Hospital Outpatient Fraud

The Hospital Outpatient Prospective Payment System (OPPS) determines the rate of Medicare reimbursement for outpatient services using the Ambulatory Payment Classification (APC) and the Healthcare Common Procedure Coding System (HCPCS). Each outpatient service is identified by its APC group and HCPCS code and reimbursed at a nationally consistent rate, except for the labor-related portion of the payment which is determined based on wage levels at the particular hospital. Services that are determined according to pay schedules outside the OPPS such as the Clinical Diagnostic Laboratory Fee Schedule (CLFS) are exempted from OPPS.

Upcoding in OPPS Billing and Medicare Fraud

Because OPPS pays different amounts for similar services, there is substantial incentive for upcoding, which involves manipulating the APC to a more lucrative code and billing Medicare for the upcoded diagnosis. APC upcoding and other falsifications of Medicare billing for outpatient services can be considered Medicare fraud under the False Claims Act. This particular type of Medicare fraud can be difficult to prove, often requiring inside information from whistleblowers filing qui tam lawsuits against the perpetrating hospitals.

While the OPPS system is designed to determine fair Medicare compensation for outpatient services and to reduce Medicare costs, upcoding undermines the OPPS structure and costs taxpayer dollars in Medicare overpayments. Becoming a whistleblower to report OPPS fraud is a service to the tens of millions of Americans who benefit from Medicare as well as to taxpayers nationwide. To encourage individuals to come forward in qui tam lawsuits to report fraud, the False Claims Act provides for generous whistleblower rewards in successful cases.

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