OIG Alert On Reassignment of Claims By Physicians 

The OIG recently issued and advisory alert to physicians cautioning them to exercise caution before reassigning their right to bill the Medicare program and receive Medicare payments.  Physicians may be liable for false claims submitted by entities to which they reassigned their Medicare benefits.  The OIG statements encourages physicians to use heightened scrutiny of entities prior to reassigning their Medicare payments.   The OIG alert described recent cases where physicians have been entangled in cases that were caused by third parties who improperly use reassignment authority.

OIG recently reached settlements with eight physicians who violated the Civil Monetary Penalties Law by causing the submission of false claims to Medicare from physical medicine companies. The physicians reassigned their Medicare payments to various physical medicine companies in exchange for Medical Directorship positions. While serving as Medical Directors, the physicians did not personally render or directly supervise any services. There was evidence that the services the physical medicine companies claimed the physicians performed were not actually performed or were not performed as billed.

 Other physical medicine companies falsely billed Medicare using the physicians’ reassigned provider numbers as if the physicians personally rendered the services or directly supervised a “technician” rendering the services. Many of the owners and operators of the physical medicine companies were criminally prosecuted. OIG determined that the physicians were an integral part of the scheme and pursued their liability under the Civil Monetary Penalties Law.

 As described in the OIG alert, physicians need to exercise due diligence whenever they reassign their ability to obtain reimbursement.  Physicians have the right to access billing information of the provider t0 whom reassignment is made concerning the services the physician is alleged to have performed and for which the entity billed Medicare. Physicians have unrestricted access to claims submitted by an entity for services that the entity billed using the physicians’ reassigned provider numbers.  Physicians should exercise this authority provide added assurances that the services for which the entity billed Medicare were, in fact, performed and were performed as billed.

Failure to provide this type of due diligence can expose the physician to possible penalties in the event that the reassigned provider misuses the physician’s billing rights.

View the OIG Special Alert

Billing of “Incident To” Services In Physician’s Office

Physician offices will generally bill for certain services performed by non-physician personnel as “incident to” the services of a physician.  “Incident to” services generally means services or supplies that are furnished as an integral, although incidental, part of the personal professional services of the physician.

The determination of whether a service is provided “incident to” a physician’s services can also have physician compensation implications.  The Stark law permits a group practice physician to be compensate based on personal production and “incident to” services.  Services that cannot be billed “incident to, such as diagnostic imaging services, cannot be credited directly to the physician when determining compensation within the group, a number of requirements must be met in order to bill a service as “incident to” the physician’s service performed in a physician’s office (as opposed to an outpatient department of a hospital).  The “incident to” billing requirements are summarized by the Center for Medicare and Medicaid Services in Chapter 15 of the Medicare Benefit Policy Manual.

Services and supplies commonly furnished in physicians’ offices are covered under the incident to provision. Where supplies are clearly of a type a physician is not expected to have on hand in his/her office or where services are of a type not considered medically appropriate to provide in the office setting, they would not be covered under the incident to provision.  Supplies usually furnished by the physician in the course of performing his/her services, e.g. bandages, and oxygen,  are also covered.

To be covered supplies, including drugs and biological, must represent an expense to the physician or legal entity billing fir he services or supplies. For example, where a patient purchases a drug and the physician administers it, the cost of the drug is not covered.  However, the administration of the drug, regardless of the source, is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug would have been covered if the physician purchased it.

The physician must directly supervise the personnel performing the applicable service.  Direct supervision in the office setting does not mean that the physician must be present in the same room with his or her aide.  However, the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services.  The availability of the physician by telephone and the presence of the physician somewhere in the institution does not constitute direct supervision.  The physical presence of the physician is required in order to bill the service “incident to” the physician’s service.  In a group practice setting, other group members can supervise services that are ordered or directed by another physician member of the group.  However, a physician group members must be available in the office suite in order to bill the service on an “incident to” basis.  If there are no physicians in the office at the time that the service is rendered to a patient, the service cannot be billed. Even if the provider has the ability to provide the applicable service independently, physician supervision must be present if the service is billed “incident to” the service of a physician.  There must also be a primary physician professional service furnished to initiate a course of treatment.  The physician must provide the initial service and the non physician practitioner’s service must be related to the initial service in order to be billed “incident to.”

