As the federal government expands its crackdowns against nonviolent crime, a number of psychologists have been snared by investigations and many more may become entangled.

Determined that health-care fraud, abuse and misbilling, intentional or otherwise, will be significantly reduced, the U.S. Departments of Health and Human Services (HHS) and Justice (DOJ) are going after providers for a range of claims practices, some of which have been in common use for years.

The DOJ has named health-care fraud and abuse its second priority, after the battle against violent crime. HHS, at the mandate of Congress, is pouring hundreds of millions of dollars every year into the battle.

The resulting onslaught has hit several parts of the health-care industry--hospitals, most prominently--like a firestorm, with audits, demands for repayment, civil penalties, assessment of three-fold damages and even criminal charges.

Experts say some charges are a result of the providers not knowing, not understanding or being careless about the often-byzantine reimbursement rules. Other charges are the consequence of providers pushing a little too hard to maximize reimbursement. Others are from intentional plans to defraud insurance programs. And others are simply the result of overzealous enforcement practices.

But with an estimated 7 percent to 10 percent of health-care dollars being lost to incorrect billing, the government is examining claims like never before and taking virtually no excuses. Across the country psychologists have been targeted with investigations, and with the enforcement push expanding, compliance experts say it's likely more will be.

Last month the Monitor gave an overview of the massive enforcement initiative. This month, we look at actions psychologists can take to keep themselves out of trouble.

Advice from the experts

Probably the most important step, say health-care consultants, is to realize there has been a revolution in terms of the demands for precise coding, billing and practice administration in general.

"We are in a new era of accountability in health care," says James Georgoulakis, PhD, MBA, APA's representative to the Resource Value Update Committee that advises the Health Care Financing Administration.

That advice, Georgoulakis emphasizes, should be heeded whether a psychologist bills to government programs or just to private insurance companies, or even private payers. Although billing practices involving Medicare have been the principal target of federal investigators, the government is empowered to go after fraud against other health-care payers. In addition, private insurers are learning from and coordinating with the federal actions.

"Industry allows the government to be the stalking horse, absorbing the bulk of the costs to detect and expose problems," says Terrie Storm, director of corporate compliance at New Life Treatment Centers, corporate office, Plano, Texas. "Then it, too, begins to enforce similar restrictions."

A psychologist may have been billing the same code in the same way to a Medicare carrier for years without hearing any complaint. But suddenly it becomes a "pattern of misbilling." A provider may have been writing patient records in the same style for a lengthy career. But now he or she can be told by Medicare auditors or other enforcers that most of the services billed were not documented in the patient record, and all the money received from the government or other payer for patient services must be paid back. Or worse, the provider could be accused of fraud and be subject to huge monetary penalties or even criminal charges.

Georgoulakis, who has written books and articles on compliance in health-care reimbursement, urges practicing psychologists to look at the way they run their practice and the way they submit claims to all the payers they bill to and see where they may be vulnerable. And then make it policy to do that annually.

He and others say that even a vigorous effort to comply is no guarantee you won't feel enforcement heat. Indeed, a number of psychologists caught up in audits and other actions are contesting the contention that they broke any rules. On the other hand, many psychologists are mistakenly billing in a way that's prohibited by one rule or another. So a concerted effort to ensure compliance can lower your risk of being targeted or of receiving the maximum penalties if you are targeted.

Search for the information

Compliance--working and billing by payers' rules--requires practitioners to proactively gather all the information that applies to claims submissions. Medicare carriers, for example, send out thick newsletters on claims and billing and most of the information doesn't apply to a psychologist's practice. Nevertheless, practitioners are required to know everything in every line of those periodicals that might apply to their claims submissions.

Storm, who provides billing guidance for psychological services in many states, recalls the case of a psychologist who government investigators found to be billing contrary to a Medicaid policy published in a newsletter before he even became a Medicaid provider. Nevertheless, she says, he had to pay back all the funds he received under that type of billing.

She advises psychologists to vigorously seek guidance from their carrier, any other payer they deal with, their state associations and anyone else who can give them information on using codes. She suggests practitioners keep a three-ring binder or other collection of those pages of their carrier's newsletters that affect their practice and other pertinent information on coding and billing.

Many consultants suggest documenting any phone conversation or other information from the carrier.

