Medical Billing Laws

The False Claims Act of 1863 was not intended to apply to medical billing. Its original intent was to protect the government against the fraudulent sale of supplies to the Union Army during the Civil War. Under the terms of the original act, wrongdoers were forced to pay double damages and pay a $2,000 fine for each claim. Anyone filing suit was also entitled to a 50-50 split with the government on all successful fraud claims. The law remained virtually intact until the 1940s and has been amended nearly 50 times since then. The False Claims Act remains one of the toughest pieces of legislation regarding fraud and can be applied to cases involving medical billing.

In 1996, the Health Care Finance Administration created the Correct Coding Initiative. The Initiative had two general purposes. Its main intention was to create a system of national codes for physicians. This would make relocation easier, negating the need for new provider numbers. The second was to promote the practice of correct coding and billing for all medical providers and to reduce allegations of fraud and incorrect billing. The Correct Coding Initiative was originally intended for state and federal programs, but a number of other insurance companies have adopted the practice as well.

In 1996, the Health Insurance Portability and Accountability Act (HIPPA) was created, though it was not implemented until 2003. HIPPA was intended to protect patient privacy and controls what information can be included on medical bills. However, HIPPA does allow a patient's personal health information to be disclosed when necessary. HIPPA specifies administrative, physical and technical safeguards to protect the privacy and integrity of patients.