Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
|IN THE CASE OF|
The Inspector General,
|DATE:August 27, 2004|
- v -
Thomas A. O'connor, M.D.,
| Docket No.C-02-722
Decision No. CR1206
The Respondent, Thomas A. O'Connor, M.D., is a physician licensed to practice in the State of Wisconsin, who participates in the Medicare and Medicaid programs as a provider of services. Joint stipulations (Joint Stip.) ¶¶ 1, 4. Between October 1, 1997, and July 31, 1999, he frequently billed the Medicare program for a sophisticated nuclear medicine procedure which, he admits, he did not provide. Instead, he provided a simpler and less expensive procedure, spirometry. Joint Stip. ¶¶ 7, 23. The Inspector General for the Department of Health and Human Services (I.G.) charges that Dr. O'Connor knew or should have known that the claims submitted were false, and the services were not provided as claimed. The I.G. also charges that Dr. O'Connor knew or should have known that the spirometry services he actually delivered were not medically necessary. She proposes that he be excluded from participation in the Medicare, Medicaid, and all federal health care programs for a period of seven years, and that he pay a Civil Money Penalty (CMP) of $126,000.
For the reasons discussed below, I conclude that Dr. O'Connor knowingly submitted false claims to the Medicare program. I also find that he delivered and billed for services that he knew were not medically necessary. I find reasonable the sanctions proposed by the I.G. and therefore affirm the imposition of a seven year exclusion plus $126,000 CMP.
Medicare Part B is a supplementary medical insurance program for the aged and disabled. Social Security Act (Act) §§ 1831-1848. (1) Medicare pays for items or services that are reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Act § 1862(a)(1)(A).
To administer Medicare Part B, the Centers for Medicare and Medicaid Services (CMS), acting on behalf of the Secretary of Health and Human Services, enters into contracts with private insurance companies called carriers. Among other duties, carriers process and pay provider claims for reimbursement. Following instructions issued by CMS, the carrier pays only for covered services that are medically reasonable and necessary and furnished to Medicare beneficiaries. The carrier determines payment rates and amounts, and audits provider records. Act § 1842(a); 42 C.F.R. §§ 421.5, 421.200. For the most part, payment is based on a fee schedule (although if a physician's billing on a Medicare claim is less than the fee schedule, Medicare pays the lesser of the two amounts). Act § 1848; transcript (Tr.) 197.
In submitting their claims to the carriers, providers identify the service or item by code, using a five digit numerical code found in the American Medical Association's Physicians' Current Procedural Terminology (CPT), a systematic listing and coding of procedures and services performed by physicians. See Joint Stip. ¶¶ 7, 8; Webb v. Shalala, 49 F. Supp. 2d 1114, 1116 (W.D. Ark. 1999).
During the time relevant here (between October 1, 1997 and July 31, 1999), the Wisconsin Physicians Services Insurance Company acted as the Part B carrier in the State of Wisconsin. Joint Stip. ¶ 2. Respondent O'Connor submitted to it 126 claims for services under CPT code 78596 (pulmonary quantitative differential function), when, in fact, he had not provided that service. He had instead provided routine spirometry services, which should be billed under CPT code 94060. Joint Stip. ¶¶ 7, 17, 18, 19. A test properly billed under CPT code 94060 is less extensive than a test properly billed under CPT code 78596 and is reimbursed at a substantially lower amount. Joint Stip. ¶ 16.
The Act subjects to CMP and/or exclusion from program participation any person who knowingly presents, or causes to be presented, to an officer, employee, or agent of the United States, or of any department, or agency thereof: 1) a claim for a medical or other item or service that the person knows or should know was not provided as claimed; 2) a medical or other item or service that the person knows or should know is false or fraudulent; or 3) a pattern of medical of other items or services that the person knows or should know is medically unnecessary. Act §§ 1128A(a)(1)(A),(B), and (E); 42 C.F.R. §§ 1003.102(a)(1),(2), and (6).
By letter dated April 18, 2002, the I.G. advised Respondent that, pursuant to her authority under sections 1128A(a)(1)(A),(B), and (E) of the Act, she proposed imposing a CMP of $126,000 and excluding him from participation in Medicare, Medicaid, and all federal health care programs for a period of seven years. She proposed these sanctions because she determined that he had knowingly presented, or caused to be presented to the Part B carrier, 126 claims for payment that were: 1) for medical or other items or services that he knew or should have known were not provided as claimed; or 2) for medical or other items or services that he knew or should have known were false or fraudulent; or 3) a pattern of medical or other items or services that he knew or should have known were not medically necessary. I.G. Demand Letter; Respondent exhibit (R. Ex. 1), at 1-2. A schedule of claims attached to the letter identified each of the 126 claims that formed the basis for the I.G.'s actions. Id., at 7-10. According to the I.G., not only did Respondent knowingly bill for a procedure reimbursed at a higher rate than the one performed, even the procedure he performed was justified in no more than 15 of the 126 claims. She determined that Respondent submitted claims to Medicare for a pattern of services (totaling at least 111) that he knew or should have known were not medically necessary. Id., at 3.
Respondent timely appealed. He asserted that he provided necessary and appropriate services, that the majority of billings were medically appropriate, that any mistake concerning improper billing codes was a clerical mistake in billing and not intentional, and that the proposed penalties were excessive and unwarranted. Resp. Hearing Request; R. Ex. 2.
Pursuant to my orders, the parties submitted their pre-hearing exchanges, including stipulations, proposed exhibits, and declarations of witnesses. I held the hearing on October 20, and 21, 2003, in Milwaukee, Wisconsin. Mr. Stephen Godek and Arthur S. Di Dio, M.D., appeared on behalf of the I.G. Mr. Daniel M. Purdom appeared on behalf of the Respondent, Thomas O'Connor, M.D.
I have admitted the following exhibits: I.G. Exs. 1 through 126; I.G. Ex. 127A; I.G. Ex. 128; I.G. Ex. 129A; I.G. Exs. 130 through 193; R.Exs. 1 through 11. Tr. at 10-11.
During the hearing Respondent expressed surprise that the I.G. and her expert witnesses reached their conclusions based on what he characterized as incomplete medical records. Based on what appeared to be his genuine surprise and recognizing the potentially serious impact of my decision here, I offered him the opportunity to submit the supplemental medical records. See Tr. 282 et seq. With his post-hearing brief, Respondent submitted the additional documents, and, by motion received June 15, 2004, asked that they be admitted into the record as exhibits.
The I.G. strenuously objects, pointing out that Respondent should have provided the records in response to the I.G.'s discovery motion, and that Respondent's failure to produce the documents prior to hearing violated my scheduling order. The I.G. also argues that the records are irrelevant since justification for a medical procedure should be apparent in the medical records from the date of service.
With respect to the relevance objection, even if the I.G. is correct that the date of service record, by itself, must justify a medical procedure for Medicare reimbursement purposes, I am not convinced that medical records going beyond the date of service are irrelevant in an exclusion/CMP action. While such purportedly inadequate documentation might preclude Medicare reimbursement, the I.G. would be hard-pressed to impose an exclusion or even a substantial CMP because the provider, on the date of service, neglected to record information found elsewhere in the patient's medical record.
On the other hand, the I.G.'s procedural objections are well-founded, and ordinarily would preclude submission of additional evidence at this late date. I was nevertheless inclined to admit the evidence based on Respondent's representations that he had misunderstood the I.G.'s discovery request as limited to medical records from the date of service and on what appeared to be his genuine surprise as to the relevance of the documents, hence his failure to submit them, in response to my prehearing order, as part of his case in chief. Although it seemed strange for the issue to arise for the first time during these proceedings, I was under the impression that Respondent had not understood that evidence contained in unproduced sections of the medical records could be significant in establishing medical necessity. See Tr. 284. ("I am a little surprised that these additional records haven't just come to the fore naturally . . .when the carrier initially expressed its concerns. On the other hand, as I said, I do think [that] Counsel was genuinely surprised yesterday [to learn the significance of these additional medical records.]") Tr. 284.
In fact, review of the record in this case shows that Respondent has long understood the significance of the medical records in question. In a letter dated November 24, 1999, Dr. O'Connor complained that the carrier "missed many documented facts on these 116 patients such as : 1. smoking history; 2. medication; 3. ongoing illness flow sheet; 4. physical exam findings; 5. history; and 6. allergies and asthma history." I.G. Ex. 147. By letter dated December 3, 1999, counsel for Respondent wrote to the carrier:
I.G. Ex. 148, at 2. Before the carrier fair hearing officer Respondent submitted "a copy of the pertinent medical records with supporting documentation both highlighted and transcribed onto a separate table." I.G. Ex. 158, at 2 et seq. Comparing the table to the medical records produced in this case shows that Respondent did not then limit himself to the date of service records. He provided what he characterized as "other supporting information from patient history." At that time, he argued, as he argues now, that the entire history of patient treatment must be analyzed in order to understand medical necessity. In light of this, I see no justification for his failure to produce the documents in response to my scheduling order.