Coding and documentation

As part of their information search, Georgoulakis urges psychologists to educate themselves about how and when to use specific codes. Medicare carriers can vary on what they consider codes to mean and whether they will pay for them, he says, just as private insurers can. It is up to the provider, he adds, to use the code correctly for each payer, ensuring the code matches the diagnosis and documentation.

Experts also urge that practitioners understand the most recent information on the Current Procedural Terminology (CPT) and the ICD-9-CM codes. Both sets of codes are updated annually.

Both Storm and Georgoulakis say that psychologists don't get the education on coding that physicians do. But, they warn, psychologists will be held just as accountable.

On documentation, Georgoulakis warns, "It is not what you, the psychologist, think is complete and legible. It is what someone outside of the field determines is complete and legible."

Envision, he suggests, an FBI agent with a few days' training in health-care claims looking through your records to see if your services are properly documented. Throwing notes in a file or attaching sticky notes won't do any more, says Storm.

Psychologists must have neat documentation in a consistent format. "If your records get audited for some reason," she says, "the more of a mess that file is, the more confusing the outcome is going to be."

She recommends using a specific progress note form created for the practice or copied from publications on medical documentation. It should be designed to remind the provider of what needs to be documented, including elements such as the date, the number of the visit, insurance information, the time spent, the psychologist's signature and any other necessary elements.

Storm and Georgoulakis say some psychologists don't want to assign a diagnosis or don't want to be specific about a diagnosis, often because they don't want to label a patient.

Storm says, "You need to be able to justify the care you are giving. You need to code to the most accurate diagnosis or diagnoses that best describes the patient's condition that is being charted and being reported."

The chart note should reflect the patient's condition, she adds. Further, the code selection for diagnosis, procedure, place of service and type of service (as reported on the claim form or bill), as well as the reviews from the reviewing organization should match the documented condition.

Both experts also advise that any kind of expansion of the diagnosis or the service that is not absolutely appropriate is considered "upcoding" if it leads to increased reimbursement, and can result in charges of fraud. It's crucial, they say, to use:

  • The most accurate diagnosis or diagnoses.
  • Accurate reference to where the services were rendered.
  • The actual time spent with the patient (Storm notes that CPT individual therapy codes represent actual face time).
  • The actual type of session, such as individual or group, and the type of therapy involved.
  • The service as described in resource materials (CPT, ICD-9-CM, DSM-IV, etc.). For example, it's important not to "unbundle" the components of a service and bill each separately.

Compliance plan

The U.S. Department of Health and Human Services Office of Inspector General (OIG) has published model compliance programs for several types of providers. Although none of these are specifically for psychologists, they do offer background on the kinds of things the enforcement agencies are looking for (see "Resources").

Georgoulakis suggests each practicing psychologist build his or her own compliance plan that describes how the practice will bill and carry out administrative functions, and how it will ensure compliance. That plan, he says, should become an active part of a practitioner's everyday work.

Meanwhile, OIG is expected to publish guidance for individual practices in the future.The DOJ has pledged that a good-faith compliance effort will be a mitigating factor if a health-care entity is charged with violations. For example, a practice might be asked to make repayment, but not charged with civil penalties.

So, in addition to a written compliance plan, it's good to document your compliance efforts, including the reviews you do on your procedures and training undertaken for yourself or staff.

On the other hand, federal agencies have warned providers that the worst thing they can do is to have a written compliance plan that goes on the shelf, and is not integrated into the practice.

Further Reading


  • The APA Practice Directorate's Legal and Regulatory Affairs Office, (202) 336-5800.

  • The Health Care Lawyers Association features meetings, discussions, publications and a listserv with many of the top health-care attorneys in the nation: www.healthlawyers.org.

  • The Health Care Compliance Association was formed primarily as an association of compliance officers for health care entities: www.hcca-info.org.

  • Department of Health and Human Services Office of the Inspector General is a lead player in the health care enforcement push. In particular go to the "Reading Room" to read guidance on compliance programs. Also, the work plans and annual reports will give information on the initiatives being undertaken: www.dhhs.gov/progorg/oig.

  • Health Care Fraud and Abuse, Aspen Health Law Center, Aspen Publishers (1998) offers an overview of the enforcement push and the laws that are used.

  • Journal of Health Law, available in law libraries, has articles on the enforcement push and legal challenges to it.