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Our guest, Scott Ellner, a general surgeon, shares insights and real-life stories that shed light on the challenges health care providers face when financial incentives clash with patient-centered care. We’ll explore the impact of wasteful spending, the power of the False Claims Act in combatting fraud, and the Department of Justice’s evolving focus on value-based payment models.

Scott Ellner has been a general surgeon for over 20 years, and can be reached at PEAK Health.

He discusses the KevinMD article, “In the crosshairs: The False Claims Act’s new targets in health care.”

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Transcript

Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast, get CME for this episode by clicking on the CME link in the show notes. Today we welcome Scott Ellner. He’s a general surgeon, he’s a health care executive at Peak Health Technologies. Today’s KevinMD article is “In the crosshairs: The False Claims Act’s new targets in health care.” Scott, welcome to the show.

Scott Ellner: Great to be here, Kevin.

Kevin Pho: So let’s start by sharing your story and journey to where you are today.

Scott Ellner: So I’m a general surgeon, but really got there through a circuitous route. My father was a judge and attorney working in Malibu, and when he used to go to his court in Malibu, he would drop me off at the beach while he went to work. I was very impressed with his work in law, and always thought that maybe I would go into law.

But then something changed. While I was at UCLA in undergrad, I was surfing one day, came back to my truck on a busy Pacific Coast Highway, and a gentleman on a Harley-Davidson motorcycle was struck head-on by a car, and he landed at my feet. Obviously in distress, clearly bleeding out. I really didn’t know what to do. And then this woman, very composed, jumped out of her car on the side of the road and rendered first aid, intubated him, and I found out later that she was a trauma surgeon. Changed my life, changed my direction, and I pivoted from law school to going to medical school and now being a general trauma surgeon.

30 years later, I am actually getting a health care law degree at the Oklahoma University College of Law to follow up on that interest. And that’s why I was interested in the False Claims Act and where we are today.

Kevin Pho: Perfect. So tell us about your dual roles as a surgeon and a health care executive. How did that come to be?

Scott Ellner: My passion has always been safety and quality, and in order to influence people to focus on quality, you really have to have a leadership skill set that is able to help people understand the why. And so I learned early on that I needed some extra training in leadership, and went back to school and started getting these other roles as an executive, and was able to then persuade people in a thoughtful way to follow my passion, which was quality, surgical quality initially, and now safety, and then eventually leading health systems.

Kevin Pho: All right. So let’s talk about your KevinMD article. It’s titled “In the crosshairs: The False Claims Act’s new targets in health care.” Now, before getting to your article, just give us a 30-second primer as to what the False Claims Act is, and then lead into your article.

Scott Ellner: Sure, I’ll give a brief history on the False Claims Act and why it’s so important. The False Claims Act is one of the most powerful tools that the federal government or the Department of Justice uses in order to combat health care fraud.

And so as we know, health care spending is out of control. By 2025 US health care spend will be approximately 5.5 trillion dollars. By 2030, over 7 trillion dollars. Unfortunately, 5 to 10 percent of that spend is on health care fraud, and about 1.7 billion dollars just in 2019 was on medically unnecessary goods and services.

I had an experience when I was a younger surgeon where a colleague of mine was taking out the appendix in several cases, totally unnecessary, and billing for that appendectomy. That would qualify as part of the False Claims Act for fraudulent submission of claims.

Now, brief history. The False Claims Act is back from the Civil War era. And during that time, unscrupulous businesses were selling faulty or shoddy goods to the US government to be used by the Union Army. For example, soldiers’ uniforms were made of rags or paper that would fall apart on the field. Ammunition was packed with sawdust, which was essentially blanks. Ships which were not seaworthy were painted as new, but when launched would sink in the waterways.

And so the government enacted the False Claims Act and encouraged private citizens or whistleblowers to come forward with information in what’s called a qui tam action. Qui tam is a Latin phrase for bringing action on behalf of the king. So the whistleblower, or also known as a relator in legal terms, would be entitled to half the moneys recovered from that qui tam action.

Kevin Pho: So you mentioned an example of a surgeon fraudulently performing appendectomies and billing for that. Give us some other examples of other egregious procedures or medical encounters that would classify under the False Claims Act.

Scott Ellner: I’ll give you some examples of some recent cases that were actually settled by the Department of Justice. One of them was a health care network, health system in the Midwest, who recently settled for $345 million. They were submitting false claims through the Stark Law, the physician self-referral law.

And essentially, anytime you submit claims that violate the Stark Law, that are non-exception to the Stark Law, meaning paying for referrals, that is a false claim that you should not submit to the government. And so this network was charged by the government for the Stark Law, submitting false claims, and the relator received over $50 million in that case.

