Hospitals and other healthcare providers often hire medical billing companies to reduce the load and streamline their business. They trust these third-party service providers to submit their claims in a timely and accurate fashion to payers, and in case of denials, they expect them to provide appropriate appeal mechanisms. But many a times, knowingly or unknowingly, outsourcing medical billing partners have breached this trust and have opened doors for false claims allegations and settlements.

For instance, consider a reputed national medical billing company based in the US. The company was accused of breaching the trust in a billing scheme by fraudulently changing diagnosis codes on claims submitted to Medicare and Medicaid to get rejected claims paid on behalf of its client. As a result, the billing company was made to pay a hefty fine of $1.95 million for violating FCA norms.

In another instance, an Oklahoma-based emergency physician billing company, had to shell out $15 million to resolve charges of false billing to Medicare, Medicaid and others. The billing company that handled around 100 emergency physicians groups in more than 33 states was held liable under the FCA for up-coding claims and billing for services more extensive than those actually provided.

All these examples show the level of professionalism that is expected out of a medical billing company by concerned authorities. In fact, as per the Office of Inspector General (OIG):

medical billing companies

Reasons Why Medical Billing Companies Cross the Line

Although most medical billing companies leave no stone unturned to generate clean claims, there is always a few compulsions. This is because billing and coding have become a very competitive field and many a times billing companies are forced to cross the line to retain existing or acquire new clients. Often, these third-party medical billing and coding companies are subject to stern policies put forward by their clients on what to and how to bill for services. But as the above-mentioned cases points out, a billing company simply acting on the instruction of its client’s does not give it respite from liability under the FCA.

How to Spot the Red Flags

As per experts, it is always beneficial to follow the ‘trust but verify’ approach whenever you are not sure or in doubt about anything.

You can sign-up to receive feeds from industry experts, go through whistleblower cases, analyse communications from health plans, and be up-to-date with final rules set forward by CMS.

To put it in simple words, staying informed and updated is something that you should be doing to achieve consistently in compliant coding and reporting.

Also, be wary about balance billing, which is a controversial practice of transferring the difference between the provider’s charge and the allowed amount on to the shoulders of the patients. For instance, consider the maximum amount that can be billed for a procedure is $125. However, the provider charges $200 for the procedure and makes the patient pay the remaining amount of $75. Such a practice is called as balance billing and it is considered as an act of fraud.

Make no mistake about it; Medicare has taken note of the uptick in balance billing and is keeping constant vigil on those who violate balance billing regulations.

How to Stop Potential Fraud

Building a culture of compliance is a continuous process. Companies should appreciate this fact and incorporate appropriate strategies that will make compliance a corner stone of their operations. Billing companies can use the Compliance Program Guidance for Third-Party Medical Billing Companies published by OIG as the foundation based on which they can build a system that promotes and facilitate legal conduct. Yes, the guidance mentioned here are nearly 20 years old, but they can still be used as essentials of an effective compliance program.

Once the foundation is ready, companies can strengthen the compliance apparatus by implementing comprehensive audit plans and policies, which red flags misconducts. In this regard, OIG guidance recommends medical billing companies to be transparent and inform clients about them in advance.

Keep in mind that a compliance apparatus will never be complete unless you let employees to raise concerns or violations without fear of retaliation. Hence incorporate appropriate mechanisms that enables employees do the same without any repercussions. Also ensure that such discussion between coding or billing staff and the organization is recorded and logged appropriatly.

In case the internal medical billing and coding staff doesn’t feel as if any concrete action is taken against their complaint, they can always report the violation directly to CMS or file an FCA case. They can use CMS Medicare Fraud Hotline, which allows anonymous complaints and in the process, receive a hefty reward as whistleblower award.  Also, billers and coders who come forward and report suspected fraud are protected against retaliation by federal law and companies taking actions against such individuals may face stiff repercussions in the form of legal fees and double damages.

Lesson to Be Learned

The bottom-line is pay close attention to contracts and never let clients dictate the terms for how and what to bill. If the client doesn’t let you carry out your job with the utmost level of efficiency, then the client is not worth keeping.


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