A Complete Roadmap to Avoid Healthcare Billing Malpractice & Reduce The Risk of Lawsuits

Fraud, abuse, HIPAA compliance, upcoding, under-coding, you might often come across these words more often. Because from the last few years, these issues have become buzzwords in the news media. They not only lead to significant financial loss but also can land healthcare providers in serious legal troubles. Such as; lawsuits, court trials, federal penalties and heavy fines, etc.
In the United States, there are several eminent providers and healthcare organizations that had to face lawsuits in the past. Just because they failed to ensure billing and coding compliance. Due to its dire consequences, the elimination of medical fraud and abuse has become the top priority of the practitioners. Because the US government has started a crackdown against the healthcare practices that are deliberately involved in such malpractice.
For this purpose, government investigations have witnessed a surge from the past few years. And every physician is looking for innovative ways to keep their practice compliant. Because no one wants to be the next investigative target. Before shedding light on the main causes, penalties and ways to minimize the risk of billing malpractice, let’s take a look at some statistics.
According to a report published by the Department of Health Care Financing Administration (HCFA) Office of Inspector General (OIG). Approximately 30% of medical claims contain errors that lead to medical abuse, surprise medical bills and fraud. Due to which providers lose approximately $23.2 billion annually. However, according to the findings revealed by the federal authority most of the errors occurred due to insufficient or lack of medical documentation.
One-third of the documentation errors were caused by the providers’ failure to respond or produce the documentation, required by the auditors. For your convenience, I have compiled the statistics regarding types of errors that result in revenue loss and medical fraud.

Types Of Errors

Lack or failure to provide medical documentation 46.76%
Lack of medical necessity 36.78%
Medical coding errors 8.53%
Non converted/Unallowable service 5.26%
Other 2.67%
Total 100%

Types of healthcare practitioners involved in billing malpractice:

Inpatient (PPS) 22.59%
Physician 21.68%
Home health agency 15.74%
Outpatient 12.12%
Skilled nursing facility 10.45%
Laboratory 5.76%
Other 11.66%
Total 100%

According to another report (which can be easily accessed on the official website of the OIG). As of September 30, 2020, ARPO has charged 84 defendants. Which resulted in 31 guilty pleas and two trial convictions.
Moreover, in FY 2020, the HCF Unit’s crackdown against medical fraud and abuse resulted in:

  • 115 indictments.
  • 187 defendants were charged due to the allegedly collectively billed federal health care programs and private insurers approximately $3.8 billion.
  • 98 defendants secured imprisonment, with an average sentence of over 47

Potential Penalties for Common Medical Frauds

Type of Fraud Penalty
False Claims Imprisonment for up to five years and criminal fines worth up to $250,000
Corruption (kickbacks and bribery) Barred from future participation in Medicare programs
General Medicare fraud Imprisonment for up to 10 years & fines worth up to $250,000.
Additional penalties Substantial civil fines ranging from $11,000 to $50,000, depending on the nature of the misconduct

Causes of Billing Frauds

In order to save the medical practice from financial loss as well as compliance issues. Physicians should make sure that their billing systems are free from the following errors:

  • False or unnecessary issuance of prescription drugs.
  • Unnecessary medical surgeries or treatments for the maximum financial gain.
  • Accepting kickbacks or bribery for patient referrals.
  • Overutilization of medical services.
  • Incorrect reporting of diagnoses or procedures.
  • Upcoding: using medical codes for the expensive healthcare services than actually rendered.
  • Under-coding: using medical codes for the less expensive healthcare services than actually provided to the patients.
  • Waiving of deductibles and/or co-payments.
  • Misrepresenting locations of services, providers as well as dates of healthcare services provided.
  • Billing for a non-covered service as a covered service.
  • Billing for services not rendered.

How Can You Establish a Billing Compliance Plan?

After having an understanding of the above-mentioned statistics. It will be more clear for the physicians to keep their medical practice compliant with the rules and regulations established by the state/federal authorities. Are you looking to create a billing compliance plan and don’t know where to get started? Don’t worry! This article will help you to achieve your compliance goals. You can adopt the following strategies for building and implementing the compliance plan.

1. Establish a Code of Conduct

One can’t deny the fact that efficient management of physician billing services requires specific skills and expertise. So, in order to set the medical claims free from errors. It is crucial for the providers to hand over this responsibility to the highly trained staff. That has in-depth knowledge and extensive experience to manage medical claims in an efficient manner.
They must have a complete understanding of the federal rules and regulations, associated with medical billing and coding. Moreover, make sure that your billing and coding staff works diligently to avoid these high-risk areas identified by the OIG:

  • Billing for items or services not rendered or not provided as claimed.
  • Incorrect translation of patients’ diagnoses, treatments, medical equipment and procedures into standard alphanumeric medical codes.
  • Upcoding, under-coding, unbundling, incorrect modifiers and other errors.
  • Duplicate billing in order to collect maximum revenue.
  • Use of incorrect modifiers.
  • Insufficient documentation that supports medical necessity.
  • Submitting claims for equipment, medical supplies and services that weren’t necessary or never performed.

