7 Common Unethical Medical Billing Practices

Having worked with several professionals for many years, we have noticed some of the most common unethical medical billing practices that health care providers tend to make. 

Whether it is intentional or not, these unethical medical billing practices have plagued the system and made both patients’ life and medical providers’ jobs a lot difficult. 

Just like in any industry, mistakes are bound to happen and a handful of crooked professionals would try to manipulate the system. The patient and healthcare providers are both likely to suffer under these schemes. 

For one, patients might have to pay for a costly medical service while healthcare providers might have to face criminal charges and go to prison.

So to avoid these costly fees and lengthy litigation, we have listed some of the most common unethical billing practices you should look out for as well as a few tips on how to avoid them.

Common Unethical Billing Practices

Upcoding

Before discussing what upcoding is, it is important to note that each medical procedure has a corresponding billing code. 

Healthcare providers use these codes whenever they submit claims. These codes determine how much they would be paid for each medical procedure or service. 

Upcoding is when a medical provider misuses these codes. 

For example, a doctor provided a brief and simple medical service. Instead of coding it as it is, they coded it as an extensive and specialized medical service. This would result in higher rates of payment, allowing medical providers to increase the amount they would receive.

Practices like these often goes unnoticed because patients are not familiar with these codes and it can vary even down to the minor details.

Take, for example, evaluation of speech fluency and speech evaluation complex. They both have different codes. Healthcare professionals fully understand the difference between these two medical services; but for patients and nonmedical practitioners, both of these might just sound similar. 

With that, it is important to always be on the lookout for these fraudulent activities in your medical bill. 

If you are a patient, you should immediately contact your healthcare service provider and ask them to correct the mistakes in your bill. 

You can check out this guide created by the Center for Medicare & Medicaid Services to know more about the coding and billing information

Undercoding

This unethical billing scheme is often due to oversight. Undercoding occurs when the codes stated in the medical bill does not entirely capture all the medical services or procedures performed. 

While this may look harmless, this can actually backfire in the long-run. 

If you are a healthcare service provider, authorities might interpret it as if you are avoiding an audit. They often result in these assumptions because, in reality, many crooked professionals use undercoding to avoid audits. 

This may then result in criminal charges because of inadvertently taking part in medical fraud or undercoding. 

That being said, healthcare providers and coding professionals are not doing themselves or their patients any favor by undercoding. 

It can lead to substantial revenue loss and lower reimbursement rates for healthcare professionals. In turn, it would just create more problems and even burden the healthcare system in the long-run.

Unbundling

This billing scheme is often related or similar to upcoding. 

In this scheme, healthcare providers also manipulate the coding system in order to get ahead or receive higher reimbursements.

The Federal Bureau of Investigation has defined unbundling as “a practice of submitting bills in a fragmented fashion in order to maximize the reimbursement for various tests or procedures that are required to be billed together at a reduced cost”

In a sense, unbundling can also be called “fragmentation” because rather than billing the patient with one code, they would “fragment” it into multiple codes, which then leads to higher reimbursements or payments. 

Like upcoding, unbundling is also difficult to detect without whistleblowers (e.g. employees of the healthcare providers, secretaries, etc.). People receiving healthcare services are not always familiar with these bundle medical billing codes available for them. 

To give you an example of how severe unbundling practices can be, take the case of the Duke University Health System, Inc. 

They agreed to pay $1 million for allegedly unbundling cardiac and anesthesia services. The Department of Justice found out that Duke University has been increasing billing by unbundling claims when the unbundling was not appropriate. 

That being the case, both patient and healthcare providers should be well-informed of the bundled medical codes available out there. 

Double Billing

The definition of double billing is pretty straight forward. It is when the same bill is submitted multiple times even though the medical service or procedure was only performed once. 

Double billing is not uncommon in the medical field. Since the billing and claiming process is not always smooth, there are bound to be few mistakes along the way. 

However, those who intentionally double bill or more for the same medical procedure might face criminal and civil penalties.

Take the case of Children’s Physician Services of South Texas (CPSST) and Radiology Associates, they have agreed to pay $800,000 to settle claims that they billed and received payment twice for the professional reading and interpretation of genetic ultrasounds. 

If you are a healthcare service provider, double billing might seem easy to fix because it would only impact your revenue. 

However, its true cost goes beyond fines and fees. 

Patients might be hesitant to receive any medical services from the same healthcare provider because they were double-billed before. 

Aside from that, patients might also call the insurance company in order to remedy the situation. This, in turn, would result in more scrutiny and eventually damage the trust between the insurance company and the healthcare provider. 

So if you are a medical service provider, you should not be resubmitting duplicates without further studying them. 

Misrepresentation

This billing practice can come in many forms such as 

  • Misrepresentation of locations of service

Some patients are often billed for services that are not exactly consistent with what they receive. 

For example, a clinic worker might have handed the patient a syringe that was told to be administered at home. However, based on the patient’s medical bill, the injection is said to be administered in the clinic with a doctors’ supervision. 

