How to Avoid Illegal Medical Billing Practices

Each year, poor billing practices result in over 80 billion dollars of preventable provider treatment claims.

The Centers for Medicare & Medicaid Services (CMS), The American Medical Association (AMA), Human Health Services (HHS), and Special Investigations Units (SIU) actively review physician bills to look for patterns or discrepancies which suggest fraudulent or abusive practice.

Providers who practice erroneous billing jeopardize the integrity of their work. More importantly, improperly ordered services equal unwanted patient fees which are not always covered by benefits and copays.

Sometimes, however, improper billing is not performed intentionally. Situations like these create confusion, frustration, and may compromise a physician’s reputation. Providers are denied reimbursement for either of the following reasons:

• Fraudulent Billing Practice
• Abusive Billing Practice

There’s a distinct difference between “fraud” and “abuse” as it pertains to billing for healthcare services:

Types of Fraudulent Billing

Fraudulent billing indicates a deliberate attempt to falsely claim the frequency and/or complexity of treatment given to patients. Most cases of billing fraud are from services which are determined to be insufficient, excessive, or non-existent. An intent to deceive funding agencies needs to be established before a provider can be charged with fraud.

• Average Operating Time - on some occasions, billing for “average operating time” of a particular procedure may exceed the actual duration of the procedure, consequently increasing payment claims
• Cloning - copying symptoms and treatment from a patient’s file and pasting to another patient’s file to fabricate delivery of service to both
• Inflation - billing for tools with a larger price tag than the industry average, i.e. ordering plaster for casts for $2000, when the average cost per billing cycle is $500
• Length of Stay - in emergency or inpatient settings, providers might exaggerate the patient’s length of stay within a particular facility in an attempt to gouge the patient; providers can also overstate the type of room to receive a larger claim
• Phantom - billing for services that were not actually performed, which is one of the strongest forms of evidence conveying intention to deceive
• Redundancy - providing unnecessary care to generate a larger claim
• Repeat - billing two or more times for a service when it was actually only provided on one occasion
• Self-Referral - physicians who recommend themselves or members of their own practice to garner personal reimbursement
• Unbundling or Fragmentation - charging for services individually when HCPCS codes exist where they are bundled together, i.e. filing for an injection AND the substance being injected
• Upcoding - ordering more advanced or expensive services than what is absolutely necessary i.e. billing for a broken wrist when the patient only had a sprain or fracture

Types of Abusive Billing

Billing abuse differs from fraudulent billing in that “abuse” defines a general lack of knowledge of proper billing protocol and/or CPT code listings. Abuse is usually not deliberate, which means it is consequenced less severely than cases determined to be fraud.

• Cancellation - receiving reimbursement for a service that was not performed as a result of a cancellation or appointment rescheduling
• Keystroke - entering the incorrect CPT code for a particular service, likely because of outdated memory of the billing system or the deliberate will to coax more money from funding agencies
• Standard - when a provider bills for a service that is not delivered to an ethical medical standard, i.e. preventative patient education is withheld or sanitation is not honored during a procedure
• Value - claims placed for treatment which was delivered poorly or unnecessarily, leading to the worsening of a patient’s health, i.e. ordering heart surgery for a patient who could simply use high blood pressure pills

Regulatory bodies like The Centers for Medicare & Medicaid Services (CMS) and The American Medical Association (AMA) protect patients by auditing billing claims from physicians. When a pattern of fraudulent billing is discovered, healthcare providers are denied reimbursement.

The question then becomes, does onus belong to the provider, their educating institution, the regulatory bodies who mandate these rules, or the patient?

Individualized patient care can actually help prevent fraudulent and abusive billing practices. When each patient is handled on a per human basis, it is possible for providers to order unique services and resources without having to upcode.

What Happens if a Physician is Caught Being Fraudulent?

If the CMS or AMA discover a pattern of fraud with a provider, the benefit of the doubt is usually provided. It is possible for patients or other providers to report a physician for fraudulent and abusive billing practices by simply phoning The National Healthcare Anti-Fraud Association (NHCAA). Each state has a body of people who regulate the proper reimbursement of claims and services to providers. For a full list of state anti-fraud protectors, visit NHCAA.

Screening for provider fraudulence is proven to be an effective way to catch providers who are “shady”. Billions of dollars are recompensed annually as a result of insurance auditing; however, the “pay and chase” strategy typically used is ultimately ineffective and needs to be revised or reinvented.

How Does Fraudulent Billing Affect the Patient?

Physicians who do not bill properly end up performing a disservice to their patients. Especially in cases of upcoding and phantom billing, patients are forced to pay higher insurance premiums which may affect the totality of their coverage.

A patient who is already suffering from a difficult medical condition does not want to deal with the added stress of having to pay more money than what is absolutely necessary for their coverage. All this does is exacerbate their health condition by adding to their financial strain.

Worst of all, some providers will risk their patients lives in order to perform unnecessary albeit elaborate serious surgical procedures for a fat reimbursement check. An example of this would be ordering heart surgery on a patient with high blood pressure, when the problem can be alleviated, or at least treated with the proper medication and diet and exercise regimen.

How Do I Avoid Illegal Billing Practices?

There is an easy solution to the healthcare fraudulence problem which has truly taken the industry by the collar.

The types of providers who are most inclined towards fraudulent billing are not usually general practitioners; in fact, most of them specialize in different fields. Surgeons, internists, and toxicologists to name a few are frequently scrutinized.

Healthcare fraud is prevalent in toxicology since labs want and need to accommodate heavy volume. Toxicology professionals must take care not to order unnecessary qualitative testing, i.e. a confirmation test on an instant drug immunoassay which yielded a negative result and therefore does not require further analysis.

Behavioral health applies to all areas of healthcare. Providers are trained rigorously so they will behave ethically when they have the power to heal and protect the public.

If providers want to deliver top-notch care to their patients, they should first ensure their billing practices are on-point. Here's where a Behavioral Healthcare Consultant comes in handy.