The Consequences of Medical Billing And Coding Fraud

Medical billing and coding fraud costs the medical providers as well as the taxpayers millions of U.S. dollars annually. Eliminating abuse and fraud could mean the opposite; the patient receiving good care and services. Medical billing service can help in reducing billing & coding fraud to a great extent.

The medical billing and coding fraud is commonplace in almost every area of the health care sector within the country. The stories that normally make the headlines are unfortunately a tip of an iceberg. The medical coding assigns alphanumerical and numerical codes to patient’s diagnoses as well as procedures taken for reimbursement purpose. So submitting incorrect billing or coding information is by law considered fraud and is punishable by fines. Abuse and fraud are used interchangeably by a lot of people. The distinction between them is intent. Abuse normally occurs unknowingly and with no malice while fraud is done knowing that it is wrong. Assigning the incorrect codes for any diagnosis or procedures is by law considered fraudulent since it is a misrepresentation of the patient services.

Downcoding and Upcoding are the two major forms of billing fraud. Downcoding assigns a lesser fee and inaccurately reporting a lesser diagnosis, this often shows involvement of the fraudulent patient. Upcoding assigns the diagnosis that warrants a high reimbursement than necessary or medically necessary. In a lot of cases, the more the complications experience of the patient, the higher the reimbursement. Upcoding is as simple as choosing codes to create a complication that did not exist. In some cases, there is one code for numerous procedures. For instance, one code of operation may include the operation, incision and insertion of the tube. The third billing separate code for the procedure covered by that code is considered a fraudulent Unbundling. Submitting a solitary billing code numerous times when the actual procedure was only performed once is a fraud. Using the bundled code when only one procedure was done is also fraudulent.

Medical billers are very proactive in preventing such fraud by creating a standardized checklist to be followed whenever the claim is submitted. It is a good ruling to have one staff submitting claims while the other is posting payments, credits and adjustments. The Inspector General’s Office in the Department of Health and Human Services (DHHS) has a fraud and abuse division that focuses on these issues within the medical settings. The office offers compliance proposals to the health care sector and industry to avoid fraud and promote self-assessment. Under the government’s 1986 FCA (False Claims Act), those charged with the fraud are assessed fines of between $5,500 and $11,000 per claim.

In 1996, the CMMS (Centers for Medicare and Medicaid Services) started the NCCI (National Correct Coding Initiative). They had two intentions; to come up with national codes for the physicians which were standard so that when they relocate they wouldn’t need to reapply for the new provider numbers while the second one was to promote accurate coding initiatives for all the providers accused of fraud. Though the standards are mainly for the state and federal programs, they are being used by insurance carriers too.


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