Carolinas Healthcare to pay $6.5 million to settle upcoding allegations related to lab tests

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Carolinas Healthcare System will shell out $6.5 million to settle a major whistleblower lawsuit that alleged the system was ratcheting up testing codes to get bigger payments from federal healthcare programs the Department of Justice has announced.

The DOJ said court documents show that from 2011 to 2015, Carolinas conducted urine tests that should have been categorized as "moderate complexity" tests when being coded for government reimbursement. This classification dictates the amount that would be reimbursed for the test. However, the tests were coded as "high complexity" tests instead, triggering a higher payment of $20.00. This practice is known as "upcoding."

The government alleged that as a result of this alleged prolonged upcoding scheme the system and certain contracted facilities netted $80 more per test than they would have had the tests been properly coded.

The whistleblower lawsuit was filed by a former Carolinas lab director Mark McGuire, who under the provisions of the False Claims Act, will share in the recovery. His share will total $1,365,000, the DOJ said.

Carolinas said that in 2010, the Centers for Medicare and Medicaid Services stopped using the American Medical Association  CPT billing codes for drug screens and implemented its own coding system, so in 2013 and 2014  the system asked two separate outside consultants to review their coding process Both confirmed their coding selection, Carolinas said.

The system cooperated in the investigation, but ultimately decided after almost two years to settle. The $6.5 million figure  accounts, in part, for the difference between what Carolinas was reimbursed for the drug screens, and what Medicare and Medicaid alleged the system should have been paid had it used a different code.

"The lawsuit is not about our patient safety, quality of care, or whether the urine drug screen tests were done correctly. It is about the interpretation and application of complex and constantly changing billing guidelines," the system said.

Twitter: @BethJSanborn