Understanding Medical and Health Care Billing Compliance

As a patient, one of the most challenging parts of receiving medical care can be the cost and billing afterward. But as a professional who works in the health care system, it can sometimes be just as challenging to make sure those claim submissions are accurate and timely. The vast majority of providers work ethically and submit appropriate claims for payment, but unfortunately, mistakes can happen that create unnecessary charges for patients and potential liability for organizations and for providers. Thus, organizations must always be aware of the potential for fraudulent claims and take steps to prevent them.

It is estimated that fraudulent billing costs more than $100 billion annually and accounts for 3% to 10% of total health spending.¹ To combat this, medical providers, government agencies, and billing companies must bring a renewed focus to health care claims and billing compliance.

What is Health Care Billing Compliance?

Compliance is the act of conforming or adhering to rules.² Thus, health care billing compliance is the practice of ensuring that all claims, billing, and coding of health care and physician services are accurate and in line with regulatory requirements.³

The United States Sentencing Commission first endorsed the importance of compliance programs and, in 1991, developed the seven elements of compliance. These elements are the foundation of todays’ healthcare compliance programs. The Health and Human Services Office of Inspector General (OIG) uses these elements in providing specific guidance for hospitals and other healthcare organizations. All such guidance is available on the OIG website.⁴

According to the OIG, the seven fundamental elements of an effective compliance program are:⁵

• Implementing written policies, procedures, and standards of conduct
• Designating a Compliance Officer for compliance leadership and oversight
• Conducting effective training and education
• Developing effective lines of communication—with the Compliance Officer and the Disclosure Program/Hotline
• Risk assessment, auditing, and monitoring
• Enforcing standards through well-publicized consequences and incentives
• Responding promptly to detected offenses and developing corrective action initiatives

Many laws and regulations mandate health care billing compliance, such as:³

• Federal laws (e.g., the Medicare claims rules, False Claims Act, Physician Self-Referral Law, Anti-Kickback Statute, Affordable Care Act (ACA), and the No Surprises Act)
• State laws (e.g.,Illinois’ Fair Patient Billing Act, Medicaid claims rules)
• Health insurance policies, which have specific requirements for billing and coding, and often follow Medicare rules

Key Laws & Regulations

As mentioned above, there are several laws and regulations for billing/ claims submission in health care. Here are two prominent pieces of legislation that play a significant role in health care billing and claims.

The False Claims Act

A person who knowingly submits false or fraudulent claims to federal health care programs violates the False Claims Act (the FCA). The FCA violation can be either civil or criminal. For a civil violation, no proof of specific intent to defraud is required. Rather, the act includes situations where the submitter acts in deliberate ignorance or reckless disregard of the truth or falsity of the information. This means organizations can be liable if they ignore problems in their claims.

Violations of the FCA result in liability of up to three times the original claim, plus a penalty for each false claim filed.

The Anti-Kickback Statute

Simply put, it is a criminal offense under the federal Anti-Kickback Statute (the AKS) to knowingly offer, pay, solicit, or receive any remuneration to induce or reward a referral for any service under a federal health care program. Remuneration can mean anything of value, including money, benefits, etc. This law prohibits practices such as offering or receiving gifts for referrals that are common in other business sectors. If a provider intentionally pays something of value to obtain a referral for a patient, then they violate the AKS and in addition, the claims they submit for that patient violate the False Claims Act (FCA). The provider may face both FCA liability and criminal penalties for the AKS violation.

New Developments: The No Surprises Act

The No Surprises Act is a federal law that went into effect in January 2022. This act protects patients from unexpected out-of-network medical bills.⁶ The goal of this act is to “help stop providers from gaming the system by evading the surprise billing rules with creative contractual loopholes that still leave consumers with unexpected costs.”⁷

If patients are not using health insurance (either because they do not have it, or their insurance does not cover the treatment) they may request an estimate which must be provided three days in advance of the treatment. Providers are obligated to give these patients a good faith estimate of what their care will cost. Patients can dispute their bill if it is at least $400 more than the estimate.⁸

Patients who are using health insurance are protected from out-of-network surprise bills for:⁸

• Emergency room visits
• Non-emergency care in an in-network hospital, hospital outpatient department, or ambulatory surgical center
• Air ambulance services

The No Surprises Act also requires providers and facilities to give patients easy-to-understand notices that explain the applicable billing protections and who to contact if they have concerns.

