March 8, 2024 | By Ashley Morgan, Esq. of Liles Parker PLLC
A common issue that arises from a growing practice is how to structure the business to remain compliant while reducing potential liability concerns. Many times, practices grow and continue to operate in the same manner as they did when they only had one to two billing providers. This can work, but it can be a good business decision to sometimes operate different locations or practices as their unique clinic with their tax IDs.
For example, an internal medicine physician in a city may decide that she wants to open a separate practice location in a neighboring suburb. Let’s call her practice “ABC Medicine, LLC.” The physician may not want to go through the process of getting a new tax ID and operating the business as its own entity. It can be “easier” to continue operating it as ABC Medicine’s new location under the same tax ID and add this new location to all of her existing payor contracts. This, however, is when problems begin to arise.
ABC Medicine will now potentially double in size, which is a lot more to manage for the physician who also sees patients full-time. Billing errors may be more likely due to the number of additional issues that need to be attended to by the addition in staff and patients. ABC Medicine’s audit likelihood will increase due to the increased volume of claims. Billing errors could arise, such as billing claims under the wrong practice location. This error could put ABC Medicine at significant audit risk because the data could show providers at multiple locations on the same day or other impossible billing situations, such as providing more than 24 hours of care daily.
If ABC Medicine is audited and receives a poor audit result, the practice could be placed on prepayment review or suspension. Because both locations operate under the same tax ID and NPI, ABC Medicine’s entire business might be unable to operate because its revenue has decreased dramatically overnight.
A good risk-averse step would have been to set up the new office in the suburbs with its tax ID and NPI number. If ABC Medicine, located in the suburbs, operates as its entity while still under the ABC Medicine family umbrella, then the group’s risk is dramatically decreased. If the office in the city gets audited, then the office in the suburbs will not automatically be impacted (although it certainly still could be). This will not resolve all audit risks, and it is essential to continue to conduct internal auditing and monitoring at both practices. Still, it is certainly a better position than operating both clinics under the same tax ID.
Of course, setting up a new practice with a new tax ID has unique challenges. The group with the new tax ID must be credentialed with all payors. However, even if ABC Medicine added a new location, it would still have an obligation to notify payors about the new practice location. The credentialing process can cause delays in billing, but taking complaint proactive steps early on generally leads to fewer headaches down the road, such as a large, extrapolated overpayment after a post-payment audit. In general, setting up your practice locations compliant to accommodate growth initially will pay off in the long run.
