Three Recent Fraud Cases Involving Dermatologists Illustrate Primary Compliance Risks in Dermatology Practices

By
April 5, 2017

Three relatively recent cases involving dermatology billing practices illustrate some of the main compliance risks faced by dermatology practices.  These risk areas include:

  • Improper use of multiple removal CPT codes;
  • Billing for “impossibly long days”;
  • Failure to follow supervisions rules required to permit “incident to” billing;
  • Creating incentives for overutilization; and
  • Performing “outlier” levels of service that cannot be justified

Misdiagnosis, Overutilization, Violation of “Incident to” Billing Rules, Improper Incentives to Overutilize, Potential Practice Beyond Licensure – November 15, 2016

An allegation from a competing dermatologist resulted in a Federal government investigation of a Florida dermatologist.  The dermatologist was accused of charging the Medicare program for unnecessary biopsies and radiation treatments that were not rendered, not properly supervised, or given by unqualified physician assistants.  It was alleged the doctor was not even in the country when some of the procedures at issue were performed.  The unnecessary charges were alleged to have totaled around $49 million over a 6-year period.

The dermatologist did not admit wrongdoing in the settlement.  Rather, he alleged the overbilling resulted from his unique practice that relied on radiation, instead of disfiguring surgery, to help patients.  The doctor claimed he had cured “over 45,000 non-melanoma skin cancers with radiation therapy” over a 30-year period.  The problem with that argument appears to be the fact that the dermatologist was not trained or qualified in providing radiation oncology treatments.

There are a number of interesting things about this case.  The case was brought by a competing physician as a whistleblower.  The physician who brought the case expressed concern about having to treat patients that the accused doctor had misdiagnosed with squamous cell carcinoma.

The case also alleged significant billing for services allegedly provided when the doctor was not even in the office.  The accused doctor alleged he was available by phone while the procedures at issue were being performed.  This raises interesting issues under the rules regarding “incident to” billing.  Those rules permit a physician to bill for physician extender services.  In order to qualify to bill a service as “incident to” a physician’s service, the billing physician must meet supervisions requirements.  The physician must be physically present within the office suite during the performance of the procedure in order to qualify to bill a service as “incident to” the physician’s services.

It appears there were a number of things going on in this case.

  • There appears to have been a pattern of diagnosing a higher level of severity than was supported by the patient’s condition.
  • There was a routine use of radiation therapy, even in cases that were not medically appropriate.  This placed patients at potential risk.
  • There appears to have been questions whether the accused doctor was authorized to perform radiation therapy.
  • There were issues regarding improper use of the “incident to” billing rules when the doctor was not present to actively supervise the service.
  • There was also some evidence the doctor had offered incentives for staff to misdiagnose and over utilize the radiation treatment.
  • There was an alleged kickback arrangement with another physician who operated a clinical laboratory.

Criminal Conviction of Dermatologist Excessive Use of Multiple Removal Codes – 2015

A Chicago area dermatologist was convicted of committing Medicare fraud by submitting false claims for more than 800 patients that led to payment of reimbursement of approximately $2.6 million.  The doctor was accused of falsely diagnosing patients and submitting bills without proper documentation of the necessary condition.  Most of the claims appear to have involved diagnosis of actinic keratosis, or sun-induced skin lesions that have potential to become cancerous.   The doctor was found guilty of criminal charges arising from this matter in 2015.

The dermatologist was alleged to have falsely documented hundreds of cases of medically unnecessary cosmetic treatments he reported as involving the removal of lesions (CPT 17004).  According to court records, the physician billed under the CPT code applicable to the removal of 15 or more lesions on a more or less routine basis.  These treatments were allegedly performed on hundreds of repeat patients over a number of years.  Many of the patients received this treatment on 10 or more visits.  Medicare reimbursed this treatment by paying up to $352.40 per treatment.  When these numbers are summarized, it becomes difficult to deny that abuse was going on in this case.  Evidence presented suggested the dermatologist falsely claimed to have removed more than 150 pre-cancerous lesions from approximately 350 Medicare patients, more than 450 patients covered by Blue Cross and Blue Shield, and additional patients covered by Aetna and Humana health insurance.

This case appears to have been a relatively clear case of actual fraud rather than failure to properly document the nature of the service.  Even though the case represents an extreme situation, it still holds some lessons for providers who are not attempting to commit fraud.  A few lessons that can be extracted from this case include:

  • Care should be taken when using multiple removal codes such as 17004.  These types of codes should not be used systematically.  Over time, the removal numbers add up to indicate potential fraud. 
  • The record should be accurately and completely documented to support use of multiple removal codes.
  • Care should be taken not to bill codes relating to time increments or work units that, in the aggregate, result in an unrealistic amount of time in a given day.  Granted, some providers are more efficient than others, but at some point multiple procedure time units become excessive and can be statistically sampled to determine whether the individual doctor is within a standard range of services.

Failure to Supervise and Impossibly Long Days

Payment of $302,000 and Forced Corporate Integrity Agreement – July 2016

The government alleged the dermatologist in this case repeatedly billed for services under the “incident to” billing rules during periods when the dermatologist was not present in the office.  Some of the services were allegedly performed when the doctor was traveling out of the country.  The government also alleged the doctor billed for impossibly long days including one day where 26 hours were billed.

This case illustrates the need to comply with the “incident to” billing rules.  Those rules permit a physician extender’s services be billed under the physician in certain circumstances.  In order to qualify to bill incident to, the physician must be physically present within the office suite at the time the extender performs the service.  The physician cannot order the procedure and then leave the office while the procedure is being performed.  There are new Medicare rules clarifying some aspects of the “incident to” billing rules.  There was a previous ambiguity that some providers interpreted as permitting the physician that ordered the service to bill for the services, even though another physician actually supervised the performance of the service.  The rules revision clarified only the supervising physician can bill the services as “incident to” his or her service.  The ordering physician can only bill the service if he or she also supervises the extender.