Last month, the Centers for Medicare & Medicaid Services (CMS) announced that the Medicare fee-for-service improper payment rate had declined from 11% in Fiscal Year (FY) 2016 to approximately 6.27% in FY 2020.  Despite the fact that real progress in reducing the amount of improper Medicare payments has been made, health care fraud, waste and abuse remain a significant problem for both government and private payor insurance plans. The National Health Care Anti-Fraud Association (NHCAA) has noted that some government and law enforcement agencies have placed the total amount of loss as high as $300 billion.  Multiple State and Federal investigative and enforcement agencies are responsible for the audit, detection and, in some cases, the prosecution of individuals and entities that have improperly billed traditional Medicare, Medicare and other Federal health benefit programs in an effort to safeguard the public fisc. Private payor insurance programs, Medicare Advantage and Medicaid Advantage plans typically rely on in-house or contract Special Investigative Units (SIUs) to help protect their plans waste, fraud and abuse. This article examines the origin and present-day efforts of SIUs around the country and discusses how you should respond if your claims are audited by a medical or dental services SIU.
I. Rise of Special Investigative Units (SIUs)
Historically, the first SIU was established in Massachusetts in 1976 by Kemper Insurance.  At this time, a rash of auto insurance fraud schemes had taken place and insurance companies were looking for a way to better detect and deter future from occurring. Since that time, virtually all insurance companies have established SIUs to help protect the financial integrity of the various insurance lines (auto, properly, life and health) the offer. Today, health insurance SIUs dominate the industry landscape. In fact, a number of States have passed legislation mandating that health plans establish SIUs and implement a range of anti-fraud measures. New York  and Florida  are two examples where statutory SIU mandates have been enacted.
II. What are the Responsibilities of an SIU?
Practically all non-governmental health insurance companies have established an internal department or contracted with an outside group to serve as payor’s SIU. These SIUs are devoted to the detection of false or fraudulent insurance claims. Not surprisingly, private sector insurance companies providing medical and dental coverage often have remarkably robust SIU programs.  Generally, medical and dental SIU responsibilities include, but are not limited to:
- Development and implementation of a “Fraud Prevention Plan.”
- Creation and distribution of a “Fraud Detection and Procedures Manual.”
- Provision of anti-fraud education and training to underwriting and claims staff.
- Review of suspicious claims flagged by claims personnel.
- Investigation of fraud, waste and abuse complaints filed by patients, underwriters, claims section personnel, and others against billing providers and suppliers.
- Sharing information (such as new fraud schemes detected) with other SIUs and with government enforcement entities.
- Referring instances of civil wrongdoing to the payor’s legal counsel for possible legal action.
- Making criminal referrals to State and Federal law enforcement agencies for their review and possible prosecution.
III. Who Works in an SIU?
Not surprisingly, many of the management and investigative staff employed by private payor SIUs have law enforcement and / or investigative experience. Former agents of the Federal Bureau of Investigation (FBI), the Department of Health and Human Services -- Office of Inspector General (OIG), and State Medicaid Fraud Control Unit (MFCU) personnel are often recruited by non-governmental SIUs. SIUs also typically employ medical and dental clinical personnel who are experienced in conducting claims reviews and are knowledgeable about medical necessity, documentation requirements, coverage rules, coding, and billing guidance associated with the health care services that are eligible for payment under a particular plan.
IV. How are SIU Referrals Generated?
Referrals to SIUs for audit and investigations generally fall into the following categories:
- Referrals from internal underwriting and claims staff. When suspicious claims activity or potentially fraudulent enrollment or underwriting conduct is identified, a referral is normally made to the payor’s SIU for follow-up and investigation. After reviewing the matter referred, an SIU investigator may determine that no improper conduct was detected and return the file to the sender for processing. To the extent that the SIU determines that improper billings are present but that the provider’s conduct does not rise to the level of fraud, the SIU will normally seek to recover identified overpayments from the responsible providers.
- Data mining. As in the case of their government counterparts, SIUs use data mining techniques to identify providers whose claims and utilization practices are different than those of their peers. To the extent that a provider appears to be an outlier, the SIU then conducts a deeper review of the questionable claims being billed by the provider. After completing their review of the questionable claims, an SIU may determine that an overpayment has been made. If evidence of fraud is identified, the SIU may also make a referral to law enforcement for their consideration and possible prosecution.
