At issue in Center for Athletic Medicine v. Independent Medical Billers of Illinois and Medorizon, was a portion of the state's Medical Practice Act which prohibits "dividing with anyone other than physicians whit whom the licenses practices any fee, commission, rebate or other form of compensation fro any professional services are not actually and personally rendered." Under the arrangement between the Center for Athletic Medicine (CAM) and Independent Medical Billers (IMB), CAM would pay IMG 4.5 percent on all reimbursements and 6.25 percent on all claims not originally processed by IMB in exchange for processing all approved charges, payment posting and following up on all commercial insurance, Medicare, HMOs, commercial, workers compensation and self-pay accounts with a primary goal of "maximizing CAM reimbursements and minimize your day[s] outstanding from all payors."
In 2005, CAM filed suit against IMB, alleging that defendants breached the contract by failing to maximize reimbursements, handle debt in a timely manner and properly encode charge documents. CAM alleged that, as a result of IMB's breaches of the agreement, approximately 24 percent ? more than $4.4 million ? of CAM's total charges during the four-plus-years term of the agreement were lost and unrecoverable. CAM also alleged that, further, IMB was unjustly enriched by being paid for, but failing to provide, the contracted-for services. In September 2006, IMB filed a separate complaint, seeking to recover unpaid fees allegedly owed by CAM for IMB's medical billing services. The two suits were consolidated two months later.
In a request for summary judgment, CAM argued that the agreement did not violate the fee-splitting prohibition in the Medical Practice Act because the agreement did not influence referral and patient-care decisions. An auditor stated in an affidavit that "denial management is a 'back-end service' that is entirely focused on maximizing payment of medical bills by insurance companies and patients ? that has no impact on utilization of services by the patient ? [and] that the billing company has no impact on the referral of patients to the provider." The auditor further stated that the "practice of billing a percentage of amounts collected for the submission of bills, denial management and advocacy for the consumer has long been established as the most appropriate protocol. The typical business contract between a billing agent and a provider is based on a percentage fee basis on the actual collections ? [and this is] consistent with market practices between the payer and the employer, and between the provider and collection services."
In dismissing CAM's complaint, the circuit court found that the agreement between the parties was void and that, while the policy considerations did not appear to be implicated in the arrangement made between the parties, the plain meaning of the Medical Practice Act and the state Supreme Court's previous interpretation of the statute prohibited the agreement in this case. The district court affirmed; among its reasons: The payment was based on a percentage of CAM's profits (and not based on work actually performed, nor a flat, fixed fee); while non-physicians may receive a fee for services rendered, the fee may not be a percentage of profits or its equivalent; and that, "where an agreement results in fee splitting, the purpose behind the agreement is irrelevant; the agreement is void."
Read the full text of Center for Athletic Medicine v. Independent Medical Billers of Illinois and Medorizon (free registration required).