For physicians with independent practices, engaging a third-party billing company to manage the billing process is an attractive option. Medical billing is increasingly complex and time consuming, and outsourcing that administrative task gives physicians more time to spend on patient care.
But what happens when a third-party billing company fails to meet service expectations, leading to delayed payments, cash-flow interruptions, and even audits or fraud investigations?
Common issues physicians have with third party billing providers include:
- An increase to accounts receivable
- Failure to timely submit claims
- Failure to follow up on rejected claims
- Appeals denied due to lack of timely filing
- High turnover within the billing company account team
- Delays in processing payments
- Blaming the practice for medical billing errors
- Claim denials above industry standards due to incomplete information, coding errors, or missing documentation
- Lack of transparency regarding billing processes, claim denials, and payment statuses
If these issues sound familiar, consider these steps to resolve the dispute.
First, Understand Your Contract with the Third-Party Billing Service Provider
Thoroughly review the service agreement you have in place with the medical billing company. Your contracts should include:
- Scope of services
- Payment terms
- A business associates’ agreement (BAA) for the handling of protected health information (PHI)
- Types and timing of client management reports
- Confidentiality provisions
- Contract length and termination clauses
- Indemnification clauses
- Choice of law and forum selection clauses specifying which state’s laws apply and the court or jurisdiction where contract disputes will be resolved.
Unfortunately, many of these agreements do not include performance or service level expectations and obligations. (Before you engage your next third-party biller, ask your attorney to review the agreement before you sign to ensure your interests are protected!)While this can hamstring some breach of contract claims, physicians and practice managers still have legal remedies.
Next, Document Failures
Work with your attorney to document all instances where the billing company failed to meet their contractual or professional service obligations and the impact to your practice.
Examples of such evidence may include:
- Copies of rejected claims and the reasons a payer rejected the claims (e.g., incomplete information, coding errors, or missing documentation)
- Communications or communication attempts with the billing contractor related to the dispute
- Comparative industry standards for net collection rates and denial rates
- Calculations of the financial impact of the service failures
To establish these failures, the billing company’s duties and obligations must be included in the services agreement and the provider must have access to billing records.
Establish Legal Claims Against Your Medical Billing Company
By reviewing the agreement in place and collecting evidence, your attorney can start building a legal case against the billing contractor. A breach of contract claim is typically the most straightforward legal approach when a billing company fails to perform its contractual obligations.
Your legal team will work with you to establish:
- Existence of a valid contract (the service agreement)
- Specific terms that were breached by the third-party biller, such as reporting obligations, compliance requirements, or specific duties regarding denied claims
- Your adherence to the terms of the contract (proving that you acted in good faith and fulfilled your contractual obligations)
- Damages resulting from the breach
Taking Legal Action: Steps to Recover Unpaid Claims and Restore Practice Efficiency
If your practice is facing issues with a billing contractor, consult with a healthcare litigation attorney to discuss the best strategy to recover unpaid claims and return your practice to operational efficiency.
At Hendershot Cowart P.C., our medical billing attorneys can work with your practice to:
- Audit medical billing records to document the extent of failures and establish a pattern of systematic neglect
- Prepare a timeline of communications to demonstrate the physician's attempts to resolve the issues and highlight the billing company's continued failures despite these attempts
- Calculate the financial harm to the practice including both the direct losses from denied claims and the administrative costs incurred while attempting to resolve the issues internally
- Send a formal demand to the billing company detailing breaches and requesting immediate corrective action for the neglected claims of other service failures.
- Take legal action against the third-party billing company by filing a lawsuit and requesting compensatory damages or pursuing arbitration if required by your services agreement.
When a contract specifically includes a mediation or arbitration clause for dispute resolution, the process tends to be less adversarial, potentially allowing for more candid admissions about standard practices without the strict procedural and evidentiary requirements of court.
Is Your Medical Practice Losing Money Due To a Negligent Billing Company?
If you're experiencing high claim denial rates, lack of follow-up on rejected claims, or poor transparency from your billing contractor, contact our experienced healthcare attorneys today for a consultation. We can help you audit your records, document service failures, calculate your financial losses, and pursue the legal remedies you deserve.
Your practice deserves better – and we're here to help you get it. Call (713) 783-3110 or contact us online to schedule a confidential case evaluation.