Is contingency-fee consulting an endangered species?
Consulting firms that assist hospitals in optimizing Medicare and Medicaid reimbursement sometimes charge contingency fees for their services. These fees are based on a percentage of the increased revenue they can help a hospital capture. Although contingency-fee arrangements are not considered unethical, they can result in illegal billing practices because consulting firms may be tempted to up-code to increase their fees. The 1994 investigation of Metzinger Associates, Voorhees, New Jersey, a consulting firm providing services to 200 hospitals in 17 states, found evidence of illegal billing practices and resulted in a complaint filed by the United States Attorney’s Office. Several hospitals were named as defendants. A Fraud Alert issued by the HHS’s Office of the Inspector General earlier this year indicates the government intends to target consulting firms that charge contingency fees. Before engaging consulting firms that charge contingency fees, hospitals should carefully evaluate
