Losing a bundle: $12.5 settlement for misuse of modifier 59

by Roy Edroso on Dec 13, 2018

Following allegations of improper use of modifier 59 to unbundle orthopedic procedures, Pennsylvania health system Consolidated Health and its orthopedic surgeon-CEO Emil DiIorio, M.D., have agreed to pay federal authorities $12.5 million dollars -- $11.25 million from Consolidated and $1.5 million from DiIorio.

The settlement was announced on Dec. 11 by the U.S. Attorney's office for the Eastern District of Pennsylvania, which engineered the settlement after an investigation by the several federal agencies including the Inspectors General for HHS and -- because Workers' Compensation claims were involved -- the U.S. Labor Department.

The feds allege that from 2007 through mid-2014, Consolidated's providers broke up global payment bundles "by affixing a billing code, Modifier 59, to its request for payment" on procedures, even though two separate coding consultants who reviewed these claims told Consolidated their use of the modifier was improper and one told its officers "to self-report and repay Medicare and other federal payers." (After this warning, Consolidated continued the practice for another year and a half.)

The U.S. Attorney's office gave as an example of Consolidated's improper unbundling practices their total knee replacements. In 2009 DiIorio began uniformly recommending a lateral retinacular release to improve patellar tracking be performed after these procedures and billing them separately, even though before then "DiIorio rarely diagnosed any patient with poor patellar tracking and stated in almost every report that [a lateral retinacular release]... was unnecessary."

Interestingly, in 2011 a locum tenens D.O. and the U.S. Attorney's office brought a whistleblower case against Consolidated, DiIorio and several other Consolidated providers. Among their charges then was that DiIorio told his doctors "that each surgeon performing lower extremity joint replacement procedures on any patient should also perform a lateral release procedure, regardless of whether it would apparently benefit the patient or not." That suit was voluntarily dismissed by plaintiffs in 2012.

“We are unaware of any unbundling scheme that has had a bigger impact on federal funds," said U.S. Attorney William M. McSwain in the announcement on the most recent case. "My office will continue to hold businesses and individuals accountable for this type of wrongdoing."
 

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