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Provider misidentification has become the subject of federal enforcement actions. The FBI and Department of Justice have launched investigations, Medicare Carriers have made overpayment refund demands and commercial third party payors have imposed sanctions as a result of provider misidentification.

Provider misidentification has become the subject of federal enforcement actions. The FBI and Department of Justice have launched investigations, Medicare Carriers have made overpayment refund demands and commercial third party payors have imposed sanctions as a result of provider misidentification.
Provider Misidentification Problem
A remarkable number of health care practices across various specialties and professions (in many jurisdictions) bill for services under one doctor’s name and identification number when another doctor actually rendered the services. This practice, whether inadvertent or intentional, is not correct.
The name and identification number placed on the HCFA 1500 billing form must be the name and identification number of the provider who actually rendered the service to the patient. Billing services under a physician’s license under the Medicare “incident to” rules when the service performed by another person under the physician’s supervision, and under certain Blue Shield contracts, are the only exceptions to this rule.
Compliance Policy
Physician practices should adopt the following compliance policy:
Provider misidentification prohibited. Knowing misuse of provider identification numbers, which results in improper billing, shall be avoided. Physicians and coding staff shall insert the name and identification number of the provider who actually rendered the service to the patient on the HCFA 1500 billing form. The only exception applies to “incident to” services under Medicare and other payor contract exceptions.
Legal Basis for Provider Misidentification Liability
Failing to include the name and number of the provider who actually rendered service to a patient is clearly incorrect for the following reasons.
First, the reverse side of every HCFA 1500 form sent by a provider via mail or electronically to a third party payor contains the following certification:
I certify that the services shown on this form were medically indicated and necessary for the health of the patient and were personally performed by me or were furnished incident to my professional service by my employee under my immediate personal supervision, except as otherwise expressly permitted by Medicare or CHAMPUS regulations.
Thus, physicians are on notice of the “personal performance” certification on the reverse side of the HCFA 1500 form. An additional notice on the form certifies that the “foregoing information is true, accurate and complete.” Misidentifying the provider who actually rendered the services in Box 31 of the HCFA 1500 form could establish civil false claims or criminal liability, or an overpayment and recoupment action, depending upon the circumstances and the provider’s level of recklessness, disregard of billing rules, actual knowledge or intent.
Second, the OIG’s model compliance guidelines for physician practices clearly identify correct provider identification as a risk area. OIG’s guidelines state as follows: “The following risk areas associated with billing have been among the most frequent subjects of investigations and audits by OIG: Knowing misuse of provider identification numbers, which results in improper billing; an example of this is when the practice bills for a service performed by Dr. B, who has not yet been issued a Medicare provider number, using Dr. A’s Medicare provider number. Physician practices need to bill using the correct Medicare provider number, even if that means delaying billing until the physician receives his/her provider number.”
Third, in U.S. v. Mackby, the U.S. Court of Appeals for the Ninth Circuit held that a physical therapy practice’s placement of a physician’s identification number on a HCFA 1500 claim form, where the physician did not directly render or supervise services, is a false claim subject to liability under the federal False Claims Act, even though the services were actually performed and done by qualified individuals. The Court further held that the practice director’s failure to ascertain the specific rules relating to reimbursement did not qualify as “actual knowledge” or “intent,” but did constitute reckless disregard of the truth and deliberate ignorance of the truth. In other words, there is a legal duty to learn the billing rules. Failure to do so did not rise to criminal level of intent in Mackby, but was sufficient to warrant imposition of fines and penalties in excess of $729,000, even though the amount actually billed was only $58,000. The Court remanded the case to the trial court to determine whether the $555,000 in triple damages and $5,000 per HCFA claim submitted violated the 8th Amendment prohibition against excessive fines and penalties.
The lessons from Mackby are: (1) false claims can be proven if the provider under whose name and identification number the services were billed did not directly render the services, and (2) failure to ascertain the rules may not rise to the level of criminal intent, but satisfies the “reckless disregard” and “deliberate ignorance” standards that could violate the federal False Claims Act.
