By Scott Cohn
CNBC Senior Correspondent
It is one of the biggest and most overlooked factors in the rising cost of health care. According to government estimates, fraud in programs like Medicare and Medicaid costs taxpayers $80 billion a year, with some estimates as high as twice that amount.
A federal fraud crackdown, some of it mandated by the Affordable Care Act, has made a dent in the problem, but the record $4.1 billion recovered in 2011 is a small fraction of the total.
The CNBC investigative team, Investigations Inc., spent six months on the front lines with federal agents for the upcoming documentary "Health Care Hustle." Among the findings: the fee-for-service model that guides most of American health care in the 21st century has created a high-stakes numbers game pitting government authorities against increasingly sophisticated crooks, with patients often caught in the middle.
One of the most difficult types of fraud to combat is known as "upcoding," where the provider bills Medicare or Medicaid for a more expensive procedure than the patient actually received.
"We've built our medical care system in this country around a fee for service model," said Dr. Peter Budetti, the Deputy Administrator of Medicare and Medicaid in charge of "program integrity," in an interview scheduled to be broadcast Wednesday, April 4, on Rock Center and Monday, April 9, on CNBC.
Every procedure and diagnosis has a billing code. The codes are used not only for billing Medicare and Medicaid, but in many private insurance programs as well. There are already thousands of codes, used in increasingly sophisticated data analysis by authorities seeking to spot fraud.
Now, in an effort to combat upcoding, the Center for Medicare and Medicaid Services has unveiled a vastly expanded list of codes, more than 1,600 pages long, that is almost comically specific.
There is code W273XXA, "contact with a needle (sewing) initial encounter," not to be confused with W273XXD, "contact with a needle (sewing) subsequent encounter."
"We have to describe what we're going to pay--that's the fee side of it--and what the service is that was delivered," Budetti said.
Medical coding has become a profession in itself, as providers try to maximize their revenues without running afoul of the rules.
Entire businesses have sprung up to teach practitioners how to navigate the codes.
One such business is operated by Dr. Adam Alpers, an osteopathic physician in Ocala, FL. Alpers created a video series called "Medical Coding Cash Secrets," which he sells on his web site.
"I’m offering you an opportunity to improve your practice in ways that you never imagined," Alpers says in a promotional video on the site.
Alpers explains how doctors can bill Medicare and Medicaid when they tell a patient to quit smoking.
"This simple technique could generate anywhere between ten and fifteen thousand dollars in additional revenue for your practice," Alpers says in the video.
“The statistics show that about 19% of your patients smoke," he continues. "So if you address the issue in the manner I will show you, in the Medical Coding Cash Secrets Program, and code the visit properly, and reach that higher billing level, you will easily generate $10,000 or more additional revenue each year using this smoking cessation code.”
CNBC purchased the video series, which sells for $349. In addition to describing how to bill for "smoking cessation," the program explains how having a patient complete a six-minute walk down the office hallway can be billed as a "simple pulmonary stress test," a code that can generate more revenue than similar procedures done in the examination room.
Dr. Alpers declined multiple requests for an interview. In an e-mail, he said, "I have tried to teach proper guidelines to the complicated process of documenting an office visit according to proper protocols which are in writing."
In his course materials, Alpers says he is teaching providers how to use the proper billing codes for things they are already doing.
Authorities we shared the materials with were skeptical. Deputy Health and Human Services Inspector General Gary Cantrell said Alpers does appear to be careful in his language. Still, Cantrell told CNBC he wants to look into the program further.
"I guess my initial reaction is I guess I think there’s a fine line between education and suggesting of upcoding," Cantrell said. "And that would be my first concern, is the potential that this kind of advice – which, he didn’t get into details, but could certainly lead to upcoding."
Alpers' site also includes glowing testimonials from health care professionals, such as a Dr. J. Williams, said to practice in La Crosse, WI.
Williams, whose picture appears on the site, is quoted as saying, "My revenue has increased in the thousands of dollars monthly."
CNBC located Williams, not in Wisconsin, but in Florida, where he ackowledges having worked with Alpers. He said the quote is fabricated, calling it "factually incorrect." Williams said he was unfamiliar with Alpers' program.
Also on the site, Ocala, FL nurse practitioner R. Zylis, is quoted as saying, "You have taken my revenue to a new level." On one version of the web site, the quote is accompanied by a woman's picture.
However, the only nurse practitioner listed in Ocala is Rob Zylis. He told CNBC that while he does know of Dr. Alpers, he knows nothing about the program.
"I’m not sure why my name was used on the web site. I’m just not familiar with and and up until a few days ago had no knowledge of it," Zylis said.
In his e-mail, Alpers insisted he did work with Williams and Zylis, but acknowledges it was before he developed his program.
“I discussed with them my desire to find a way to make the guidelines more clear," he writes.
Alpers claims the men gave him permission to use their names but he did not get it in writing.
Soon after we began asking questions, Dr. Alpers' web site changed. Now, a message on the site says it has been taken down, temporarily, for "maintenance."
Editor's note: Scott Cohn's report, 'Health Care Hustle,' airs Wednesday, April 4, at 10pm/9c on Rock Center with Brian Williams. The full investigation airs Monday, April 9, at 9pm ET/PT on CNBC.