Combating Penalties for Noncompliance With Reimbursement Practices

Fraudulent billing practices, in which a provider knowingly submits a claim for reimbursement for services that were not actually rendered, might constitute a violation of the federal False Claims Act. To avoid running afoul of potential civil or criminal liability, organizations must ensure that Medicare claim reporting is accurate. 

Whether a business is facing civil penalties or monetary losses, each penalty can have a domino effect on adverse events for the business. With such a wide range of potential noncompliance incidents, more compliance officers are exploring ways to combat these penalties so they can respond proactively instead of reactively.

Inaccurate, “unknowing” claim reporting, resulting from missing or inaccurate data, can have a less severe, but very real, consequence: the denial of a claim. A healthcare organization that is denied reimbursement for services rendered suffers financial loss as surely as one that is financially penalized.

With claim denials on the rise, and with current federal government emphasis on general tamping down of fraud, waste, and abuse, it is important to understand and follow proper reimbursement practices. This article discusses practices that might result in claim denial or that might subject an organization to liability, and what a healthcare organization might do to avoid these consequences. 

Reimbursement Practices to Avoid

Claims denials are on the rise, impacting the ability to collect revenue and sustain operations.  Some denials result from noncompliance with federal fraud, waste, and abuse laws. Such noncompliance can result in non compliance fines. 

Cases of Upcoding

Upcoding is a practice that involves billing for more expensive services or procedures than what was actually performed for the patient. Upcoding can constitute a violation of the federal False Claims Act. The False Claims Act prohibits the knowing submission of a false or fraudulent claim to the federal government. Upcoding violations can result in civil or criminal penalties, as well as loss of licensure.

Using compliance software can prevent upcoding. Software can automatically flag potential coding errors through use of automated auditing tools. What do these tools look for in billing data? Items such as duplicated or partially duplicated invoices, irregular payment patterns, or activity that appears to deviate from an organization’s standard billing methods. Software can be used to perform reconciliation between an organization’s billing records and its financial records. If the records cannot be reconciled, there may be a potential upcoding issue.

Using compliance software with a proper billing practice training feature can ensure that mistakes, deliberate or otherwise, are not repeated.  

Unbundling Services

Unbundling refers to incidents in which a provider bills for individual components of a service that should have been billed as a single package, or bundleUnbundling can constitute a violation of the federal False Claims Act, and can subject a healthcare organization to criminal and civil penalties, including noncompliance fines of $25,000. Again, use of compliance software compliance tools that analyze billing practices and that provides training, can ensure the soundness of an organization’s billing practices. 

Failing to Verify Insurance Eligibility

Billing for services provided to patients who aren’t eligible under their insurance is another common improper billing practice. This kind of activity may constitute insurance fraud, if an individual knows a claim is false, or acts with reckless disregard as to whether the claim is accurate. Even if the billing was the result of inadvertence, a claim will still be denied. Repeated claims denials as a result of billing insurance for patients ineligible for service coverage impacts an organization’s bottom line. Compliance software that can flag instances of potential billing for services a patient is ineligible for, can be used to reduce incidents of this practice.

What These Practices Cause

The most significant consequence of noncompliance with reimbursement practices is the associated financial penalties. Organizations may be subject to noncompliance fines that can be difficult to recover from both financially and in terms of reputation. Additionally, engaging in improper reimbursement practices can lead to a variety of other serious consequences for healthcare businesses, including exclusion from federal programs and criminal charges.

Being barred from receiving federal funding from Medicare or Medicaid can severely impact revenue both in the present and future for any company, regardless of size. In extreme cases, incidents of fraud within your reimbursement practices can lead to criminal prosecution and imprisonment.

Continuously avoiding these practices can prevent unwanted legal practices and enhance an organization’s reputation for integrity.

Prioritizing Penalty Prevention With Compliance Software

The penalties for noncompliance with reimbursement practices range from noncompliance fines to exclusion from participation in federal programs and even criminal charges, all of which can be prevented if proper billing techniques and practices are observed.

Using compliance software that analyzes and flags billing data for irregularities, suspicious patterns, and that identifies when a claim ineligible for reimbursement is made, can ensure integrity in billing. Integrity in billing can keep an organization on the right side of the False Claims Act, as well, ensuring that when required exclusion checks are run against workforce members, the checks will be less likely to turn up unwanted results.

Using software with an exclusion monitoring list feature, and that provides federal fraud, waste, and abuse laws training, can also minimize incidents of improper billing. Running exclusion list checks on potential hires may reveal such hires have committed improper billing practices in the past. Once a check reveals such activity, an organization will know to not hire such a person, and, in effect, hire the liability that the person represents. Running exclusion list checks of current hires ensures that you are alerted to incidents of billing misconduct within your own workforce, enabling you to take appropriate personnel actions.

Training your workforce on federal fraud, waste and abuse laws, including the federal False Claims Act, is as valuable as any software audit; once employees understand what billing activities are prohibited, these employees will understand why having such auditing software is of use in the first place. 

Get in touch with a compliance professional today to start streamlining your approach to healthcare compliance.