Medicare Compliance & Reimbursement

Learn to recognize these danger signs in your billing company contracts.

If you're paying your billing company a percentage of the money you receive from Medicare, you could draw a higher percentage of the feds' scrutiny.

The HHS Office of Inspector General made clear in its 2005 Work Plan that the agency plans to examine providers' arrangements with billing companies. And attorneys say any billing company contracts involving a percentage fee rather than a flat fee will be more likely to rise to the top of the OIG's hit list.

"Certainly the OIG does not like percentage contracts in a lot of situations," says attorney Chris Crosswhite with Duane Morris in Washington.

One damaging theory is that percentage-based billing deals give billing companies an incentive to upcode, because the more the provider makes, the more the billing company makes, says attorney David Glaser with Fredrickson & Byron in Minneapolis, MN.

"I would not encourage a client to hire someone as a coding consultant" with a payment rate based on a percentage of revenue, Glaser notes. For one thing, this arrangement makes the consultant less objective and less likely to recommend a lower-paying code when appropriate.

Protect Yourself With Specific Contracts

Not all percentage-based contracts are created equal, though. A "weak" contract that doesn't specify the provider's role in reviewing and approving bills will draw more ire from the OIG, notes Crosswhite.

Your contracts should spell out exactly what the billing company and the provider will do. "The stronger the contract is on those kinds of things, the better that will appear when someone has to produce that contract," he adds.

Also, if you're relying on a billing company to take care of all your Medicare enrollment and assignment paperwork, you should double-check its work to make sure you're not accidentally submitting incorrect information, Crosswhite adds.

If you have reassigned your payments to your billing company, which then sends the money on to you, then a percentage-based fee may violate the reassignment rule.

Go For Direct Payment Deals

With percentage-based payments, your billing company will not meet one of the tests for the billing agent exception to the reassignment rules, explains Crosswhite.
 
But as long as you receive the money directly, then "there's nothing illegal about having a percentage contract if [the billing company] gives you good advice," says Glaser.
 
In these cases, you only have cause for concern when the consultant gives you bad advice, he concludes.