Under the regulations governing these proceedings, I "must exclude" any exhibit not provided in accordance with my scheduling order unless I find that "extraordinary circumstances" justified Respondent's failure to exchange the exhibits timely, in accordance with my prehearing order. (Emphasis added.) 42 C.F. R. § 1005.8(b). Even if Respondent truly did not understood the significance of these additional documents, I would have been hard pressed to find the required "extraordinary circumstances." Where the evidence establishes that he has long understood the significance of the documents to his theory of the case, the question is not even close. I therefore decline to admit these additional records.
Moreover, even a finding of "extraordinary circumstances" does not entitle Respondent to submit the documents. If I find "extraordinary circumstances," I must then determine whether the admission of the new evidence would cause "substantial prejudice" to the I.G. 42 C.F.R. § 1005.9(b)(3). On its face, it seems that the I.G. could well make such a showing. Her expert witnesses based their testimony on a full review of the records supplied and would now be required to repeat that entire review process. Had Respondent specified how the new documents change the case, this might not have been unreasonable. However, as the I.G. points out, in submitting its additional records, Respondent offers no "analysis or explanation as to how they establish the medical necessity of the spirometry tests at issue." I.G. Response at 8. He has thus provided no specific argument or issue to which the I.G. would respond.
I note that the I.G.'s exhibits include Respondent's submissions to the carrier fair hearing officer, so Respondent's proposed exhibits are somewhat cumulative. The record already contains some evidence of patient history and treatment to which Respondent could have referred. I.G. Ex. 158. In any event, as discussed below, these documents relate to the medical necessity issue, and the more serious issue here is the upcoding. A finding that all of the spirometry tests were medically reasonable and necessary would not have significantly altered the outcome of this case.
The parties agree that, between October 1, 1997, and July 31, 1999, Respondent O'Connor billed the Medicare program for services under CPT code 78596, "pulmonary quantitative differential function," when, in fact, he had performed spirometry, which should have been billed under CPT code 94060, "spirometry services." He presented 126 such claims to Medicare. Joint Stip. ¶¶ 7, 13-15, 17-24.
The case presents the following questions:
Spirometry, also referred to as "pulmonary function testing" or "pulmonary function study," is a basic pulmonary diagnostic test used to assess breathing capacity. The procedure typically involves a patient's forced exhalation into a plastic mouthpiece attached to a cylinder. The exhalation moves a stylus that records the results on a graph, called a spirogram. The spirometer can be a simple, portable machine, or a highly sophisticated device that performs a variety of pulmonary function diagnostic tests. A spirometry test typically lasts no more than 10-15 minutes. I.G. Ex. 187, at 5-7 ¶¶ 17-19 (Herdeman Decl.); Tr. 17; I.G. Ex. 181, at 1 ¶ 5 (Bussan Decl). For reimbursement of "bronchospasm evaluations: spirometry services, before and after bronchodilator," providers must bill the Medicare and Medicaid program under CPT code 94060. I.G. Ex. 181, ¶ 14.
In contrast, a pulmonary quantitative differential function study is a nuclear medicine study that involves both a ventilation (air flow) scan and a perfusion (blood flow) scan. During ventilation, a radiopharmaceutical agent is inhaled into the lungs. Images from the scan show how the air is distributed in the lungs. During the perfusion scan, the radiopharmaceutical agent is injected into a vein, circulated throughout the bloodstream and into the lungs. Images from this scan show how the blood is distributed in the lungs. I.G. Ex. 187, at 7-8 ¶¶ 21-22 (Herdeman Decl.). The test is performed prior to lung surgery to determine how much lung function will be removed and how much will remain following surgery. R. Ex. 5, ¶ 12 (Ragalie Decl.); Tr. 411-412. Apparently, a physician will always order spirometry along with a pulmonary quantitative differential study. R. Ex. 5, ¶ 15; Tr. 409. Providers are required to bill pulmonary quantitative differential function (ventilation/perfusion) studies to Medicare and Medicaid under CPT code 78596. I.G. Ex. 181, ¶ 15.
Between 1997 and 1999, Medicare paid physicians an average of $44 for a spirometry test. I.G. Ex. 181, ¶ 16 (Bussan Decl.) In 1997, Medicare paid $287.91 for the nuclear medicine study. In 1998, Medicare paid $310.12 for it, and in 1999, Medicare paid $309.95 for it. Joint Stip. ¶ 16.
Respondent O'Connor acknowledges the submission of improper claims but denies that he engaged in a deliberate scheme to upcode and asserts that his "coding errors" were "nothing more than a clerical mistake that was the result of a poor business decision." R. Post Hearing Brief at 2. He claims that he did not have "actual knowledge" that CPT code 78596 was not the correct code for the pulmonary function study administered to his patients.
For the reasons discussed below, I found Dr. O'Connor's claims incredible.
Dr. O'Connor asserts that he began administering spirometry in his office in the mid-1980's, using what he characterizes as a "very large pulmonary function apparatus with bellows." R. Ex. 3, at 1 ¶ 4; Tr. 484. (3) In August 1993, he purchased from Dan Cronin a new spirometer; a Satellite Subminiature Spirometry System. R. Ex. 3, at 2; Joint Stip. ¶ 24. When he delivered the machine, Mr. Cronin demonstrated its use to Respondent and to Respondent's medical assistant, Mary Dolinac. R. Ex. 3, at 2. Dr. O'Connor suggests that Dan Cronin "led him to believe" that the new machine performed a more sophisticated test, which could justify higher reimbursement:
R. Ex. 3, ¶ 9. (O'Connor Decl.) The "superbill" is a preprinted form that lists medical diagnoses, CPT codes, and amounts to be billed for each service. They are tailored to reflect the codes commonly used by an individual physician or practice. The physician simply checks off the code for the service performed. Dr. O'Connor, like many physicians, used the superbill for convenience in billing. He periodically reviewed and revised it to reflect changes in the services he provided and changes in the CPT and diagnostic codes. Joint Stip. ¶ 29; Tr. 124-125. For each of the claims at issue here, Dr. O'Connor personally marked the CPT code, diagnosis, and amount to be billed. Joint Stip. ¶ 31.
The evidence establishes that Dr. O'Connor did not revise his superbill when he purchased the new machine. He purchased the spirometer on August 27, 1993 and revised his superbill to add the nuclear medicine code over two years later in December 1995. Joint Stip. ¶ 24; Tr. 485-486. In fact, he admitted under cross examination that, notwithstanding his declaration, the superbill "wasn't revised right away, no." Tr. 486. He also testified that, from approximately 1988 until 1996, he billed for spirometry using the proper code - 94060. Tr. 484.
Nevertheless, Dr. O'Connor steadfastly maintains that he did not understand in 1993 that he was buying a spirometer, claiming that he thought he was buying a "pulmonary function study machine." Tr. 536. He claims that he did not think he was providing the same service "because I was using a different machine." Tr. 496. He testified that the new machine gave him "more information," specifically, "it gave maximum midexpiratory flow." Tr. 536-537. But Dan Cronin more credibly explained that the new machine "provides basically the same tests" as performed by Dr. O'Connor's manual model, including a maximum midexpiratory flow (MMEF). Mr. Cronin explained that he knew that because
I do not believxe that Dr. O'Connor did not know what he was getting when he bought the new spirometer. The new machine - which was smaller, more portable, and computerized - was obviously an improvement, but it performed the same tests as his earlier machine, and Dr. O'Connor had to have realized that. Tr. 142-143; See also I.G. Ex. 162, at 1 (warranty registration form indicating that he purchased the machine because of its size and portability).
Moreover, Dan Cronin flatly denied telling Dr. O'Connor that the apparatus he sold him was capable of measuring blood flow through a lung, or performing a "full pulmonary function study." Because he sold such equipment to hospitals, Mr. Cronin was aware of the differences. I.G. Ex. 193, ¶ 6; Tr. 150. Mr. Cronin also explained that when he demonstrated the machine, his practice was to point to the manual and "say that the codes are in here, the billing codes . . . and . . . these tests are reimbursable, and their codes that you use for the reimbursements are in here." Tr. 147-148. He specifically recollected referring Dr. O'Connor to the User's Manual for information about CPT codes for spirometry testing. I.G. Ex. 193, ¶ 3 (Cronin Supp. Decl.). He also thought that he told Dr. O'Connor that the test charge would typically be $50 to $55. Tr. 148.
Tr. 152; I.G. Ex. 193, ¶ 2. (Cronin Supp. Decl.).
The User's Manual identifies the machine Dan Cronin sold to Respondent as a spirometry system, and its appendix lists the CPT codes "for office pulmonary function tests:"
I.G. Ex. 163, at 60.
In his post-hearing reply brief, Dr. O'Connor claims that he did not receive a users' manual when he purchased the machine. R. Reply Brief at 5. In his declaration, Dr. O'Connor made no such claim. He said that he "never had the need to reference the User's manual for the spirometry machine," but would call the Jones Medical Instrument Company if he had a problem. R. Ex. 3, ¶ 8. Under cross-examination, he expanded this to claim that he "never got a user's manual." Tr. 492. No other evidence or witness, confirms this assertion, and I did not find it credible. Not only did I find Mr. Cronin more credible, I simply do not believe that Dr. O'Connor would have purchased a $2,450 machine without receiving operating instructions. See I.G. Ex. 162.
