Will ICD-10 Transition Expose More False Claims Act Violations?

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At the end of the week, healthcare providers will transition to a new set of diagnostic codes, commonly referred to as ICD-10. The new ICD-10 codes will more than quadruple the number of ways to classify diseases and their treatment by medical staff. This could have big implications for the False Claims Act.

For those not familiar with them, the International Classification of Diseases (ICD) is a global system of classifying patient ailments developed under the sponsorship of the World Health Organization. It is separate from the Current Procedure Terminology (CPT) codes which have been developed by the American Medical Association (AMA) to describe medical procedures and physicians services.

The diagnostic and procedure codes are used to determine the appropriate amount of government reimbursement by Medicare and Medicaid. Providers that intentionally upcode illnesses in order to receive more from the federal government are engaged in fraud and can be sued under the law. Health care providers that unintentionally receive overpayments from the federal government and then retain those overpayments (beyond the amount of time specified by the Affordable Care Act) illegally can also be the subject of an action.

With more codes available, it may be easier for a hospital or practice to intentionally choose an improper but higher paying code. Additionally, there is greater potential that health care fraud will be exposed for providing medically unnecessary services as Medicare and Medicaid providers are required to be more specific with their codes. Either scenario could increase the number of whistleblower lawsuits brought under the False Claims Act in the next few years.

There are also expected to additional changes in payments by Medicare and Medicaid in a few years as a result of reassessing fee payments following the collection of the additional data provided under ICD-10.

The old coding system (ICD-9) was adopted by the U.S. in 1979 and includes only 14,000 codes. The transition happened well before Congress amended the False Claims Act to strengthen the public-private partnership with whistleblowers.

Th transition to the new codes has been in process for quite some time now. Last year, Congress delayed the implementation of ICD-10 codes by Medicare and Medicaid until October 1, 2015. There is still a grace period for Medicare Part B physicians of one year for doctors coding in the proper family but with insufficient specificity under the new guidelines. Part A providers of inpatient hospital stays and skilled nursing facility care are required to comply as of October 1st.

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