Medical Coding and Billing: How to Avoid Accusations of Fraudulent Billing
When you are executing the bill-collector part of your medical billing job, avoiding the appearance of fraud will forestall any accusations for any reviewing authority.
When balances are forgiven, note the account and, if the patient tries to return, collect all outstanding debts and copays prior to another encounter. Keep in mind, however, that the only condition under which the provider can’t collect an outstanding debt from a patient is if the provider has sent the patient an IRS form 1099 to patients whose debts were forgiven.
This form is used to report income on which taxes were not collected. (The 1099 obligates the patient to report the non-paid debt as income, because he or she received something of value and didn’t pay for it.)
Providers who routinely forgive patient debt run the risk of prosecution under anti-kickback statutes and possibly the False Claims Act. The reasoning is that, by not collecting co-insurance amounts from patients, providers are billing Medicare for excessive charges.
Say Medicare pays $80 of a $100 bill, with the expectation that the patient will pay the remaining $20. By not going after the $20 patient contribution, the provider is essentially saying that he really only expected to receive $80, not the $100 he actually billed. And if he was expecting only $80 for the service, he shouldn’t have billed $100.
To avoid accusations of fraudulent billing, do the following:
Consistently apply the office hardship policy to all patients.
Keep proof of financial hardship, which should consist of an application for financial assistance that documents the patient’s financial stability. Also document all attempts to collect patient debts.
Verify the wording in payer contracts with regard to patient balances.
Bottom line: You can forgive patients — but not too much!