fraud investigations, with regard to investigations targeting podiatrists, recent cases suggest that federal authorities are targeting a few specific types of practices. These include:

1. Billing for Lab Work and Skin Substitutes Deemed Not Medically-Necessary (and Other Billing-Related Issues Involving Lab Work and Skin Substitutes)

Prior to performing grafts and other wound treatment procedures, podiatrists must quickly but carefully determine what type of procedure is necessary. In order to do so, they must frequently obtain x-rays and other scans and test results so that they can confidently make an accurate diagnosis. Various forms of lab work will be necessary as well, and podiatrists must determine which type of skin substitute is most appropriate given the extent and current condition of the patient’s injury.

Despite the need to quickly make informed decisions, podiatrists will often find their medical judgment being second-guessed in health care fraud investigations. This typically takes the form of federal agents and prosecutors accusing them of ordering tests or using certain types of skin substitute (usually the more-expensive alternatives) that are not “medically necessary” under the applicable program billing guidelines. For example, types of lab work and skin substitutes that will often be subjected to close scrutiny in federal health care fraud investigations targeting podiatrists include:

  • Lab Work – CBC with Differential, Serum Albumin, Pre-Albumin Level, Total Lymphocyte Count, Transferrin Level, Urinary Creatine Excretion, Complete Metabolic Panel (Na, K, Cl, CO2, Glu, BUN, Cr, Ca, TP, Alb, TBili, AP, AST, ALT), and Hemoglobin A1C.
  • Skin Substitutes – Dermagraft, Nushield, Puraply, Affinity, Grafix Core, and Grafix Prime

In some cases, federal authorities may also accuse podiatrists of unnecessarily using a skin substitute in lieu of a product such as Fibracol Plus, which is inferior but less expensive. This is common in cases involving treatment of injuries such as:

  • Arterial ulcers
  • Diabetic foot ulcers
  • Pressure ulcers
  • Surgical wounds
  • Trauma wounds
  • Venous leg ulcers
  • Dehisced wounds
  • Wounds with exposed bones and tendons

2. Use of Improper CPT Codes for Billing Purposes

Even when a test, treatment, or skin substitute qualifies as medically-necessary under the relevant program guidelines, podiatrists can still face investigations triggered by use of incorrect CPT billing codes. The list of potentially-relevant codes is extensive, and many billing codes are very similar to one another. For example, your practice’s billing administrator is probably familiar with the following:

  • 15002 – Surgical preparation or creation of recipient site by excision of open wounds, burn eschar, or scar (including subcutaneous tissues), or incisional release of scar contracture, trunk, arms, legs.
  • 15004 – Surgical preparation or creation of recipient site by excision of open wounds, burn eschar, or scar (including subcutaneous tissues), or incisional release of scar contracture, face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet and/or multiple digits.
  • 15721 – Application of skin substitute graft to trunk, arms, legs, total wound surface area up to 100 square centimeters, first 25 square centimeters or less wound surface.
  • 15272 – Each additional 25 square centimeters of wound surface area, or part thereof (List separately in addition to code for primary procedure).
  • 15275 – Application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, hands, feet and/or multiple digits, total wound surface area up to 100 square centimeters; first 25 square centimeters or less wound surface area.
  • 15726 – Each additional 25 square centimeters of wound surface area, or part thereof (list separately in addition to code for primary procedure).

But, while these numbers may be familiar, does your billing administrator (either an in-house employee or a third-party billing company) have the medical knowledge to determine when one code should be applied as opposed to another? Under the False Claims Act and other federal statutes, even unintentional and unknowing billing violations can trigger civil penalties, and podiatrists (and other doctors) cannot avoid liability by delegating their billing compliance efforts. In federal health care fraud investigations, agents from the U.S. Department of Justice (DOJ), Federal Bureau of Investigation (FBI), Office of Inspector General (OIG), and other agencies will routinely scrutinize providers’ reimbursement requests for billing and coding violations.