 The personnel providing the services must have  legal relationship to the entity that is billing the service as “incident to” the service of the physician.  In most cases this will not raise a problem because an employee of the practice will be billing the services.  However, this issue can raise a problem in cases where an outside provider supplies personnel to operate the technical component of medical equipment.  Inappropriate billings for “incident to” services present a significant compliance area for physician practices.  Policies should be put in place to direct staff on the appropriate rules to assure that a service is correctly billed.

Agressive Anesthesia Billing Advice Can Be Costly

I wanted to alert anesthesia groups to what I consider to be some very bad advice that is being provid ed by some billing consultants.  If taken, the advice could put your group in the midst of a lawsuit with a third-party payor or even a claim of insurance fraud under state insurance laws.

By now, pretty much everyone understands the general rule for billing multiple medically directed CRNAs.  It is industry standard to compensate a provider for up to four medically directed CRNAs; provided that the seven basis elements for medical direction are performed and documents in the patient’s record.  Industry standard and Medicare regulation permit reimbursement for multiple medical directions, but total reimbursement is never allowed in amounts that would exceed 100% of what the anesthesiologist would be paid if he or she had performed the service on their own.

 Medicare imposes the 100% restriction by compensating both the anesthesiologist and the CRNA 50% each when the anesthesiologist is medically directing up to four CRNAs.  The overall limitation is generally followed in the private insurance context by either reimbursing 100% of the anesthesiologist charge or by paying 100% of the first claim to be processed.

Some billing companies have begun giving extremely aggressive, and I believe extremely risky, advice to their anesthesia clients.  In some cases, there may be a history of the anesthesia group “self-discounting” their medically directed cases so they cannot be viewed as double billing for medically directed cases.  Double billing would occur if the group billed and collected for 100% of both the anesthesiologist and the CRNAs charge.  This is fairly clear.  Billing for both providers can be justified in some instances, but the presence of both providers must be medically directed and well documented in the medical record.  Special coding modifiers are used to indicate when a claim is being made for 100% of both the CRNA and anesthesiologist’s time.

Some aggressive billing companies will recommend that the anesthesia group end a previous practice of pre-discounting their bills without notice to the insurance provider.  This is sometimes done by the billing company without first advising the client.  This practice has the effect of greatly increasing revenues because it in effect double bills the insurer for medically directed cases.  The case coding remains the same as the group previously coded; indicating a medically directed case.  The effective per unit cost doubles virtually overnight.  In some cases, it may continue undetected.  Usually the insurance company will eventually notice that anesthesia costs are increasing.  At the point of discovery, the insurance company will seek recoupment of amounts that it has overpaid.  Most contracts will permit the insurance company to withhold future payments to offset previously overpaid amounts.

Even though the group may have relied on the advice of a billing company, the group really has no meaningful defense once the insurance company discovers that a change in billing practice without prior notice resulted in a significant overpayment.  The amount of overpayment can climb into the millions of dollars before it is discovered.

 If this practice took place involving the Medicare program, there is no question that it would create liability under the False Claims Act and could possibly even trigger criminal charges for false billing.  Most states have insurance fraud statutes that create civil and/or criminal liability for submitting false or fraudulent insurance claims that could apply to the type of practice.

The Federal False Claims Act could expose the practice to three times the actual total amount of the improperly billed claims plus between $5,000 and $11,000 per claim.  There can be hundreds of claims involved, so the dollar amount of exposure can be financially devastating.  The application of state insurance law statutes will vary by state.  However, the financial and criminal exposure from this type of practice can be significant under state law as well.

The group will always remain “on the hook” for the consequences of billing for their services; even when they were advised to undertake the practice and often even when the practice was commenced without their knowledge.  You may have a lawsuit against the billing company, but the insurer, the OIG, DOJ or state enforcement agencies will look primarily to the physician or the group when problems arise.

