UCHealth agrees to $23 million settlement with the feds over false billing accusations

UCHealth, the state’s largest medical provider, has reached a $23 million settlement with federal authorities over allegations that it overbilled for emergency care at its hospitals, the Colorado U.S. Attorney’s Office announced Tuesday.

The allegations claim that UCHealth hospitals from Nov. 1, 2017, through March 31, 2021, automatically used the most expensive billing code possible for certain emergency department claims submitted to government health coverage programs Medicare and TRICARE, which is for members of the U.S. military and retirees.

Using this billing code without having proper justification violates the Fair Claims Act, the feds allege.

“Improperly billing federal health care programs drains valuable government resources needed to provide medical care to millions of Americans,” Principal Deputy Assistant Attorney General Brian M. Boynton, the head of the Justice Department’s Civil Division, said in a statement. “We will pursue health care providers that defraud the taxpayers by knowingly submitting inflated or unsupported claims.”

UCHealth denied wrongdoing.

“UCHealth is pleased to see the end of this lengthy and resource-intensive investigation,” UCHealth spokesman Dan Weaver said in a statement. “UCHealth denies these allegations, but we agreed to the settlement to avoid potentially lengthy and costly litigation. The settlement allows us to focus our resources on providing excellent patient care.”

The complex world of hospital billing

The allegations dive deep into the complex world of hospital billing. When a hospital wants to charge for a service, it uses a billing code to identify what the service is. Sometimes, a single service could be charged under a range of billing codes, depending on the severity of the patient and the amount of hospital resources that care uses up.

This is the case with so-called evaluation and management — or E&M — services in emergency departments. Basically, this is the charge for walking into the emergency room for treatment.

Emergency visits can be billed using one of five Current Procedural Terminology, or CPT, billing codes: 99281 through 99285. The former is for the least severe cases — the ones that probably didn’t need to come into the ER to begin with. The latter is for the most severe — critical situations with immediate risk of death.

The feds allege that UCHealth automatically charged a visit using CPT 99285 if its health care providers checked a patient’s vital signs more times than the total number of hours that the patient was present in the ER. In other words, if a patient spent three hours in the ER and had their vitals checked four times, the Department of Justice alleges that UCHealth would automatically code that as a level-5 ER visit under CPT 99285. This didn’t apply, though, to patients spending less than an hour in the ER.

The feds say that UCHealth used the highest-level code “despite the severity of the patient’s medical condition or the hospital resources used to manage the patient’s health and treatment.”

“The United States alleged that UCHealth knew that its automatic coding rule associated with monitoring of vital signs did not satisfy the requirements for billing to Medicare and TRICARE because it did not reasonably reflect the facility resources used by the UCHealth hospitals,” the Colorado U.S. Attorney’s Office wrote in a news release Tuesday.

“We will hold accountable health care companies who adopt automatic coding practices that lead to unnecessary and improper billing,” Acting Colorado U.S. Attorney Matt Kirsch said in a statement.

Growing concerns about “upcoding”

When hospitals charge a higher-level billing code than appropriate, it is known as “upcoding.” The practice has become a major focus for researchers trying to understand why U.S. health care spending is so high.

One analysis published in 2019 found that the percentage of ER visits coded using 99285 rose to 27% in 2017 from 17% in 2008, while the use of the three least-severe code levels dropped. An analysis of Colorado claims data by the Center for Improving Value in Health Care found that 99285 had become the most commonly billed E&M code in the state by 2016, up from third in 2009.

Another study found that 30% of the growth in Colorado’s spending on ER services was due to upcoding. The state had by far the highest amount spending per ER visit of the four states included in the analysis.

The price differences between the codes can be significant. According to state-collected data posted on ColoradoHospitalPrices.com, for an ER visit at UCHealth University of Colorado Hospital coded as 99281 — the least-severe level — Medicare pays $85.89, while some private health insurers pay as much as $700. For an ER visit coded as 99285, Medicare pays $621.39, and some private health insurers pay more than $6,000.

Whistleblower complaint

The allegations about UCHealth’s improper billing first came to the feds’ attention via a whistleblower complaint filed by a former UCHealth employee. The whistleblower, an Arvada man named Timothy Sanders, wrote in a complaint filed in 2021 that he worked as a “revenue recovery auditor” whose job it was to resolve complaints from patients who believe they had been overcharged.

Sanders said he discovered that an automated system was falsely billing patients under 99285 and that not only did UCHealth officials know about this but they had no intention of doing anything about it.

“What Sanders learned was that UCHealth would reduce an emergency services bill if a patient complained, but otherwise UCHealth would take no steps to make sure a given emergency services bill was correct,” the complaint Sanders filed states.

Under federal law, whistleblowers are entitled to a share of the settlement money that the government collects. Sanders is due to receive $3.91 million from the proceeds of Tuesday’s settlement, according to the U.S. Attorney’s Office.

UCHealth operates more than a dozen hospitals and hundreds of clinics across Colorado. In a given year, it treats roughly 3 million patients.UCHealth brought in more than $8 billion in revenue from treating patients during the fiscal year that ended in June, according to an audited financial report filed with federal regulators. It made more than $500 million in profit on patient care.

Rolling in investment gains and other revenue sources, the health system made more than $1 billion in profit last fiscal year.