3. Kickbacks and Referral Fees Paid to Skin Substitute Companies and Other Third Parties

Another common issue in health care fraud investigations targeting podiatrists is the alleged payment and receipt of illegal kickbacks, referral fees, and other forms of remuneration. While this issue can arise within the context of various business relationships, it most commonly comes up with regard to podiatrists’ dealings with skin substitute companies. Unfortunately, these companies will often use unethical means to attempt to convince podiatrists to use their products as opposed to those sold by their competitors, and falling victim to these attempts can lead to civil or criminal Anti-Kickback Statute liability.

Under the Anti-Kickback Statute, it is a federal offense to offer, pay, solicit, or receive any improper payment in connection with medical services or supplies (including skin substitutes) provided to a federal health care benefit program beneficiary. Accepting payments, discounts, and even free products from skin substitute companies can potentially expose podiatrists to Anti-Kickback Statute liability. While there are a number of “safe harbor” provisions that can apply, most of these safe harbors are so narrow that a business relationship must be specifically structured with a particular safe harbor in mind in order for the doctor to be protected from federal prosecution. As a result, federal authorities routinely pursue charges under the Anti-Kickback Statute when investigating podiatrists and other doctors as well.

Avoiding Liability in a Federal Health Care Fraud Investigation

With these concerns in mind, in order to mitigate their risk of being charged as the result of a federal health care fraud investigation, podiatrists must undertake program-specific compliance efforts, and they must be prepared to affirmatively demonstrate their compliance in the event of an investigation. While these efforts should be specifically tailored to each individual podiatrist’s practice, some general guiding principles include:

  • Program-Specific Billing Compliance – Medicare, Tricare, the VA, and the various other government health care benefit programs all have their own unique sets of billing rules and regulations. Each time your practice bills one of these programs, it must comply with that program’s rules and regulations. This includes, but is by no means limited to, that program’s definition of “medical necessity.” A comprehensive compliance program will address all aspects of your practice’s program billings, and it will serve as the foundation of your defense strategy in the event of an investigation.
  • Active Training and Implementation of the Compliance Program – Once you have a compliance program thoroughly documented, the next step is to implement it throughout your practice. You should make sure you have a clear understanding of your obligations, and appropriate training should be provided to personnel in all areas.
  • Contractual Protections in Relationships with Skin Substitute Companies, Billing Administrators, and Other Third Parties – In order to avoid allegations of improper payments, and to provide protection in the event that a third-party billing administrator overbills the government on behalf of your practice, contracts with these parties should be drafted with these specific types of concerns in mind. The same goes for contracts with other vendors and health care providers as well.
  • Regular Re-Evaluation and Calibration of Compliance Efforts – As the federal program rules and regulations change, and as skin substitute companies, billing administrators, and other third parties come and go, podiatrists must re-evaluate and calibrate their compliance efforts in order to ensure that they will be adequately protected in the event of a federal investigation.
  • Documentation, Documentation, and More Documentation – When faced with a federal investigation, having thorough documentation to substantiate medical necessity and clearly establish the limits of your financial relationships with third parties can be crucial to avoiding unnecessary consequences. While it may be burdensome, maintaining thorough documentation is a necessity, and it will pay off when you need to defend your practice.
  • Taking Prompt Action in the Event of Contact from Federal Agents – Finally, in the event that you are contacted by federal agents, acting quickly can greatly improve your chances of resolving the investigation without charges being filed. This starts with hiring an experienced federal defense team to intervene in the investigation on your behalf.

Contact the Federal Health Care Fraud Defense Lawyers at Oberheiden, P.C.

Are you concerned about your podiatry practice’s billing compliance? Have you been contacted by agents from the DOJ, FBI, OIG, or another federal agency? If so, we encourage you to contact us immediately for a free and confidential case assessment. To speak with a member of our federal health care fraud defense team in confidence, call (214) 692-2171 or request an appointment online now.

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