If you have been presented with “unique” billing opportunities that promise to net your increased revenue, take great care.  It is always possible that you can legitimately amend your practices to net more revenue.  You should be cautious before implementing any changes in billing practices.  If you are being promised something that may be too good to be true, it probably is.  If you have any doubts, contact a health care attorney before changing your practices.

Once the issue is raised by a third party, you will necessarily be on the defensive.  The additional revenues that you receive along the way will not come close to justifying the pain and anguish you will go through following detection.

Be careful of who you choose to do your billing.  Make certain that you bind them to a contract that restricts the type of activity described in this article.  Make certain that you have an ongoing dialogue with your billing company about their practices.  Make certain that you periodically audit their activities under your compliance program.

What Not To Do If An Employee Alleges Fraud

In the course of some reading on anesthesia billing issues, I came across a case from 2002 that clearly describes how not to handle an employee who alleges that your practice may have a billing problem.

 Brandon v. Anesthesia & Pain Management Associates, Ltd., 277 F.3d 936 (2002) involved a physician who became suspicious that other members of his anesthesia group may have been pumping up the billings a bit.  Specifically, the physician felt that other members of his group may have been falsifying the number of operations that they were supervising in order to qualify for “medically directed” reimbursement rates.  He also alleged that members of the group may have altered billing sheets to indicate that they had performed work, even though they had left the hospital for the day.

 It is not clear from the case whether the physician’s allegations were true or proved.  However, the reaction of the anesthesia group where the physician raised these issues was far short of ideal from a legal standpoint.

The allegations were raised by the physician during a board meeting.  A few weeks after the disclosure, the physician was told that he should start looking for other work.  The physician asked for more information on his shortcomings and was not provided with any details.  At that point, he began keeping a journal of suspected billing problems.  A few months later, the physician was notified that he would be required to leave his job by the end of the year.  The physician reiterated his complaints at that point.  The complaints were met with strong, vulgar language (which you can read in the case).  He was told that he did not have a contract and that the group would make life difficult for him if he did not resign.

The group was found to have violated Illinois’ retaliatory discharge laws for taking action against the physician who had alleged billing fraud.  The court upheld the state law claim even though the Federal False Claims Act provided a civil remedy for the physician.

It should be pointed out that the physician had a possible claim as a “qui tam” litigant under the False Claim Act, assuming the facts described in the complaint were true.

This case provides a textbook example of how “not to” address employee allegations of billing deficiencies.  All such allegations should be taken seriously and investigated.  Your practice should adopt compliance policies to provide procedures to follow when employees or others make complaints.  Handling complaints in the manner of the group in this case, exposes the group to a great deal of unnecessary risk.  Once a complaint is made, make sure is it investigated.  If there is a problem, take appropriate steps to remedy the situation.  In some cases, this may require self-disclosure and repayment.  When in doubt about what to do, consult your health care compliance attorney.

OIG To Review Accuracy Of Present-On-Admission Indicators – Hospital Acquired Conditions

 In 2008, CMS began requiring hospitals to submit indicators for present-on-admission (“POA”) with each Medicare diagnoses code.  This enables CMS to identify which diagnoses were present when the patient was admitted and which developed during the term of the stay in the hospital.  Hospitals do not receive any additional compensation relative to conditions that develop during the term of the hospital stay.  In fact, hospitals with high rates of hospital-acquired conditions receive reduced Medicare payments under the Affordable Care Act.

 The 2012 work plan includes a new item relating to hospital-acquired conditions.  The OIG will be using certified coders to review claims for accuracy of POA indicators.  It appears that the OIG will be providing this information to CMS to assist CMS in fulfilling its responsibilities to reduce payment to hospitals with high levels of hospital-acquired conditions.  This action item reflects increased focus on the issue of hospital acquired conditions.

Diagnostic Imaging – Medicare Requirements Radiology Test Coverage

We often get questions regarding the conditions of coverage for non-hospital (radiology group) coverage of diagnostic radiology services.  Most questions involve the level of supervision that is required under Medicare rules and the requirements that a treating physician order the applicable test.  Oftentimes, these questions are tied to issues relative to the Stark Law exception for diagnostic radiology services that are performed following a consultation request from another health care provider. 

