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E&O Insurance

A Solution for The Growing Risks associated with Billing Errors

Government agencies and private insurance payers are stepping up their efforts to recover for billing errors. If you are notified you that you are subject to an investigation due to billings errors, what coverage do you have? Most organizations have malpractice insurance coverage, but nothing that protects them against claims of billing errors, intentionally or otherwise.

Billings E&O insurance provides coverage for defense of the claims as well as payments of fines and penalties assessed for the errors. The allegations can be brought by government agencies thru the False Claims Act (FCA) for Medicare as well as private insurance carriers and by qui tam plaintiff (whistle-blower). The damages, penalties and defense costs can be substantial:

  • Treble damages, plus $10,781 – $21,563 per claim penalty (not per resident/patient)
  • Defense costs average $80,000

The Recovery Audit Contractors (RAC) program provides incentive to not only government agencies, but also its outside contractors to identify billings errors. RAC auditors are incentivized to uncover over-billings and are compensated on average 10% of the over-billings. These contractors are given access to billing data and constantly monitor and audit the billings, looking for red flags or potential false claims. Through these Government programs and qui tam plaintiff lawsuits, the US Government recovered $2.5 and $2.4 Billion in 2016 and 2017 respectively in settlements. The percentage of settlements due to government initiated and other non-qui-tam suits increased with the U.S. Attorney General pledging to make investigating False Claims Act violations a priority for the DOJ.

How do you protect your practice?

​The best protection is for a practice is to have a billings risk management program that includes both proactive and reactive elements. A complete program will allow your practice to prevent errors, as well as discover, correct and defend against unknown errors.

Proactive –  Strict Compliance program

  • Thorough, meticulous records supporting every aspect of billing
  • Regular internal audits and Periodic third party audits of billing

Reactive – Billings E&O coverage

  • Pay Defense costs (including shadow audits)
  • Pay fines and penalties attributed to the allegations.

Limits – $1,000,000 to $10,000,000

Deductibles – $2,500 to $25,000

Min Premiums –  $2,500

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