June 2000
Volume 64 |
Number 6
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PRACTICE MANAGEMENT
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| Errors and Omissions
Insurance Help to Shield Against Fraud and Abuse Liability |
Karin Bierstein,
Practice Management Coordinator
Some sophisticated ASA members and their business managers have
begun asking whether Errors and Omissions (E&O) insurance
will protect their practices against liability for billing errors
and Medicare fraud and abuse.
This new form of insurance will cover the legal and litigation
expenses associated with a government investigation or a private
payer audit, and it may also cover resulting fines and penalties.
It will not protect the practice against having to refund any
overpayment, but fines and penalties are often much more significant
than the actual dollar amount of the overpayment. The Federal
False Claims Act and the Civil Monetary Penalties provisions of
the Medicare statute each provide for up to $10,000 in civil fines
for each false claim plus triple the amount of the overpayment.
Thus, to take the example of a single $300 erroneous claim, settlement
with the government could cost as much as $10,900. As long as
the billing errors underlying the overpayment are truly not intentional,
but result from "reckless disregard" or "deliberate ignorance"
at worst, the statutory penalties $10,600 could
be covered by a good E&O policy.
Standard Directors and Officers (D&O) liability or malpractice
policies, or even standard E&O coverage, will not generally
cover Medicare fraud and abuse fines or audit expenses. D&O
policies exclude losses based on punitive damages, liquidated
damages, criminal or civil fines, sanctions, taxes and the multiplied
portion of any damages award subject to doubling or trebling.
Malpractice insurance generally covers personal injury, property
damage or employee benefits liability arising from the policyholder's
professional medical activities. These areas do not encompass
reviews or investigations by private or governmental insurance
programs or the fines and penalties resulting from the investigations.
(It is possible, however, that traditional liability insurance
will protect a practice against liability for a retaliatory discharge
claim filed and won by an employee who has triggered the fraud
and abuse investigation through a whistleblower action.)
A number of carriers, therefore, have begun introducing specific
billing E&O insurance products. For example, the professional
liability insurer endorsed by the Wisconsin State Medical Society,
PIC Wisconsin, recently announced that it had added a new coverage
at no charge to the policyholder. The new coverage would reimburse
for costs incurred because of a Medicare/Medicaid audit with a
$25,000 limit for each incident and an annual aggregate limit
of $25,000.
An E&O policy that covers only the investigation's costs
and that has a relatively low dollar limit may not offer holders
a great deal of security. Another new E&O policy, offered
by Princeton Insurance Companies, automatically and at no extra
cost covers all subscribing New Jersey physicians for up to $50,000
in reimbursement for legal defense, shadow audit costs and patient
record review. More importantly, policyholders have the option
of increasing their defense limits to $1 million and obtaining
coverage for fines and penalties incurred through a government
audit. At least one commercial insurance broker (the Graham Company)
is now offering a package that includes immediate access to legal,
accounting and compliance specialists along with coverage for
civil fines and penalties and defense and audit costs.
Like all other companies offering health care billing E&O
insurance, the three noted above require as a condition of coverage
that the practice have in place a written compliance plan that
satisfies the insurers' guidelines. If a practice is still not
convinced of the value of a formal compliance program, the contingent
availability of insurance protection against fraud and abuse liability
might tip the balance.
Most carriers will also base coverage determinations and prices
upon a review of the practice's compliance history as well as
upon the amount of the deductible, if any. It should be noted
that the application becomes a part of the policy, if written,
and accuracy of the disclosures in the application is therefore
critical.
E&O policies are generally written on a claims-made basis.
Anesthesiologists terminating coverage or leaving practice who
wish to protect themselves against liability arising out of any
billings submitted during the term of the policy will need to
ensure that they purchase "tail" coverage.
E&O insurance for improper billing may be worth exploring,
particularly for the larger anesthesiology group whose volume
and variety of billings make it more likely that the practice
at some point will collect greater reimbursement than is due,
despite a good-faith compliance program. As is always the case
when purchasing insurance, you should know the quality of the
carrier and fully understand the terms of the policy under consideration.
A New Medicare Web Site to Place in Your 'Bookmark' List
Is there a limit to the number of trigger point injections for
which you may bill? Does Medicare allow monitored anesthesia care
(MAC) for the procedure that was performed? The answer to these
and similar questions depends on whether your particular Medicare
carrier has adopted a "local medical review policy" defining "medical
necessity" for the procedure in question. (See the "Practice Management"
column in the March 2000 issue of the NEWSLETTER.)
Local medical review policies, or LMRPs, may be unique to your
carrier, or they may be based on a national model made available
to each of the Health Care Financing Administration's (HCFA's)
40-plus Medicare Part B carriers. (The MAC policy adopted and
adapted by many carriers is an example of a national model.) In
either event, the LMRPs are expected to reflect the input of the
local practicing physician community, generally through the specialty
representatives who serve on the Carrier Advisory Committees.
HCFA has just established a Web site on which all the various
LMRPs should ultimately be available. Although your carrier may
already be posting information on its own Web site and
some of them have excellent sites only <www.lmrp.net>
allows a comparison of payment policies across carriers. It is
worth a visit.
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