Epic Systems, the Verona, Wisconsin-based health IT giant, is facing a lawsuit in which the complainant has attested that the vendor’s software defaults to double-billing for anesthesia services, resulting in the government being overbilled by hundreds of millions of dollars.
According to a Law360 report last week, as well as other media reports, Epic’s billing software wrongly “defaults to charging for both the applicable ‘base units’ for anesthesia provided on a procedure, as well as the actual time taken for the procedure, resulting in payers being overcharged for anesthesia, relator Geraldine Petrowski said in an amended complaint in June that was unsealed [Nov. 2],” according to Law360.
“This unlawful billing protocol has resulted in the presentation of hundreds of millions of dollars in fraudulent bills for anesthesia services being submitted to Medicare and Medicaid as false claims,” Petrowski said. Petrowski served in various roles at Raleigh, N.C.-based WakeMed Health “between 2008 and 2014, serving as hospital liaison for the healthcare system’s implementation of Epic’s software, during the course of which she came across the anesthesia billing issues, developing ‘major concerns’ about incorrect billing, she said, according to Law360.
Other media reports included a statement from an Epic spokesperson who denied the Florida federal False Claims Act allegations. And in a statement emailed to Healthcare Informatics, Meghan Roh, public affairs for Epic, said, “The Department of Justice did its own expert review and decided not to move forward. The plaintiff’s assertions represent a fundamental misunderstanding of how claims software works.”
In 2012, Medicare altered its billing practices for anesthesia, requesting that hospitals change from a system based on billing “units,” equal to 15 minutes each, to billing in the actual minutes that a physician spent on a procedure.
As explained in the Law360 report, “Because that reimbursement protocol automatically adds in and reimburses at the appropriate minimum ‘base unit’ level—the minimum available reimbursement—for a particular medical procedure at Medicare’s end, base units are not meant to be reported on reimbursement forms,” according to Petrowski.
However, Epic's software allows hospitals to set up anesthesia billing to reflect not only the actual minutes worked but also the base unit for that particular procedure—and defaults to that setting, meaning hospitals are effectively reimbursed twice for the same procedure, Petrowski attested.
One example of this default setting in action is via a surgery bill from the MD Anderson Cancer Center, also an Epic customer, which Petrowski said had “overbilled Medicare by the equivalent of nine units— seven for the procedure, reflecting the base unit level, and two likely reflecting related start and stop time,” according to Law360.
The lawsuit attested that Epic acted with “deliberate ignorance and/or reckless disregard of the truth,” which led to the fraudulent billing. Under the False Claims Act, defendants are liable for treble damages and civil penalties between $5,000 and $10,000 for each false claim.
Earlier this year, eClinicalWorks, and some of its employees, paid $155 million to resolve a False Claims Act lawsuit in which the company allegedly violated federal law by misrepresenting the capabilities of its software and for allegedly paying kickbacks to certain customers in exchange for promoting its product, according to the U.S. Department of Justice.