Risk Assessment of Medical Practice Billing Companies

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Office of Inspector General


[By Pati Trites MPA, CHBC with Staff Reporters]

The Office of Inspector General [OIG] believes a medical billing company’s written policies and procedures, its educational program and its audit and investigation plans should take into consideration the particular statutes, rules and program instructions that apply to each function or department of the billing company.

Co-ordination Needed

Consequently, coordination between these functions is needed, with an emphasis on areas of special concern that have been identified by the OIG through its investigative and audit functions.

Furthermore, the OIG recommends that billing companies conduct a comprehensive self-administered risk analysis or contract for an independent risk analysis by experienced health care consulting professionals. This risk analysis should identify and rank the various compliance and business risks the company may experience in its daily operations.

Risk Analysis

Once completed, the risk analysis should serve as the basis for the written policies the billing company should develop. The OIG provides the following specific list of particular risk areas that should be addressed by billing companies. It should be noted that this list is not all-encompassing and the risk analysis completed as a result of the company’s audit may provide a more individualized roadmap. Nonetheless, this list is a compilation of several years of OIG audits, investigations and evaluations and should provide a solid starting point for a company’s initial effort.

Problem List

Among the risk areas the OIG has identified as particularly problematic are:

  • Billing for items or services not actually documented;
  • Unbundling;
  • Upcoding, such as, for example, “DRG creep;
  • Inappropriate balance billing;
  • Inadequate resolution of overpayments;
  • Lack of integrity in computer systems;
  • Computer software programs that encourage billing personnel to enter data in fields indicating services were rendered though not actually performed or documented;
  • Failure to maintain the confidentiality of information/records;
  • Knowing misuse of provider identification numbers, which results in improper billing;
  • 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.

Additional Risk Areas

The physician-executive should understand that a billing company’s prior history of noncompliance with applicable statutes, regulations and Federal health care program requirements may indicate additional types of risk areas where the billing company may be vulnerable and may require necessary policy measures to prevent avoidable recurrence.

Additional risk areas should be assessed by billing companies as well as incorporated into the written policies and procedures and training elements developed as part of their compliance programs.


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Billing companies that do not code bills should implement policies that require notification to the provider who is coding to implement and follow compliance safeguards with respect to documentation of services rendered.

Moreover, the OIG recommends that billing companies who do not code for their provider clients incorporate in their contractual agreements the provider’s acknowledgment and agreement to address the above coding compliance safeguards.


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