Medicare, like many other insurers, often pays doctors a standardized rate based on the service they performed. Open heart surgery costs $Z, a blood test for cholesterol costs $Y, and a physical costs $X. Upcoding is a fraud that centers on healthcare providers submitting improper medical codes to insurers for reimbursement, generally for improperly high reimbursement. Doing so can trigger liability under the False Claims Act, a law that empowers whistleblowers to detect, prevent, and deter fraud against the government.

To make the payment system practical, medical billing is generally done through a standard series of codes, with thousands of different healthcare services being assigned a code, often known as CPT (short for common procedure terminology) codes.

Abusing this system by submitting codes for services that are more expensive than those performed, or for services never performed, is known as upcoding. That’s exactly what a recent whistleblower case alleged the University of Colorado Health (UCHealth) did. The case ended with the system agreeing to pay $23m to resolve the allegations.

The allegations centered around a set of codes called evaluation and management (E&M) codes. E&M codes are used for evaluating a patient. In emergency medicine, which this case concerned, there are five E&M codes. Choosing which one to bill is based on a variety of factors, including how long a visit took and how many bodily systems were evaluated during a visit. Longer, more complicated visits draw higher reimbursements than shorter, simpler visits.

Here, the UCHealth’s ER was accused of automatically, due to the system’s health software, billing the most expensive E&M code each time patient vital signs were checked, no matter how long or complex the visit was, allegedly resulting in Medicare overpaying the system by millions of dollars. The allegations included that UCHealth knew about this problem and refused to fix it.

The case was brought forward by a whistleblower, Tim Sanders, who was employed by the University of Colorado Health for two months in 2020. Sanders’ position involved resolving billing complaints from disgruntled patients. Through this role, he learned that the system was routinely overcharging for ER visits. Sanders will receive an award of over $3 million for bringing the case forward.

This is one of the largest upcoding settlements in recent memory (though not the largest, in 2017 a hospitalist group paid $60 million), partially driven by the fraud being so systematized.

Billing and coding in healthcare can be very Byzantine and fraud schemes can prove to be extremely complex and bear no resemblance to those discussed here. What’s important to know is that any scheme where inaccurate billing leads to the government paying more than it otherwise would is potentially a violation of the False Claims Act. Due to the complicated and often opaque nature of medical billing, insiders like Sanders are necessary to prevent and detect fraud. Whistleblowers who are aware of schemes to defraud the government may be entitled to an award. Contact Whistleblower Partners today to learn more.