Insurance Fraud – Are You Guilty?

by Ken Berley, DDS, JD, DABDSM
Frequently I am questioned about billing practices. This area of the law which encompasses insurance fraud and abuse is too large to cover in one small article. Therefore, this overview may be the first of several articles on this subject as I am sure there may be a great deal of interest and confusion generated as a result of this writing. You should be aware that the law on this subject is covered by state and federal statutes, state and federal contract law and can result in civil and criminal penalties. In other words, you can go to JAIL if you are found guilty!

Fraud involves intentional deception or misrepresentation intended to result in an unauthorized benefit. An example would be billing for services that are not rendered. Abuse involves charging for services that are not medically necessary, do not conform to professionally recognized standards, or are unfairly priced. An example would be performing a restoration on a patient when there was no pathology present or charging insurance an exorbitant price for a service. Abuse may be similar to fraud except that it is not possible to establish that the abusive acts were done with an intent to deceive the insurer. A conviction based on fraud requires a finding of intent, where a conviction based on abuse does not. If a jury cannot determine that your goal was to receive an unauthorized benefit you should not be found guilty of fraud, however, you could be held liable for insurance abuse by simply overcharging for services. Civil and criminal convictions based on fraud carry much stiffer penalties than a conviction for insurance abuse.

Reportedly, fraud and abuse are widespread and very costly to Medicare and the medical insurance industry. The United States Government Accountability Office (GAO) estimates that $1 out of every $7 spent on Medicare is lost to fraud and abuse and that in 1998 alone, Medicare lost nearly $12 billion to fraudulent or unnecessary claims. Although no precise dollar amount can be determined, some authorities contend that insurance fraud constitutes a $100-billion-a-year problem.

According to BlueCross & BlueShield United of Wisconsin: What is health care fraud? Nov 30, 1999, false claim schemes are the most common type of health insurance fraud. The goal in these schemes is to obtain undeserved payment for a claim or series of claims. Such schemes include any of the following when done deliberately for financial gain:

  • Billing for services, procedures, and/or supplies that were not provided.
  • Misrepresentation of what was provided; when it was provided; the condition or diagnosis; the charges involved; and/or the identity of the provider recipient.
  • Providing unnecessary services or ordering unnecessary tests.

In Dental Sleep Medicine, it appears that the most common issues that I have observed involve failure to balance bill and charging different rates for different patients. So we will briefly discuss these issues.

May a dental sleep medicine practitioner: (1) as a general rule, waive an insured patient’s co-payment amounts, if based on the patient’s financial hardship; (2) charge its uninsured patients lower rates than it charges its insured patients for the same services; and/or (3) charge patients who pay by cash lower rates than it charges patients who pay by credit card for the same services?

Many insurance policies cover a percentage of the sleep dentist’s “usual” fee. Some dental offices routinely charge insured patients more than uninsured ones but represent to the insurance companies that the higher fee is the usual one. This practice is illegal. It is also illegal to routinely excuse patients from copayments and deductibles. (A copayment is a fixed dollar amount paid whenever an insured person receives specified health-care services. A deductible is the amount that must be paid before the insurance company starts paying.) If the insurance company is paying the Sleep Dentist a percentage of the usual and customary fee, then waiving the co-payment on a regular basis, as well as charging lower rates to non-insureds or patients who pay with cash, is generally construed as insurance fraud. These practices may suggest that the Sleep Dentist’s usual and customary fee is not being accurately reported to the insurance company. When a discounted rate is charged to the patient, the question arises as to whether the discounted rate is actually the provider’s usual and customary charge. Is this a true discount or is the office misrepresenting their real fee? Thus, routinely waiving co-payment amounts and charging higher rates to patients with insurance compared to non-insureds is illegal. It is legal, however, to waive a fee for a patient with a genuine financial hardship or give free services to your pastor, but do not routinely waive deductibles and co-payments and use the financial hardship clause as the vehicle. Discounts may routinely be offered to: family; clergy; professionals and long-term established friends. However, you should keep in mind that it would be difficult for the Sleep Dentist to prove in a court of law that an excessively large percentage of his patients were eligible for a discount. If you approve a discount for a patient, record in the patient’s record why the discount was given. If possible, you should document why the discount was appropriate. For example, if a discount is provided for a patient based on financial hardship, it is prudent for the Dental Sleep Provider to maintain proof of the financial hardship. Therefore if your office determines that you would like to offer a discount to an elderly patient on Social Security with no other source of income, the patient’s financial problems could be documented by an affidavit of financial need and a copy of the patient’s social security check. These documents would then become a permanent part of the patient’s medical record.

Studies have shown that if patients are required to pay for even a small portion of their care they will be a better patient. Patients who have a financial stake in their treatment make medical decisions based on need rather than because they are free. Routine waivers raise overall health costs. Such waivers are considered fraudulent because averaging them with the Sleep Dentist’s full fees would make the “usual” fees lower than the amounts actually billed for. For example, if a patient’s medical policy will reimburse 80% of the UCR fee and the dental sleep practice charges the insurance company $100 then the insurance company would be obligated to pay $80 and the patient pay $20. If however, the sleep dentist were to routinely waive the $20 co-payment, the dentist’s usual and customary charge would be $80 and not the $100 submitted to the insurance company. Under those circumstances, the reimbursement from the insurance company would be $64. Thus resulting in fraudulent reporting.

S8262 Update

Unfortunately change is the only certainty that we have in life. As Winston Churchill said; “There is nothing wrong in change, if it is in the right direction. To improve is to change, so to be perfect is to have changed often.”
Sadly not all change is in the “right direction.” As of July 1, 2015, CMS has deleted S8262. As stated in our summer edition of DSP, I have employed S8262 to file medical insurance for custom lab fabricated morning repositioning appliances since entering the field of DSM. However, I was informed in mid June that CMS was deleting S8262, just after my last article went into the hands of the attendees at the AADSM. Rose Nierman and I are working on another code to use and we have written CMS for S8262 to be reinstated. However, as of July 1, 2015, S8262 is no longer available. CMS manages the HCPCS codes and they can add or delete codes quarterly as needed. S8262 has been listed in the “temporary” code section for some time, but for some unknown reason has now being deleted. Please join us in writing CMS regarding this deletion. It is unlikely that CMS is aware of the need for that code for TMD, DSM and Oral Surgery. The address for Medicare is: Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore MD. 21244.

Additionally, if a medical policy requires the patient to pay a $1,000 deductible before any benefits will be paid and the sleep dentist submits a claim for $1,500, the insurance company would pay the dentist $500 expecting that the dentist would collect $1,000 deductible from the patient. By waiving the $1,000 deductible, the dentist would be charging less for the services than he reported to the insurance company. This practice is fraudulent.
Insurance fraud is a serious crime with serious consequences. Please ensure that your office is compliant with state and federal laws. You are ultimately responsible for all of your medical insurance claims, even if you employ a billing service. Unfortunately, it is my opinion, that many of the billing practices routinely employed by medical insurance billing companies operating in Dental Sleep Medicine may be exposing trusting dentists to an audit. If you are audited, you could be charged with insurance fraud or abuse. Do not assume that your billing service knows the law! That could be a costly mistake.

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