How a Medical Billings Errors & Omissions Policy Can Protect Against A Medicare Recovery Audit

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Human Service agencies billing Medicare may find themselves paying thousands of dollars in defense costs and regulatory fines resulting from a Medicare Recovery Audit. According to the Centers for Medicare and Medicaid Services, “the Medicare Fee for Service (FFS) Recovery Audit Program’s mission is to identify and correct Medicare improper payments through the efficient detection and collection of overpayments made on claims of health care services provided to Medicare beneficiaries.”

Health Insurance Claim Form, calculator, pen and stethoscope.

The audit process can uncover medical billing errors that result in very costly penalties. Under the Civil Monetary Penalties Law, civil penalties may include an assessment of up to three times the amount claimed for each item or service. These audits are conducted by outside independent contractors and medical collection agencies, collectively referred to as Recovery Audit Contractors (RACs). The RAC firm is compensated between 9%-12.5% of the overpayments identified and recovered.

The Recovery Audit Program targets healthcare organizations, including social service agencies, behavioral health facilities, physician groups, hospitals, and billing entities.

To address this exposure to financial loss, Human Service agencies should explore a Medical Billings Errors & Omissions policy and the coverage it provides. These policies will often cover the following:

1) Defense costs and regulatory fines from actual or alleged billings errors for claims brought by:

  • Governmental agencies

  • Recovery Audit Contractors

  • Qui Tam Plaintiffs

  • Commercial Health Insurance Payers

2) Coverage for regulatory actions:

  • Billings error proceeding

  • Health insurance portability and accountability act (HIPAA)

  • Physician Self-Referral (STARK)

  • Emergency Medical Treatment and Active Labor Act (EMTALA)

To learn more about your organization’s exposure and the appropriate insurance options, please contact Rancho Mesa Insurance Services at (619) 937-0164.