There are three core requirements for a radiology test to be covered under Medicare. The test must be properly ordered by a treating physician (with limited exceptions), the test must be performed by an authorized supplier, and the test must be performed under the proper level of physician supervision.  This article will briefly cover all three of the prerequisites to coverage of diagnostic radiology tests. The requirements described in this article applies to outpatient tests. Tests ordered in the hospital context are subject to slightly different rules and is beyond the scope of this article.

 Who may order diagnostic radiology tests?

The Medicare reimbursement rules have strict standards for determining who is authorized to order a diagnostic radiology test. The rules are different depending upon whether the provider is located in a hospital or in a non-hospital setting such as an independent diagnostic testing facility or physician’s office.

Generally, in a non-hospital setting, a diagnostic radiology test must be ordered by the treating physician. The treating physician rule is located in the Medicare regulations and requires that the diagnostic test be ordered by the physician (or in certain circumstances a non-physician practitioner) who furnishes a consultation or treats a beneficiary for a specific medical problem and who uses the results of the diagnostic radiology test in the management of the patient’s medical problem.

Generally, the Radiologist performing the test is not permitted to order a diagnostic radiology test.  There are certain exceptions to the treating physician rule which were described in Medicare Transmittal 80. Transmittal 80 describes limited circumstances where a radiologist is permitted to order a diagnostic test and still receive payment for the technical component under Medicare rules.

A radiologist is authorized to order a diagnostic mammography test based upon the results of an initial screening examination.  Where the treating physician cannot be reached and this is documented in the patient’s chart , the testing facility may furnish additional Diagnostic tests if the interpreting radiologist at the testing facility documents that there are abnormal results with the test originally ordered by the treating physician and that an additional test is medically necessary. In order to rely on this exception, the fact that the treating physician was not available and that additional tests were medically necessary should be well documented in the chart.  This exception requires the results of the test to be communicated to the treating physician and used by the treating physician in treating the patient’s medical condition.

Where medically appropriate, the interpreting radiologists is also permitted to make determinations regarding the parameters of the diagnostic test contained in the initial order from the treating physician. In cases where there is a clear and obvious error in the initial order, the interpreting physician may make appropriate modifications. The intervening physician may also cancel orders based upon the patient’s medical condition at the time of the diagnostic tests.

Except for the limited circumstances described above and included in Transmittal 8, the radiologist must always rely upon the order that is made by the treating physician and may not independently order diagnostic radiology test.

Who Is Qualified To Perform the Radiology Test?

The second major requirement for the coverage radiology services in a non-hospital setting is that only a qualified provider of the services may be reimbursed. Qualified providers include physicians, group practices of physicians, approved portable x-ray suppliers, independent diagnostic test testing facilities, nurse practitioners or clinical nurse specialist as authorized under state law, FDA certified mammography facilities, clinical psychologists for certain types tests, qualified audiologists, pathology slide preparation facilities, clinical laboratories for certain tests, and radiation therapy centers.

 Level of Physician Supervision For Diagnostic Imaging Tests

The last of the major requirements for coverage of radiology services is the level of physician supervision that is required given the specific test being performed. Radiology services must be provided under at least a general level physician supervision. Additionally, certain tests must be provided under direct or personal supervision, which require higher levels of physician presence and involvement. Failure to provide the appropriate level of physician supervision and to document the supervision in the chart will result in loss of coverage under Medicare and Medicaid. Any claims submitted in spite of not meeting the supervision requirements will be considered to be not reasonable or necessary by CMS.

There are a few exception from the physician supervision requirements for certain limited types of tests. It must be kept in mind however that these exceptions are Medicare only exceptions and there may be other federal or state laws that apply to require physician supervision. Tests that are excepted from physician supervision requirements include diagnostic mammography procedures, diagnostic tests performed by a qualified audiologist and certain psychological tests.

