Billing processes for health care providers can be complicated and require they follow strict billing rules, including following the necessary guidelines to file medical insurance claims. Incorrect medical billing is a serious ethical violation with fines and penalties being assessed. The most common reasons for errors are due to the inputting of incorrect codes, performing medically unnecessary treatments, and having no or insufficient documentation. Each year, there is an estimated $55 billion in overpayment improperly billed to government programs. The average cost of defending against a regulatory procedure is $80,000, with fines and penalties potentially reaching hundreds of thousands of dollars.
Over the last 10 years, the government has been proactive about recouping monies lost due to billing errors through its Recovery Audit Contractors (RAC) program. Each region has a designated RAC, with an incentive to receive between 9% and 12.5% for overbillings they discover. The RAC reviews claims on a post-payment basis and limits review to claims that were paid within the past three years. There are three types of review processes: automated—no medical record needed; semi-automated—claims review using data and potential human review of a medical record or other documentation; and complex—medical record required. Home health agencies, hospitals, physician practices, nursing homes and durable medical suppliers are among the providers subject to RAC audits.
To address this exposure, Billing Errors & Omissions (E&O) insurance is available, providing health care providers with coverage for the defense of alleged billing errors and the fines and penalties assessed because of the errors. Allegations may be brought by government agencies that include the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services. Commercial payers can also file a fraudulent billing complaint.
Helping Insureds Preventing Billing Mistakes
In addition to providing coverage to respond in the event of alleged billing errors, following are steps to share with your insureds to help protect them from making these mistakes in the first place:
- Carefully note the treatment provided. Always get a patient’s consent before you provide treatment. Inform them if they might expect billing because of this treatment.
- Teach the staff proper billing practices. They should know how to properly document treatment and file insurance claims. This ensures proper billing.
- Keep a log of financial transactions. Use the log to monitor the processing of financial statements. It might even help the client investigate claims and pinpoint errors.
- Follow all billing accountability laws. Always respect a patient’s financial and medical privacy.
- Use trusted and verified medical accountants to process billing statements.
Manchester Specialty Programs specializes in providing home health care providers with a total insurance solution. For information about how we can help you protect your insureds, please contact us at 855.972.9399.