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Delphi Management Services

How to Avoid Overbilling and Misbilling

Medical billing has a lot of moving parts. Your goal, whether a large multi-specialty medical suite or small two-provider ambulatory care office, is to treat patients well and keep your business running smoothly by billing properly.

Sometimes errors can occur during the medical billing process. Two important errors that can hamper your ability to bill accurately are overbilling or misbilling.

Overbilling the Government and Overbilling Insurance Companies

Between overbilling and misbilling, overbilling is the more dangerous of the two, with real ethical and legal consequences. Overbilling is when medical providers charge either the government or insurance companies more than the actual services provided. Overbilling can happen on a granular level or on a much wider scale; it is important to note that it is almost always occurs intentionally to defraud one or more parties. Generally, there are three ways one can overbill, including:

1) Upcoding: When a medical provider or technician codes for a higher level or more complicated service than the one actually rendered, allowing them to bill at a much higher rate.

2) Overcharging: Overcharging is distinct from upcoding; instead of coding for a higher-level procedure, overcharging is adding additional units of service to the actual service performed, or simply adding codes or procedures fraudulently.

3) Utilization Abuse: This is a form of overbilling where unnecessary tests, procedures, treatments, clinic visits, or equipment usage is ordered to bill a larger volume.

Misbilling Costs to Your Medical Practice

Misbilling is the usually unintentional process of making a mistake at multiple points in your billing protocol, resulting in appreciable cost to the medical practice. Misbilling can manifest in a variety of ways, but there are at least three misbilling errors that affect every practice:

1) Not Identifying All Billable Codes: This can seem like a moving target because ensuring every single billable code has been entered takes focused and specific skill, experience, and up-to-date knowledge on the part of the biller and the medical provider. However, when not all codes have been identified, your medical practice will not be paid its due amount by the payer.

2) Not Coding with High Enough Specificity: Similar to above, coding with adequate specificity could mean the difference of a few hundred dollars on a single claim if not more. Specificity in coding has become even more critical after the transition to ICD-10 coding procedures where claims can be rejected outright if the code does not provide enough detail.

3) Inability to Generate a Clean Claim: A clean claim is essentially a claim that is devoid of avoidable demographic, procedural, or coding errors. A dirty claim can have errors like misused CPT modifiers, lack of prior authorization, inaccurate data entry, mismatched totals, or outdated codes entered.

How to Avoid Overbilling and Misbilling

There can be serious ramifications for overbilling, but luckily, the solution is relatively straightforward: don’t do it, and don’t let anyone else in your practice overbill. It is illegal, and almost always done knowingly. In the pursuit of trying to raise revenue, you risk being caught for medical billing fraud.

There are cases where overbilling can occur accidentally, and misbilling almost exclusively occurs by accident (not too many businesses want to lose money intentionally). What are some ways your practice can avoid both these issues? Below, we get into four of the main ways your practice can avoid overbilling and misbilling:

1) Conduct an Internal Billing Audit: No one likes to hear the word audit, but when a company is proactive and self-examines disruptions in its revenue cycle, it allows for the medical practice to identify errors in its claims and the sources of claim denial. Initiate billing audits at regular intervals to keep vigilant of when your billing process may be in trouble and the ability to address the issues immediately.

2) Examine All Denied Claims in Detail: One fact about denied claims is the denial is often the fault of the payer, not the practice, and some healthcare firms don’t bother to appeal the denied claims. By making it a practice to examine every denied claim, you can identify recurring problem areas to rectify them while also ensuring that the claim was denied legitimately and not through an error of the payer. Also, this can help bulwark against repeat denials for the same reason.

3) Employ an Outside Medical Billing Company: Outside medical billing firms like Delphi Management Services are experts at managing billing issues like preventing misbilling and, of course, identifying areas that could be construed as overbilling. By employing firms dedicated to this specialty, you can be sure your billing and coding methods are completely up-to-date.

4) Create Avoidance Strategies and Tripwires: When problem areas have been identified, your practice can develop strategies to help them avoid the same problem, or similar problems, in the future. Whether having an all-hands meeting between front and back office staff, or regular email reminders, this can prevent billing problems before they happen. Similarly, targeted “tripwires,” or certain problem levels that are breached – say, when your claim denial rate reaches 4% – can be important to establish and are critical indicators that your billing strategy needs to be revised.