By John Fisher, JD, CHC, CCEP

Client Alert: Dermatology Fraud Case Highlights Risks of Repetitive Multiple Removal Code Billing

Date: June 27, 2017

Executive Summary

A 2015 criminal conviction of a Chicago-area dermatologist provides a cautionary example for healthcare providers that bill high-volume procedure codes. The dermatologist was convicted of Medicare fraud after submitting false claims for more than 800 patients, resulting in approximately $2.6 million in reimbursements. The case centered on allegations that the physician falsely diagnosed patients, billed medically unnecessary services, and failed to maintain adequate documentation supporting medical necessity.

Why This Matters

The case demonstrates how repeated use of multiple removal codes can draw scrutiny when billing patterns appear inconsistent with normal clinical practice. According to the allegations, the dermatologist routinely billed CPT code 17004, which applies to the destruction of 15 or more lesions, across hundreds of repeat patients over several years. Many patients allegedly received the same billed treatment on 10 or more visits, and Medicare reimbursed the service at up to $352.40 per treatment.

Evidence presented in the case suggested that the dermatologist falsely claimed to have removed more than 150 pre-cancerous lesions from approximately 350 Medicare patients, more than 450 patients covered by Blue Cross and Blue Shield, and additional patients covered by Aetna and Humana. While this case appears to involve intentional fraud rather than ordinary coding error, the facts underscore the importance of monitoring billing frequency, documentation quality, and medical necessity support.

Key Compliance Risks

Providers that bill multiple removal codes, time-based codes, or other high-volume procedure codes should be alert to the following risk areas:

• Routine or repetitive use of high-value procedure codes without individualized clinical support.
• Documentation that does not clearly identify the diagnosis, number of lesions treated, medical necessity, and clinical rationale.
• Billing patterns that suggest unusually high volume, repeated treatments, or services inconsistent with patient presentation.
• Aggregate billing totals that appear unrealistic when compared with provider schedules, visit frequency, or expected clinical norms.
• Failure to periodically audit coding practices and correct outlier patterns before they become enforcement concerns.

Practical Takeaways

Healthcare organizations should use this case as a reminder to review internal controls around dermatology coding, lesion removal documentation, and high-volume procedure billing. Compliance programs should include periodic claim reviews, provider education, and targeted audits of codes that are frequently used or highly reimbursed.

In particular, providers should ensure that each billed service is supported by patient-specific documentation and that billing trends are reviewed in the aggregate. Even when services are clinically appropriate, incomplete documentation or unusual billing patterns can increase audit and enforcement risk.

Recommended Action

Healthcare providers and organizations that bill for lesion removal, dermatology procedures, or other high-volume services should consider conducting a focused review of their coding, documentation, and claim submission practices. A proactive review can help identify potential outlier patterns, strengthen medical necessity documentation, and reduce the risk of payer audits or enforcement action.

If your organization has questions about multiple removal code billing, dermatology coding compliance, or the design of an effective internal audit process, consider consulting experienced healthcare regulatory counsel or compliance professionals before issues arise.