⚖️ 7 Common Legal & Compliance Issues for Small Healthcare Organizations
Running a healthcare practice today isn't just about caring for patients — it's also about navigating a minefield of legal and regulatory requirements. Unlike large hospital systems, small and mid-size practices often lack in-house legal teams, making them more vulnerable to costly missteps.
Here are the most common legal and compliance challenges small healthcare organizations face — and what to watch for.
1. 📝 Improper or Outdated Payor Contracts
What happens: Many small practices accept the boilerplate contracts that insurers send over — often without legal review. These agreements frequently include unfavorable reimbursement terms, shifting audit language, or vague dispute resolution provisions.
Risk: Underpayment, denied claims, and weak appeal rights.
Solution: Have all payor contracts reviewed, negotiated, and updated before signing.
2. 💰 Billing and Coding Errors
What happens: Mistakes in CPT codes, modifiers, or upcoding/downcoding can trigger audits or false claims investigations — especially with Medicare/Medicaid patients.
Risk: Fines, recoupments, or even exclusion from government programs.
Solution: Regular coding audits and compliance training for billing staff are essential.
3. 🔐 HIPAA Violations & Data Security Gaps
What happens: Small organizations often lack formal HIPAA training or fail to conduct required security risk assessments.
Risk: Civil penalties, reputational damage, and breach notification obligations.
Solution: Ensure you have a HIPAA compliance plan, secure email/EMR systems, and training protocols in place.
4. 📆 Missed Timely Filing Deadlines
What happens: Claims are denied because they weren’t submitted within the insurer’s time window — even when services were properly rendered.
Risk: Lost revenue due to denied payments.
Solution: Use practice management software or billing services to track claim timelines — and appeal wrongful denials aggressively.
5. ⚖️ Employment & Independent Contractor Misclassification
What happens: Misclassifying employees as independent contractors (or vice versa) can lead to tax problems, liability for unpaid wages, or compliance issues with licensing boards.
Risk: Lawsuits, back taxes, penalties.
Solution: Review all agreements and job roles with a healthcare attorney familiar with employment law.
6. 💼 Medical Liens and Improper Collection Practices
What happens: If you treat personal injury patients, you may be relying on medical liens for reimbursement. But without proper agreements and notice, your lien may not hold up.
Risk: Not getting paid at all when the case settles.
Solution: Use enforceable lien agreements and track lien status with the attorney handling the injury case.
7. 🧾 Lack of Compliance Programs and Written Policies
What happens: Many small providers operate informally and don’t have a documented compliance plan — especially if they’re not billing federal programs.
Risk: Increased risk of fines, loss of licenses, or inability to defend against audits.
Solution: Create a simple compliance program that covers:
HIPAA
Billing & coding
Anti-kickback / Stark compliance
Employee conduct and training
🧠 Final Thoughts
Small doesn’t mean safe. In fact, small healthcare practices are often more exposed to legal and compliance risk because they’re running lean.
But the good news? You don’t need an in-house legal department — just proactive guidance, clear contracts, and good habits.
Need help reviewing your payor contracts, policies, or HIPAA plan? Let’s make sure your practice is protected.
📧 eric@hurleylawgroup.com
🌐 hurleylawgroup.com
🗓️ Book a compliance check-in today!