Utah lawmaker, doctor admits to undercharging patients

Concerns about doctors and hospitals "upcoding," or overcharging Medicaid, drove Utah lawmakers in 2011 to create the state's first Office of the Inspector General (OIG).

But what about under-charging for medical care? Is that legal?

Rep. Michael Kennedy, R-Alpine, a family physician, recently admitted to doing just that in order to give poor, uninsured patients a break.

"I regularly, illegally by the way, downcode these people. I put them at a 212, a certain medical code to see me. That's a $55 charge to see me," he said last week at a Health Reform Task Force meeting.

Kennedy said many providers deliver free or discounted medical care to those in need. "We're all focused on the right thing: How do we help those people? And in many ways they are being helped," he said, arguing against expanding Medicaid, which he said the state can ill afford.

"We have a president who said, 'If you like your doctor, you can keep your doctor and if you like your [health] plan, you can keep your plan.' He also said [the Affordable Care Act] would cost only $1 trillion and save money in the long run. That's not what we're dealing with here," said Kennedy, bemoaning the rising health costs being shouldered by his patients and his own family of 10.

Indeed, Utah providers — generally hospitals and public clinics — write off hundreds-of-millions in uncompensated care annually. A gubernatorial work group, however, found Utah's charity care inadequate to meet all the health needs of the state's poorest residents.

But what about undercharging patients by misrepresenting services rendered on medical bills?

If there's no harm from the patient's perspective, it's also perfectly legal in the eyes of government insurers, according to the U.S. Centers for Medicare and Medicaid Services (CMS).

"It's not illegal to undercharge. In fact, audit contractors have found any number of cases where this has occurred and revised payments upward to the provider," said CMS spokesman Michael Fierberg.

Under-billing may not be the best business strategy, though, and could cause other patients to press for discounts and question the arbitrary way in which health care prices are derived.

And it might have been frowned upon by Kennedy's former employer, Vivian Lee, senior vice president for Health Sciences at the University of Utah, an advocate for expanding Medicaid.

Kennedy worked for the U. until June 2013 and is now in private practice in Orem.

- Kirsten Stewart