All healthcare stakeholders have a vested interest in compliant billing and coding practices. Compliance means that all practices leading to payment for healthcare services (e.g. documentation, CPT coding, billing, and claim submission) must comply with requirements under the Health Insurance Portability and Accountability Act (HIPAA) as well as applicable laws, regulations, policies, standards, procedures, and contractual obligations. For federal payers like Medicare and Medicaid, compliance is overseen by the Office of Inspector General (OIG) and supported by several levels of auditing including Recovery Audit Contractors or “RAC audits.”
Medical necessity for billed services is the absolute and overarching requirement that must be satisfied for every claim submitted under a specific CPT (Coding and Procedural Terminology) code. Medical necessity means that the billed item or service was reasonable and necessary for the diagnosis, treatment, or condition for which it was billed. While documentation in the medical record must support the medical necessity of each billed charge, it is improper to use gratuitous, inaccurate, or false documentation to justify a medically unnecessary claim. Common examples of fraudulent (non-compliant) practices include falsifying medical records, upcoding (assigning a higher billing level than necessary), and unbundling (submitting separate claims when fewer claims would suffice).
Due to the substantial sums at stake, there is a skyrocketing number of investigations and lawsuits involving billing and compliance. At the federal level, most of the activity is driven by RAC audits and whistleblowers under the qui tam provision of the Federal False Claims Act. Whether civil or criminal, plaintiff or defense, such claims are inherently complex and require multiple specialized areas of expertise. Typical experts include CPT coders, federal and state claims submission experts, Forensic Claims Auditors, and Certified Fraud Examiners. Since medical necessity is the foundation of most claims, physicians, surgeons, and other medical specialists are critical assets in nearly every case.