  • Misrepresentation of dates

Claims submitted by healthcare service providers are often not consistent with the date of service it was rendered. 

For example, a healthcare service provider has only visited or seen the patient for one day. But instead of reporting it as it is, they instead stated in their claim that they visited and treated the patient for two days. 

  • Misrepresentation of the provider of service

This might seem far-stretched, but some clinics or facilities do hire and let unprofessional, unqualified, and untrained staff do medical procedures and services. 

Going back to the same example that we use in bundling, the Duke University Health System, Inc. also settled an alleged claim for billing the government for services provided by physician assistants (PA’s) during coronary artery bypass surgeries when the PA’s were acting as surgical assistants (along with graduate medical trainees), which is not allowed under government regulations.

Phantom Charges

This billing practice is a blatant fraudulent claim and it is also the most common one because it is so easy to carry out. 

Phantom invoicing is an unethical billing practice for a medical service or procedure that was never rendered. 

It can also happen when a medical service provider submits a claim for medical procedures that are completely unnecessary. This means that the treatments were only administered based on profit. 

For example, a healthcare service provider submitted a claim for wheelchairs that a patient neither needed nor received. 

Phantom billing or invoicing becomes a burden in our healthcare system because resources are fraudulently spent and unnecessarily utilized. 

This could result in backlogs and the people who actually need the medical services might find it difficult to obtain or receive one because resources have already been drained and depleted.  

It is worth noting that healthcare service providers are not the only ones who can commit this kind of fraud, patients can also be part of this scheme. 

Some healthcare providers might offer monetary compensation to the patients in exchange for their cooperation.

So whether you are a patient or a healthcare service provider, always be on the lookout for these unethical medical billing practices. 

Corruption

As we previously mentioned in our Anti-Kickback Statute article, referrals and kickbacks are generally illegal when it comes to healthcare programs. 

Before we discussed corruption in medical billing, it is important to note that healthcare providers oftentimes received payment for referrals. 

This in turn has led to abuse, leading several healthcare professionals to recommend other medical procedures or services even when they are not needed.

A medical service provider would then file a claim and receive higher reimbursement for these unnecessary services or procedures. 

Healthcare beneficiaries are the ones who suffer from this unethical billing practice because they are being charged for services they do not need. 

This, in turn, could lead to higher premiums and even worse, patients losing trust and veering away from any medical services or procedures.  

It is worth pointing out that gaining evidence (if you are a patient) or proving your innocence (if you are a medical service provider) on bribery or kickback schemes is not an easy thing to do. 

We highly suggest you to contact an experienced attorney from your state to help you. 

Best Practices to Avoid and Detect Unethical Billing Practices

Given that there are thousands of billing codes and not everyone has the ability to interpret their billing statement,  we have listed a few practical tips that would help you. 

Be Informed

The best advice we can give you is to arm yourself with knowledge of the healthcare laws as well as familiarize yourself with your billing statement and the CPT codes

Whether you are a healthcare beneficiary or a healthcare service provider, this would help you ensure that every billing statement you received or generated is always accurate and free from any errors. 

Maintain an Updated and Proper Documentation

Patients and medical service providers should always strive their best to provide the most updated and recent documentation. This would not only ensure that all information in the billing statement is correct but it would also help medical practitioners in providing the best treatments and services. 

Ensure Transparency

Healthcare service providers must immediately handle concerns regarding their employees’ or colleagues’ unethical coding practices. They must be transparent and facilitate interdisciplinary collaborations in making sure that the employees’ unethical behavior is dealt with accordingly. 

In line with this, all healthcare providers must be knowledgeable of the currently mandated coding and classification system. Failure to research or state the appropriate code should be dealt with immediately. 

Monitor the System

A healthcare service provider must always strive to improve the accuracy of their coding process. They must ensure that both healthcare and coding professionals are aware of the ethics and standards that they need to follow. 

The AHIMA Standards of Ethical Coding should always be followed and implemented in the workplace. This would help ensure that the expectation for making ethical decisions in the workplace and commitment to integrity during the coding process is always reflected in the employees’ work.

Conclusion

Hopefully, we managed to impart a few useful tips on how to avoid and detect unethical medical billing practices. 

The next time you generate or read a medical billing statement, you would know what to avoid or look out for. 

To briefly recap, we discussed

  • Common Unethical Billing Practices
    • Upcoding
    • Undercoding
    • Unbundling
    • Double Billing
    • Misrepresentation
    • Phantom Charges
    • Corruption
  • Best Practices to Avoid and Detect Unethical Billing Practices
    • Be Informed
    • Maintain an Updated and Proper Documentation
    • Ensure Transparency
    • Monitor the System

 It is worth pointing out that the tips and topics mentioned above are not meant to be a comprehensive topic about unethical medical billing practices nor should be construed as legal advice. We still highly recommend you to seek guidance from a law professional. 

Book a consultation with Khouri Law today!

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