Respondent attacks the Cronin testimony, pointing out that Mr. Cronin made substantive changes in his declarations. In his initial declaration, Mr. Cronin said that he did not discuss billing codes or reimbursement amounts with Respondent, but that he "would" point out billing codes in the User's Manual. I.G. Ex. 192, at 3 ¶ 6 (Cronin Decl.). In a supplemental declaration, however, he said that, after reviewing Dr. O'Connor's declaration, he remembered referring Dr. O'Connor to the User's Manual, and he remembered a discussion he had with Dr. O'Connor regarding reimbursement rates. I.G. Ex. 193, at 1 ¶ 2 (Cronin Supp. Decl.); Tr. 144-145. I do not find this unreasonable, and I found credible Mr. Cronin's straightforward responses under cross-examination. He was very careful in his testimony, and I am confident that he limited his answers to items he could recall.
Respondent suggests that the I.G. "prodded" Dan Cronin into changing his testimony in order to "get" Dr. O'Connor. R. Post-hearing brief at 13. I find this accusation not only unsupported, but also impractical. No reasonable attorney would choose to submit inconsistent statements from his/her own witness if he/she had a choice. Had the I.G. really not liked Dan Cronin's original declaration and intended to suborn perjury, as Respondent suggests, she far more reasonably would have "prodded" the false statement in the first place, presenting one consistent account. Moreover, Mr. Cronin's initial declaration was nearly as damaging as his supplemental declaration. The manual provisions are unambiguous, and Mr. Cronin's directing Respondent's attention to them would be sufficient to establish Dr. O'Connor's actual knowledge of the appropriate billing code for the tests his new machine performed.
And what possible motivation would Mr. Cronin have to lie? He no longer sells medical equipment. He is in the real estate business, far from the I.G.'s reach or influence. Tr. 141. He is not even remotely in danger of becoming the target of an I.G. investigation, nor any other I.G. issued sanction.
Finally, and most compelling, the Cronin testimony is consistent with Dr. O'Connor's subsequent actions, inasmuch as Dr. O'Connor admits that for at least two years following Mr. Cronin's demonstration, he billed the code that is listed in the User's Manual. (4) The evidence thus establishes that he came away from his 1993 interaction with Dan Cronin thinking that 94060 was the appropriate billing code for the test performed by the machine Dan Cronin sold him.
More than two years after he bought the new spirometer, Dr. O'Connor revised his superbill, substituting the 78596 code for 94060. He claims that he did so based on the advice and assistance of his former business manager, Robert "Dan" Collins, and billing clerk, Dana Schmitt, "people that I was relying on to help me with my billing and with my coding." R. Ex. 3, ¶ 10; Tr. 483, 487. He argues that his reliance on the opinions of others in determining the superbill code "proves" that he did not intentionally use an improper code. R. Post-hearing Brief at 6. He claims that Dana Schmitt suggested that CPT code 78596 was the correct billing code for pulmonary function study with bronchodilator, and that he "relied on her suggestion because she had extensive experience billing for similar services for other practices and providers." R. Ex. 3, ¶¶ 10, 11.
Tr. 535-536; See also Tr. 540 ("It wasn't my idea to come up with this code, believe me. It was not my idea. I would have never found this code in my attempts to generate revenue.")
Respondent's admission - that, without further inquiry, he simply "went along" with his clerical employee's suggestion to upcode because the "better code" increased his revenue - by itself justifies the I.G.'s imposition of sanctions. Respondent seems to assume that he is less culpable if someone else initiated the idea of billing under the nuclear medicine code. R. Reply Brief at 10. I disagree. He is culpable whether he initially found the code by himself, or someone pointed it out to him, and he then decided to use it.
But I do not believe that Dr. O'Connor passively accepted his employee's suggestion. Nor do I accept his protestations of ignorance with respect to coding. Compelling evidence establishes that he was familiar with CPT coding, and that he himself affirmatively and deliberately upcoded in order to increase his income.
Robert "Dan" Collins is a business consultant. He has known Respondent for many years, and, from 1985 until approximately October 1996, acted as Dr. O'Connor's business adviser. I.G. Ex. 192, ¶¶ 1-2 (Collins Dec.). Mr. Collins obviously has the utmost regard and affection for Dr. O'Connor, although he also opined that Dr. O'Connor had "personality problems," pointing out that he had a lot of anger, and yelled at his employees, who frequently quit shortly after they were hired. I.G. Ex. 192, ¶ 5; accord, I.G. Ex. 169 (Dolinac statement); I.G. Ex. 170 (Schmitt statement); I.G. Ex. 171 (Gordon statement). See Joint Stip. ¶¶ 26, 28 (in which the parties stipulate to the accuracy of the Gordon and Schmitt statements to the I.G. investigator, I.G. Exs. 170 and 171).
According to Mr. Collins, in the mid-1980's he assisted Dr. O'Connor in the preparation and printing of a superbill form. Dr. O'Connor had a "very strong knowledge of CPT codes and diagnostic codes used in submitting claims for reimbursement of services." Mr. Collins said that he "personally reviewed the CPT codebook with Dr. O'Connor." Dr. O'Connor wanted to maximize the amount of his reimbursement from all sources, including Medicare and Medicaid. Dr. O'Connor personally selected the CPT codes and set the fees for all of the medical items and services that he provided. He personally reviewed the explanations of benefits (EOB) and remittance advices (RA) sent by Medicare, Medicaid, and private insurance companies. He "was excessive about reviewing payment data, sometimes staying in the office until 3:00 a.m. to do so." He occasionally called Dan Collins at home, as late as 11:00 p.m., to complain about reimbursement issues involving Medicare and Medicaid. "Dr. O'Connor analyzed the RA's to death." I.G. Ex. 177 ¶¶ 8, 9,13; Tr. 115, 127.
Dan Collins also testified that Dr. O'Connor "would certainly" have chosen the particular service to bill to Medicare or Medicaid, and Mr. Collins could not think "of an ongoing scenario" in which someone in Dana Schmitt's position would have selected the level of service or billing codes. Tr. 129-130.
I found that Dan Collins, like Dan Cronin, was very careful in his testimony, and wholly credible. While noting that Dr. O'Connor spent so much time with them that it hurt his practice, Mr. Collins obviously admired Dr. O'Connor's concern for his patients.
Dan Collins explicitly denied any knowledge of improper conduct. On the other hand, he declared:
I.G. Ex. 177, ¶ 6.
Mr. Collins' testimony is consistent with the other evidence in the record, including statements from Dr. O'Connor's employees. Dana Schmitt started working for Dr. O'Connor in 1988, right after she graduated from high school, and was a full-time clerk in his office from 1988 to 1990. I.G. Ex. 170, at 1; Joint Stip. ¶ 28; Tr. 296. The record is a little foggy as to what she did from 1990 until 1992, but in 1992 she "returned to his employment" full-time with the title of "business manager." I.G. Ex. 170, at 1; Joint Stip. ¶ 28. She had no special training in accounting or billing (Tr. 315), and explained that "business manager" was just a title.
Tr. 359. According to Ms. Schmitt, "Dr. O'Connor pretty much did everything." Tr. 358. She was not even allowed to look at the mail. Tr. 357.
Respondent concedes that he knew that Dana Schmitt was not formally certified to determine CPT codes, and that she had no formal medical training. However, he asserts that he nevertheless "relied on her suggestions, because she had extensive experience billing for similar services for other practices and providers." R. Ex. 3, ¶ 12. Ms. Schmitt, however, flatly denied having such experience. Tr. 371-372. She worked for a company called Enco Billing but not in its coding department, and, in any event, the billing there was for psychiatric services. Tr. 388. She worked in the billing department of St. Mary's Hospital where she followed up on unpaid claims, but was not involved with coding. Tr. 391. She started to work on Dr. O'Connor's billing well after he made the coding change, in December 1996, when she was employed by a company called Lakefront Billing. Even then, the job only required her to input information from a charge sheet provided by Dr. O'Connor. Tr. 117, 315, 318-322.
Respondent asserts that Dana Schmitt "testified that she did attend a seminar regarding billing in the early 1980's." R. Post-hearing brief at 6. At best, Ms. Schmitt could not specifically remember whether she attended any training sessions. When asked if she'd had any training, she replied:
I may have sometime in the '80's that I don't necessarily specifically recall. It wouldn't have been at my job, my job at the time, may have attended a seminar; that was something big that we had went (sic) to early on.
Even if she attended some kind of training sometime in the 1980's, this would hardly qualify her as someone with "extensive experience" in billing codes, and I see no credible evidence to suggest that she had more than a marginal understanding of CPT coding. She may occasionally have read an article from the carrier publication, Communique (5) (particularly when Dr. O'Connor instructed her to), but she did not work with the CPT manual on a daily basis and simply did not see herself as the person responsible for the accuracy of the codes submitted to Medicare. Tr. 306, 355-356. She was genuinely shocked and upset to learn (during the course of her testimony) of Dr. O'Connor's claim that she had suggested the incorrect code.
