U.S.
Department of Labor
Office of Inspector General
Audit Report
MEDICAL PROVIDERS OVERBILL FECA MILLIONS
EACH YEAR
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at the time that the audit was issued. More current information may
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Report Title: Medical Providers Overbill
FECA Millions Each Year
Report Number: 09-97-200-04-431
Issue Date: September 29, 1997
The Department of Labor (DOL) can save millions of dollars
each year by utilizing commercial systems to screen billings for medical
provider code manipulation in the Federal Employees' Compensation Act (FECA)
program. Our sample of Fiscal Year 1995 bills, reprocessed by a commercial
vendor specializing in code manipulation detection, showed at least a $7
million loss because of improper or abusive medical provider billings.
Although the percentage of FECA payment dollars lost to improper billings
is small (about 3 percent), the volume of payment activity ($450 million
for FY 1995) translates to significant dollar losses.
The audit identified 20 providers which warrant criminal investigations.
Another 12 providers identified by the audit as submitting improper, abusive
billings were already under investigation by the Office of Inspector General,
Office of Investigations (OIG, OI). These 32 providers represent about
one half of one percent of the medical providers we identified as improperly
billing FECA.
We found no indication of widespread fraud. We cannot make projections
as to what portion, if any, of the $7 million improperly billed amount
was due to fraud. Conversely, a portion of the billings not identified
as improper or abusive may, in fact, be fraudulent.
FECA program management have been supportive partners throughout the
audit. At the conclusion of fieldwork, we provided them information on
the types and amounts of identified improper billings. They have promised
aggressive collection action against providers who improperly billed FECA.
We recommended that DFEC begin formally evaluating commercial code manipulation
detection packages for potential procurement. We concluded that procurement
and use of a commercially available code manipulation detection product
are advisable because:
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Medical providers will be placed on notice that FECA will not tolerate
sloppily prepared or false billings.
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Medical providers that continue to submit improper billings can be easily
identified and targeted for educational assistance, or if warranted, criminal
investigation.
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Commercial firms usually have multiple physicians available and a network
of board certified specialists to analyze codes and code combinations and
provide explanations and support for identified problems.
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Commercial firms can develop product improvements to counter new types
of abuse because they have access to information from insurance clients
on newly detected abuses.
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Commercial firms generally react quickly to changes in the codes or code
combinations and set up new algorithms to evaluate the codes.
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