You must determine whether general, direct or personal supervision is required in order to bill the applicable diagnostic radiology procedure. Failure to meet the appropriate supervision requirement will lead to loss of reimbursement. This can also be an area of potential civil money penalty exposure if billings are made in spite of there not having been appropriate supervision. Thus, the supervision requirement is a significant compliance issue for medical practices who must establish and maintain appropriate policies and procedures regarding supervision of various levels of radiology diagnostic test.

Each level of supervision has very specific requirements that must be met. For this reason it is important to know which level of supervision is required for the specific test being performed. General supervision requires that the procedure be furnished under the physicians overall direction in control. Physician presence is not necessarily required during the performance of procedures that require general supervision.  Under general supervision the physician is responsible for general supervision and training of support personnel who are actually performing the test services. The physician is also responsible for maintaining the necessary equipment and supplies for the safe operation of the diagnostic test.

Direct and  personal supervision each require higher levels of physician involvement and generally require some level of physician presence throughout the performance of the test.  Direct supervision in the office setting requires that the physician be present in the office suite and immediately available to furnish assistance. Physical presence in the office suite must be maintained throughout the entire performance of the procedure. The physician is not required to be physically present in the room where the procedure is performed unless there is a need for the physician’s presence due to some problem that arises during the course of performing the test.

The highest level of physician supervision is personal supervision. Personal supervision requires a physician to actually be present in the room during the performance of the procedure. Personal supervision generally involves diagnostic tests with invasive or otherwise dangerous aspects.  One significant example of a test that requires personal supervision are contrast studies.

It is important to know what level of supervision is required for the test that is being performed. The level of supervision that is required for each test is included in the Physician Relative Value Fee Schedule.  The CMS web site includes a spreadsheet that designates the level of supervision that is required for a variety of services including diagnostic imaging services.  The spreadsheet includes a column for “physician supervision.”  The column indicates a numerical value with “1″ indicating general supervision, “2″ indicating direct supervision and “3″ indicating personal supervision.

 Physician practices and compliance officers should be certain that their policies are in line with CMS requirements for coverage of diagnostic radiology test. Radiology groups must be certain that the tests that they are charged with performing meet each of the requirements stated above. Radiology groups need to be certain that the test is ordered by the treating physician unless inapplicable exception is present, and that the appropriate level of physician supervision is met for the type of test that is being performed.

 For more information regarding the requirements for radiology services and other legal issues that affect radiology practices and providers, please contact John Fisher at the Ruder Ware Health Care Industry Practice Group.

 ESRD PPS Form CMS-265-11

Effective January 1, 2011, §153(b) of the Medicare Improvements for Patients and Providers Act (MIPPA) requires the implementation of a bundled ESRD prospective payment system (ESRD PPS). The ESRD PPS provides a single payment to ESRD facilities that will cover all of the resources used in providing outpatient dialysis treatment, including supplies and equipment used to administer dialysis (in the ESRD facility or at a patient’s home), drugs, biologicals, laboratory tests, training, and support services.

Form CMS-265-11 must be completed by all independent end stage renal dialysis (ESRD) facilities that are not hospital-based for cost reporting periods ending on or after January 1, 2011.   Submit the form to your fiscal intermediary (FI)/Medicare administrative contractor (MAC) (hereafter referred to as contractor) no later than the last day of the fifth month following the close of your cost reporting year.

Recent OIG Billing Audits Are Reflective of Risk Areas for Hospital Billing

The Office of Inspector General Audit Division has released the results of a billing audit that it performed relative to Norwood Hospital, a 264-bed acute care facility located in Norwood, Massachusetts. The audit included certain identified claims for inpatient and outpatient services provided to beneficiaries from July 2008 through June 2010.  The OIG  audit covered $1,204,371 in Medicare payments for 198 claims (123 inpatient and 75 outpatient) that were judgmentally selected by the OIG as potentially at risk for billing errors.  A complete report of the Norwood audit can be found at: Norwood OIG Audit Report

The audit found that the Hospital complied with Medicare billing requirements for 99 of the 198 claims. However, 99 claims had errors, resulting in overpayments totaling $206,836. The OIG determined that the overpayments occurred primarily because the Hospital did not have adequate controls to prevent incorrect billing of Medicare claims and did not fully understand the Medicare billing requirements.

