Is ‘Upcoding’ a Trending Practice in Work Comp?

Phil Yacuboski

Scranton, PA ( – At the Pelicci Pain Relief Center in Scranton, Dr. Leroy Pelicci submitted paperwork involving trigger point injections for U.S. Postal Service workers for more than a decade, according to federal investigators, (as reported in a recent article). They were submitted for payment to the Department of Labor Office of Workers’ Compensation Programs under the Federal Employees Compensation Act and the Federal Employees Health Benefits Program.

Dr. Pelicci died earlier this year, but his estate has agreed to settle those claims in the amount of $625,000.

“Today’s settlement should serve as a warning to those who would attempt to defraud the Government,” said Scott Rezendes, Special Agent in Charge, Office of Personnel Management Office of Inspector General.

The practice is known as “upcoding” and as the federal government reports it’s costing billions of dollars in fraud, they are cracking down.

“Upcoding is deemed a way of enhancing profits on what would otherwise not necessarily be the most profitable sector of the medical compensation business,” said Nicholas Woodfield, principal and general counsel of The Employment Law Group, P.C., a firm representing people known as ‘whistleblowers’ in the workplace. “It’s a systemic pattern where everyone who comes in is coded as having a severe case of whatever it is. And so there’s a consistent pattern of upcoding and that’s the business model to make those clients more profitable to the medical service provider.”

Woodfield said in the long run, it costs everyone more money.

“A competent workers’ comp carrier is charging premiums based on actuarial studies of what injuries are going to be expected and how severe they are going to be and what it will cost based on their contracts of reimbursement with the medical service provider,” he said. “The overall costs will rise because the carrier is going to think that it’s more expensive to treat these things and so premiums will go up as a result. It’s whether or not the pattern of fraud can be identified.”

Woodfield said the medical services providers are so large, they already have practices such as upcoding already built into their business model.

“The risk of getting caught is so small that they factor it in and in certain business models they may get caught and they may have to pay back half of it, but then they’ve gotten half of what they got and that’s not so bad,” Woodfield said.

“We have a team of nurses that basically review the medical records that make sure the criteria that provider is billing supports the level of services that are being billed in the medical record,” said Barbara Clark, a registered nurse and nurse audit supervisor at Rising Medical Solutions, a medical- financial services firm that provides medical cost containment. “If they are billing a high level of codes, we want to make sure the documentation that the provider submits, supports the criteria for that code.”

Clark said the process is completed for most claims, although there is a dollar amount that is often a target.

“We do focus on a lot of the larger bills when it comes to seeing a pattern of a facility billing a lot of high level codes,” she said. “We try to make sure the documentation supports those codes.”

Clark said initial codes could be high, but should drop throughout the claims process.

“We keep monitoring and reviewing the bills and we make recommendations to the providers,” she said. “We’ll tell them that the level of coding is too high and it can’t be submitted.”

She said providers are given an option to revisit the claim and resubmit the information.

Clark also said education is key.

“We’re always here to help them if they have questions,” she said.