With respect to making changes in the superbill, she described a very different process by which it was revised:
Respondent argues that he "never claimed that Ms. Schmidt was qualified to independently choose the CPT code for the procedures that he provided to his patients nor did he ever ask her to perform this service." Nevertheless, he insists that he believed her capable of looking up a particular study or test if requested and providing him the correct CPT code for the procedure. R. Post-hearing Brief at 8. But Dana Schmitt denied looking up any code for the pulmonary function study:
Tr. 373. She explained that "typically" staff would only look up a code if it were "a very cut-and-dry" type of procedure. If Dr. O'Connor "did other procedures . . . he had his own book, and he looked up - personally looked up the codes and wrote those on." Tr. 383. She said that Dr. O'Connor would give her sheets with the codes "almost always" already on them. Tr. 306-307, 329 ("Oftentimes we were given a new sheet with new codes that said, 'Here, use this.' ")
In what I consider a marginally relevant aside, Ms. Schmitt testified, hypothetically, that, had she gone to the CPT code manual to look up the code for pulmonary function study (which she denies doing), she would have found, in the index, code number 78596, and would have considered it a proper code for the procedure, presumably because the index identifies the 78596 procedure as "function study." Tr. 307. But, in practice, she said that if she ever had to look something up in the CPT code book, or if a new test were given for which she did not have the code, staff did not rely on the index, but
Tr. 309. She would not have relied on the index because the index does not contain a description of the code services being provided. Tr. 314. And, in fact, when she learned that Dr. O'Connor was under investigation, she found out the appropriate code by contacting Jones Medical, the company that sold the machine. Tr. 302.
In his reply brief, Respondent asserts, without citation to the record, that "Respondent recalls that she look (sic) up the code prior to it being included on the revision of his superbill." R. Reply Brief at 12. Nowhere in the record, including Respondent's testimony, did I find any assertion that Dana Schmitt looked up pulmonary function study in the CPT code book. But even if she had, following her ususal practice, she would have given Dr. O'Connor a copy of the coding page, which plainly identifies Code 78596 as "pulmonary quantitative differential function (ventilation/perfusion) study." And Dr. O'Connor has admitted to reviewing the full code description. R. Ex. 3, at 3 ¶¶ 13, 14 ("I reviewed the written description of CPT code 78596 . . . ." "Based upon Ms. Schmidt's (sic) recommendations and my review of the code description, CPT code 78596 was placed on my superbill . . . .")
I would expect anyone with a modicum of medical training to recognize that a pulmonary quantitative differential function (ventilation/perfusion) study differs from a routine spirometry. See Tr. 79 (A "skilled medical practitioner . . . would be aware that a perfusion scan measures blood flow to the organ in question . . . and that a spirometry doesn't measure the blood flow . . . .") I found wholly disingenuous Dr. O'Connor's suggestion that he was only "learning now" that the spirometry test he performed was not measuring blood flow. Tr. 492, but see Tr. 494. ("In the context of what that particular - - going back and looking at it now, in the context of that code, yes, I did not consider it a blood flow situation." ) And if he truly believed that he was measuring blood flow, why was he ordering such an expensive test, since he obviously had no need for and did not receive any blood flow information.
Dana Schmitt also confirmed Dan Collins' observations as to Dr. O'Connor's involvement with billing and his knowledge of coding. She opined that Dr. O'Connor was familiar with the CPT codes for the services he provided. She testified that he received and read the carrier publication, Communique:
Tr. 356, 359.
Dr. O'Connor himself admitted that he "had gone to some coding classes," but claimed "it's new stuff to me, going through a CPT code. I was going primarily to figure out how to bill the E&M (evaluation and management)." Tr. 541. However, in a letter to the carrier dated May 7, 1998, he asserted that he attended State Medical Society coding and documentation seminars and spent "considerable time each week reading literature and staying appraised [sic] of regulatory requirements in all areas of my practice." I.G. Ex. 138, at 1.
Dr. O'Connor's attempt to explain away Dana Schmitt's denial that she ever suggested a change in coding was neither coherent nor credible:
* * *
Nor does Respondent offer any credible justification for the significant increase in revenue generated by his upcoding, a level of reimbursement wholly out of proportion to the service provided. Dr. O'Connor was aware of the money coming into the office. Tr. 353-354. He acknowledged that, before he changed the code, he was receiving about $30 to $50 in reimbursement for the spirometry. With the upcode, he supposedly began to charge $750 for the same service, and received approximately $300 in Medicare reimbursement. Joint Stip. ¶ 16. (6) In contrast, he billed a mere $93 for an EKG. Tr. 247.
That he paid an employee $10 to $15 per hour to administer the 15 to 20 minute spirometry test should have suggested that his charges were out of line. Tr. 328-329, 538. And yet Dr. O'Connor was unapologetic, claiming that a $750 charge did not strike him as excessive "when somebody else in the Milwaukee area is getting $750 for a pulmonary test, and my office girl or my business manager or my help is telling me about it and saying, 'Why aren't we doing this?'" Tr. 538-540.
Respondent dismisses as irrelevant his setting a $750 fee for the procedure he performed. Because Medicare would not pay him the amount he charged for any procedure, but would pay only its fee schedule, Respondent reasons that it doesn't matter what amount he claimed for the service, and, he argues, his listing an excessive fee for an uncomplicated procedure does not support the proposition that he knowingly submitted false claims. I agree that Dr. O'Connor did not expect anyone to pay him $750 for the test. However, the record shows that he set his fees by roughly doubling the amount that Medicare would pay, and, by upcoding, he increased his reimbursement by as much as ten-fold, which is still a significant, and unjustified, increase in revenue. Tr. 323-324, 326. (7)
Respondent also argues that "it just does not make sense" that he would have attempted to defraud the program by using a nuclear medicine study, since he was so obviously incapable of providing that service, and, given his long and acrimonious history with the Medicare program, he must have known that he would be audited. R. Post-hearing Brief at 5. Unquestionably, Respondent exercised extremely poor judgment. But virtually anyone who unsuccessfully contrives to defraud the Medicare program could make the same argument. I do not consider the stupidity of a scheme very persuasive evidence of a party's innocence. (8)
Besides, no evidence suggests that Respondent understood how "ridiculous" his selection of CPT code 78596 was. As he points out in his declaration, the written description of CPT code 78596 "did not mention isotopes." R. Ex. 3, at 3 ¶ 13. Beyond the fact that the code paid well, he seems to have made no inquiry into what the procedure entailed. And this does not appear to be a procedure with which most physicians would be familiar. Of the physicians who testified in this case, only Dr. Ragalie, the pulmonologist, seems to have understood exactly what a pulmonary quantitative differential function test involved. Tr. 411-412.
Moreover, assuming he even thought that far ahead, Respondent may not have appreciated how severe the repercussions would be if he were caught. He had a long history of conflict with the carrier over issues such as upcoding and overutilization, yet no actual penalties had ever been imposed. At most, he had only been required to refund the resulting overpayment and been subject, from time to time, to increased scrutiny. I.G. Ex. 136; see also, I.G. Exs. 133, 137, 147.
That Respondent was motivated by a desire to generate additional revenue is certain. He admits to a "cash flow crunch," and, in February 1998, the carrier told him that he had to refund a $20,222 overpayment. However, the record does not establish, and I do not believe, that he acted out of simple greed. The testimony of those who know him, along with his own statements and actions, suggest that he was often intemperate, and seems to have been motivated by a combination of anger, arrogance, indignation, petulance, and desperation, as well as altruism and dedication to his patient population.
Dr. O'Connor serves a patient population that relies almost exclusively on the Medicare and Medicaid programs. He has never turned away a Medicaid patient in a community where many physicians refuse to participate in the program. Tr. 121-122. But those programs simply will not reimburse for the quality of services that Dr. O'Connor provides, and, in his view, he cannot make an adequate living providing high quality medical care to the population that he serves. Throughout this time period, he was trying desperately to find a way to keep his head above water financially:
Those who worked with him seem to agree that, even under normal circumstances, Dr. O'Connor's behavior was often combative and rash. According to Dan Collins, Dr. O'Connor was "always" battling government agencies, and insurance companies were "constantly" auditing him. I.G. Ex. 177, ¶ 14. He was a strong patients' rights advocate who thought that his patients deserved good health care, and that third parties should pay for it.
I.G. Ex. 177, ¶ 15. The documentary evidence confirms Collins' observations. In a letter to the carrier dated December 30, 1986, for example, Dr. O'Connor announced that he "did not wish to continue" his participation in the Medicare program because of the program's unfair payment practices, including the "unreasonable fee structure," Medicare's ability to "change codes and reduce my fees without justification," and Medicare's "discriminatory" policies, which encourage a "'two-tiered' system of medical care." I.G. Ex. 174.
Dana Schmitt also reluctantly agreed that Dr. O'Connor complained that Medicare did not pay very much, and "chopped up his fees." Tr. 334. She didn't "particularly recall" his threatening to resign from the Medicare program but conceded that he sometimes wrote intemperate notes. She was afraid of him. Tr. 334-337. (9) See also I.G. Ex. 170, at 2. ("O'Connor screamed and cursed at [Schmitt] and . . . Mary Dolinac when they told him they could not bill for home health care plan oversight when there were no records to substantiate the service. He threatened to fire Dolinac.") (Schmitt Statement) Joint Stip. ¶ 28.
