Digital Health & Telemedicine

The importance of billing errors and omissions insurance in healthcare: protecting against costly errors

In the complex landscape of healthcare billing, errors and omissions (E&O) can have significant financial and legal consequences for healthcare organizations and the individual’s providing services. The term "Billing E&O" encompasses not only billing errors and omissions but also various regulatory proceedings that may affect healthcare providers. It is crucial for insured individuals to understand the risks associated with audits and lawsuits related to billing practices and ensure they have appropriate coverage to mitigate these exposures.

Billing errors coverage

One aspect of billing E&O insurance is the reimbursement of defense costs, fines, and penalties, as well as shadow audit expenses incurred in billing error proceedings. These proceedings can be initiated by federal or state governmental agencies, qui tam plaintiffs, contractors working on behalf of the government (such as Zone Program Integrity Contractors and Recovery Audit Contractors), or commercial payers. Having coverage for billing errors ensures that healthcare professionals are protected in case of audits or legal actions, reducing the financial burden and potential damage to their reputation.

Coverage for other medical regulatory violations

In addition to billing errors, healthcare professionals may also face other regulatory violations that require legal representation. Billing E&O insurance can provide reimbursement for defense costs and fines and penalties incurred in proceedings related to HIPAA (Patient Privacy), EMTALA (Emergency Medical Treatment and Active Labor Act), and STARK (Physician Self-Referral) violations. These coverages are essential in safeguarding healthcare organizations against potential liabilities arising from non-compliance with medical regulations.

The rise of medical billing audits

Medical billing audits have become a significant concern for physicians and medical facility administrators across the United States. Since the implementation of the permanent Recovery Audit Program in 2010, medical billing audits have gained momentum as the government seeks to combat improper payments in Medicare and Medicaid programs. Specific to telehealth, the Department of Health and Human Services Office of Inspector General found 40% of Medicare beneficiaries used telehealth. The report identified 670 providers improperly billed for both a facility fee and a telehealth visit. Although some providers might be billing this way in error, others might be billing inappropriately to maximize their Medicare payments for each visit. 

Despite ongoing efforts to reduce improper payments, the problem persists, making the risk of audits a tangible threat to healthcare providers. The Centers for Medicare and Medicaid Services (CMS) telehealth CPT codes grew from 103 CPT codes at the start of 2022 to 271 codes for 2022. Ninety-nine of those codes are temporary and will be removed, 63 will remain on the list through 2023

In the complex world of medical billing, the risk of errors and regulatory violations is growing with the financial squeeze on Medicare. Billing E&O insurance is a crucial tool for healthcare professionals and organizations to protect themselves from the financial and legal consequences of these exposures. Telehealth providers are uniquely impacted by this exposure due to the changes CPT codes, CMS limited mental health coverage, and cross-state regulation changes.

Please contact Newfront’s Digital Health & Telemedicine team with questions. 

The Author
Brian Schmid

Account Executive

Brian Schmid serves as Account Executive within the Digital Health and Telemedicine Team at Newfront. With over 11 years of extensive brokerage experience, Brian has progressed through various roles, developing a comprehensive understanding of the industry along the way. Throughout most of his career, Brian has been devoted to serving clients within the healthcare sector. Notably, Brian's expertise lies in medical malpractice and professional liability insurance, particularly for companies operating technology platforms aimed at delivering patient care or enabling medical professionals to provide healthcare services via technological solutions. Collaborating closely with the Newfront Digital Health Team, Brian plays an instrumental role in guiding clients through the intricacies of insurance, empowering them to make well-informed decisions pertaining to risk management. Brian maintains a certificate in Healthcare Risk Management and is currently working on his Associate in Risk Management designation.

Connect with Brian on LinkedIn
The information provided here is of a general nature only and is not intended to provide advice. For more detail about how this information may be treated, see our General Terms of Use.