2. Written Policies and well-defined Procedures

It has been observed that the majority of healthcare practitioners don’t have the precisely written and well-defined procedures to manage the revenue cycle as well as the overall operations of a healthcare practice. You should clearly mention all the legal actions and penalties for the administrative staff. In case of violation of the rules, information leakage or other intentional misconduct.
Before handing them the responsibilities, make sure that the employees sign the legal documents or policy paper. In addition to this, physicians should establish well-defined processes to execute the following tasks:

Medical Documentation
As I have earlier mentioned, 46.76% of billing errors were due to the lack of medical documentation. Accurate and precise documentation is the most important way to save your healthcare practice from potential billing and coding errors. That results in revenue loss and billing fraud. As medical coders & billers take the information, required for preparing claims, from the health records, maintained by the registration staff.
So, in order to eliminate the errors from the very beginning. Practitioners should hire well-experienced registration staff to perform these duties. Keep a proper check and balance on them to make sure that they collect error-free information. Such as; patients’ demographics and insurance etc. One of the best solutions to enhance the efficiency of medical documentation is the utilization of cutting edge practice management solutions i.e. EHR systems.
It’s pertinent to mention here that, EHR systems help physicians to shift their health records from paper files to digital forms. By using such advanced solutions physicians can easily exchange healthcare information without the fear of theft or loss. In addition to ensuring the accuracy of the documentation. Practitioners should pay special attention to address the requirements of medical record documentation. For instance,

  • Which documents are required when coders perform the task of medical coding? The requirements may include laboratory results, prescriptions, X-ray reports, etc.
  • Do you have a standardized process to assess the adequacy and effectiveness of the medical records, that pave the way to accurate medical coding and claims preparation?

Healthcare providers should always keep in mind that accurate documentation is the key to ensure the compliance of their physician practice.

Coding Practices
The compliance and maximum profitability of medical facilities are highly dependent on error-free medical coding. However in order to ensure a high level of accuracy and specificity in your coding process. You should provide the coders with a complete course of action they should take when they assign diagnostic and procedural codes to a particular illness and injury.
Moreover, you can also take guidelines for developing a coding policy, from the official coding guidelines (set by the cooperating parties comprising AHIMA, the American Hospital Association, the National Center for Health Statistics, and HCFA). No doubt medical coding is a complicated task, which must be performed under the supervision of the AAPC certified medical coders having a complete understanding of the latest coding classifications such as HCPCS, ICD-10, CPT, etc.

Claims Scrubbing
Mistakes are bound to happen even in highly professional environments. The same is true for physician revenue cycle management. Therefore, before final submission, medical claims should be double-checked and scrubbed to detect as well as eliminate the potential errors. That can later result in claim denials, delayed/partial reimbursements or medical abuse, fraud. The benefits of claims scrubbing are included;

  • A high rate of clean medical claims.
  • Quick reimbursements.
  • Fewer claim denials and rejections.
  • Reduced risk of billing frauds.
  • Consistent cash flow.

3. Constant Education and Training

The healthcare industry is undergoing rapid evolutions in terms of payers policies, medical coding, billing guidelines, medical documentation and federal policies. So, make sure that your billing and coding staff undergo constant training to keep pace with the ever-changing industry.
Let’s make the concept of training more specific. To achieve better coding compliance. Your coding staff must have been properly trained and receive ongoing continuing education. In this way, they stay updated with the latest, deleted, or modified medical codes resulting in precise coding. You should make a proper training plan that includes;

  • What kind of training and education should be given to the staff on issues of relevance to their work processes?
  • For what time period the new employees will get training prior to assuming charge of job responsibilities?

4. Auditing and Monitoring

Regular medical auditing and monitoring of the health records to identify the effectiveness and accuracy are crucial for the success of a healthcare practice. Regardless of whether you choose external or internal medical audits. It’s crucial to evaluate the coding practices to make sure that: they are fully compliant with the rules and regulations issued by the concerned authorities.
In addition to medical coding. It’s also necessary to examine overall practice operations to identify the potential risks and implement appropriate solutions to eliminate all the red flags. Then prepare a comprehensive audit report to make wise business decisions.

Is Hiring a Physician Billing Company a Good Idea?

Due to the increasing care responsibilities and the adaption to the value-based care models. The trend of outsourcing physician billing and coding services to a trusted third party like PBC has become a new normal. Particularly in the United States. No doubt, outsourcing always comes with immense benefits. But there are some healthcare practitioners that are still confused that whether or not they should rely on the billing collection agencies when it comes to ensuring compliance?
However, according to the opinion of the industry experts. Successful collaboration with competent companies is the best solution for all the financial as well as compliance challenges. In this way, medical practitioners get access to a large talent pool. Comprising certified billers, coders, denial and accounts receivable managers. They have over decades of experience and are less prone to errors. Furthermore, outsourced billing and coding experts are legally bound to collect maximum revenue on your behalf. And save your healthcare practice from any type of misconduct.
For this purpose, they make sure that claims are being prepared and submitted with accurate patient’s demographic information, medical codes, valid insurance information, etc leaving no chance of denials and more importantly billing malpractice. Outsourced billing companies also assign a compliance officer to their clients  to ensure 100% compliance with the administrative workflow. Hence outsourcing will be the most sensible decision you’ll ever make.
Furthermore, the last information you want to have is, how do medical billing companies charge customers? Here’s a complete information on the topic.
Want the much-needed billing and coding assistance? Then Physician Billing Company is always here to help you in overcoming all your financial challenges. It’s a HIPAA compliant RCM company in the United States that is capable of saving your healthcare business from further losses.


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