Another example is Medicare Advantage. Medicare Advantage is a great thing. Over half of the Medicare beneficiaries are now in these private health plans run by big insurers. The problem is that there has been this risk-based coding where the patients are being up-coded with greater comorbidities. And that’s OK if they truly have those comorbidities. However, if you cannot substantiate that the patient is sicker, and you’re getting paid by the federal government for those larger capitated payments, the government will go after you for the False Claims Act, for fraudulent billing. There was a recent case also settled by a big insurer. The relator in that case received $8 million for bringing that qui tam.

Kevin Pho: With these cases, does there have to be some intent involved? Do some of these malicious actors who get caught, do they do so intentionally? How about typical doctors who just order extra MRIs just to be a bit more defensive? Do they have anything to worry about?

Scott Ellner: Unfortunately, you do not have to demonstrate intent to show that you’re defrauding the government. The Department of Justice or the government uses the element of knowingly submitting false claims, and that’s a broad term. Knowing can be absolute knowledge, which you’re egregiously doing something. It can be reckless disregard, so in defensively getting MRIs just because you potentially don’t want to get malpractice claims. Or it can be deliberate ignorance, just not knowing. And so unfortunately, intent is not something where you can use it as an excuse to get out of being scrutinized by the government.

Kevin Pho: So as a practicing primary care physician, other clinicians like myself, what are some things that we should be aware of so we don’t get caught up with this?

Scott Ellner: First and foremost, I’m sure you all have a compliance department and work with legal counsel, and it’s really important to scrutinize your claims and be sure that the claims that you’re submitting are audited at least, if not yearly, every couple years.

The second thing you can do is just ensure that you’re asking yourself, does this patient really need this test? Does this patient truly need this procedure? Or this durable medical equipment? I think those are important questions. Ethically, we hold ourselves to a standard, and it’s important to ask ourselves these questions.

The other thing I say is look at your contract, particularly if you’re an employed physician or you have a professional services agreement. Look at your contract, seek advice from an attorney to make sure that you’re not being paid, and I’m going to emphasize this, never ever be paid based on the volume or value of referrals. And if you think that may be happening, seek advice from an attorney.

Kevin Pho: I’m an employed physician, and the majority of physicians in the United States are employed, and they just go about practicing what they do every day. Who can they question? How can they check to see whether the volume of the referrals that they do, or what tests they order, could put them in danger of the False Claims Act?

Scott Ellner: That’s a great question, and you’re right, approximately over 70 percent of physicians are now employed by some entity, whether it’s a health system, private equity, or an insurance company. But what’s important is to make sure that you work with somebody who’s knowledgeable in your organization who can audit for compliance reasons your billing pattern.

What I will tell you is that with generative AI and machine learning, the government now has a powerful tool, using this adaptive technology to look for patterns of abuse. And those technologies are now becoming more and more available, where you can actually go through your claims and identify these patterns where potentially some of these codes that you’re submitting may not pass muster for the False Claims Act.

So I would suggest that you seek out counsel within your institution. All health systems have legal counsel. Work with your compliance department. You should have a compliance officer who is knowledgeable about the False Claims Act. Review your contract. And I would say if you’re employed, there’s something called the safe harbor for anti-kickback, and then there’s the Stark Law exception. And understand how you fit under that safe harbor, so you don’t get yourself into trouble and are scrutinized by the government.

Kevin Pho: Now, are these cases purely with Medicare and Medicaid? Do we have to worry about private insurers as well?

Scott Ellner: Absolutely. To answer your question, yes. Medicare, Medicaid, and commercial payers or private insurers, private parties can bring a case against you as well. The government is really looking at those who abuse Medicare, Medicaid, TRICARE, the public insurance. However, the commercial insurers have their own fraud units as well.

Kevin Pho: And would these entities typically go after individual physicians, or would they go to their employers first?

Scott Ellner: It depends. It depends on the level of knowing and intent, how widespread the fraud occurred. But typically it’s both the organization as well as the physician or the other agents who are involved in referrals or fraudulent billing, upcoding. So it really can go across the entire organization, hold the organization responsible. There’s civil and then there’s also criminal penalties. And so you really have to look closely and understand your billing.

Kevin Pho: Talk to us about what typically happens if a physician gets into trouble under the False Claims Act. What would be the next step? I would assume legal counsel would be involved, but just walk us through a typical scenario and a typical outcome.

Scott Ellner: So what would happen is the agency, whether it’s Department of Justice or potentially the Office of Inspector General under the Department of Health and Human Services, would contact the organization. The organization’s legal counsel should be the first person who is identified to transmit information.

