Risk Areas to Consider by a Third-Party Billing Company the inherent risks of utilizing a specific compensation model are not limited to those outlined above. the structure of a given compensation arrangement may place a billing company and its clients in a precarious position under both federal and state law, possibly jeopardizing the company’s ability to legally enforce the payment provisions set out in a contract. Possible problems include, but are not limited to: • fee splitting issues: generally, fee splitting involves the splitting or sharing of fees among professional colleagues. depending upon the circumstances, a fee splitting scenario may violate a physician’s ethical obligations,6 a state’s medical Practice act, and/or federal or state anti-kickback provisions. a number of states have enacted provisions that prohibit the splitting of professional fees between a physician and other professional clinicians outside of their organization. for example, in new York under nYs education law, section 6530(19), the use of percentage-based compensation arrangements is allowed in only specific situations, none of which include the sharing of fees with a billing company. arguably, such arrangements violate new York’s fee-splitting prohibition. it is therefore imperative that a billing company carefully examine state law to determine how the fee-splitting rules are applied and interpreted in a given jurisdiction before utilizing a percentage-based compensation arrangement. the failure to do so could result in the voiding of an underlying contract and could conceivably relieve a provider from paying a billing company any percentage that may be due. • medicare claims: under 42 usc § 1395u(6), medicare payments may only be made to either the beneficiary who received the medical services at issue or a party (such as a physician or physician practice) that furnished the services and accepted assignment of the beneficiary’s claim. thirdparty billing companies do not qualify as a “party” under this regulation. therefore, reimbursement cannot be made directly to the company. While this provision does not prohibit percentage-based arrangements, it clearly adds an additional barrier to payment that must be overcome by billing companies and providers seeking to employ a percentage-based reimbursement scheme. • medicaid claims: it is important to keep in mind that medicaid is jointly funded by the federal and state governments. 18 hbma billing • november.december.2013 as such, the state laws affecting a state’s medicaid program may differ in certain respects from jurisdiction to jurisdiction. at least two states, new York and florida, currently prohibit percentage-based arrangements when the payment of medicaid services is involved. Ways to Reduce a Third-Party Billing Company’s Risk of Provider Payment Default as we have discussed, the government has consistently expressed its concerns regarding the use of percentage-based arrangements, despite the fact that this compensation approach remains the predominant compensation method used between third-party billing companies and physicians. although no approach will completely eliminate risk, there are a number of steps you can take to reduce the level of risk that may be presented. these include, but are not limited to: • due diligence:We recommend that you conduct “due diligence” when entering into any compensation agreement with a new client. this is especially crucial should you choose to employ a percentage-based approach. this step applies equally to both third-party billing companies and providers. important questions to ask include: have you checked the oig medicare and state medicaid exclusion lists? how about the gsa debarment list? how did you learn of this billing company or practice? have you actually met with the other party? did you tour the other party’s facilities to better ensure that their operations appear bona fide and compliant with the law? remember, under the false claims act, if a billing company submits “or causes to be submitted,” a false claim to the government, a person or entity can be liable under the act. billing companies arguably “… cause to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government” because of the role they play in the claims submission process.7 therefore, billing companies should take the initiative and perform a reasonable level of due diligence on a provider before submitting a claim on their behalf. • having an effective compliance Plan: a compliance plan can go a long way towards reducing your potential liability, thereby increasing the likelihood that you will be able to (The Good, the Bad, and the Ugly continued)
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