• Uncertain Future for Percentage-Based Billing Arrangements
  • August 19, 2008
  • Law Firm: Krieg DeVault LLP - Indianapolis Office
  • An Illinois appellate court recently held that physicians are prohibited from entering into fee-splitting contracts with third-party medical billing companies.  This decision is expanding the dialogue as to the future of percentage-based billing arrangements.  While there is currently no federal law that prohibits such contracts, some states regulate these arrangements. 

    The Office of the Inspector General ("OIG") has historically disapproved of percentage-based billing arrangements.  The OIG's main concern has been the risk of the third-party billing companies upcoding, billing false claims, and duplicate billing in order to increase compensation.  The OIG has published its opinion and recommendations encouraging providers to take an active role in ensuring that claims are billed correctly.

    Alternatively, the Healthcare Billing and Management Association advocates for such arrangements, recognizing the difficulties faced by providers if they are forced to pay a flat-fee for services, with no incentive for the billing companies to produce a favorable result. 

    Aside from the recent court decision in Illinois, only New York and Florida explicitly prohibit percentage-based billing arrangements.  However, unlike Illinois, New York and Florida legislation has prohibited such contracts with respect to only Medicaid billing.