FWA Insights: Catching outlier behaviors in physical therapy claims

Fraud, waste, and abuse (FWA) significantly impact consumers by driving up healthcare costs, increasing insurance premiums, and compromising the quality of care. These inappropriate billings result in billions of dollars in unnecessary expenditures each year, which are ultimately passed on to consumers through higher out-of-pocket expenses and reduced access to essential medical services. One of the best ways to improve the effectiveness of FWA programs is with technology that can identify outlier claim patterns.

Insurance fraud in physical therapy practices encompasses a variety of schemes that manipulate billing and treatment processes for financial gain. Common fraudulent activities include billing for services not rendered, upcoding (charging for more expensive services than those provided), and unbundling (separating services that should be billed together to increase reimbursement).

Implementing systems that can identify outliers early helps prevent overpayments with rapid detection, increasing the likelihood of recovering funds  and even flagging irregular claims before they get paid at all. Let’s look at a recent investigation by Cotiviti’s own special investigations unit (SIU) that demonstrates the benefits of this approach.  

Outlier analysis  

When conducting a claim data analysis, Cotiviti’s team identified red flags in the billing practices of a licensed physical therapy provider. The provider submitted claims for therapeutic activities at a significantly higher frequency than their peers, emerging as the top-paid provider in their specialty for these services. Further analysis revealed alarming discrepancies, including billing for services exceeding 24 hours in a day and neglecting to conduct re-evaluations for physical therapy.

Although anomalies can occur, it is crucial to support findings with evidence or identify a broader pattern that may indicate intent. Upon analyzing the provider’s 12-month billing history, Cotiviti identified potentially excessive services such as:

• Multiple days with more than 15 hours of billable services for one insurance plan
• Billing patients excessively, such as billing for identical codes for three hours a day, several days a week
• Outlier amongst peers for the following codes:
  • 97110 therapy procedure strength development, per 15 minutes
  • 97113 aquatic therapy
  • 97530 one-on-one therapy procedure, per 15 minutes
  • 97162 moderate complexity physical therapy evaluation

Diving into the investigation

The first step for Cotiviti’s SIU was to conduct a postpay investigation by sampling 30 members’ service bills. The provider supplied records for most claims, but could not produce records for specific dates of service. The investigation revealed the following:

• 78% of services billed by the provider exceeded the CMS Medically Unlikely Edits (MUEs)
• 87% of records produced did not contain the provider’s signature
• 91% of services billed were not separately or sufficiently documented
• Cloning was identified on the patient’s records; every progress note’s assessment section contained identical information from session to session and from patient to patient
• Documentation in the record was inconsistent
• More than 50% of the provider’s payment for the reviewed claims resulted in an overpayment, totaling nearly $20,000

Due to the outcome of the postpay investigation, the provider was placed on a prepay review for six months. During this time, our SIU identified an at-risk amount from suspect codes totaling approximately $65,000. After medical records were reviewed, 100% of the claims were denied due to the documentation not meeting the health plan’s policy specifications, including:

• Cloned documentation with no individualized care instructions or interventions to support direct contact
• Conflicting documentation with session notes that showed no improvement, but reassessment notes saying the patient made improvement
• Nearly all patients had the same goals, but they were not measurable
• The provider billed the same patient for aquatic and land exercises on the same day despite saying the patient was unable to perform land activities
• The totaled billed time exceeded Medicare’s recommended maximum per day

Key takeaways to strengthen your FWA results

Cotiviti’s prepay review resulted in savings of more than $100,000 for the health plan through avoiding inappropriate claims. The case was referred to the health plan’s internal SIU for further investigation and consideration of referrals to the proper regulatory agencies.

Reviewing claims for FWA through both prepay and postpay approaches can result in proactively identifying problematic behaviors, stopping payment for inappropriate billing, and recovering funds more effectively. By scrutinizing billing practices according to state and health plan guidelines and enforcing robust review processes, plans can safeguard against FWA and uphold the integrity of their payment systems, helping to protect their members.