False Claims Authorities Take Aim at Tennessee Mental Health Facility Caught Upcoding

One of the most common practices occurring within the context of healthcare fraud involves a process known as upcoding. When a doctor or nurse performs a medical service, that service corresponds to a universal set of codes used to prepare the patient’s bill. These codes are derived from a compilation known as the Common Coding System for Healthcare Procedures and each specific procedure is assigned a number. In addition, similar procedures often have different codes depending upon the amount of time the physician spent with the patient or whether a physician or nurse performed the procedure.

Upcoding occurs when a medical facility enters a code for a medical service that is incorrect or exaggerated. While harmless errors happen frequently and are easily corrected, the Department of Justice has been cracking down on businesses that rely upon upcoding as a routine business practice and have issued stern penalties and warnings against this business model.

Upcoding falls within the purview of the False Claims Act because every time a doctor’s office submits an invoice for a false or exaggerated medical service, that office is submitting a false claim for payment to the government. As we have explained in prior posts, the FCA will not apply to instances of honest, good faith mistakes. However, a medical facility that daily relies on upcoding to earn profits will likely face significant liability in the event of a whistleblower lawsuit.

Upcoding Case Against Tennessee’s A.I.M. Center

A recent case has emerged involving a mental health rehabilitation center located in Chattanooga, Tennessee. According to allegations, the A.I.M. Center was involved in an upcoding scheme from 2009 through 2012. As a result of the allegations, the A.I.M center has agreed to pay $80,000 to settle these claims. Specifically, the A.I.M. Center was using upcoding in order to bill Medicaid and Medicare patients for a full day’s worth of mental health services when many patients only spent a few minutes to an hour at the facility. The A.I.M. Center is also charged with “double billing,” which is a practice wherein a facility bills for “per diem” services at a flat rate and then bills for each individual service offered during the patient’s stay – notwithstanding the fact that the services are considered part of the per diem charges.

The whistleblower in this case is a former member of the A.I.M. Center staff and is set to receive an undisclosed portion of the final settlement amount. The State of Tennessee worked in concert with the federal government to recover some of the money stolen as a result of this scam. Tennessee Attorney General Bob Cooper said in a statement:

“Mental and behavioral health services are a vital component of the care provided to TennCare recipients….This Office will continue to pursue providers that improperly bill for these needed services.”

The federal government reiterated this position with the reminder that:

“In terms of dollars spent, Medicaid is the federal government’s second largest health care program, and it is the single largest payer for mental health services in the United States… Funding for mental health services is an area of significant need for our community. It is critical to the continued viability of our system that providers bill public healthcare programs only as authorized by law. We will continue to aggressively pursue the recovery of funds improperly paid due to fraud, waste, or abuse.”