Schemes, Errors & Scams – How Uncommon Claim Review Leads to Savings

Nokomis Health | Stories from the Front Line

Nokomis Health’s coding team was reviewing a client’s out of network laboratory and a batch of genetic testing claims raised some questions. The claims appeared to be legitimate – the CPT code was valid, the diagnosis code supported the charge, the NPI and TIN were correct – but the charges were very high for the code and it was unusual for the code to stand alone. We obtained records on several claims and found that the lab was simply performing a quality assurance function, they were not performing a covered service.

The scheme was simple: when a patient was scheduled for a biopsy, the lab would ask the patient to swab their cheek and send the tissue sample to them. The lab sequenced the patient’s DNA and also sequenced the tissue sample obtained from the biopsy. They charged $4,200 to confirm that the results of the biopsy were in fact from the patient of record. We denied these claims as being non-billable services and saved the client over $90,000 (the client would have paid them at billed charges had we not intervened). Based on these findings, we also built an edit to catch and deny any future claims from this provider.

This is a good example of the many, many claim errors that we see every day. Payors typically catch and deny routine errors, but they often don’t have the capability, time, or expertise to uncover the less common errors that we are equipped to identify. Coders are under constant pressure to work fast and most errors that we see are not intentional, although some really are either fraudulent or misleading at best.

Another systemic error that we recently uncovered led to savings of over $200,000 for a client. The contract with a large hospital provided for a DRG payment for inpatient admissions, plus a percentage of charges for implants and high-cost drugs. The contract did not specify the definition of implants or drugs, but typically they are identified by revenue codes. We questioned the large implant charges on several claims because the procedures billed typically do not require implants. After obtaining the itemized statement and operative report, we discovered that the hospital was incorrectly classifying routine operating room supplies as implants, arguably intentionally to receive additional reimbursement. We denied the incremental charges and saved the client over $200,000.

Sometimes a scheme can be more difficult to uncover. Reviewing claims from an ENT clinic, we discovered three issues:

  • First: the clinic was billing for allergy serum far too frequently and the payor’s claim edit software didn’t catch this error. Providers should only charge for allergy serum when it is prepared for the patient, not at every visit for an injection.
  • Second: we discovered that the clinic was billing for two procedures (flexible fiberoptic laryngoscopy and nasal endoscopy) much more frequently than other clinics. We obtained records and saw no clinical indication of the need for these procedures, and we suspected that the clinic was performing them frequently to enhance their revenue.
  • Third: we found that many patients were returning to the clinic for a consultation within 5 to 10 days of the initial appointment. Again, we suspected that the clinic was bringing patients back simply to increase their revenue, not because the patient needed to be seen for a consultation.


We denied many of these claims and worked with the client’s medical director so that she could make an outreach call to the clinic.

This is just a small sample of claim errors that we uncover daily for our clients. Our experience and technology have equipped us to find errors that others miss. We aim to be precise in our edits to minimize the frustration that providers experience from unsupported denials, but at the same time, we believe that payors have a responsibility to only pay accurate claims that are supported by documentation.

Contact us to learn more about how Nokomis Health can help your organization save money on claim costs. Sign up today for a complimentary analysis of your paid claims to see your savings opportunity.

Nokomis Health – Your Partner in Medical Claim Management