What will happen is there will be a minimal investigation, or it could lead to what’s called a civil investigative demand, where it will go from just questioning, simply asking for information, to all the way to depositions. And so there’s a discovery process in which anything that could be admissible in this case would be used as evidence to justify that the False Claims Act was violated. So it really involves depositions, something called interrogatories, answering questions, and then going through a full discovery phase as part of that.

Kevin Pho: So all this sounds pretty scary to the average physician who may not be aware of this before listening to this podcast. Do the majority of physicians have anything to worry about?

Scott Ellner: Great question. And the quick answer is no. The majority of physicians are hard working, and frankly, physicians, it’s been a rough go the last several years. It’s very challenging to work in health care in the industry these days with more and more expectations. But the quick answer is no.

What I would say is that if you are earning a total cash compensation, if you’re employed, above what’s called fair market value, then you should probably be somewhat concerned. And there are ranges that your organization should follow, but it will raise red flags if the cash compensation is higher than it normally would be compared to your peers. But a majority of physicians are working very hard, they shouldn’t have to be concerned about the False Claims Act, and they’re providing patient care with the highest integrity.

Kevin Pho: We’re talking to Scott Ellner. He’s a general surgeon. He’s a health care executive at Peak Health Technologies. Today we’re talking about the False Claims Act. So Scott, what do you see as the near-term trend of the False Claims Act in the coming year or so?

Scott Ellner: Well, we are going to see that the Department of Justice is going to scrutinize Medicare Advantage. They’re really going to use the tools available, and I mentioned AI technology, deep learning, neural networks, which are going to identify patterns of abuse, particularly around upcoding to make patients look or appear sicker to have those greater capitated payments. So I would say, if you are deeply involved in value-based care working with MA patients, just make sure that your coding accuracy reflects the patient diagnosis.

The second area is privacy. Privacy and security of protected health information. You’re probably hearing about this, I’m sure you’ve done a podcast about this. Selling patient information. And there are going to be people out there, who good, bad, or nefarious, are going to want to monetize patient information. In fact, a patient’s medical history is six times more valuable than their credit card. And so that’s something that the government will be looking at.

And so what does this mean for physicians or health care entities? Ensure that you have proper HIPAA privacy protections in place so that information does not get out there, either knowingly or unknowingly.

Kevin Pho: And in terms of the physicians who get entangled with this act, do they affect both proceduralists and generalists equally? Is that true?

Scott Ellner: I would say the proceduralists tend to be targeted more, because doing more procedures, you get paid more historically in fee for service. However, that paradigm is shifting, given that with value-based care delivery, primary care physicians are also targeted more and more.

Kevin Pho: And you mentioned a difference between Medicare Advantage versus Medicare. For those who aren’t familiar with those two entities, why are Medicare Advantage cases more scrutinized?

Scott Ellner: So Medicare, our traditional Medicare Part A and B, was historically just a fee for service model. You do something to the patient and you get paid. Medicare Advantage, or Medicare Part C, is about doing things to ensure that the patient gets good outcomes, and managing populations of patients so that you can provide preventive type of services to keep them healthy.

The way that you get paid though is through these capitated payments. And if your patients are identified as being sicker, have greater comorbidities, have cardiomyopathy, have diabetes with kidney injury, those up codes will allow you to be paid more the following year. You have to make sure that you document and accurately reflect that those patients do in fact have those comorbidities, in order to justify having those up codes.

Kevin Pho: Now, what about a primary care physician who codes a disproportionate amount of 99215s, for instance? Would they have something to worry about?

Scott Ellner: Yeah, that’s a great question, Kevin. Absolutely. If you’re coding to the highest level of acuity for a patient visit and that encounter, and you’re coding 99215s, absolutely, those level five visits are going to be scrutinized. And so you really have to make sure that if in fact those patients are going to go through a history and physical, that they have all the documentation there to demonstrate that it reflects the billing, because those claims will be scrutinized.

Kevin Pho: Then let’s end off with some of your take-home messages that you’d like to leave with the KevinMD audience.

Scott Ellner: Yeah, first and foremost, physicians are the cornerstone of health care, and you’re all doing a great job and greatly appreciated. And the majority of you do not have to worry about this.

What I would say though is if you are employed or have a professional services agreement with any organization, make sure that you review the contract and understand that you’re either under the Stark Law exception or the anti-kickback safe harbor.

The third thing I would say is that really work with your audit and compliance team to understand your billing practices. The Department of Justice is very serious. They’re going after egregious actors and those who unknowingly are submitting claims that are fraudulent.

And just be sure that you have an awareness that your organization is also supporting you. And if you don’t know, ask. Seek legal counsel, whether within your organization or your own private attorney, to make sure that you’re following the proper guidelines for billing.

Kevin Pho: Scott, thank you so much for sharing your time and insight, and thanks again for coming on the show.

Scott Ellner: Great to be here. Thank you.