- Health Care Fraud Working Group referrals. Since the passage of the “Health Insurance Portability and Accountability of 1996” (HIPAA), CMS, OIG, FBI, Department of Justice (DOJ) prosecutors and other government stakeholders have periodically met with private payor SIU representatives to share their knowledge of fraud schemes identified, enforcement initiatives and similar information. These informal Health Care Fraud Working Groups are typically organized and managed the U.S. Attorney’s Office in each judicial district. It is worth noting that the ‘‘Consolidated Appropriations Act, 2021’’ enacted in December 2020, created a new “Public-Private Partnership for Waste, Fraud, and Abuse Detection.” This effectively codifies, replaces and funds the informal “partnership” established in 2012 by the Secretary, HHS, which is currently known as the “Healthcare Fraud Prevention Partnership (HFPP).” It remains to be see whether the HFPP will supplement or supplant, the existing information Working Groups that are now well established around the country.
- Patient, provider and anonymous complaints. All SIUs have set up reporting mechanisms to facilitate the submission of complaints by patients, providers and individuals who wish to remain anonymous. These reporting mechanisms normally include telephone hotlines, mail and online reporting options.
- State Medical Board or State Nursing Board informal and direct referrals. To the extent that a State Medical Board takes an adverse action against a licensed health care provider, the board is likely required by law to report the adverse action to the National Practitioner Databank (NPDB). When this report is filed, notice of the adverse action is available to insurance payors. SIUs carefully monitor these reports to determine if an audit or investigation of a provider’s claims is warranted.
V. Types of Improper Conduct or Fraud Cases Investigated
As you would imagine, the types of improper coding and billing cases identified by SIUs are quite similar to the types of cases pursued by their government counterparts, such as Unified Program Integrity Contractors (UPICs) and Recovery Audit Contractors (RACs). Examples of improper made by medical practitioners include:
- Failure to properly document support for medical necessity.
- Improperly billing for the services of a non-credentialed provider.
- Improper use of incident-to billing.
- Failure to sign / close out an EHR entry.
- Failure to screen – employment of an excluded individual.
- Improper E/M coding practices (e.g. 25 modifier problems, lack of supervision, unqualified provider, substandard quality).
Examples of improper made by dental practitioners include:
- Billing for dental services not rendered.
- Failure to sign progress notes (either electronically or by hand).
- Misrepresentation of a non-covered service.
- Misrepresentation of the provider of the dental service.
- Unlicensed individuals found to have performed dental procedures.
- Routine failure to collect the patient’s full payment or share of cost without notifying the carrier.
- Missing dental treatment plans / consent forms.
VI. Actions That Can be Taken by an SIU:
As set out below, there are a number of actions than an SIU may take as part of its assessment of your medical necessity, documentation, coding and billing practices. These actions include, but are not limited to:
- Unannounced site visits. Representatives of a payor’s SIU may show up unannounced at your office. They typically try to get records while they are on the premises. This approach is very unfair to providers, often leads to an interruption of patient care and can result in an incomplete assembly of medical records. Call your health lawyer if the SIU shows up at your office!?
- Prepayment audit. When suspicious billing practices are identified, SIUs are increasingly placing providers on prepayment This can delay payment and can be quite time consuming.?
- Postpayment audit. SIUs are continuing to expand their use of postpayment audits and have tried to extrapolate damages in many of our client’s audits. We have been very successful in having the extrapolated damages dismissed based on contractual and state law arguments.?
- Payment hold. Depending on the nature of the SIU’s concerns, a provider may be placed on payment hold until the payor is satisfied that the billing practices are compliant.
- Corrective action plan. If an SIU believes that the improper conduct identified was the result of lack of training, lack of knowledge, an error or a mistake, it may permit a provider to remain as a participating provider as long as the provider enters into and abides by a corrective action plan.
- Termination from plan. In the event that an SIU believes that a participating provider is engaging in improper conduct or fraud, the SIU may recommend that the payor terminate the provider agreement between the parties. Your right to appeal a proposed termination action varies from contract to contract.
- Referral to law enforcement. The most serious action that an SIU can take is to allege that you are engaging in fraud and report you to the OIG or DOJ for investigation and possible prosecution.
NATIONWIDE REPRESENTATION — CALL 1 (800) 475-1906
Liles Parker attorneys include several former Federal prosecutors who held significant positions at the Department of Justice. Many of our health lawyers are also Certified Professional Coders. Our lawyers have extensive experience representing clients in audits by private payor Special Investigation Units. Are your medical or dental claims being audited? Give us a call for a complimentary consultation. We can be reached at: 1 (800) 475-1906.
 National Health Care Anti-Fraud Association http://www.nhcaa.org/resources/health-care-anti-fraud-resources/the-challenge-of-health-care-fraud/
 Section 409 of the New York Insurance Law and Regulation 95 require insurers to file with the Department of Financial Services,
 There are numerous articles on our website addressing the enforcement activities of specific dental SIUs. These include, but are not limited to:
(2) “SIU Dental Audit Reviews by DentaQuest, Delta Dental and Cigna Can Ultimately Lead to Criminal Prosecution and Imprisonment. Are Your Dental Office’s Medical Necessity, Documentation, Coding and Billing Practices Compliant?”