On April 9, 2014, the Center for Medicare and Medicaid Services ("CMS"), a branch of the Department of Health and Human Services ("HHS"), released data showing utilization, payments, and submitted charges for services and procedures that were provided by physicians and other healthcare professionals to Medicare beneficiaries.  This unprecedented release of Medicare billing information seeks to improve transparency in the healthcare sector, but it may expose physicians and healthcare organizations to civil False Claims Act ("FCA") and criminal fraud actions based upon whether the amounts these professionals billed were appropriate for the services they provided. 

    A. History of HHS Releasing Information on Medicare Billing

This issue has long been a controversial issue for many, including physicians, who point out that such information in the wrong context has the potential to cause significant harm.  In 1977, the Carter Administration released lists correlating the amounts of Medicare reimbursements with the names of physicians and service providers receiving those reimbursements.  The Florida Medical Association ("FMA") filed a lawsuit seeking to enjoin the release of the information, and the American Medical Association ("AMA") joined that lawsuit.  Eventually, in 1979, the Middle District of Florida granted permanent injunctive relief forbidding the release of information personally identifying service providers under the Medicare program.  The U.S. Court of Appeals for the Eleventh Circuit reaffirmed the injunction in 2009.  See Alley v. U.S. Dep't of Health & Human Servs., 590 F.3d 1195 (11th Cir. 2009) ("Because the FMA injunction, reasonably construed, covers the subject matter of Alley's FOIA request, we conclude that HHS did not 'improperly' withhold those records under the FOIA.  If Alley believes the FMA injunction is invalid, overly broad, or outdated, she can challenge it in the Middle District of Florida after joining all necessary parties.").  More recently, however, on May 31 2013, the Middle District of Florida vacated the FMA injunction reasoning that the continued enforcement of the injunction was inequitable and detrimental to the public interest because of significant changes in factual conditions and the law since 1979.  This decision, in part, set the stage for the current Administration's release of Medicare billing data.

    B. The Obama Administration's Release of Medicare Billing Information

The Medicare billing data released on April 9, 2014 by the Obama Administration was posted in excel spreadsheets on CMS's website, and includes all final and resolved insurance claims for the calendar year of 2012.  The data is extremely detailed and includes, among other information:

• the identity of parties providing healthcare services;
• the type of entity providing services; the provider's address;
• the type of services provided; the number of Medicare beneficiaries receiving the service; the average Medicare allowed amount for the service;
• the standard deviation showing the amount of variation from the average Medicare allowed amount that exists within a single provider, HCPCS service, and place of service;
• the average of the charges that the provider submitted for the service;
• the standard deviation of the charge amounts submitted by the provider, which shows the amount of variation from the average submitted charge amount that exists within a single provider, HCPCS service, and place of service;
• the average amount that Medicare paid after deductible and coinsurance amounts have been deducted for the line item service; and
• the standard deviation of the Medicare payment amount, which shows the amount of variation from the average Medicare payment amount that exists within a single provider, HCPCS service, and place of service.

The data provides this detailed information for over 880,000 different healthcare providers that, all together, received $77 billion in Medicare payments in 2012 under Medicare's Part B Fee-For-Service program. 

The data, however, has a number of limitations which, in turn, creates the potential for misunderstanding and misuse.  The data does not account for quality of care provided by physicians, which can skew the data substantially.  The data also does not account for the severity of the underlying diagnosis across the different billing entries that resulted in the billing for a particular service.  For example, one factor that might skew the data in this regard is pharmaceuticals.  Physicians who purchase and administer expensive drugs to patients, such as oncologists who administer chemotherapy, will be misleadingly shown in this data as having received substantial payments from Medicare for their physician services.  Additionally, Medicare payments for a particular service can vary based on the city the service was performed, and the amount or intensity of the services performed in one visit. 

    C. The AMA's Response

The AMA was quick to point out that the release of the information without context and proper safeguards that would explain the information to the public is misleading and can lead to false conclusions and other unintended consequences.  The AMA, on its website, pointed out a number of potential problems surrounding the data that the media should take into account, which it listed as follows:

1. Errors: Data being released may contain errors because there is currently no mechanism for physicians and other providers to review and correct their information.
2. Quality: The data does not include explicit information on quality of care provided or quality measurement. It solely focuses on payment and utilization of services so it cannot be used to evaluate the value of care provided.
3. Number of Services: Residents, physician assistants, nurse practitioners and others under a physician's supervision can all file claims under that physician's National Provider Identifier (NPI); the data may not properly detail the services performed and who performed them. Additionally, there are several instances in which it can appear that two surgical procedures were done when in fact there was only one. For example, when there are co-surgeons or an assistant at surgery, the procedure should be counted as only one surgery, not two.
4. Charges vs. Payment: Medicare and other payers pay fixed prices for services based on fee schedules; therefore the amount paid to physicians is generally far less than what was charged and is not an accurate portrayal of payment.
5. Patient population: The data being released is an incomplete representation of the services physicians provide, as it is not risk adjusted. Additionally, it does not include care for private insurance patients or Medicaid beneficiaries, making it a limited view of the patients a physician cares for. 
6. Site of service: Payment amounts vary based on where the service was provided.  To reflect a difference in practice costs, Medicare pays physicians less for services provided in a hospital outpatient department than for services in the physician's office.  However, for services in the outpatient department, another payment is made to the facility to cover its practice costs so that, in reality, the total costs to Medicare and to the patient may be higher when a service is provided in a facility setting. 
7. Provider comparisons: There is a lack of specificity in specialty descriptions and practice types in the data, which could be misleading when making comparisons between physicians. In some cases, physicians who appear to have the same specialty can serve very different types of patients, thus impacting the mix of services provided.
8. Missing information: The data does not account for patient mix or demographics. It also does not point out that a significant share of Medicare payments is used to cover such costs as office overhead, employee salaries, supplies and equipment. To make matters worse, the data includes reimbursements for physician-administered drugs but fails to explain that these payments are compensation for the price of the drugs themselves, many of which are very expensive and are required to treat such serious conditions as cancer and macular degeneration.
9. Coding and billing changes:  Any analysis using the data should take into account changes in Medicare's coding and billing rules that may be different over time and across regions of the country (e.g., local coverage determinations). 

AMA Guide to Media Reporting on CMS’ Medicare Physician Claims Data, Am. Med. Ass'n, http://www.ama-assn.org/ama/pub/news/news/2014/2014-04-08-ama-guide-media-reporting-cms-medicare-physician-claims-data.page (last visited April 17, 2014). 

The AMA further stressed that payments or costs for services are not the only method to evaluate medical care, and that "quality, value and outcomes are critical yardsticks for patients."  The AMA concluded that the data dump by CMS does not allow patients to reach meaningful conclusions about the value or quality of healthcare services they receive.

    D. Potential Exposure to Fraud Litigation

The data release has significant legal implications.  As noted above, the data provides detailed, line-item billing information for over 880,000 different healthcare providers that, all together, received $77 billion in Medicare payments in 2012 under Medicare's Part B Fee-For-Service program.  This line-item detailing of services provided and amount billed for those services invites comparison between the different amounts charged for a particular service, and may, in the future, form the basis of or supplement a lawsuit by a FCA qui tam whistleblower or a government investigation alleging that a healthcare provider fraudulently overbilled for its services. 

In fact, a recent report from Reuters indicates that the qui tam plaintiffs' bar is already mining CMS' data for any outlier service providers that billed an unusually high amount to Medicare.  Patrick Burns, the co-director of a nonprofit activist group, Taxpayers Against Fraud, reportedly sent a link to CMS' database to around 400 qui tam plaintiffs' lawyers under the heading "Have Fun!".

This release of data also comes close to when a website established pursuant to the Sunshine Act will begin showing payments by manufacturers of drugs, devices, biological therapeutics, and medical supplies to physicians.  That website is scheduled to begin releasing such information later this year.  Government investigators and potential qui tam relators may then be able to correlate and compare unusually high Medicare payments to service providers with unusually high Sunshine payments to service providers.

Whether a whistleblower could actually use the released CMS data to bring an action is an open question.  It is arguable that relying exclusively on CMS data to bring a lawsuit would be barred under the FCA's prior public disclosure bar, albeit weakened under the ACA.  Compare US ex. rel. Radcliffe v. Purdue Pharma, L.P., 737 F.3d 908 (4th Cir. 2013) (holding under the ACA, the prior public disclosure bar is no longer a subject matter jurisdictional defense, but still available as a defense) with United States v. Omnicare, Inc., 11-CV-8980, 2014 WL 1458443, *8-*9 (N.D. Ill. Apr. 14, 2014) (determining that the public disclosure bar defense applies after the 2010 amendments to the FCA and describing the defense as a jurisdictional bar).  Certainly, one could still raise the prior public disclosure bar as a defense, and no whistleblower could argue that they are the original source of the information allegedly showing fraud since CMS is the party disclosing the Medicare reimbursements, not the whistleblower.  The data could be used, however, to supplement an FCA claim and pile onto existing allegations with this additional "evidence."  This data might also trigger or supplement an investigation into service providers for unusual billing activity.

    E. Conclusion

With the release of this information, more than ever, it is important for healthcare organizations and professionals to be aware of the increased risk of fraud lawsuits, as the Government has provided substantial incentives (which includes a significant percentage of any damages award or settlement) for private parties bringing a qui tam fraud action against a party for Medicare overbilling.