Tennessee-based TeamHealth Holdings has agreed to pay $60 million plus interest to resolve allegations that IPC Healthcare, a company it recently acquired, is guilty of overbilling Medicare, Medicaid, the Defense Health Agency, and the Federal Employees Health Benefits Program.
North Hollywood, CA-based IPC Healthcare Inc. provides hospitals with physicians and other professionals. Its employees work in more than 1,300 facilities across 28 states. Allegedly, the TeamHealth-controlled company had a practice of “upcoding” when billing government programs. Upcoding refers to billing for more expensive medical services by changing service codes in relevant documentation.
Whistleblower Dr. Bijan Oughatiyan Exposes Alleged Upcoding Scam
The False Claims Act lawsuit against IPC Healthcare was filed by Dr. Bijan Oughatiyan, MD, who worked as a hospitalist (a physician who focuses on hospital services) at IPC between 2003 and 2008. The suit was filed shortly after he left the company, in 2009. The 49-year-old doctor alleges that IPC "trained" and "encouraged" hospitalists in the practice of overbilling.
After observing IPC’s questionable practices, Oughatiyan decided to start collecting billing records from colleagues in order to gather evidence to file a qui tam lawsuit under the False Claims Act. Under the Act, private citizens can sue on behalf of the government and share in any recovery. For his efforts and assistance in holding IPC accountable, Oughatiyan is set to receive a $11.4 million whistleblower award.
Alleged Upcoding Fraud Occurred Before TeamHealth Acquired IPC for $1.6B
While the alleged misconduct took place long before TeamHealth acquired IPC for $1.6 billion in 2015, the burden has fallen on the hospitalist service provider´s new owner. According to the lawsuit, IPC was in the habit of encouraging hospitalists to increase their billings, often pressuring those with lower billing levels to "catch up." The government has also stated that IPC hospitalists "regularly submitted daily billing records for services that would have taken in excess of 24 hours to perform, even using extremely conservative estimates."
The complaint filed by the government in February 2015 explains in minute detail how and why upcoding was allegedly taking place at IPC:
“For example, CPT Code 99221 applies to initial hospital care where a physician spends thirty minutes at the patient’s bedside and all decisionmaking is straightforward or of low complexity. The corresponding payment (the amount Medicare reimburses the hospital) is $82… The payment for seventy minutes of a physician’s time requiring highly complex medical decisions is $174. The more complex the service, the greater the government reimbursement…”
“The government alleges that IPC used these codes to bill Medicare for higher and more expensive levels of medical service than were actually provided… this upcoding is due to IPC’s billing practices. IPC’s key metric for measuring physician performance is revenue per patient encounter.
When IPC hospitalists bill for higher levels of service, both the federal reimbursement rates and revenue per patient encounter are higher. Thus, IPC hospitalists have a strong incentive to upcode. Indeed, under IPC’s physician incentive plan, hospitalists receive bonuses based on the amount the hospitalist bills. These bonuses can equal or exceed the hospitalist’s base salary.”
Perhaps on account of the evidence gathered by Dr. Oughatiyan while on the inside, the company took these allegations seriously enough to pay the government $60 million dollars. TeamHealth has also agreed to enter into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services.
Lamont Pugh, Special Agent-in-charge at the Inspector General's Office has commented, "When healthcare companies boost their profits by misrepresenting the services they bill to taxpayer-funded healthcare programs, our office will make sure they are held accountable for their deceptive schemes and that they make changes to bill these programs appropriately."