The I.G. points out (and Respondent does not challenge) that, even though Respondent purportedly added the nuclear medicine code to his superbill in December 1995, he did not seek reimbursement under that code in any significant way until after February 1998. The record establishes that he was simply not ordering spirometry and was not billing under either the spirometry or the nuclear medicine code for almost two years after he changed his superbill. Julie Anne Gordon, who is Dr. O'Connor's health technician and the employee who actually performs the test, told the I.G. investigator that until 1998 the spirometer sat on a desk, gathering dust, and the parties have stipulated to the accuracy of her statement. (10) I.G. Ex. 171; Joint Stip ¶¶ 25, 26. Mary Ann Dolinac confirmed that the spirometer sat unused for a long time, although she thought that Dr. O'Connor began ordering the test in early 1997. I.G. Ex. 176. Dana Schmitt told the I.G. investigator that Dr. O'Connor started ordering "a lot" of spirometers in 1998. I.G. Ex. 170, at 1; Joint Stip. ¶ 28 ("The Parties agree that the information contained in the Report of Interview of Dana Schmitt, I.G. Ex. 170, is accurate and correct and may be used or relied upon by either the I.G. or Respondent in this proceeding.")
So the machine sat idle for years. Then, according to the billing data, on October 22, 1997, Respondent billed Medicare using, for the first time, the nuclear medicine code, claiming an October 14, 1997 date of service. I.G. Ex. 127A, at 4 (Medicare beneficiary no. 118). He also billed the Medicaid program under this code for an October 14, 1997 date of service. I.G. Ex. 129A, at 1 (Medicaid beneficiary no. 29). (11) Thereafter, however, he did not submit another bill under the nuclear medicine code until mid-February 1998, when he began such billing on what appears to have been a fairly regular basis. (12) See Joint Stip. ¶ 9; I.G. Exs. 1-126.
Dr. O'Connor has offered no credible explanation for this billing pattern. The timing of his bills suggests a certain deliberateness to his actions, and one might infer that he submitted just a couple of claims in October 1997, one to each program, waited to see the result, and, when nothing bad happened, he began the bogus billing in earnest.
The I.G. also suggests that Dr. O'Connor started significant upcoding in response to the carrier's determination to collect from him a more than $20,000 overpayment. By letter dated February 12, 1998, the I.G. advised him of its audit results, finding an actual overpayment of $3,056.40 extrapolated to $20,222.20, based on the carrier finding of upcoding (on evaluation and management) and his provision of services that were not medically reasonable and necessary. I.G. Ex. 136. In the I.G.'s view, Respondent saw increasing and upcoding his orders for spirometry services as a way to increase revenue and retaliate against what he considered unfair reimbursement practices. The I.G. buttresses this inference with testimony from Dan Collins that Dr. O'Connor had threatened exactly such behavior. According to Dan Collins,
I.G. Ex. 177, ¶ 20. Dan Collins said that he was "troubled" by Dr. O'Connor's threats to maximize reimbursement by billing higher levels of service. He warned Dr. O'Connor about the possible civil and criminal implications of upcoding and billing for services that were not medically necessary. He went over the CPT manual with him about E & M (evaluation and management) codes, and the appropriate levels of service. He also explained to Dr. O'Connor the need to document the criteria for each level of service. I.G. Ex. 177, ¶ 21.
Respondent has not credibly explained his actions, and we may never know or understand his precise motivation. However, the credible evidence in this record leads to the inescapable conclusion that he well knew the appropriate code for the service he provided, but that he deliberately upcoded in order to increase his revenue. I next consider whether he also ordered unnecessary spirometry tests.
I consider Dr. O'Connor's deliberate upcoding of spirometry services the serious misconduct here, and doubt that he would be facing these penalties had he limited himself to overutilization of an otherwise appropriately coded service. On the other hand, the evidence establishes that his practice of upcoding was linked to the dramatic increase in the number of spirometry tests he ordered, suggesting that he ordered and billed for the spirometry tests without regard to whether they were medically necessary. The medical records also show a disturbing number of spirometry tests ordered for patients who presented with no complaints or with complaints wholly unrelated to any respiratory problem. The record also shows that, in all of these cases, Dr. O'Connor followed the initial spirometry test with bronchodilator treatment, and then a post-bronchodilator spirometry test, without regard to the results of the initial test. Finally, no reliable evidence suggests that he acted on or even reviewed many of the test results. These findings support the conclusion that he billed for services that he knew were not medically necessary.
In deciding that Respondent billed for services he knew or should have known were not medically necessary, I do not accord res judicata effect to the decision of the fair hearing officer. I recognize that the carrier has issued a fair hearing decision in which it determined that none of these procedures were medically reasonable and necessary, and that Respondent did not appeal that decision, so it stands as the final agency decision on the matter. I.G. Ex. 159. That Respondent is not entitled to reimbursement is therefore well established. From this, the I.G. argues that the doctrine of res judicata bars Respondent from claiming that any of these tests were medically reasonable and necessary. The I.G.'s argument, however, does not take into consideration the differing burdens of proof in these separate forums. Before the carrier, the Respondent bears the burden of establishing his entitlement to Medicare reimbursement. Act § 1833(e); 42 C.F.R. § 424.5(a)(6). Here, the I.G. bears the burden of persuasion on this issue. 42 C.F.R. § 1005.15(b). If Respondent had prevailed at the fair hearing he might have been able to argue res judicata since his burden of proof was greater in that proceeding than it is here. However, since he has a lesser burden here than he had before the fair hearing officer, he is not now precluded from arguing that the spirometry tests were medically reasonable and necessary. (13)
Before he started to bill under the nuclear medicine code, Dr. O'Connor rarely ordered a spirometry test. As noted above, the parties have stipulated to the accuracy of Julie Anne Gordon's statement that the spirometer sat gathering dust until 1998, and to Dana Schmitt's statement that Dr. O'Connor started ordering "a lot" of spirometry tests in 1998. I.G. Exs. 170, 171; Joint Stips 25, 26, 28. Dr. O'Connor has not explained this sudden jump in spirometry testing, and nothing in this record suggests a change in Dr. O'Connor's patient population to justify it. Only Dan Collins offers a credible explanation: Dr. O'Connor's openly articulated plans to make up for his "losses" by providing extra services and adding them to his bills. I.G. Ex. 177, ¶ 20.
As discussed above, Medicare only pays for items and services that are reasonable and necessary for the diagnosis and treatment of illness or injury or to improve the functioning of a malformed body member. Act § 1862(a)(1)(A); 42 C.F.R. § 411.15(k)(1). See I.G. v. Stern, DAB No. 1314, at 6 (1992) ("The ALJ properly emphasized that, in order for there to be reimbursement by Medicare, the services provided must be medically necessary and supported by appropriate documentation.") The carrier has issued policies explaining medical necessity. To be considered medically necessary, items and services must be "necessary to treat or diagnose the symptoms, illness, or injury, and generally considered accepted medical practice in the community." PHYS-001; I.G. Exs. 136, at 92 (1989 Medicare Policy Manual); 159, at 22; 181, at 22 ¶ 23; 187, at 18 ¶ 45. Something in the individual patient's history, symptoms, behavior, or past medical history of active diseases renders the service necessary for the safety of the patient. I.G. Ex. 136, at 94.
With limited exceptions, not applicable here, Medicare does not pay for routine checkups and other exams that would be considered "screening." See 42 C.F.R. § 411.15(a). As the carrier policy recognizes:
I.G. Ex. 136, at 93, 96.
The I.G. presented the opinions of two medical experts: Dr. Kenneth L. Bussan, the carrier medical director, and Dr. Daniel R. Herdeman, a Board-certified internist and primary care physician. I.G. Exs. 181, 187. They explained that the standard for ordering, performing, and evaluating spirometry tests is set forth by the American Association for Respiratory Care's 1996 Clinical Practice Guidelines for Spirometry. I.G. Ex. 183; I.G. Ex. 181, ¶ 4; I.G. Ex. 187, ¶ 47. According to Dr. Bussan, spirometry testing could be medically appropriate if the patient has a history of allergies or cigarette smoking and other symptoms or physical findings, such as shortness of breath, decreased breath sounds, increased chest diameter (if credible), cyanosis in the fingers, coughing, or wheezing. Under those circumstances, spirometry could be necessary to 1) detect the presence or absence of lung dysfunction suggested by history or physical signs and symptoms (e.g. age, smoking history, family history of lung disease, cough, dyspnea, wheezing) and/or the presence of other abnormal diagnostic tests (e.g. chest radiograph, arterial blood gas analysis); 2) quantify the severity of known lung disease such as COPD or asthma; 3) assess, establish, or monitor the change in lung function over time or following administration of or change in therapy such as inhalation of a bronchodilator; 4) assess the potential effects or response to environmental or occupational exposure; 5) assess the risk for surgical procedures known to affect lung function; or 6) assess impairment and/or disability. I.G. Ex. 181, ¶ 8 (Bussan Decl.); I.G. Ex. 183.
Dr. Herdeman agreed that the test is appropriate if the patient's symptoms suggest. He testified that, in reviewing the medical records, he "considered the symptoms really the most important guiding light." Tr. 67. He agreed that spirometry should be ordered in the presence of some type of troubled breathing, wheezing, or a chronic cough, although, in his view, the presence of decreased breath sounds would not by itself justify the test. Tr. 89. Nor would increased chest diameter necessarily justify the test, in part because of the subjectivity of the finding. Tr. 90. A diagnosis of COPD, by itself, would not justify ordering the test. Tr. 91-92.
