HLTH 3510 Week 9 Billing Compliance Memo Example

Memorandum

To: Practice Administrator and Medical Director, Gastroenterology Associates

From: Billing compliance analyst (student intern)

Date: Month Day, Year

Re: Two colonoscopy billing patterns that create audit exposure, one likely accidental and one requiring review, with recommended actions

Purpose

This memo reports two patterns found in a quarterly review of 120 colonoscopy claims submitted by the practice, explains why each creates exposure to payer audits and possible legal risk and recommends specific actions. The review was conducted using the practice's billing records and procedure notes. One pattern appears to be an accidental coding error. The other may also be accidental, but it is the kind of pattern that federal investigators look for, and it should be reviewed promptly by someone outside the billing team. Case counts are from a composite practice created for this assignment.

The review sampled claims from the last quarter only, so the patterns may extend further back.

Pattern 1: Unbundled Colonoscopy Codes on Polyp Removal Cases

What was found. In 9 of 41 colonoscopies with snare removal of a polyp, a single procedure was billed twice over: once as a plain colonoscopy and again as a colonoscopy with snare removal. The snare code already contains the colonoscopy, so the pair inflates what was done. In 7 of the 9 cases, the payer's edits denied the diagnostic code, so no overpayment occurred. In 2 cases, involving a smaller payer whose edits apparently did not catch the pair, both codes were paid.

Likely cause. All 9 claims were coded by the same newly hired coder during her first month, using a charge sheet template that listed both codes as options. The pattern stopped after she was retrained in the second month.

Exposure. This is a billing error, not evidence of intent. But the two paid claims are overpayments, and under the overpayment provision of the Social Security Act a provider that identifies a Medicare or Medicaid overpayment has 60 days to report and repay it (42 U.S.C. § 1320a-7k(d)); many commercial contracts have similar requirements. Keeping a known overpayment can turn an error into a much more serious problem.

Pattern 2: Screening Claims Billed as Diagnostic Without a Documented Symptom

What was found. In 14 of 79 colonoscopies where the procedure note stated the indication was average-risk screening, the claim listed a symptom diagnosis, such as abdominal pain or a change in bowel habits, as the first diagnosis, and did not use the screening diagnosis or preventive modifier. The symptom did not appear in the procedure note or the pre-procedure history for 11 of the 14. Coding a screening as diagnostic generally results in patient cost-sharing, and for some payers a higher payment to the practice.

Why this pattern is more serious. Submitting a claim that misrepresents the reason for a service to obtain higher payment can create liability under the federal False Claims Act when government programs are involved, even without specific intent to defraud, because the law covers claims submitted with reckless disregard of their truth (31 U.S.C. § 3729). The pattern also harms patients, who receive bills for services that should have been free under the preventive benefit. We do not know the cause. It may be a template default, a coder's misunderstanding or something else. That uncertainty is why the review should be done by someone independent of the billing team.

Exposure. Of the 14 claims, 3 were Medicare claims. Those carry the greatest legal risk. The 11 commercial claims carry contractual risk and may violate the federal preventive services rule as applied to patients.

Recommended Actions

1. Pattern 1, within two weeks: Confirm the two overpayments with the payer, refund them and document the refund. Remove the diagnostic code from the polyp removal charge sheet template.

2. Pattern 2, immediately: Ask the practice's compliance officer or outside counsel to review the 14 claims and the documentation, determine the cause and decide whether corrected claims, refunds or patient refunds are required. Pause any further use of the charge template involved until the review is complete.

3. For affected patients: Once the review confirms which claims should have been processed as screenings, submit corrected claims and refund any cost-sharing patients paid.

4. Going forward: Add a monthly audit of 10 randomly selected colonoscopy claims, comparing the first diagnosis and modifiers with the procedure note. Federal compliance guidance recommends regular auditing and monitoring as a core element of an effective compliance program (U.S. Department of Health and Human Services, Office of Inspector General, 2023).

What This Memo Does Not Conclude

This memo does not conclude that anyone in the practice acted with intent to defraud. Pattern 1 appears to be a training error that has already stopped. Pattern 2 could have an innocent explanation. The memo's purpose is to make sure the practice identifies and corrects problems itself, documents what it did and returns any money it should not have received. Practices that find and fix their own errors are in a far stronger position than those whose errors are found by payers or auditors first.

References

False claims, 31 U.S.C. § 3729 (2023).

Reporting and returning of overpayments, 42 U.S.C. § 1320a-7k(d) (2023).

U.S. Department of Health and Human Services, Office of Inspector General. (2023). General compliance program guidance. https://oig.hhs.gov/compliance/general-compliance-program-guidance/