The Most Important Medical Billing Laws

A description of the major medical billing laws, and what you need to do to follow them...

Like regular commercial businesses, the healthcare industry has to comply with certain state and federal regulations to stay legal. Unlike regular commercial businesses, however, the healthcare industry has to follow additional rules and regulations.

This is because medical services not only deal with the business side of medicine, but also with the healthcare of individuals. This means that they have much more of a responsibility to remain within the ethical standards of business, as well as medical, practice.

On a national level, CMS and the CDC regulate much of the medical industry.

These two organizations govern Medicare and Medicaid services for the poor, elderly, and disabled (CMS), and the control of diseases (CDC). Working together, they create new regulations. These new rules make sure that all medical professionals provide the most up-to-date and trustworthy services to their patients.

Medical Billing Basics

Medical Billing Basics
Want to quickly get to grips with the fundamentals of medical billing? We recommend the ebook The Basics of Medical Billing, a guide to the industry written by a mother/daughter team of billers. Learn more about it here.

HIPAA and national regulations

The national government has also enacted laws which regulate the medical industry.

The biggest of these new laws is HIPAA, the Health Insurance Portability and Accountability Act. It's created many changes in the healthcare industry in the last decade.

HIPAA contains lots of new medical billing laws and regulations. One of the most important is patient confidentiality, which has made it necessary for each and every medical practice to create safeguards against the leaking of confidential patient information.

This includes requiring every employee in a medical office to sign a form stating their understanding and commitment to patient confidentiality. Another requirement of HIPAA is to inform each and every patient about their rights under HIPAA, including the confidentiality of their medical information.

Another important aspect of the HIPAA legislation is the enactment of HIPAA 5010. This is a requirement for all electronic patient data to be confidential, according to HIPAA standards.

A further requirement of HIPAA is the use of ICD-10 codes, which allow for more specificity in the reporting of patient diagnoses.

Click for more on HIPAA 5010.

Standards of ethical medical practice

Medical providers have to stay ethical

On a more local level, medical providers and offices are required to operate within the standards of ethical medical practice.

This includes the way providers and their offices communicate with their patients, treat them while they are in the office, and provide the best care available to all patients.

Although most of these practices aren't illegal per se, they can make a provider or his office liable in court.

For example: if a patient wasn't treated to the best of the provider's ability because of their race or sexual orientation, then that provider would be liable if anything happened to that patient due to lack of adequate medical care.

In a hospital or large physician group setting, there may also be ethical committees. These gather in special situations to decide on the correct ethical medical treatment of patients. This is to avoid problems with treatment and to avoid future litigation, if necessary.

There may also be medical billing laws on the books regarding the standards of ethical business practice, such as discrimination. Any other specific laws would vary state-by-state.

See also: ethical considerations for medical billers.

Contracts with insurance

Perhaps one of the biggest governing documents in medical offices are the provider's contract with insurance companies. These include regulations ranging from how long patients have to wait in the waiting room to how claims are billed and sent.

For every insurance company that a provider takes, he or she has to sign a contract which regulates the practices of the doctor and negotiates the payment amount for each code that the provider bills.

This contract includes clauses about the ways the provider's office will treat patients in the office (usually within the standards of ethical medical practice, and for reasonable and necessary services). The contract also includes important billing rules which the provider's office has to follow.

Medical billing laws

One of these rules is about balance billing.

When a provider signs a contract with an insurance company, he agrees to take a certain percentage or payment amount for specific services.

The amount that the physician bills over the agreed upon amount with the insurance must be written off by the doctor's office.

This means that the provider cannot bill the patient for any amount over the negotiated rate. If a provider does do this, it's called balance billing. Balance billing is illegal, per your contract with the insurance company.

Medical billing fraud

Perhaps one of the biggest problems within the healthcare industry is medical billing fraud. This means that the provider's office is knowingly billing for services that weren't performed, or that are inaccurate.

The insurance company then pays more, which ultimately fattens the doctor's wallet.

Medical billing fraud is a serious offense and isn't taken lightly by the federal government. Depending on the extent and amount of the fraud, providers may have to pay huge fees or spend time in jail.

Good business practices

Besides all of the many regulations governing medical practices, doctors and their staff have to have good business practices. Many of these are not federally or locally governed, but concern the way you treat customers and the quality of service that you provide.

No matter what types of business you run or work in, it's important to make sure that you provide the best care possible and treat your customers like you would like to be treated yourself. The medical industry is no different!

We also recommend the ebook The Basics of Medical Billing for getting a good grasp of the industry.

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