Billing industry challenges critical GAO study
Claims cited company isn’t a biller
By Bob Burleigh, CHBME
Brandywine Healthcare, Malvern, PA
[Burleigh is a spokesman for the Healthcare Billing and Management Association (HBMA), a group that has raised objections to a recent General Accounting Office study that led to a congressional hearing highly critical of the billing industry. Following is his reply to the accusations.]
Behavioral Medical Systems Inc. (BMS), which was identified as a billing company in the General Accounting Office’s (GAO) report, was not a billing company. BMS misrepresented itself as a provider to the Medicare program and to the real billing company that it used to submit claims. The GAO report did not identify the real billing company, indicating that it played no relevant role in BMS’s fraud. (The billing company is not an HBMA member.) Government agencies should set a better example of fair, honest, and accurate reporting, particularly when attributing dishonesty to others.
HBMA deplores dishonest providers and billing companies, as our code of ethics reflects. We are aware that there have been instances of billing company misconduct. But, it appeared that the GAO’s testimony on April 6 tried to avoid reporting "old news" and slanted the report about BMS in order to describe provider fraud as billing company fraud. The only other conclusion one might draw is that they do not know the difference between a provider and a billing company.
Almost a year ago, HBMA discussed the prospect of billing company identification with the GAO and Penny Thompson, director of the Office of Program Integrity, and her staff, at their request. The recommendations presented by the Office of the Inspector General included the same proposal. We support the concept — and have never opposed the proposal — because identification could (and should) be a relatively benign requirement.
In her April 6 testimony before Congress, however, Thompson noted that if billing company registration already had existed, it would have done nothing to prevent or detect BMS’s misconduct.
The economics of the BMS case is illustrative of several points. Although the "headline" indicated that the fraud was for $1.3 million, Medicare’s payments were just $362,000. Had these claims been valid, the program paid only 28 cents per dollar billed. The fraud was, nevertheless, fraud, and is no less egregious because of the "lesser" amount. Based on the service fees — 5% of collections — charged by the billing company BMS hired, BMS paid $18,100 for billing services during the 20-month period cited. (We assume BMS actually paid for billing, although BMS’s dishonesty could have included theft of services.) The billing company earned a gross income of $3.68 per claim; we estimate their per-claim profit would have been 55 cents, based on an industry norm of 15% of gross income.
Actual billing was required for payments to be produced and, therefore, actual billing costs were incurred for all claims. The billing company in this case realized $118 per month in "improper" profits, based on the GAO’s figures. It seems clear that the potential for gain does not justify the risk to a billing company. This also illustrates the weakness of the "improper incentives" concern stated in another of the OIG recommendations.
The OIG’s April testimony to Congress recommended prohibiting incentive (usually interpreted to mean percentage-based) fee arrangements between providers and billing companies. This is a well-known OIG concern and one that HBMA has addressed in a position paper posted on HBMA’s Web site (www.hbma.com).
The OIG’s March 2000 report "Medical Billing Software and Processes Used to Prepare Claims," served as a foundation document for an April commerce committee hearing. We reviewed this report in detail and while we respect the amount of effort and taxpayer expense invested in the report, we found it to be significantly flawed and factually inaccurate in virtually every section. At best, it reflects a superficial and incomplete knowledge of a very complex industry.
We are concerned that Congress and other readers might use this report as "gospel" from which to reach conclusions or on which to base decisions that could have a profound impact on a large and vital industry segment. We agree with the OIG that there could be a greater risk posed by so-called proprietary software, but the opposite is also true — there could be greater security and protections built into proprietary systems developed to fill the considerable void left by some commercial systems. HBMA has offered to meet with the authors of the report to share its concerns.
HBMA is a voluntary trade association dedicated to compliance and training. We welcome additional training options, but any government-sponsored training program(s) should be developed for providers (our customers), as well as billing companies. However, we are skeptical of government representatives preparing training materials for private industry in view of our concerns related to the OIG’s report.
Last year, we reported to HCFA concerns about inaccuracies and incomplete content in its Medicare computer-based training (CBT) materials. CBT has been represented as accessible training materials about Medicare claims submission, but we have found them to be significantly incomplete and, in some cases, they are inaccurate. Almost a year later, the content has not been expanded and the errors have not been corrected.
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