Does the Billing Company Have a Compliance Plan?

One of the most important components of doing your due diligence in hiring a billing company is to ensure that they have an active compliance plan. In fact, having a compliance plan should be a hiring requirement. Having a compliance plan is imperative and, at the least, shows the billing company’s commitment to follow all federal and state rules. The Office of Inspector General (OIG) has reiterated that physicians remain responsible to the Medicare program for bills sent in the physician’s name or containing the physician’s signature, even if the physician had no actual knowledge of any billing impropriety. In addition, OIG has a long-standing concern that arrangements between a billing company and providers based on a percentage of collections may increase the risk of intentional upcoding and similar abuse of practices. Although, these agreements are not outlawed, OIG is keeping a watchful eye on any irregular billing patterns. In the meantime, the OIG stated that, to the extent a billing company contracts on a percentage basis, the billing service must not receive Medicare payments on behalf of the physician into a bank account that it solely controls. A billing agent cannot bill claims under its own name or tax identification number, nor could a billing service have the Medicare payments sent directly into a bank account over which the billing service maintains sole control. Rather, the billing company must bill claims under the physician’s name and tax identification number, and the payments should instead be deposited into a bank account over which the physician has control. In order to ensure compliance with the law, the Centers for Medicare and Medicaid Services (CMS) has instructed carriers to obtain documentation concerning the billing arrangement where there is evidence that the rules are not being followed. OIG recommends that billing companies have a fraud and abuse compliance plan in place. On November 30, 1998, OIG released its guidelines to help third-party medical billing companies detect and fight Medicare and Medicaid fraud and abuse. In the OIG’s guide, it recommends a bilateral reporting system. Thus, if a billing company discovers credible evidence of misconduct of its client’s activities, the OIG recommends the billing company report such conduct immediately to the appropriate government authorities. In such cases, the billing company should refrain from submission of questionable claims and notify the provider in writing within thirty (30) days of such determination. Where the misconduct is continued or fraudulent, the billing company is advised to:

  • Refrain from submitting any false or inappropriate claims;
  • Terminate the contract; and/or
  • Report the misconduct to the appropriate federal and state authorities within a reasonable time, but no more than sixty (60) days after determining there is credible evidence of a violation.
  • The OIG does not believe that misconduct includes “inadvertent errors or mistakes.” “Continued misconduct” includes “patterns of misconduct, particularly with respect to conduct that previously had been identified by the billing company or carrier as suspect.” The OIG guidance directs billing companies to focus on the following seventeen (17) risk areas, both in their own and their clients’ operations:

  • Billing for items or services not actually documented;
  • Unbundling;
  • Upcoding, such as for example, billing for a higher level of visit code when a lower level has been done;
  • Inappropriate balance billing;
  • Inadequate resolution of overpayments;
  • Lack of integrity in computer systems;
  • Computer software programs that encourage billing personnel to enter data in the fields indicating services were rendered that were not actually performed or documented;
  • Failure to maintain the confidentiality of information/records;
  • Knowing misuse of provider identification numbers, which result in improper billings;
  • Outpatient services rendered in connection with inpatient stays;
  • Duplicate billing in an attempt to gain duplicate payment;
  • Billing for discharge in lieu of transfer;
  • Failure to properly use modifiers;
  • Billing company incentives that violate the anti-kickback statute or other similar federal or state statute or regulation;
  • Joint ventures;
  • Routine waiver of copayments and billing third-party insurance only; and
  • Discounts and professional courtesy.
  • The Compliance Program Guidance for Third-Party Medical Billing Companies is posted on the OIG’s website. (Access at Overall, you should select a billing company that complements your needs and matches your practice culture. In addition, you should see significant savings in money and time. Furthermore, you should have enough assurance that you are dealing with an ethical and reliable company. A good match will ensure your business success, however, a bad choice will have a drastic negative outcome.

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