Respondent's expert, Dr. Glenn F. Ragalie, is board certified in internal medicine, pulmonary medicine, and critical care medicine. He is an associate clinical professor in the Department of Medicine of the Medical College of Wisconsin, and medical director in a hospital long-term respiratory unit. R. Ex. 5, at 1. Dr. Ragalie agreed that spirometry is appropriately administered to patients with respiratory symptoms, although, as discussed below, he advocated its broader use, noting that many pulmonologists consider spirometry "as fundamental to medicine as are measurements of pulse, blood pressure, temperature, height, and weight." (R. Ex. 5, ¶ 17). On the other hand, he seemed to recognize that the Medicare program does not cover such wide-spread use of the test. Tr. 440.
I do not doubt that Respondent might have been able to justify the medical necessity of some of the tests ordered, based on signs and symptoms, had he demonstrated that he ordered the test for some purpose and that he reviewed the test results. With respect to the patients whose records are found at I.G. Exs. 9 and 13, for example, the I.G. no longer asserts that Respondent knew or should have known that spirometry was not medically necessary. (14) The evidence shows that Dr. O'Connor served a population that included many poor and mentally ill patients, who are more likely to smoke and more likely to present with the kinds of respiratory problems that could justify spirometry testing. Tr. 77, 477.
Nevertheless, a disturbing number of patients presented to Dr. O'Connor with no complaints or with complaints completely unrelated to respiratory problems. Nine of the patients presented with no complaints. In their records, Dr. O'Connor wrote under chief complaint: "I'm ok," (I.G. Exs. 1, 2, 4, 5, 6, 7, 8, 9) and "Feeling ok (I.G. Ex. 3). Twenty-five patients presented with complaints of pain or injury. I.G. Ex. 10 ("pain in legs & fingers"); I.G. Ex. 11 ("My back hurts"); I.G. Ex. 12 ("I fell and hurt back on stairs"); I.G. Ex. 13 ("I'm same - no better," referring to back and shoulder problems); I.G. Ex. 14 ("I fell yesterday"); I.G. Ex. 15 ("My neck is cracking; I'm losing my balance"); I.G. Ex. 16 ("My back"); I.G. Ex. 17 ("Both wrists are hurting"); I.G. Ex. 18 ("My knees"); I.G. Ex. 19 ("My back & ® leg"); I.G. Ex. 20 ("I'm better but my legs are bad"); I.G. Ex. 21 ("My back was out"); I.G. Ex. 22 ("My back is hurting a lot"); I.G. Ex. 23 ("The shoulders"); I.G. Ex. 24 ("My back is bad"); I.G. Ex. 25 ("I'm hurting in L ankle and L chest); I.G. Ex. 26 ("spots"); I.G. Ex. 27 ("My back"); I.G. Ex. 28 ("My left leg"); I.G. Ex. 29 ("Back hurts much more"); I.G. Ex. 30 ("Back pain"); I.G. Ex. 31 ("Pain in whole body"); I.G. Ex. 32 (indecipherable on my copy, but apparently back pain); I.G. Ex. 33 ("I'm falling at home. I hurt my back again"); I.G. Ex. 34 ("My legs are bad. I can't walk").
Sixty-one others presented with other what appeared to be non-respiratory issues. I.G. Ex. 35 ("emotional problem"); I.G. Ex. 36 ("I want to have a baby"); I.G. Ex. 37 (tremors and depression); I.G. Ex. 38 (losing weight); I.G. Ex. 39 ("He's sleeping all the time"); I.G. Ex. 40 ("I lost some weight"); I.G. Ex. 41 ("I bought a treadmill"); I.G. Ex. 42 ("management problems / No further nosebleeds."); I.G. Ex. 43 ("got confused in N. C. 1 mo. ago; passed out" treated for TIA); I.G. Ex. 44 ("I'm losing urine"); I.G. Ex. 45 (Diabetes); I.G. Ex. 46 ("Numbness L side of face"); I.G. Ex. 47 (herpes); I.G. Ex. 48 ("My leg ulcers"); I.G. Ex. 49 ("My back got better"); I.G. Ex. 50 ("I got a reaction from [antibiotics]"); I.G. Ex. 51 ("I'm not bruising as much"); I.G. Ex. 52 ("my leukemia"); I.G. Ex. 53 ("I'm not well" GI complaints); I.G. Ex. 54 ("I had a heart attack yesterday"); I.G. Ex. 55 ("R S weakness"); I.G. Ex. 56 ("I'm terrible."); I.G. Ex. 57 ("skin rash checkup"); I.G. Ex. 58 ("My voice's still hoarse"); I.G. Ex. 59 ("My hernia is out"); I.G. Ex. 60 ("My heart . . .") I.G. Ex. 61 ("My diabetes. I can't sleep"); I.G. Ex. 62 ("Rash got worse"); I.G. Ex. 63 ("My bottom bruises" dx vulvitis); I.G. Ex. 64 ("seizures and voices"); I.G. Ex. 65 ("My thyroid is off. It's hypo"); I.G. Ex. 66 ("My right hand doesn't work"); I.G. Ex. 67 ("up" ); I.G. Ex. 68 ("My rheumatoid flared up"); I.G. Ex. 69 ("I'm dizzy); I.G. Ex. 70 ("Blood still in urine"); I.G. Ex. 71 ("I threw up my breakfast"); I.G. Ex. 72 (ganglion cyst); I.G. Ex. 73 ("I have problems with my [indecipherable] management"); I.G. Ex. 74 (post hepatic neuralgia); I.G. Ex. 75 ("problems with husband"); I.G. Ex. 76 ("has [indecipherable] on PAP smear"); I.G. Ex. 77 (back, headaches, joints, dermatitis); I.G. Ex. 78 (® eye improved with Rx"); I.G. Ex. 79 ("My butt itches and hurts and bleeds"); I.G. Ex. 80 ("sores on back. Boil on back."); I.G. Ex. 81 ("My jaw locks up"); I.G. Ex. 82 ("BP [up indecipherable]"); I.G. Ex. 83 ("Skin sores are better"); I.G. Ex. 84 ("My sugars are still up"); I.G. Ex. 85 (pancreatitis); I.G. Ex. 86 ("hemorrhoids"); I.G. Ex. 87 ("Her eyes"); I.G. Ex. 88 ("My weight is out of control"); I.G. Ex. 89 ("I want a PAP smear"); I.G. Ex. 90 (GI bleeding); I.G. Ex. 91 ("My legs still swell"); I.G. Ex. 92 ("I worry a lot. I'm real nervous. I can't sleep."); I.G. Ex. 93 ("I'm sweating a lot during the day."); I.G. Ex. 94 ("Blood sugar 246"); I.G. Ex. 95 ("My husband died. My allergies are bad").
In addition, twenty patients presented with cold or flu-like symptoms. (I.G. Ex. 96-116).
Applying Medicare standards to their review of the medical records, Drs. Bussan and Herdeman saw no justification for spirometry testing in the vast majority of cases. (15) Respondent's expert, Dr. Ragalie, did not specifically challenge their opinions with respect to Medicare reimbursement, but he advocated a standard more liberal than Medicare's to justify testing. He noted that some experts in the field of pulmonary medicine and smoking cessation feel that "spirometric measurements are as fundamental to medicine as are measurements of pulse, blood pressure, temperature, height, and weight," and referred to recommendations from the National Lung Health Education Program for spirometry testing of all smokers older than 45, as well as anyone with cough, mucus, hypersecretion, dyspnea, or wheeze. Id., ¶¶ 17-21. Dr. Ragalie has thus justified spirometry as a screening test, perhaps a "good preventive measure," but not meeting the criteria "established by Medicare for being 'medically necessary,'" as Respondent well knew or should have known. I.G. Ex. 136, at 96; Tr. 440. (16)
Testing all patients who fall into particular categories based on age and smoking history may be considered good medical practice, but is considered screening, which Medicare does not cover. Had Dr. O'Connor been billing Medicare for tests justified by the National Lung Health guidelines, he should have billed Medicare using a specific code, called a V code, that is used to identify tests that are screening tests.
I thought that Dr. Ragalie was a very knowledgeable, careful, and credible witness. Had he reviewed the individual medical records with the Medicare rules in mind, I have no doubt that he could have provided reliable testimony as to whether a particular test was "medically reasonable and necessary." He is obviously an admirer and strong supporter of Respondent's work, who desperately hoped that Respondent could continue to serve his patient population. I find it significant that he was careful to limit himself to justifying, in a general way, the performance of spirometry testing on "most, if not all of Dr. O'Connor's patients in question." R. Ex. 5, ¶ 22 (Ragalie Decl.) In fact, he conceded that he had purposely phrased his declaration in the conditional, because, even applying his more liberal standard, he could not say that the testing was justified in specific cases.
Tr. 447. At that, he acknowledged that not all of the patients met even his liberal testing criteria.