The audit of Norwood was part of the OIG’s routine process to identify certain billing areas that are at a high risk of error.  The OIG has announced that it plans to conduct more of this type of review on an ongoing basis.  As such, the nature and outcome of this review process can be instructive to hospitals who may find themselves on the receiving end of one of these audits.
The OIG has outlined the general areas where it will focus its audits and has identified these areas as “risk areas.”  Risk areas identified by the OIG includ claims billed for:

• inpatient short stays,
• inpatient same-day discharges and re-admissions,
• inpatient claims billed with high severity level DRG codes,
• inpatient claims paid in excess of charges,
• outpatient claims billed with modifier -59,
• outpatient claims billed during inpatient stays,
• outpatient evaluation and management services billed with surgical services,
• outpatient claims paid in excess of charges, and
• outpatient dental services.

The report from the OIG identified more specific errors that the Hospital was found to have made and wich led to the overpayment determination.  These specific findings are quite instructive.  Facilities should consider including these areas as potential risk areas for targeted internal review.  In some cases, these areas a facility may wish to provide focused training and instruction to billing staff of other relevant employees in order to reduce the risk of inaccurate claims being made.

Some of the specific areas that were a problem in the Norwood audit included:

• Incorrect billing of Medicare Part A for beneficiary stays that should have been billed as outpatient or outpatient with observation services.
• One claim did not have a valid physician order to admit the beneficiary for inpatient care
• Incorrect billing for inpatient claims with same-day discharges and re-admissions.
• Billing with incorrect DRG codes for several cases with high severity level DRG codes.

Anti-kickback Statutes and Safe Harbor Regulations

Overview: On the books since 1972, the federal anti-kickback law’s main purpose is to protect patients and the federal health care programs from fraud and abuse by curtailing the corrupting influence of money on health care decisions. Straightforward but broad, the law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony. Violations of the law are punishable by up to five years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health care programs.

Because the law is broad on its face, concerns arose among health care providers that some relatively innocuous — and in some cases even beneficial — commercial arrangements are prohibited by the anti-kickback law. Responding to these concerns, Congress in 1987 authorized the Department to issue regulations designating specific “safe harbors” for various payment and business practices that, while potentially prohibited by the law, would not be prosecuted.

Advanced Diagnostic Imaging Service Accreditation Requirement

Providers of the technical component of advanced diagnostic imaging procedures will be subject to new accreditation requirements starting January 1, 2012.  Advanced diagnostic imaging procedures include diagnostic magnetic resonance imaging (MRI), computed tomography (CT), and nuclear medicine imaging such as positron emission tomography (PET).  X-ray, ultrasound, fluoroscopy procedures, and diagnostic and screening mammography are excluded from the accreditation requirement.

The 2008 law that created the accreditation requirement also required CMS to designate accrediting organizations.  CMS has approved three national accreditation organizations – the American College of Radiology, the Intersocietal Accreditation Commission, and The Joint Commission – to provide accreditation services for suppliers of the technical component of advanced diagnostic imaging procedures.

The accreditation requirement applies to all providers of advanced diagnostic imaging services, including physician offices that provide these services.  However, the accreditation applies only to the provision of the technical component and not the physician interpretation component of the procedures.

 There is also a potential billing implication to the new accreditation requirement.  It appears that the end result of requiring accreditation may be that the technical and professional component will not be able to be billed globally following the effective date of the accreditation requirement.  It appears that separate billing would be required due to the fact that the technical component will need to be billed with a “code 95″ indicator while the professional component will not.  This billing issues has not been clarified by CMS.  Providers should seek guidance prior to the January 1, 2012 effective date.

The takeaway is that providers should not only deal with the accreditation requirement but must also re-examine how the services are billed.  This is particularly true in a physician practice that provides both the technical and professional component of advanced diagnostic imaging tests.