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Is contingency-fee consulting an endangered species?
1Cabot Marsh Corporation, Bethlehem, PA, USA.
Summary
Consulting firms charging contingency fees for Medicare and Medicaid reimbursement optimization may lead to illegal billing practices like up-coding. Hospitals must carefully vet these firms to ensure accurate and defensible billing submissions.
Area of Science:
- Healthcare Administration
- Medical Billing and Reimbursement
- Healthcare Fraud and Compliance
Background:
- Consulting firms often use contingency fees, a percentage of increased revenue, to assist hospitals with Medicare and Medicaid reimbursement.
- While not inherently unethical, this fee structure can incentivize illegal billing practices, such as up-coding, to inflate consultant earnings.
Purpose of the Study:
- To examine the potential for illegal billing practices associated with contingency fee arrangements used by healthcare consulting firms.
- To highlight the government's increased scrutiny of such practices, as indicated by a Fraud Alert from the HHS Office of the Inspector General.
Main Methods:
- Review of a 1994 investigation into Metzinger Associates, a consulting firm.
- Analysis of a Fraud Alert issued by the HHS Office of the Inspector General regarding contingency fees.
Main Results:
- The investigation of Metzinger Associates revealed evidence of illegal billing practices, leading to a complaint filed by the United States Attorney's Office.
- A government Fraud Alert signals an intent to target consulting firms charging contingency fees.
Conclusions:
- Hospitals engaging contingency fee consultants must rigorously evaluate their recommended billing submissions for accuracy, credibility, and defensibility.
- The practice of contingency fees in healthcare consulting carries significant compliance risks that warrant careful consideration and due diligence.