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INSURANCE FRAUD PROSECUTOR ISSUES 2005 ANNUAL REPORT: New Jersey’s Office of Insurance Fraud Prosecutor (OIFP) has published its 2005 annual report, highlighting the OIFP’s insurance fraud investigations and prosecutions during the past calendar year and noting its 100% conviction rate in 2005. Criminal fines and penalties increased by 57% from 2004. Of particular note was a record-breaking 448% increase over 2004 in restitution orders imposed, amounting to $88.9 million. Civil judgment and settlement amounts netted $5.4 million, a 178% increase over 2004. The Washington-based Coalition Against Insurance Fraud identifies OIFP as the fraud unit filing, by far, the greatest number of civil actions out of 44 fraud units across the country. In the area of health care claims fraud, the OIFP report identifies diagnostic testing, pain management, surgical centers, and billing for unlicensed services as areas under heightened scrutiny.

Making the OIFP’s job easier, the New Jersey Supreme Court ruled, in a split decision, that the burden of proof required in civil actions brought under the Insurance Fraud Prevention Act (IFPA) is the minimum preponderance of evidence standard. The IFPA provides for compensatory and treble damages, payment of attorneys fees and investigative costs against a person found to have violated the Act. The IFPA is being used regularly against physicians by the State and insurance carriers–often related to allegations of improper billing. The IFPA is especially troublesome because it requires no finding that the improper act was intentional.

DOBI CAUTIONS CARRIERS ON PAY FOR PERFORMANCE CONTRACTS: The New Jersey Department of Banking & Insurance (DOBI) has issued a bulletin warning health insurance carriers that they may not use “pay for performance” compensation in provider agreements until DOBI approves the terms. Such contracts must include provisions allowing providers to review the accuracy of performance data and describing the appeal process when a provider is denied a bonus or is penalized based on pay for performance measures. DOBI advises that it will disapprove any pay for performance program that results in financial incentives for providers to withhold medically necessary covered health care services.

CMS GATHERING DATA COMPARING E&M CODE USAGE: Beginning this month, Medicare Carrier Empire will begin mailing Comparative Distribution Reports (CDRs) to all providers billing Evaluation & Management (E&M) services. These reports are designed to provide information on the provider’s use of the codes for subsequent office services (99211- 99215). Coding for these services is a major component of provider error rates and lead to frequent requests for overpayment refunds. Empire will be contacting several thousand providers per month, on a random schedule, over the next year. Empire advises that the information provided in these CDRs is intended to be educational in nature and is not linked to current medical review audit plans for the year ahead. However, major variance from a peer group is sometimes a factor in provider selection for audit and providers are reminded that documentation must describe all aspects of the selected coding level. New Jersey providers can email inquiries relating to Empire’s CDRs to NJCDR@empireblue.com.

FEDERAL GOVERNMENT ISSUES PANDEMIC FLU PLANNING CHECKLIST FOR MEDICAL OFFICES: The U.S. Department of Health & Human Services and the Centers for Disease Control and Prevention have issued a checklist for physician offices and clinics to use in preparing for pandemic influenza. The checklist, at http://www.pandemicflu.gov/plan/medical.html,supplements New Jersey’s avian flu surveillance and testing information for physicians, available at http://nj.gov/health/flu/professionals.shtml.

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