Compliance Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)
If an audit or investigation uncovers billing errors at your healthcare company, you will have to pay back any overcharges that you obtained from the errors, as well as other financial penalties. You will also likely have to implement and execute a Corrective Action Plan that will ensure that the billing problems do not surface again in order to keep your eligibility in the healthcare program.
Your healthcare company is responsible for creating that Corrective Action Plan. It has to satisfy the payor or federal agency that is demanding it, and has to bring your healthcare company into billing compliance. However, it should also not be so demanding and onerous that it cripples your company’s ability to function.
The team of consultants at Corporate Investigation has helped doctors, medical professionals, and healthcare executives craft Corrective Action Plans that are effective at bringing your billing process into compliance, while also being easy to implement and keeping your company efficient.
What is a Corrective Action Plan?
A Corrective Action Plan is a course of action that health insurers and federal agencies often require after they have found that your healthcare company has been making severe or systemic billing errors.
Private insurers closely monitor the bills that you send them for reimbursement after providing essential healthcare services to the insurer’s policyholders. Federal law enforcement agencies, like the Centers for Medicare and Medicaid Services (CMS) do the same for people who are on government-funded healthcare programs, like Medicare, Medicaid, or Tricare.
When these public or private entities find signs that your healthcare company is overbilling for the services you provide, they will investigate. If those audits and investigations find concrete evidence that there are billing errors that have resulted in overcharges against their program, they will demand recoupment. If those errors are systemic, regular, or significant, these public and private insurers will demand that you implement a Corrective Action Plan to fix your billing system and prevent the errors from happening again in the future.
Generally, you will not have much of a choice over whether to implement a Plan. If you refuse to implement one, private insurers will likely terminate their contract with you, while public payors will often strip your company of eligibility for reimbursement from government-funded programs.
However, it is up to you and your company to propose a Corrective Action Plan. This puts you in a good position to move your healthcare company forward after a costly finding of billing noncompliance and overcharges. Rather than having a Plan imposed on you by the entity that has accused you of overbilling it, you can put one together that ensures future compliance while also preserving your company’s efficiency and interests.
Corrective Action Plans Have to Prevent Future Billing Errors
First and foremost, your Corrective Action Plan must satisfy the payor that has found billing discrepancies. If it does not, the payor can make you ineligible for publicly-funded healthcare programs or can terminate your contract.
Generally, payors accept Corrective Action Plans that follow the “IERAIF” protocol. These plans have the following components that ensure future billing compliance:
- Identification of problematic billing codes,
- Evaluation of the magnitude of those issues,
- Root cause analysis of the issues,
- Action plans that correct the underlying root cause,
- Implementation of that action plan, and
- Follow-up.
Each of these steps bears an explanation.
Identification
The first aspect of every Corrective Action Plan is to identify the issue. If the Corrective Action Plan is being imposed because an audit or investigation has discovered billing errors, then the results of the investigation can be used to put together this step of the Plan.
However, there are some cases where the audit’s results are not clear or detailed enough to help put together your Plan. In these cases, an additional internal audit may be necessary.
Evaluation
Once billing discrepancies are identified, acceptable Plans have to evaluate how severe they are. This asks whether the billing error is an anomaly or a rule. If the billing error is widespread, then the amount of the overcharge is likely to be far higher than if it was an isolated incident. Evaluating the scope of the billing problems is essential for understanding the severity of the issue.
Root Cause Analysis
After identifying the billing problems and ascertaining their extent and severity, the next step that most acceptable Corrective Action Plans take is to find the root cause of the problem. Billing errors rarely just happen. They are often the result of a misunderstanding or disconnect somewhere within your healthcare company. Some common issues include:
- An outdated compliance policy
- A healthcare professional routinely using the wrong billing code
- A poorly-trained medical coder not knowing the difference between two medical procedures
Figuring out what went wrong and what led to the billing error is the only way to prevent it from happening again.
Action Plan
The core element of every good Corrective Action Plan is the action plan, itself. Once the root cause of a billing error has been isolated, it needs to be fixed. The action plan is the blueprint for what those fixes will be.
This is the portion of your Corrective Action Plan that the disgruntled payor is most interested in seeing. It has to be thorough, effective, and feasible. It has to persuade the payor that the Plan will work and that the billing errors will not happen again.
Implementation
All Corrective Action Plans should describe how the fix will be implemented at your company. While this is often straightforward, the details matter. For many healthcare companies, explaining the logistics for putting their action plan into place is tricky.
Follow-Up
Corrective Action Plans should also include a protocol to follow-up on the implementation of the action plan to ensure that it is working the way it was intended to work. Without an effective follow-up plan, it can be impossible to tell if the fixes that were implemented have done their job.
Frequently Asked Questions About Corrective Action Plans
What are Some Common Action Plans to Take to Fix Billing Errors?
Every Corrective Action Plan should be unique and tailored to the specific billing errors that were uncovered in the audit or investigation. However, some of the most common types of action plans that get implemented are:
- Updating training material or providing additional training to billing personnel
- Revisions to the company’s compliance protocols
- Completely overhauling the compliance mechanisms
- Adopting better verification procedures
- Adding penalties for noncompliance or incentives for compliance records
In many cases, a mixture of these fixes serve as the core component of a Corrective Action Plan.
Can I Dispute the Need to Implement a Corrective Action Plan?
You can dispute the need for a Corrective Action Plan. Doing so, however, generally means challenging the outcome of the audit or investigation. There are often numerous steps that you have to complete before you can take your appeal to court, especially if the Corrective Action Plan is being demanded by a private insurer. Those steps are generally outlined in your contract with the payor.
When is a Corrective Action Plan Required?
Corrective Action Plans are typically required after an audit or investigation has uncovered a significant amount of billing discrepancies and errors. If the errors were severe or pervasive enough, your payor will likely demand that you take specific precautions to prevent them from happening in the future, or else the payor will cut your healthcare company off from its sources of funding. Those specific precautions that you plan to take are detailed in the Corrective Action Plan.
Can I Create a Corrective Action Plan Without a Consultant?
You can, but the complexity of fashioning one that is sufficient for your payor is something that overwhelms most healthcare executives. Additionally, if you create one but your payor is not satisfied, the costs are significant. In the best case, you will have spent lots of time creating the Corrective Action Plan, only to have it rejected and get sent back to square one. In the worst case scenario, though, your payor rejects your proposed plan and terminates its relationship with your company. Even if your Plan is accepted, without significant experience in crafting these proposals, it is unlikely to be the most efficient way for your company to meet the demands of your payors.
What are the Risks of Not Creating One?
The primary risk of not creating an effective Corrective Action Plan is the termination of your relationship with the payor that is demanding one. Whether they are a private insurer or a public healthcare program, your payor is demanding that you implement a Corrective Action Plan in order to stop systemic billing errors. This comes with the implied threat that they will end their contract with you if you do not comply.
Additionally, not creating a Corrective Action Plan will leave those billing errors unfixed. This can jeopardize other contracts that you have with other insurers, potentially exposing your healthcare company to additional liability and the likelihood of a subsequent audit that also demands a Corrective Action Plan.
The Consultants at Corporate Investigation Can Help
Creating, implementing, and executing a thorough and effective Correction Action Plan can mean the difference between keeping and losing eligibility to a publicly-funded healthcare program or a lucrative contract with a huge private health insurance company. It can also prevent another situation where your healthcare company is accused of billing errors that could lead to substantial recoupments of overcharges.
The consultants at Corporate Investigation have helped numerous healthcare companies put together Corrective Action Plans that satisfy payors and insulate the company from further liability. Contact them online or call their office at (866) 352-9324 for help.