Fourth, in State v. Vainio, a Montana optometrist was convicted on February 11, 2000 on two felony counts of Medicaid fraud arising from submitting claims for services that were performed by his brother. The brother was an optometrist but was not eligible to participate in the Montana Medicaid program. Similarly, in U.S. v. Raithatha, a Kentucky physician was convicted on July 19, 2001 for, among other things, submitting bills to Medicare under the provider number of a physician who did not actually order the service, when the physician who performed the service was not eligible to bill Medicare.
Impact on Third Party Payors
For many third party payors, provider misidentification does not result in any substantive difference in reimbursement or coverage for two reasons.
First, many of these payors are legally required to or voluntarily accept “any willing provider.” For example, many commercial plans, Blue Shield, Blue Cross major medical, auto insurance, and workers’ compensation insurance (excluding the “list of six” restrictions) either do not have a credentialing restriction process or are statutorily mandated to allow any licensed provider to participate.
Second, the particular insurance product may have a point of service option or out of network benefit. Any willing provider payors or those with out of network benefits arguably suffer no loss if the provider was misidentified since benefits are available to non-participating providers, or the insurer does not differentiate between participating and non-participating providers in the amounts paid.
In other words, the carrier would pay the same amount regardless of the identification of the provider, as long as the services were actually billed, medically necessary and correctly coded. If a disclosure were made to this type of carrier and payment returned, it would appear to be appropriate to simply re-bill the services under the correct provider’s identification, resulting in a “wash” and a significant expenditure of administrative resources to achieve no practical advantage for either the practice or the payor. In essence, this is arguably a “no harm, no foul” situation.
If, however, the payor is a gatekeeper managed care organization or HMO, which has strict credentialing requirements limiting the number of providers who can participate and the product has no out of network benefits, misidentification of the provider who actually rendered the services results in reimbursement that neither the doctor nor the patient were authorized to receive. Provider misidentification in this situation results in an overpayment that should be returned.
Provider misidentification in the context of the Medicare program may either be a “no harm, no foul” situation or one that warrants an overpayment refund. If provider misidentification occurred, but the provider who actually rendered the service (whose name did not appear of the HCFA 1500 billing form) was a participating provider, no loss to the program would have occurred because the provider who actually rendered the service could simply re-bill the claim and the practice would be entitled to the same amount of reimbursement. This would appear to fall under the “no harm, no foul” category. In fact, if the provider of services is inadvertently misidentified during the time in which it takes to process a Medicare participating provider application, Medicare typically makes the application valid retroactive to the application date, thereby further eliminating any possible loss to the federal program.
If, however, the provider who actually rendered the service (whose name and identification number were not on the HCFA 1500 billing form) was not a participating provider, an overpayment would have occurred that would require disclosure to the Medicare program because Medicare reimbursement to non-participating physicians may not exceed 95 percent of the fee schedule amount paid to participating physicians. Therefore, a five percent overpayment would have occurred, requiring a refund to be made.
Audit/Corrective Action
Because commercial third party payors and some federal authorities believe provider misidentification is either a false claim or criminal fraud, practices should determine compliance with the provider identification rules. If non-compliance is evident, charts should be audited and corrective action implemented, including possibly an overpayment refund.
Physicians and all other providers have a legal obligation under the Medicare Fraud and Abuse Act to disclose and refund mistakenly obtained reimbursement. If a provider conceals or fails to disclose to the carrier or the government the mistaken payment received, a felony is committed. It is important to understand that the initial mistake is not an illegal act, but failure to disclose and return the money could be a felony. CMS proposed regulations on January 25, 2002 imposing a 60-day deadline to return mistakenly obtained overpayments.
A recent case brought by a whistleblower under the civil False Claims Act underscores this point. A hospital failed to disclose an $800,000 reimbursement mistake. The federal government intervened in the qui tam case on behalf of the whistleblower and recovered $1.5 million from the hospital as a sanction for failing to return the mistakenly obtained reimbursement.
Physicians should take seriously their obligations to correctly identify the provider who rendered the service and to refund any mistakenly obtained reimbursement.
Charles I. Artz, Esq., is the founder of the law firm Charles I. Artz & Associates, located in Harrisburg, Pa.