The Importance of Billing Compliance

Compliance in health care billing, including staying vigilant about how and why people are billed, will:

• Protect patients from being overcharged, or charged for something in error
• Streamline the patient experience
• Prevent fraud, waste, and abuse in the system
• Make sure medical providers are paid fairly, accurately, and on time, which in turn helps keep them profitable
• Maintain the integrity of the healthcare system and medical organizations’ reputations
• Protect organizations from liability for fraudulent billing

Above all, compliant medical billing, claims, and coding ensures the integrity of the health care system.

Common Challenges in Health Care Billing Compliance

Medical bills and claims can be complex, and there are hundreds of thousands issued every year. Thus, it’s no surprise that there are errors and challenges that occur—whether they’re intentional or not.⁹

• Coding errors: inaccurate or inconsistent billing codes and out of date information
• Upcoding: when patients are billed for a more expensive service than what was actually provided
• Undercoding: when providers intentionally leave out codes for services provided
• Duplicate billing: billing more than one time for the exact same service or claim
• Unbundling: when providers submit separate claims for services that should be submitted as one overall service
• Fraudulent activities: When someone knowingly or recklessly submits a claim to Medicare or other payers to receive a payment they should not, or to receive a higher payment than they should, or does not return an overpayment when it is discovered

How to Ensure Compliance

Staying compliant in your health care organization is crucial for both you and your patients’ health. It is important to understand the reasons behind the rules, learn how to implement compliance best practices to limit potential liability, identify ethical practices, and understand billing challenges.

Follow these best practices to avoid billing and coding issues.

1. Establish effective policies, procedures, and practices that are auditable and that include disciplinary measures for non-compliance/incentives for compliance.

It is fundamental that an organization anticipate issues and create a structure that allows health care billing and claims to remain compliant through a clear understanding of requirements.

2. Maintain a hotline or other system to allow people to anonymously report issues and investigate all reports.

The OIG highly recommends that every organization maintain an anonymous reporting system so that employees and patients can alert you if there is a problem.

3. Thoroughly train staff.

From day one, make sure your employees know the health care billing compliance rules of your organization, as well as the federal and state laws that affect your business. Provide regular check-in trainings and communicate all new changes and why they are necessary.³

4. Ensure your organization has a compliance officer.

Understanding all the ins and outs of health care compliance is difficult. Luckily, there are trained professionals who know how to interpret, develop, and maintain processes, policies, and procedures that promote legal and ethical business practices.

5. Monitor claims and billing routinely, and perform regular audits and contract reviews.

Stay accountable by consistently auditing and monitoring your organization’s statements and practices. You can have someone work internally to do this or hire an independent third party that specializes in health care billing compliance.³ Implement corrective actions when needed.

Health Care Compliance Graduate Certificate

The HCC Certificate program teaches you the relevant law and practical applications of compliance. Gain knowledge of best practices through exploration of current issues, and learn from Pitt Law’s expert faculty, including professors at the School of Law, current and former federal regulators, and compliance-industry experts. For those interested in a more comprehensive legal education, consider a Master of Studies in Law.

Be the Expert in Health Care Billing Compliance

University of Pittsburgh School of Law’s online programs make it easy to learn while you’re working, so you fit classes into your schedule, not the other way around. Our Master of Studies in Law with a Health Care Compliance specialization is designed for professionals seeking to enhance their careers with a versatile alternative to the traditional three-year JD.

Schedule a call with an admissions outreach advisor to learn more.