Tr. 465. See, e.g., Tr. 457-458 (no evidence of respiratory symptoms); Tr. 466-467 (38-year old patient; review of systems is negative; the patient's chief complaint is herpes; and the patient quit smoking years earlier); Tr. 468 (34 year old patient; review of systems negative; chief complaint was pap smear that came up positive for a venereal disease; no complaints of cough, wheezing, or shortness of breath. Dr. Ragalie acknowledged that her smoking alone would probably not be sufficient to justify the test); Tr. 471 (38 year old patient who wanted a pap smear; review of systems negative; no suggestion of any respiratory symptoms. Dr. Ragalie argued that there are recommendations for using it "even in a setting like this," but agreed she did not meet the guidelines for performing the test).
Moreover, even if the testing were otherwise justifiable based on the patients' signs and symptoms, the record does not show that Dr. O'Connor acted on or even reviewed the test results. Dr. Herdeman explained that he looked for indications in the medical records that therapy was initiated or changed based on the spirometry results. Tr. 92. Even if test results are normal, you would expect to see remarks in the patient record that the test result is normal, and that a potential diagnosis (of what the test is designed to identify, e.g. asthma of COPD) is excluded. Tr. 92-93. Dr. Ragalie agreed that the medical record "usually" would reflect that the physician interpreted the test results and acted on those results. Tr. 448.
Dr. Herdeman testified that he did not find in Dr. O'Connor's patient charts the kinds of notations he would expect to see if a physician were acting on the results of the ordered tests. For example, he might have expected to see evidence of an occasional follow-up pulse oximetry, by which a device attached to the finger or earlobe determines how much the carrying capacity of the blood to carry oxygen is occupied. It provides helpful information as to whether the patient needs supplementary oxygen. Although listed on Dr. O'Connor's superbill, pulse oximetry was never checked off, nor mentioned in the treatment record as provided but not billed for. Nor did the records suggest that counseling to stop smoking might be necessary, nor that medications were necessary. Tr. 93-4.
A test is only reasonable and necessary if the physician has a purpose for ordering it. That a physician fails to review or act on test results suggests that the test was not medically reasonable or necessary. See I.G. Ex. 181, ¶ 24; I.G. Exs. 1-116.
Other evidence compels the conclusion that Respondent did not review the results of many of the tests he ordered. For a suspiciously large number of patients, perhaps all, he provided a spirometry test followed by bronchodilator treatment and a post-bronchodilator test, as opposed to a simple spirometry test without bronchodilator. Dr. Ragalie explained that the purpose of adding the bronchodilator is to give the physician some sense of whether medications will help the patient. If the physician sees substantial improvement in the spirometry findings after the bronchodilator, it might indicate a medication that could help with lung function. Tr. 450. In his own practice, if there's impairment, he often asks for the bronchodilator to give him guidance as to what pharmaceuticals would be proper. Tr. 450. Because he is a pulmonary specialist, and his patients are almost always symptomatic, he commonly orders the bronchodilator. Tr. 450.
The evidence shows that Dr. O'Connor regularly ordered the bronchodilator without regard to the results of the initial test. In 29 instances, the results from the first test were within normal range, yet he ordered a bronchodilator followed by a post-bronchodilator test. I.G. Exs. 1, 3, 4, 10, 12, 19, 21, 22, 24, 25, 26, 39, 54, 59, 65, 69, 71, 76, 77, 82, 92, 95, 98, 106, 109, 111, 112, 121, 126.
In testimony that was not contradicted, Dr. Bussan also opined that at least 29 of the 126 tests were medically worthless based on his review of the spirogram's tracing curve: I.G. Exs. 7, 11, 16, 20, 22, 23, 26, 28, 35, 38, 42, 47, 48, 53, 55, 63, 64, 66, 67, 76, 81, 84, 88, 89, 102, 106, 107, 119, and 125, all at 4. I.G. Ex. 181, ¶ 20. A spirometry test is invalid if the spirogram's tracing curve is not smooth, either because the machine was not calibrated or the patient failed to perform the test properly by coughing or through poor cooperation. The inaccuracy of the tracing curves alters the validity of all resulting measurements. Because such spirograms cannot be properly interpreted, they are medically worthless.
I can understand how a provider, particularly a provider with a large number of mentally ill patients, may legitimately order the test, and end up with unreliable results because of a factor that was not necessarily foreseeable. I do not know whether Medicare would reimburse under those circumstances, but would not necessarily find fault with the provider for seeking reimbursement. However, I see no justification for following that unreliable test result with bronchodilator treatment and a post-bronchodilator test.
That he repeatedly ordered the second test without regard to the results of the first shows that Dr. O'Connor either knew or should have known that he was providing services that were not medically necessary, if not for the first, certainly for the follow-up spirometry.
For wrongful claims made after January 1, 1997, the Act subjects a violator to a CMP of no more than $10,000 for each falsely claimed item or service, an assessment of not more than three times the amount wrongfully claimed for each falsely claimed item or service, and to exclusion from participation in federal health care programs. Act § 1128A(a). The statute affords me considerable discretion in determining the amount or scope of the penalty, assessment, or exclusion, but I must consider 1) the nature of claims and the circumstances under which they were presented, 2) the Respondent's degree of culpability, history of prior offenses, and financial condition, and 3) such other matters as justice may require. Act § 1128A(d); 42 C.F.R. §§ 1003.102(a)(1), 1003.103(a)(2), 1003.104(a)(2); I.G. v. Stern, at 13.
Regulations also provide guidance as to how the penalty and assessment should be determined. They describe circumstances which might aggravate or mitigate the final penalty. Substantial mitigating factors compel setting the aggregate amount of the assessment and penalties sufficiently below the maximum. Substantial aggravating factors compel setting the aggregate amount of the assessment and penalties at an amount close to or at the maximum. Unless there are extraordinary mitigating circumstances, the aggregate amount of the penalties and assessment should be not less than double the approximate amount of damages sustained by the United States. 42 C.F.R. § 1003.106(c). Here, the United States sustained over $ 30,000 in damages for the false Medicare claims. Joint Stip. ¶¶ 38, 40.
In determining aggravation and mitigation, I consider the following factors: 1) the nature and circumstances of the incident; 2) Respondent's degree of culpability; 3) Respondent's prior offenses; 4) Respondent's other wrongful conduct; 5) Respondent's financial condition; 6) other matters as justice may require. 42 C.F.R. §§ 1003.106(b); 1003.107.
In determining the nature of the claims and circumstances under which they were presented, the I.G. points to three criteria which, by regulation, are considered aggravating: 1) the items or services "were of several types, occurred over a lengthy period of time;" 2) there were many such items or services, or the nature and circumstances indicate a pattern; and 3) a substantial amount was claimed or requested for the items or services. 42 C.F.R. § 1003.106(b)(i)(ii)(iii). I would not consider the items or services "of several types." The I.G. points out that Respondent submitted similar claims to the State Medicaid program, hence another "type" in addition to the Medicare claims. As discussed below, I will consider the Medicaid submissions in analyzing "other wrongful conduct," but inasmuch as this action is based solely on the Medicare claims, I do not find that the items or services upon which this action is based "of several types."
I agree that the other factors are met, any one of which is sufficient to create an aggravating circumstance. Over a period of 22 months, Respondent submitted claims that he knew or should have known were false. His submissions were not isolated incidents, but constituted a pattern. He submitted 126 such claims, which I consider "many." He eliminated entirely the spirometry code from his superbill, billing instead under the nuclear medicine code, and his practice of upcoding coincided with a dramatic and unexplained increase in the number of spirometry tests he ordered. Taken together, these circumstances establish a "pattern." Finally, he "claimed" approximately $750 for each test (total claimed $94,500), and received more than $30,000 in reimbursement to which he was not entitled. These are "substantial" sums, particularly considering the nature of the service actually provided.
out, correctly, that his conduct caused no patient injury nor compromised
patient care. I would consider incidents that result in patient harm a
seriously aggravating circumstance, but I do not find the absence of patient
harm mitigating. Physicians are simply not supposed to harm their patients.
42 C.F.R. § 1003.106(b)(1)(iv). Moreover, the regulation spells out those
circumstances that may be considered mitigating (few items or incidents
of the same type occurring within a short period of time and totaling
less than $1,000) and failure to harm patients is not among them. 42 C.F.R.
The regulations characterize as an "aggravating circumstance" establishing culpability that Respondent "knew that the item or service was not provided as claimed." 42 C.F.R. § 1003.106(b)(2)(i). For the reasons discussed in detail in the body of this opinion, I have concluded that Respondent affirmatively and deliberately upcoded. He well knew what the appropriate code was for spirometry. He may not have been familiar with the particulars of "pulmonary quantitative differential function" study, but he knew that he was not providing that service. He nevertheless billed under that code because Medicare reimbursement was roughly ten times greater than for a simple spirometry test.
The evidence suggests that Dr. O'Connor may have taken the action in a fit of pique over what he (and many other primary care physicians) viewed as an unjust reimbursement system. Doubtless, the fairness of the system leaves much to be desired, but that fact does not mean that providers may engage in self-help, and it does not negate Respondent's culpability. I consider Respondent's culpability a seriously aggravating factor.
