Feds join whistle-blower suit against IPC in upcoding case

The U.S. Justice Department has filed a complaint against IPC the Hospitalist Co. alleging the company actively encouraged physicians to upcode claims for routine patient evaluations for the past decade.

The government, joining a whistle-blower lawsuit filed by one of its physicians, alleges that North Hollywood, Calif.-based IPC has overbilled federal healthcare programs by upcoding for evaluation and management services since 2003. For example, the government said hospital-based physicians with IPC were billing a high-severity E&M code, 99233, at an average rate of 70%, while the national average is around 20%. That code pays almost $90, compared with $36 for a less-intensive code.

“IPC's upcoding scheme caused, and still continues to cause, Medicare, Medicaid and other federal payers to overpay millions of dollars to IPC,” according to the complaint (PDF). “As a result of corporate/management pressure, and/or in keeping with IPC corporate culture and expectations to maximize billings, IPC hospitalists have routinely and systematically submitted upcoded claims for payment to the United States.”

The lawsuit stems from a qui tam lawsuit filed by Dr. Bijan Oughatiyan in 2009 and unsealed in December. Oughatiyan, who was an IPC hospitalist based in San Antonio from 2003 to 2008, said IPC encouraged physicians to bill Medicare using more expensive codes and rewarded big billers through profit-sharing.

The Justice Department describes a compensation structure that rewards physicians for maximizing billings. The company “encourages its hospitalists to maximize their billings through peer pressure and ranking hospitalists against each other,” the government says in the complaint. “Low-billing hospitalists are pressured to use more complex billing codes that reimburse at higher rates and increase net revenue per patient encounter.”

IPC was informed of the government's investigation in 2010. Company officials said they have cooperated and are holding discussions with the Justice Department.

“We believe we have a strong compliance focus, and that we operate with appropriate billing policies, procedures, provider training and compliance programs and controls,” IPC officials said in an April 25 Securities and Exchange Commission filing. “We produced responsive documents and have been in contact with representatives of the DOJ.”

The U.S. is seeking treble damages and civil penalties ranging from $5,500 to $11,000 for each false claim. The complaint does not include a tally of what the Justice Department believes IPC is liable to pay.

In fiscal 2013, publicly traded IPC recorded $41.4 million in net income on $609.5 million in revenue. Approximately 53% of IPC's revenue came from Medicare and Medicaid. As of Dec. 31, 2013, IPC employed more than 1,700 hospitalists and clinicians at more than 1,500 hospitals and post-acute facilities in 26 states.

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