Warning on Codes for Billing Insurance Companies

Over the last few years I have represented numerous clients, physicians, dentists, dieticians, etc, in claims brought against them by health insurers on numerous grounds.  Many of the claims are that the procedures billed were unnecessary, that the incorrect billing code was used, that too many procedures were done, that the person doing the billing was not permitted to use the codes that were submitted, that the records of the health care provided do not reflect a viable reason for the procedure, that the billing was done in the name of someone other than the person who rendered the care, etc.

The situation usually starts when the insurance company asks the provider to turn over a sample of patient medical records for an audit.  This may be fifteen or twenty or more patient records.  The company then has its “experts” go over the records and the bills and then a report is issued.  Invariably, the audit shows that the medical provider has incorrectly billed for services in some way and a percentage of error is put on the sample.  So, for example, if the audit finds a 30% error rate, the insurance company then totals the billings by the provider for the last two, three, four or more years and takes the position that the error rate on the sample applies to all of the billings. Therefore, if the provider billed $400,000 to this insurance company over the past years, the company will send a letter to the provider and politely state that a check for $120,000 should be sent to the company by return mail.

What now, you might ask.  Well, you can write the check and that will put an end to the problem.  But, you might wonder why the insurance company did not tell you years ago that you were doing something wrong.  Maybe you were using one particular code for a procedure that pays $200.00 and the company says you should have been using a different code that pays $150.00.  Had the company contacted you in the past you could have argued with them to convince them that your coding was correct, or you could have decided simply to bill the new code and accept less money.  But the companies do not contact you early.  They take the position that you are responsible for submitting correct billing and if it takes them four years to catch up to you, that is your problem.

So, now you are looking at a very large demand for money and you are not enjoying the situation at all.  At this point you should have contacted a lawyer as this is now a significant legal problem and calling the insurance company yourself is really a fruitless endeavor.  Your lawyer should discuss, amongst other things, the following with you:

1.  You need to retain your own billing expert to review the conclusions of the company’s audit—you might be surprised how often the company’s audit is completely flawed;

2.  You need to determine your situation if you are in a contract with the insurer as opposed to being an out of network provider;

3.  If you have a contract, you will find that it has an arbitration clause and it will permit the winning side to have its legal fees paid by the loser;

4.  Has your billing been done by a billing company and if so, can you contact them to deal with part of this problem and perhaps pay for part of any payment;

5.  Will the insurance company report you to the Office of Professional Medical Conduct or the Office of Professional Discipline on the ground that you have been engaged in fraudulent billing–this can bring the revocation of your license into play;

6.  Can you negotiate a reasonable settlement and move on.

I have found that in almost all of the cases I have seen, the insurance company has made major mistakes in how it approaches this issue.  I had a case in which the physician never signed the separate arbitration agreement and this meant that the company would have to bring a lawsuit in state court and have the issue decided by a jury.  In another matter, the client and I proved that all of the billing was exactly correct and zero money had to be paid. In another, we showed that the health care provider had been told by an employee of the insurer, years ago, which billing code to use and that the company could not now complain.

The stakes are considerable raised when the health care provider is reported as having been billing in a fraudulent manner.  This is a very dangerous situation as the provider’s license and livelihood are at serious risk.  No one wants to be in this position, so you want to handle this insurance issue before it becomes an issue with loss of license implications.

I currently am dealing with several of these matters at various stages.  I can assure you that they must be dealt with carefully as they have the potential to become much more dangerous than just the loss of money.  On the other hand, you can defend yourself and make the matter either go away without any payment or have it resolved with a small settlement.  Sometimes the payment can be stretched out over a period of years to make it more digestible.

The takeaway of this article is that you must be aware of this issue and do what you can to be certain that you are billing in accordance with the rules of the insurance companies.  But, even if you do play by the rules, the companies can still come after you to get back as much money as they can.  You then must be prepared to fight the matter with the tools available.