FWA Insights: Spotting red flags in adult day care claims

Adult day care programs provide vital care for seniors and other vulnerable adults, offering them both physical and mental stimulation while also providing respite for their caregivers. So, when Cotiviti’s fraud, waste, and abuse (FWA) team noticed several red flags in one clinic’s claims for these services, we initiated an investigation—ultimately leading to the discovery of an overpayment of approximately $1 million.

In this third installment of our Cotiviti FWA Insights blog series, our special investigations unit (SIU) will walk through a recent case of inappropriate billing for these adult day care services.

What is adult day care?

As noted by AARP, while community senior centers are generally a resource for healthier seniors, adult day care centers “serve those with physical or cognitive disabilities who may need more supervision and services,” with more than half of visitors having some form of cognitive impairment. More than 4,000 such centers operate throughout the United States. A small number of providers of such services unfortunately have been known to try to improperly increase their reimbursement, generally targeting Medicare or Medicaid programs, as shown in these examples:

• The owner of various centers in Texas was convicted of healthcare fraud for billing for items or services that were not actually provided to clients of the centers
• Two adult day care centers in Massachusetts paid more than $1 million to resolve allegations of improperly billing the state’s Medicaid program for services that were not provided or exceeded permissible billing practices
• The owner of two centers in Michigan was convicted of healthcare fraud for billing Medicare for psychotherapy that was not provided

The audit: Telemedicine modifier raises a red flag

The clinic in our example billed Cotiviti’s client, which serves a large Medicaid population, using HCPCS code S5102 for adult day care services. While performing data analysis and peer comparison, a Cotiviti investigator identified the clinic as a major outlier in billing volume for this code. In addition, the clinic had appended more than 1,000 unique patient encounters with modifier GT, indicating that the services were provided through video and audio telecommunications systems (in other words, through telemedicine), which is generally ineligible for payment with HCPCS code S5102.

On top of this, the clinic’s billing patterns indicated potential unbundling of evaluation and management services and preventive visits by appending modifier 25, which can be abused to bypass claim editing systems and receive higher reimbursement.

Additional red flags included:

• The clinic failed to provide medical records for nearly a quarter of the 150 claim lines our SIU sampled
• The medical records our team reviewed did not contain a referral from a primary care provider or other types of documentation that would demonstrate their appropriateness
• No chief complaint was documented to support the billing of Evaluation and Management (E&M) services

To top this all off, our SIU conducted research on regulations surrounding adult day care services in the clinic’s city, which revealed an executive order was issued during the COVID-19 pandemic that adult day care centers be closed and suspended. The executive order was in place while the clinic continued to bill in-person and telemedicine adult day care services.

The upshot: A $1 million overpayment is identified

Cotiviti recommended denial of the claims, which the provider appealed. The health plan is pursuing an overpayment of nearly $1 million, which will ultimately help the client deliver better care for vulnerable Medicaid populations.

To discover or perhaps even prevent such schemes in the future, health plans should consider the following approaches:

• Perform extensive review of both internal and state documentation and billing guidelines for adult day care services
• Compare providers and clinics to their peers to determine outlier billing patterns
• Determine whether modifiers were appropriate for the services billed, paying particular attention for modifier 25 for unbundling of E&M services