How costly is Medical Billing Mistakes and Fraud?

Even though working from the comfort of home as a medical billing professional may seem like the near-perfect career, offering benefits and advantages that within a doctor’s office or healthcare center are unavailable, the ramifications of possible mistakes can be very costly.

An example of how things can go wrong can be shown by MSO Washington, Inc. MSO is a medical practice management and billing service company that had to agree a settlement against claims of healthcare fraud, to the value of $565,000. 

The Dept. of Justice alleges that the company made claims to Medicare and Medicaid for settlement which failed to include the proper records and claims for procedures that were deemed medically unnecessary. The Department found that in some cases the procedures claimed for were never completed, or they were executed but charged for at rates above the industry standard.

It seems as though the healthcare providers were allegedly not aware of the questionable billing practices, and consequently, they were not a part of the investigation. The system that was under investigation was a home visitation program, in which doctors and medical professionals visited homes to inspect the residence itself.

As a professional and highly-trained medical professional, one would be able to detect anomalies and point out possible fraudulent activities. There is great value placed on such individuals, and as a result, insurance companies and government-based agencies will depend heavily on that person’s skills and training, as well as their moral character. After all, one would have medical documentation of many patients at hand.

Throughout the education and billing services classes, one is expected to learn every part of the coding systems that are used and relate to procedures, medical products and the services that their respective companies provide. Important aspects that medical offices and hospitals seek out when looking for specialists include a concern and prioritization of getting their job done; correctly and efficiently.

Where claims are concerned, most companies/offices will seek out a fair reimbursement for their services. Companies can lose vast sums of money through malpractice, accidental or intentional.

The owner of MSO Washington Inc. did not admit liability, so it can be deemed that the fraud was accidental and not intentional. This only highlights the importance of personnel who can account for their work and ensure that there are no errors. High-quality personnel are able to seek out the correct compensation while preserving a fraud-free status.

How to Prevent Medical Billing Fraud

Medical billing frauds are mostly related to medical insurances. In the US, such frauds may pertain to Medicare and Medicaid. Many people connected to health care sector may be involved in such frauds. The list of possible fraudsters includes beneficiaries, billing department personnel, recruiters, health care providers, and companies that offer medical services. 

Quite often invoices are raised for services that were not rendered to the beneficiary. Likewise, fraudulent bills may include medicines that are not prescribed for the beneficiary covered under medical insurance. Beneficiaries claim reimbursement of such bills, which might relate to somebody else's medication. Such inflated bills may also be raised to fleece the beneficiaries. 

At times cost of treating ailments that are not covered under any medical insurance, or costs of other services related to health care that do not come under Medicare are recovered by beneficiary through invoices that mention other ailments that are covered. 

This defeats the purpose of having specific coverage in medical insurance policies and Medicare. Health care facility may raise separate bills for procedures that are already covered under some main billing item. The effect of such unbundling is that the invoices get inflated. Such frauds are obviously felony. 

They happen with connivance of some medical professionals, and other personnel in billing department of the health care facility. Since legal implications of such frauds are quite serious, health care facility needs to take necessary measures for preventing medical billing frauds. 

For starters screening every employee at the time of recruitment is advisable. Background checking of the prospective candidate is a must. It is also necessary to verify the billing certificates produced by the candidate. 

In addition to this precaution, the health care facility can implement a foolproof system that requires compliance at different stages so that possibilities of medical billing fraud are remote. Somebody from administrative department should be given the responsibility of ensuring regular compliance with the system. 

This person should also have powers to deal severely with any fraud that may be detected. It is necessary to explain the entire procedure, and various checks integrated in them to every employee. The system should also ensure that an employee can report any abuse by superior without fearing any backlash. 

In addition to above measures, the health care facility can ensure that all the rules and regulations stipulated under Health Insurance Portability and Accountability Act  (HIPPA) are followed. HIPPA is a US law. It relates to health related information about a patient. It also has provisions relating to patient’s privacy and security of relevant information. 

HIPPA therefore stipulates that information about a patient such as the patient’s name, medical history, address, etc.. be protected. Passwords that guard such information should be kept a secret so that unscrupulous people do not learn about any patient’s case history. 

Placing fax machines in places that do not allow general public to access them is another way to prevent medical billing fraud. It is advisable to send encrypted mails relating to the patient rather than sending mails without any security precaution. 

A confidentiality agreement with severe consequences for breach can be entered into between the facility and the medical billing personnel. Such precautions are necessary even if a third party’s services are being availed for medical billing. Relevant clauses can then be incorporated in the contracts for such services. 

Medical Billing Fraud & abuse

Fraud, waste and abuse prevention & training

If you identify potential fraud, waste, or abuse, please report it to us immediately so that we can investigate and respond appropriately. Please see the How to Contact Us section of this guide for contact information. Please note UnitedHealthcare expressly prohibits retaliation if a report is made in good faith.

• Fraud Is a false statement, made or submitted by an individual or entity, who knows that the statement is false, and knows that the false statement could result in some otherwise unauthorized benefit to the individual or entity. These false statements could be verbal or written.

• Waste Generally means over-use of services, or other practices that result in unnecessary costs. In most cases, waste is not considered caused by reckless actions but rather the misuse of resources.

• Abuse Generally refers to provider, contractor or member practices that are inconsistent with sound business, financial or medical practices; and that cause unnecessary costs to the health care system.

Effective January 1, 2009, the Centers for Medicare & Medicaid Services (“CMS”) modified certain rules and regulations of the Medicare Advantage and the Part D programs. The rules state that a compliance plan must include training, education, and effective lines of communication between the compliance officer and the organization’s employees, managers, directors, as well as first tier, downstream and related entities. This change clarified that plan sponsors, such as UnitedHealthcare, need to apply these training and communication requirements to all entities they are partnering with to provide services in Medicare Advantage or Part D programs.

As a contracted provider for UnitedHealthcare’s Medicare Advantage programs, you are considered a first tier or downstream entity and are subject to this CMS requirement. It is our responsibility to ensure that your organization is provided with appropriate training for your employees and applicable subcontractors. To facilitate that, we will be providing your organization with training materials, which will be made available on UnitedHealthcareOnline.com.


Annually, your organization must administer the training materials to your employees and applicable subcontractors. This annual training can be done using our materials or you may use your existing training program and/or materials provided by another health plan as long as that training meets the CMS requirements. Please maintain records of the training (i.e. sign-in sheets, materials, etc). Documentation of the training may be requested by UnitedHealthcare, CMS, or an agent of CMS to verify the training was completed.