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 U.S. attorney’s office in Colorado announced Tuesday.

The allegations allege that UCHealth Hospitals, from November 1, 2017, through March 31, 2021, automatically used the most expensive billing code possible for certain emergency department claims submitted to the government health coverage programs Medicare and TRICARE, intended for members of the American army. and retirees.

Using this billing code without proper justification violates the Fair Claims Act, authorities say.

“Improper billing of federal health care programs drains valuable government resources needed to provide medical care to millions of Americans,” said Principal Assistant Attorney General Brian M. Boynton, head of the Department of Health’s Civil Division. Justice, in a press release. “We will pursue health care providers who defraud taxpayers by knowingly submitting exaggerated or unsubstantiated claims. »

UCHealth has denied any wrongdoing.

“UCHealth is pleased to see the end of this lengthy and resource-intensive investigation,” UCHealth spokesperson 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 delve deep into the complex world of hospital billing. When a hospital wants to bill for a service, it uses a billing code to identify the service. Sometimes a single service may be billed under a series of billing codes, depending on the acuity of the patient and the amount of hospital resources used by the care.

This is the case for so-called evaluation and management services – or E&M – in emergency services. Basically, this is the fee charged for going to 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 first is for less serious cases – those who probably did not need go to the emergency room initially. The latter is for the most serious — critical situations with immediate risk of death.

The federal government claims that UCHealth automatically billed for a visit using CPT 99285 if its health care providers checked a patient’s vital signs more times than the total number of hours the patient was present in the emergency room. In other words, if a patient spent three hours in the emergency room and had their vital signs checked four times, the Justice Department alleges that UCHealth would automatically code that as a Level 5 emergency room visit under CPT 99285. This would not be the case. did not apply, however. , to patients spending less than an hour in the emergency room.

The federal government says 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 vital signs monitoring did not satisfy Medicare and TRICARE billing requirements because it did not reasonably reflect the resources of the facilities used by the UCHealth hospitals,” the U.S. Attorney for Colorado said. Office wrote in a press release Tuesday.

“We will hold accountable health care companies that engage in auto-coding practices that lead to unnecessary and inappropriate billing,” Colorado Acting U.S. Attorney Matt Kirsch said in a statement.

Growing concerns about upcoding

When hospitals bill a higher level billing code than the appropriate one, it is called “upcoding.” This practice has become a major concern for researchers trying to understand why health care spending in the United States is so high.

A analysis published in 2019 found that the percentage of emergency department visits coded using 99285 increased from 17% in 2008 to 27% in 2017, while use of the three least serious code levels declined. A analysis of Colorado claims data by the Center for Improving Value in Health Care found that 99285 became the most commonly billed E&M code in the state in 2016, up from third in 2009.

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

Price differences between codes can be significant. According to data collected by the state and published on ColoradoHospitalPrices.comfor an emergency room visit at UCHealth University of Colorado Hospital coded 99281 — the least serious level — Medicare pays $85.89, while some private health insurers pay up to $700. For an emergency room visit coded 99285, Medicare pays $621.39 and some private health insurers pay more than $6,000.

Denunciation complaint

Allegations regarding UCHealth’s improper billing were first brought to the federal government’s attention via a whistleblower complaint filed by a former UCHealth employee. The whistleblower, an Arvada man named Timothy Sanders, wrote in a 2021 complaint that he worked as a “revenue collection auditor” whose job was to resolve complaints from patients who believed they were overcharged .

Sanders said he discovered an automated system was falsely billing patients under the number 99285 and that UCHealth officials not only knew about it, but had no intention of doing anything about it .

“What Sanders learned was that UCHealth would reduce the emergency services bill if a patient complained, but otherwise UCHealth would take no action to ensure that a given emergency services bill was correct ” says the complaint filed by Sanders.

Under federal law, whistleblowers are entitled to a share of the settlement money collected by the government. Sanders is expected 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 throughout Colorado. In a given year, it treats approximately 3 million patients. UCHealth has more than $8 billion in revenue to treat patients in the fiscal year that ended in June, according to an audited financial report filed with federal regulators. It has made more than $500 million in profits on patient care.

Thanks to investment gains and other sources of revenue, the health system made more than $1 billion in profits last fiscal year.