Doctoring The Doctor Bills

Russell Pearlman and Hannah Storm
CBS/The Early Show
It took a California physician, Dr. Kathryn Locatell, to blow the lid on seminars teaching doctors how to lie and cheat on insurance claims to make more money, reports CBS News Correspondent Sharyl Attkisson.

One health care consultant promised her great rewards.

"He exhorted that I would soon be able to afford that Lexus, or that Kincaid painting I had my eyes on."

Dr. Locatell alerted Congress, and then agreed to go undercover to help federal investigators. What they discovered, and secretly recorded, were health care consultants advising doctors on the finer points of "gaming the system."

Rationing care to patients with low-paying insurance, billing at a doctor's rates for a nurse's services and failing to refund overpayments were among the suggestions physicians may be getting from unethical consultants.

One consultant advised: limit patients with Medicare and other less-desirable insurance. The audio recording of the seminar said, "We don't want them taking the best appointment slots. So they get scheduled only 10:00 to 11:30 in the morning. We want the best appointment slots to go to the best payers."

Read All About It
Click here to read the transcripts of audio tapes where federal investigators are given unethical advice on billing from medical consultants.

Click here to read the entire General Accounting Office report.

The tape went on to describe how doctors can always schedule two office visits even if they've already determined a patient is perfectly healthy: "The doctor then spends quality time with the patient and talks about lifestyle, all these other goodies, and you know, tosses a stethoscope on and all these other things that make a patient feel better."

"What (investigators) found is astonishing and disturbing," Sen. Chuck Grassley, R-Iowa, said Wednesday at a Senate Finance Committee hearing on medical consultants. "This behavior is unethical, it's illegal and it's intolerable."

Sen. Max Baucus, D-Mont., who chairs the committee, noted that the hearing was focusing on a few bad cases and stressed that the vast majority of health care consultants provide a useful service.

The report by Robert Hast, General Accounting Office director of investgations, did not estimate how widespread unethical advice is or how many physicians or hospitals may be following it.

Rebecca Anwar, president of the National Association of Healthcare Consultants, said in a statement to the committee that "billing for medical services is, probably, the most complicated and highly regulated form of invoicing that exists in the United States."

Physicians, hospitals and clinics seek the advice of consultants because of this complexity, she explained. She said her association has never received any complaints about this advice.

Hast said Grassley asked the agency to look into the consulting business and, in response, his investigators checked the Internet sites of consultants and selected two, whose seminars they attended.

In one instance a consultant seemed to advocate that when physicians discover they have been overpaid they not refund the money, as required by law.

What Fraud Costs
In 1997 fraud in the health care industry totaled about $54 billion nationwide, with $20 billion attributable to private insurers and $34 billion to Medicare and Medicaid.

For fiscal year 2000, the Office of the Inspector General reported that an estimated $11.9 billion in improper payments were made for Medicare claims.

Source: General Accounting Office

Admitting the overbilling and turning in the money is a red flag to the government to investigate, the unnamed consultant said in a tape recording played at the hearing.

Admitting a violation supposedly indicates a willingness to cooperate, possibly reducing any penalty, the consultant went on: "Yeah right. Ah, what does that mean? ... maybe you go to a better jail."

"Ah, so what most practices are, are just changing behavior and getting on with life," he concluded.

In another case the consultant suggests having a nurse run a battery of tests on a heart patient during one visit so the doctor can have this information available to consult when the patient returns a week or so later.

But the consultant then goes on to suggest that instead of billing for two visits - one with a nurse and one with the doctor - the bill be for a single more complex, detailed and costly visit with the doctor, "'cause the doctor himself could have done that."

The company that put on the seminars in question now face possible criminal proseuction. And the federal overnment has issued an alert to doctors urging them to be careful when choosing health care consultants.

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