The new problem of our time: Billing errors
Government agencies and private insurance payers are stepping up their efforts to recover for billing errors. If you are notified you that you are subject to an investigation due to billings errors, what coverage do you have? Ten years ago the answer is probably none. Now Billings E & O coverage is available and will protect your practice against billing errors even if there is no fraud involved or detected. Billings E & O insurance provides coverage for defense of the claims as well as payments of fines and penalties assessed for the errors. The allegations can be brought by Government agency’s thru the False Claims Act (FCA) for Medicare or Medicaid billing errors as well as private insurance carriers or by qui tam plaintiff (whistleblower). The penalties are quite steep, being treble damages, plus $10,781 - $21,563 per claim penalty. That is per claim, not per resident/patient and can really add up quickly. Defense costs alone are costing on average $80,000 just to defend these suits.
It is just not the Government that is going after billings errors its outside contractors thru the Recovery Audit Contractors (RAC) program. These RAC auditors are incentivized to uncover overbillings. Their compensation on average is 10% of the overbillings. These contractors are given access to billing data and constantly monitor and audit the billings looking for red flags or potential false claims. Thru these Government programs and qui tam plaintiff lawsuits the US Government recovered $2.5 and $2.4 Billion in 2016 and 2017 respectively in settlements. The percentage of settlements due to the government initiated and other non-qui-tam suits increased and Attorney General Jeff Sessions has pledged to make investigating False Claims Act violations a priority for the DOJ.
It is just not the Government that is going after billings errors its outside contractors thru the Recovery Audit Contractors (RAC) program. These RAC auditors are incentivized to uncover overbillings. Their compensation on average is 10% of the overbillings. These contractors are given access to billing data and constantly monitor and audit the billings looking for red flags or potential false claims. Thru these Government programs and qui tam plaintiff lawsuits the US Government recovered $2.5 and $2.4 Billion in 2016 and 2017 respectively in settlements. The percentage of settlements due to the government initiated and other non-qui-tam suits increased and Attorney General Jeff Sessions has pledged to make investigating False Claims Act violations a priority for the DOJ.
How do you protect your practice?
The most effective means is by having a strict compliance program with regards to billings (including admissions and care provided as coded) and maintaining thorough and meticulous records supporting every aspect of billing. Regular internal audits and periodic third party audits of billing practices can help discover any issues for immediate correction. In addition, you can purchase affordable Billings E & O coverage. This cover will pay for defense costs (including shadow audits), and pay fines and penalties attributed to the allegations. Limits range from $1M to $10M, with deductibles from $2.5K to $25K. Premiums start at $2.5K.
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