American College of Physicians: Internal Medicine — Doctors for Adults ®


Fraud and abuse update

From the October 1998 ACP-ASIM Observer, copyright 1998 by the American College of Physicians-American Society of Internal Medicine.

New report questions hospital investigations

A new report concludes that many of the coding errors documented during an investigation of teaching hospitals may not indicate fraudulent activity.

After investigating the nation's 1,200 teaching hospitals, the HHS Office of the Inspector General (OIG) concluded that its audits had found serious upcoding errors in the way teaching hospitals bill Medicare. HHS said that most of these errors were multilevel in nature and thus represented fraudulent activity.

A report from the General Accounting Office (GAO), however, found that most of the coding errors involved one-level discrepancies. According to the report, one-level discrepancies do not necessarily indicate fraud and may instead reflect differences of opinion about how to code patient care.

The GAO report also questioned the criteria HHS used to select institutions to audit. The investigations targeted institutions that have the largest number of residents, receive the most government payments for GME and face civil lawsuits.

In response to the GAO report, the OIG conceded that it misstated the extent of the upcoding found. At the same time, the OIG refused to yield on the magnitude of the upcoding problem in teaching hospitals or on its audit selection methods, which the GAO also questioned.

ACP-ASIM is currently reviewing the GAO report, "Medicare: Concerns with Physicians at Teaching Hospital (PATH) Audits," which can be found at

HCFA to pay for tips

The federal government is preparing to pay individuals who help identify fraud and abuse in the Medicare program.

HCFA's Incentive Program for Fraud and Abuse Information will reward individuals who alert HCFA or Medicare carriers about possible fraudulent acts as long as the information leads directly to recovery of Medicare monies. Rewards will equal 10% of the recovered funds, or up to $1,000 per instance. Congress mandated the new program in 1996, and it is scheduled to take effect this January.

Earlier this summer, ACP-ASIM expressed major concerns about the program. While the College supports HCFA's efforts to eliminate fraud, it warned that the program could put an element of mistrust into important medical relationships. "Unless adequate safeguards are put in place," ACP-ASIM said in a statement, "the 'incentive' to report alleged fraud and abuse could undo years of cultivated relationships built on mutual trust."

The College also noted that HCFA must not let tips from beneficiaries create unnecessary investigations or allow beneficiaries to become the arbiters of what constitutes fraud and abuse. HCFA must explain to patients that the program has been created to weed out intentional fraud only and that rewards will be made only when intentional fraud is found, ACP-ASIM said. The College also emphasized that patients should be encouraged to discuss concerns with their doctors prior to contacting the government about potential wrongdoing.

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