Healogics: The Separate Visit the Government Said Never Happened

In the Healogics Modifier 25 settlement, the wound-care provider agreed to pay $398,163 to resolve allegations that it billed Medicare, Medicaid and TRICARE for separate evaluation and management services that were never performed on procedure days. The whistleblower’s complaint describes a billing decision an insider would recognize: an antibiotic prescription written during wound treatment allegedly became the reason to add another visit charge.

The Justice Department’s June 20, 2018 announcement covered claims from January 2012 through June 2017. Healogics was a Florida-based wound-care provider with clinics across the country, and the settlement concerned Modifier 25 billing in a case brought in the Northern District of Iowa. A private citizen started the whistleblower case, and the Department of Health and Human Services Office of Inspector General investigated it.

What Modifier 25 Is Supposed to Show

Modifier 25 identifies significant, separately identifiable evaluation and management work beyond the work included in another service that day. Under Medicare’s coding rules, a different diagnosis or a new patient does not, by itself, justify another visit charge.

In wound care, debridement removes unhealthy tissue to promote healing. The Healogics complaint describes the usual evaluation associated with that procedure as part of its payment. The alleged extra visit raised a question beyond which E/M level to choose: what significant, separate clinical work supported charging for another service at all?

That distinction also drove the case against Skyline Urology, which agreed to a $1,850,000 settlement announced in February 2019. The Justice Department alleged that Skyline billed Medicare separately for routine E/M services already included in same-day procedures. In each case, the government challenged the added visit payment for work it alleged the procedure already covered.

The Prescription That Became Another Visit Charge

The Healogics whistleblower complaint came from a medical coder at a hospital housing a Healogics-managed wound center in Kansas. The coder reviewed reimbursement codes assigned by nurses and others for care at the Healogics-managed wound center. That position gave the coder a view of both the clinical notes and the changes made before a claim went out.

The complaint alleged that nurses initially coded debridement, then another coder added a Level III E/M service when the physician prescribed an antibiotic for the same wound. It described the prescription as part of the procedure, while the added code represented separate physician work:

The whistleblower challenged both the existence of a separately billable service and the level assigned to it. According to the complaint, inspecting the wound and prescribing an antibiotic also fell short of the work represented by the added office-visit code.

The Coding Manual and the Response to a Warning

The complaint also alleged a pattern involving nurse-only dressing changes, coded as office visits requiring more clinical work than the records showed. It said the records documented nursing care without physician clinical work supporting the higher codes. For those claims, the whistleblower traced the nurses’ coding choices to instructions from Healogics:

The complaint distinguished the manual-driven nurse-only codes from the later debridement add-on. It described that add-on as less systematic, but consistent at the Olathe center, and said the nurses did not add it when making their initial coding decisions.

According to the complaint, a December 9, 2014 compliance meeting produced different responses to the two concerns. The team decided to stop adding the E/M code to debridement claims, but the whistleblower alleged that Healogics and Olathe Medical Center never notified the government about earlier claims using it. For nurse-only records, the complaint alleged that the team discontinued code 99213 while continuing code 99212.

The alleged explanation for keeping that code was the cost of facilities and equipment. We see the problem in that explanation: it answers a question about overhead when the disputed claim is supposed to describe care. The complaint alleged that the nurse-only coding continued despite the coder’s concerns, making management’s response to an internal billing warning part of the story alongside the original claims.

What Evidence Does a Whistleblower Need?

The chart, the claim and an insider who can explain the code change help us build an added-visit case. The Healogics complaint supplies a concrete sequence: a nurse’s procedure code, a prescription in the chart, a later addition in the coding office and a response from compliance staff. An insider may understand the handoffs that the final bill leaves invisible.

The 2017 Journal of AHIMA article Busting Bad Medicine: A Call to Action Addressing Healthcare, Fraud, Waste, and Abuse describes checking treatment dates, treatment types and nurse or physician signatures. It then explains why the written chart is only part of an investigation:

We assess the clinical records and billing decisions together, including who provided the care, who changed the code and who could explain the instruction behind it. A claim can pass Medicare’s automated edits and still lack the clinical work it bills for.

The Settlement, Whistleblower Share and Separate Fees

The Iowa settlement resolved the government’s allegations against Healogics, and the announcement said the whistleblower who brought the case was entitled to a share of the recovery. Healogics also agreed to pay $48,694 in separate fees to the whistleblower’s law firm.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The whistleblower reward comes from the recovery the case produces. Here, a billing insider’s account connected the treatment record to the coding process behind the government’s claims.

The Separate Healogics Hyperbaric Oxygen Settlement

The Justice Department announced Healogics’ hyperbaric oxygen therapy settlement on the same day. That resolution concerned allegations of medically unnecessary or unreasonable therapy billed to Medicare and arose from cases in Florida. Healogics agreed to a $17.5 million fixed payment, with additional payments that could bring that settlement to $22.51 million. The larger case addressed whether the treatment itself should have been billed.

The Iowa case concerned an additional visit charge on a procedure day. For a wound-care insider, that difference determines which part of the encounter explains the alleged false bill: the reason for the treatment, or the separate service the claim said accompanied it.

You Know Where the Extra Charge Appeared

If you saw a wound-care encounter acquire an extra visit charge, speak to our whistleblower experts about who directed it and what the chart shows. We work with you to build your strongest wound-care whistleblower case around the clinical work, the billing decisions and the people who knew how they connected. We bring in health care billing whistleblower lawyers who understand procedure-day claims, and we stay beside you throughout the case.