Common mistakes by your current medical billing outsourcing Partner’s negligence

 Erika Regulsky Billing & Collections, Medical Billing

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Protecting Your Practice from Medical Billing Malpractices & Fraud

Medical billing is an essential part of healthcare services. It involves translating healthcare specialists’ notations and insurance agency requirements into billing codes, ensuring healthcare providers receive payment for their services. However, medical billing negligence, fraud, and malpractice can result in significant financial losses to medical practices or patients.

While extreme damages resulting from such incidents are rare, the pandemic has brought to light various risks associated with these threats. In this blog post, we’ll explore these risks and discuss how to protect yourself against them.

Risks of Medical Billing Negligence, Fraud, and Malpractices

Errors in Medical Billing

Medical billing agencies play a crucial role in ensuring healthcare providers receive payment for their services. However, even minor errors in medical billing can result in insurance agencies refusing to pay for services. Shockingly, nearly half of all Medicare claims contain errors. Mistakes made by medical billing agencies can result in significant financial losses to medical practices or patients.

Medical billing errors

Negligence in Medical Billing

While medical professionals are required to carry malpractice insurance to protect them in the event of failure to perform required medical services, medical billers are not responsible for patient care and therefore ineligible for medical malpractice claims. However, mistakes made by medical billing agencies can still result in significant financial losses to medical practices or patients. In 2019, more than half of all patients owed $1,000 or more to their doctors, raising questions of negligence.


Legal Consequences

Medical billing agencies can face legal actions for negligence in the event of a mistake resulting in significant financial loss to a patient or practice, such as double-billing, a major issue faced by the industry. Moreover, negligence regarding patient privacy can result in legal action. Medical billers can be subject to penalties even if a reveal of private information happens due to a mistake.


Protecting Yourself Against Risks

To protect themselves against claims for damages resulting from mistakes, independent billers or medical coders can acquire a professional liability policy, which may differ in coverage. A named perils policy can also be acquired for incidents like privacy breaches. Those handling medical billing in-house should check with their employer to see if they are covered under their policy.

In case you are concerned about potential hazards and vulnerabilities to your practice, reaching out to a specialized medical billing agency may be a suitable option. They can help assess the situation and determine if you need further assistance.

Protecting against risks

Steps you can take to address these issues:

Review the contract: The first step is to review the contract you signed with the outsourcing partner.  Check  to see if there are any provisions related to negligence or breach of contract, and what remedies are available in case of such incidents.


Communicate with the outsourcing partner: Contact your outsourcing partner and explain your concerns about their negligence. Be specific about the issues you have observed, and provide evidence if possible. Give them an opportunity to address the issue and propose a solution.

outsourcing partner

Escalate the issue: If your outsourcing partner does not respond satisfactorily or takes no action to address the issue, consider escalating the issue to their senior management. This can be done through a formal complaint letter or by scheduling a meeting with their management team.


Consider terminating the contract: If the outsourcing partner continues to be negligent and does not provide satisfactory solutions, you may consider terminating the contract. This should only be done after carefully reviewing the contract terms and obtaining legal advice

Terminating contract

Find a new outsourcing partner: Once you have terminated the contract, it is important to find a new outsourcing partner who can provide the services you require. Do your research and select a reputable company with a good track record in medical billing outsourcing.

New outsourcing partner

To ensure that you choose the right partner, there are several key attributes to consider, including:

Industry expertise and experience: Look for a partner with a thorough understanding of the healthcare industry and a proven track record of success in RCM, particularly in your area of specialization.

Expertise & Experience

Technology and innovation: Select a partner with access to cutting-edge technology and the ability to implement innovative solutions that optimize your revenue cycle. Evaluate their workflow automation, analytics, and robotic process automation capabilities.

Tech & Innovation

Scalability and flexibility: Choose a partner that can adjust to your organization’s changing needs and scale its services to accommodate increased demand. Assess their ability to deliver quality and turnaround time for service level agreements (SLAs). Physician practices should consider their monthly close processes, while revenue cycle services providers should evaluate their ability to hire on demand.

scale & flexibility

Compliance with regulations: Ensure that your partner is well-versed in and compliant with all relevant regulatory requirements, such as HIPAA, to minimize the risk of non-compliance. In the case of medical coding processes, examine their audit procedures and ability to protect against upcoding for services.


Communication and transparency: Your partner should provide regular and clear updates on your revenue cycle’s progress and be available to address any questions or concerns. Verify if they have real-time reporting capabilities using workflow automation tools. This ensures that you have control over your inventory, and they are accountable for clearing up the work sent to them.

Communication & Transparency

Cost-effectiveness: Evaluate the overall cost of outsourcing, including any setup or recurring fees, to ensure that you receive value for money. Seek help from a third party to benchmark cost proposals and confirm that you receive competitive rates.

cost effective

Privacy and Data Security: Top revenue cycle services partners ensure the security and privacy of client data by implementing robust measures to protect sensitive information and handle it securely.

Data security

Performance metrics and reporting: They provide clear and transparent reporting on their performance, allowing clients to measure the success of their outsourcing arrangement.

metrics & reporting

Medical billing malpractices, frauds, and negligence can result in significant financial losses to medical practices or patients. While extreme damages resulting from such incidents are rare, the pandemic has brought to light various risks associated with these threats. Protecting yourself against these risks through professional liability policies, named perils policies, or seeking assistance from expert medical billing agencies can ensure your financial safety in the long run.

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I’m a multi-certified revenue cycle management professional and compliance officer with 20+ years of experience. I contribute articles to leading healthcare publications and journals. I am currently working as Senior Transition Manager, in BillingParadise headquartered at Diamond Bar, California. BillingParadise offers Medical Billing Services that intersect perfectly with the EMR/Practice management system you use.BillingParadise has offices in New Jersey, New York, Florida, Georgia, Minnesota, and Texas.

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