Respondent argues that he corrected the "coding error" on his superbill, and that his overpayment has been fully and timely repaid. The regulation characterizes as a mitigating circumstance "if corrective steps were taken promptly after the error was discovered." 42 C.F.R. § 1003.106(b)(2). Although Respondent obviously stopped his improper billing after he was caught, and CMS recouped its overpayment, I do not find that this mitigating provision applies here. Respondent's actions were not "errors" that he subsequently "discovered." His actions were deliberate. He knowingly upcoded for almost two years before he took any corrective steps, which consisted of halting the misconduct. Although I do not fault him for not making immediate restitution, since he obviously did not have the money, I do not consider it mitigating to stop his willful misconduct after he was caught.
42 C.F.R. § 1003.106(b)(4). In addition to submitting 126 upcoded claims to the Medicare program, Respondent submitted 162 upcoded claims to the State Medicaid program. Under the regulations, this is plainly an aggravating circumstance. Join Stip. ¶ 8; I.G. Ex. 129A.
The regulations mandate consideration of the respondent's available resources when determining the amount of the penalty and assessment. 42 C.F.R. § 1003.106(b)(5). Respondent does not have a lucrative practice. Indeed, his financial troubles contributed to his taking the unfortunate course that he took. The parties agree that Respondent has a limited ability to pay a CMP and assessment. R. Ex. 1, at 4.
The regulations also afford me broad discretion to consider circumstances of an aggravating or mitigating nature if, "in the interests of justice," they require a reduction or an increase in the penalty or assessment in order to achieve "the purposes of this part." 42 C.F.R. § 1003.106(b)(6).
I was impressed by both Dr. Ragalie's and Dan Collins' descriptions of Dr. O'Connor's practice. (18) By all accounts, he cares deeply about his patients and provides a high quality of services to an historically medically-underserved population. As a result, he has never enjoyed a lucrative practice. I recognize that the imposition of a 7-year exclusion may effectively shut down his practice, to the detriment of the population he serves, and will certainly hamper his ability to repay the CMP.
On the other hand, tempted as I am to reduce the period of exclusion to avoid this result, I also recognize that it was the foreseeable result of his scheme to upcode. Respondent detests government reimbursement policies, and determined to evade them. His excellence as a physician does not really lessen the threat he poses to the financial integrity of federal health care programs. He acted as one who feels his behavior was justified, a dangerous attitude from the program's perspective. Indeed, in some ways his "principled" positions makes him more of a threat to program integrity. I am therefore not prepared to reduce the period of exclusion below the seven years proposed by the I.G. because I find that Respondent poses a threat to program integrity. Notwithstanding his excellence as a physician, CMS rightfully questions whether it should be compelled to do business with someone who has deliberately attempted to defraud its programs.
The I.G. has proposed an aggregate penalty and assessment that is still significantly below the maximum permitted by law. I have found here no "extraordinary mitigating circumstances." Considering all of the aggravating and mitigating circumstances, I find reasonable, and therefore affirm, the imposition of a seven year exclusion plus $126,000 CMP.
For all of these reasons, I conclude that Dr. O'Connor knowingly submitted false claims to the Medicare program. I also find that he delivered and billed for services that he knew were not medically necessary. I find reasonable the sanctions proposed by the I.G., and therefore affirm the imposition of a seven year exclusion plus $126,000 CMP.
Carolyn Cozad Hughes
Administrative Law Judge
1. The Medicare statute is divided into several parts. Medicare Part A covers hospitalization benefits. Act §§ 1811-1821. Part C governs Medicare + Choice plans. Act §§ 1851-1859.
2. I make findings of fact and conclusions of law to support my decision in this case. I set forth each finding, in italics and bold, as a separate hearing.
3. As discussed infra, Dr. O'Connor's staff appear to contradict the claim that he has been providing spirometry services since the mid-1980's. They unanimously declare that he began to provide spirometries in 1997 or 1998. I.G. Exs. 170, 171, 176; Joint Stip. ¶¶ 25, 26, 28. I do not interpret their statements to mean that Dr. O'Connor never ordered the test before 1997. Instead, I conclude that he ordered the test very infrequently until 1998, when he began to bill for it, on a fairly regular basis, under CPT code 78596.
4. In fact, as discussed below, even though he revised his superbill in December 1995, Dr. O'Connor did not submit his first bill under code 78596 until October 1997, over four years after he purchased the new machine. Between December 1995 and October 1997, his spirometer sat on a desk "gathering dust," and he apparently did not bill under either code 94060 or 78596. I.G. Ex. 171; Joint Stip ¶¶ 25, 26.
5. Communique is a monthly newsletter provided to all Wisconsin physicians and physician group practices with valid Medicare numbers. It contains program rules, policies, and procedures for presenting claims for Medicare payment, including the use of certain CPT codes. I.G. Ex. 131, at 5 ¶ 13 (Gray Decl.); I.G. Ex. 135.
6. But see I.G. Ex. 131, ¶ 41, in which the carrier lists somewhat lower reimbursement amounts for the relevant period, $230-$250. In either event, Dr. O'Connor began to receive reimbursement out of all proportion to the service provided.
7. The I.G. also suggests that Dr. O'Connor wrote in a $750 fee on his superbill in order to mislead the carrier into thinking that a procedure more complicated than simple spirometry was being performed. In the absence of any other credible explanation, this does not seem an unreasonable inference.
8. Nor was it inevitable that the carrier would catch him. Documents in the record show that the Medicare investigation was triggered by a January 1999 complaint to the carrier. I.G. Ex. 140. At that point, Respondent had been submitting the upcoded bills, without detection, for more than a year.
9. Initially, Dana Schmitt downplayed Dr. O'Connor's grievances with the Medicare reimbursement system, claiming that he "didn't really concern himself too much" with Medicare reimbursement practices. That statement is plainly false - even Dr. O'Connor does not make that claim. Ms. Schmitt then said that he "didn't rant and rave continually about it." When asked directly whether he ever "ranted and raved" about it, she admitted that he did. Careful review of Ms. Schmitt's testimony suggests that she was far less defensive of him after she learned that he attributed to her the suggestion that he upcode. Compare Tr. 296-371 with Tr. 373 et seq.
10. Inasmuch as she started working for Dr. O'Connor in 1993, the same year he purchased the new machine, Ms. Gordon is probably referring to the new machine. I did not find credible Dr. O'Connor's suggestion that his employees were referring to his old spirometer as the dust collector, and simply neglected to mention the newer model. Tr. 507.
11. Medicare promptly paid him $230.33 on November 4, 1997. The record is silent as to when he billed the Medicaid program, but he was apparently not paid until June 7, 1998. I.G. Ex. 129A, at 1.
12. According to the billing data, Respondent's next date of service for the 78596 code was January 19, 1998, but, inexplicably, he did not submit the bill to Medicare until more than a year later, February 3, 1999. I.G. Ex. 127A, at 4 (Medicare beneficiary no. 57).
13. The I.G. has not argued that the provisions of 42 C.F.R. § 1003.114 compel a different result. That regulation binds a respondent to any "final determination pertaining to the respondent's liability under § 1003.102 in which the respondent was a party, and had an opportunity to be heard." A carrier fair hearing decision only decides whether the procedure is covered by Medicare, and is not a basis for civil money penalty under § 1003.102. Section § 1003.102 requires that the person act "knowingly" i.e., "has actual knowledge of information, acts in deliberate ignorance of the truth or falsity of the information." § 1003.102 (e). The carrier fair hearing officer makes no such finding.
14. Of the 116 tests, the I.G. no longer challenges the reasonableness of 6. I.G. Post-hearing brief at 69.
15. Nor am I persuaded that Respondent "merely" neglected to document properly. As his staff repeatedly warned him, failure to document medical necessity renders any claim "unreimbursable under Medicare policies." I.G. v. Stern, at 8; I.G. Ex. 177, ¶ 6; I.G. Ex. 170, at 2; Joint Stip. ¶ 28.
16. The I.G. points out that the National Lung Health Education guidelines were not published until well after Respondent submitted his claims, so Respondent could not have been relying on the recommendations in ordering the test. On the other hand, Dr. Ragalie pointed out that "gurus in our field have been advocating a more liberal approach to this long before the formal recommendations came out in 2000." Tr. 443-444. As discussed above, following the recommendations may well have represented sound medical practice. However, inasmuch as Medicare plainly was not going to reimburse for spirometry testing based solely on age and smoking history, Respondent's fault was not necessarily in ordering the test, but in billing Medicare for a procedure that he knew was not covered, using a billing code that would obscure the nature of the test.
17. Although the record suggests that Respondent had a history of conflicts with the carrier over issues of upcoding and overutilization, none ever resulted in "criminal, civil, or administrative sanction," and would therefore not be considered aggravating. 42 C.F.R. § 1003.106(b)(3).
18. Dr. Ragalie is not particularly friendly with Dr. O'Connor. Yet he appeared without pay because he thought that removing Dr. O'Connor from the community was a "disservice." Tr. 473. He is extremely conscientious and attentive to his patients. He serves a "very tough clientele in his practice." A large percentage of his patients are Title XIX patients, and it is very difficult to find physicians who will serve that population. Tr. 474-475. A large number of his patients have mental illness. Tr. 477.