Why Correct Medical Billing Matters

Billing errors—intentional or not—can result in severe consequences under the False Claims Act (FCA), which imposes fines of up to three times the program’s losses plus additional penalties per false claim. In recent years, the Department of Justice (DOJ) has intensified enforcement, recovering billions of dollars from healthcare fraud cases.

From upcoding to billing for services not rendered, healthcare providers must understand what constitutes incorrect billing—and how to prevent it.

Common Types of Incorrect Billing

1. Upcoding: Billing for more expensive services than those actually provided. For instance, hospitalist companies paid millions for overbilling E/M codes.
2. Unbundling: Charging separately for procedures that should be billed under a single code (for example, billing each lab test instead of using one panel code).
3. Duplicate Billing: Submitting the same claim more than once, intentionally or accidentally.
4. Phantom Billing: Charging for services or visits that never occurred.
5. Medically Unnecessary Services: Billing for tests or treatments that lack medical justification.
6. Inadequate Documentation: Failing to maintain detailed and accurate patient records to support the billed codes.

Even honest mistakes can lead to liability under federal law, so preventive compliance is key.

Key U.S. Laws Governing Medical Billing

• False Claims Act (FCA): Imposes treble damages and fines for knowingly submitting false claims.
• Civil Monetary Penalties Law (CMPL): Allows the HHS-OIG to impose fines for fraudulent billing and kickbacks.
• Anti-Kickback Statute (AKS): Prohibits offering or accepting payments in exchange for patient referrals.
• Stark Law: Restricts self-referrals by physicians with financial interests in the referred entity.
• HIPAA: Protects patient information and penalizes falsified or misused health data.

Violations of these laws can result in fines, imprisonment, loss of medical licenses, and exclusion from federal healthcare programs.

Real-World Examples of Enforcement

• Hospitalist Group (Michigan, 2023): Paid $4.38 million for overbilling inpatient services.
• Multi-State Clinic (2024): Settled for $14.9 million after inflating chronic care management claims.
• Missouri Psychiatrist (2025): Fined $501,556 for billing psychotherapy sessions not provided.
• Acadia Healthcare (2024): Paid $19.85 million for medically unnecessary inpatient stays.

These examples show that enforcement applies across all healthcare sectors—from hospitals to small private practices.

How to Protect Your Practice from Billing Violations

1. Implement a Compliance Program: Follow HHS-OIG’s seven-element compliance model—develop written standards, assign a compliance officer, conduct training, and perform regular audits.
2. Train Staff Continuously: Ensure billing and coding teams stay updated on CPT, ICD, and CMS regulations. Regular education prevents costly mistakes.
3. Hire Qualified Coders: Use certified coders (CPC, CCS) or reputable billing firms—and monitor their work closely.
4. Conduct Regular Audits: Perform self-audits annually to verify claim accuracy and documentation integrity.
5. Maintain Thorough Documentation: Ensure every service billed is supported by detailed clinical notes, signatures, and time logs.
6. Screen Employees and Contractors: Regularly check the OIG Exclusion List to avoid penalties for hiring ineligible individuals.
7. Encourage Open Reporting: Create a culture where employees can report billing concerns without fear of retaliation.
8. Self-Disclose Errors: If overpayments or false claims are discovered, use the OIG’s Self-Disclosure Protocol to reduce penalties.
9. Stay Updated: Healthcare regulations evolve constantly. Stay informed through HHS, CMS, and industry resources.

Conclusion

Ensuring compliance in medical billing isn’t just about avoiding penalties—it’s about maintaining accuracy, transparency, and trust. At No Surprise Bill, our team specializes in medical billing and reimbursement solutions that help healthcare providers stay compliant while maximizing efficiency.

We work closely with practices to minimize billing errors, strengthen documentation, and ensure every claim meets regulatory standards. With our expertise, your practice can stay protected, compliant, and focused on providing quality patient care.