What are Mandatory Medical Billing Compliance Rules for Practices?
 Revenue Cycle Management

What are Mandatory Medical Billing Compliance Rules for Practices?

Janet Scott
Janet Scott
July 18, 2023
Last updated on:

July 18, 2023


Read time: 5 mins

Medical billing is driven by strict compliance rules. These rules have been introduced primarily to standardize how bills are generated and submitted. A compliance-driven billing guarantees accuracy, integrity, and ethical practices. Likewise, it helps to prevent fraud, abuse, and patient privacy violations.

For healthcare providers, adhering to compliance rules brings in several benefits. It is a cornerstone to efficient revenue cycle management, improved patient satisfaction, and overall operational efficiency. 

This blog will explore the various mandatory medical billing compliance rules that practices must follow to ensure smooth billing operations.

Did You Know?
Approximately 10% of healthcare claims are denied due to non-compliance with medical billing regulations in the United States.

Medical Billing Compliance Rules for Practices 

Some of the mandatory medical billing compliances are:

1. HIPAA Compliance Rules

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law in the United States that safeguards the privacy and security of patients' protected health information (PHI). It sets standards for electronic transactions, requires safeguards for PHI, and grants patients certain rights regarding their health information.

According to the HIPAA Journal, the penalties for non-compliance with HIPAA regulations include civil monetary penalties ranging from $100 to $50,000 per violation, depending on the level of culpability.

These rules mandate the use of standard electronic transactions, such as electronic claims submission, to protect the integrity and confidentiality of patient data. Healthcare practices must obtain patient authorization for disclosing PHI, except in certain permitted circumstances. HIPAA also grants patients the right to access and obtain copies of their medical records. Practices are required to maintain detailed records of PHI disclosures and implement administrative, technical, and physical safeguards to maintain privacy and prevent unauthorized access or breaches.

Protected Health Information (PHI) refers to any individually identifiable health information transmitted by a covered entity or business associate. In medical billing processes, It includes patient demographic details, medical history, treatment records, insurance information, and payment details. Handling PHI in billing requires strict adherence to HIPAA rules. Practices must ensure secure transmission, limit access to authorized personnel, use encrypted systems, and employ measures to prevent unauthorized disclosure.

Steps to Ensure HIPAA Compliance in Medical Billing
Image 1 - Steps to Ensure HIPAA Compliance in Medical Billing

2. Coding Compliance Rules

Coding compliance in medical billing refers to the adherence to established coding guidelines and standards, such as using accurate Current Procedural Terminology (CPT) codes and International Classification of Diseases (ICD) codes. It ensures that coding is consistent and accurate and supports the medical services provided, enabling proper billing and reimbursement.

The Current Procedural Terminology (CPT) coding system is a standardized set of medical codes used to describe medical procedures and services provided by healthcare professionals. Developed and managed by the American Medical Association (AMA), CPT codes are essential for accurate documentation, billing, and reimbursement in medical practices, facilitating efficient communication between healthcare providers and payers.

The International Classification of Diseases (ICD) coding guidelines provide a standardized system for classifying and coding diagnoses, symptoms, and procedures. These guidelines ensure consistency and accuracy in medical documentation, enabling effective communication, statistical analysis, and reimbursement processes across healthcare systems and providers globally.

Maintaining coding accuracy plays a crucial role in medical billing compliance. Errors in coding can lead to claim denials, delayed reimbursements, or even allegations of fraud. Incorrect codes may result in overbilling or underbilling, both of which can have financial implications. Accurate medical coding ensures that the services rendered are properly documented and billed, aligning with coding guidelines. By maintaining coding accuracy, healthcare practices can enhance billing compliance, reduce errors, and optimize revenue generation.

Stratergies to Maintain Coding Compliance in Medical Practices
Image 2 - Strategies to Maintain Coding Compliance in Medical Practices

How are medical billing errors and compliance related?
Medical billing errors and compliance are closely intertwined as compliance rules are designed to prevent and address billing errors. Adhering to compliance guidelines helps minimize errors, ensuring accurate billing, reimbursement, and maintaining the integrity of the healthcare system. To know more about medical billing and coding errors read our blog.

3. Fraud & Abuse Prevention Rule

Fraud in medical billing refers to deliberate deception or misrepresentation of information to obtain unauthorized financial gain. For example, billing for services not provided or performing unnecessary procedures. On the other hand, abuse refers to practices that deviate from acceptable healthcare standards, leading to high costs without intentional deception, such as unbundling services or upcoding.

The False Claims Act (FCA), the anti-kickback statutes, and the Stark law come under fraud and abuse prevention rules. The FCA imposes liability on individuals or entities that submit fraudulent claims to the government for payment. Healthcare providers can face substantial penalties, including treble damages and fines if found in violation. 

The Anti-Kickback Statutes prohibit offering, receiving, or soliciting anything of value in exchange for referrals or generating federal healthcare program business. On the other hand, the stark law prohibits physician self-referrals for certain designated health services. 

Healthcare practices can establish effective compliance programs to detect and prevent fraudulent practices. They should conduct regular risk assessments and implement clear policies and procedures. Also, fostering a culture of compliance and Regularly reviewing and updating the compliance program can help them to stay aligned with evolving regulations and industry best practices.

4. Documentation & Record-Keeping

It is mandatory for medical practices to maintain accurate and comprehensive documentation of patient encounters. The documents must include medical histories, examination findings, treatment details, and other relevant information. The documentation should be timely, legible, and complete ensuring a clear and accurate representation of the patient's health. 

Healthcare providers should follow established protocols and document patient encounters using consistent terminology, abbreviations, and formatting. This consistency ensures clarity and minimizes the risk of errors or misinterpretations in the billing process. Besides, healthcare practices should also establish an audit trail for documentation and reporting. This includes the record of key changes or corrections made to the documentation, along with an explanation for the modifications.  

As per the above rule, every patient documentation must comply with HIPAAs privacy and security needs. Medical practices must protect patient information and take necessary measures to prevent unauthorized access or disclosure of sensitive data. Healthcare practices should also ensure the proper handling, storage, and transmission of patient information. 


While following compliance rules is a must, the constant change in compliance rules regarding medical billing introduces complexity to the process. As regulations evolve, healthcare providers must stay updated and adapt their documentation and record-keeping practices accordingly. The introduction of new rules, guidelines, and coding standards requires ongoing training and education for staff to ensure compliance. Implementing changes across systems and processes can be time-consuming and resource-intensive. Moreover, varying regulations across different jurisdictions or insurance providers further complicate the compliance landscape.

The best way to overcome these combined challenges is to delegate medical billing compliance needs to third-party partners. Hiring a third-party service partner can alleviate the burden of medical billing complexities, ensuring compliance with regulations and improving patient care for healthcare practices. We at Invensis, bank on a knowledgeable team of compliance specialists and advanced tech-driven processes to guarantee compliance with all medical rules and regulations. Contact us to transform your medical billing services and make them more compliant

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