Health care providers are relying on billing companies to a greater degree in assisting them in processing claims in accordance with applicable statutes and regulations. Additionally, health care professionals are consulting with billing companies to provide timely and accurate advice with regard to reimbursement matters, as well as overall business decision-making. As a result, the OIG considers compliance program guidance to third-party medical billing companies particularly important in efforts to combat health care fraud and abuse.

Further, because individual billing companies may support a variety of providers with different specialties, OIG recommends that billing companies coordinate with their provider-clients in establishing compliance responsibilities. OIG has identified specific areas of third-party medical billing company operations that may prove to be vulnerable to fraud and abuse.

The OIG guidance directs billing companies to focus on the following seventeen (17) risk areas, both in their own and their clients’ operations:

  1. Billing for items or services not actually documented;
  2. Unbundling;
  3. Upcoding, such as for example, billing for a higher level of visit code when a lower level has been done;
  4. Inappropriate balance billing;
  5. Inadequate resolution of overpayments;
  6. Lack of integrity in computer systems;
  7. Computer software programs that encourage billing personnel to enter data in the fields indicating services were rendered that were not actually performed or documented;
  8. Failure to maintain the confidentiality of information/records;
  9. Knowing the misuse of provider identification numbers, which result in improper billings;
  10. Outpatient services rendered in connection with inpatient stays;
  11. Duplicate billing in an attempt to gain duplicate payment;
  12. Billing for discharge in lieu of transfer;
  13. Failure to properly use modifiers;
  14. Billing company incentives that violate the anti-kickback statute or other similar federal or state statute or regulation;
  15. Joint ventures;
  16. Routine waiver of copayments and billing third-party insurance only; and
  17. Discounts and professional courtesy.

To avoid the above risk areas OIG suggests a few recommendations. Although these recommendations include examples of effective policies, each billing company should develop its own specific policies tailored to fit its individual needs. The policies must create a mechanism for the billing or reimbursement staff to communicate effectively and accurately with the health care provider.

Policies and procedures should:

  • Ensure that proper and timely documentation of all physician and other professional services is obtained prior to billing to ensure that only accurate and properly documented services are billed;
  • Emphasize that claims should be submitted only when appropriate documentation supports the claims and only when such documentation is maintained, appropriately organized in legible form and available for audit and review. The documentation, which may include patient records, should record the time spent in conducting the activity leading to the record entry and the identity of the individual providing the service;
  • Indicate that the diagnosis and procedures reported on the reimbursement claim should be based on the medical record and other documentation and that the documentation necessary for accurate code assignment should be available to coding staff at the time of coding. The HCFA Common Procedure Coding System (HCPCS), International Classification of Disease (ICD), Current Procedural Terminology (CPTTM), any other applicable code or revenue code(or successor code(s) ) used by the coding staff should accurately describe the service that was ordered by the physician;
  • Provide that the compensation for billing department coders and billing consultants should not provide any financial incentive to improperly upcode claims:
  • Establish and maintain a process for pre-and post-submission review of claims to ensure claims submitted for reimbursement accurately represent services provided, are supported by sufficient documentation, and are in conformity with any applicable coverage criteria for reimbursement; and
  • Obtain clarification from the provider when documentation is confusing or lacking adequate justification. Because coding for providers often involves the interpretation of medical diagnosis and other clinical data and documentation, a billing company may wish to contract with/assign a qualified physician to provide guidance to the coding staff regarding clinical issues. Procedures should be in place to access medical experts when necessary. Such procedures should allow for medical personnel to be available for guidance without interrupting or interfering with the quality of patient care.


  1. Office of Inspector General (OIG), Federal Register / Vol. 63, No. 243, Third-party PDF. Retrieved from https://bit.ly/3cqrWJc
  2. Brian Mahany (2016, November 15), Medical Billing Companies Can Be False Claim Targets. Retrieved from https://bit.ly/3HzXM4e