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Physician Orders – Definition and Reimbursement Implications

Wednesday, January 24th, 2018

Physician Orders – Big Implications but Few Definitions

Physician Ordering Services Physician OrdersI wanted to talk a bit about physician orders. Physician orders hold a great deal of significance in health care. The root purpose of a physician order is to direct other providers to furnish certain services. Services ordered by a physician might include things like therapy services, skilled nursing services, home health, diagnostic testing, and a variety of other therapeutic and/or diagnostic services that might flow from the physician’s examination of the patient.

In addition to the practical application of directing care, health care payors look to physician orders to make payment determinations. The Medicare program places a great deal of importance on physician orders to support claims for ancillary and diagnostic services. Certain services require a physician’s order as a prerequisite to payment on a claim for service. In other cases there may be no direct, fee-for-service payment implication to a physician’s order, but they are still critical to patient safety and to communicate matters that may impact care and treatment of patients.

A few weeks back, my trials and tribulations as a health care compliance lawyer resulted in my need to locate a definition of what constitutes a physician’s order. I looked in the Medicare regulations and was surprised to find that there is no statutory or regulatory definition of what constitutes the order of a physician. This seemed odd given the importance of physician orders as conditions for payment of many Medicare claims. There are references throughout the regulations that require physician orders. I was finally able to locate a definition in a CMS Policy Manual. But if push comes to shove in the context of a case, these policy manuals are not binding on the interpretation of regulatory terms. CMS may define physician orders internally, but that does not necessarilly mean that a court will uphold that definition.

Some states do a better job than Medicare at defining what constitutes a physician’s order. Medicare policy sometimes defers to state law, particularly regarding some of the technical aspects of physician orders such as what constitutes a valid electronic signature. State law should always be referenced when determining issues relating to physician orders, attestation, signatures, and other issues. This does not always provide clarification and, in fact, sometimes it causes confusion. But it is necessary for a full analysis and identification of where there may be uncertainty.

So no I am inspired to do some further exploration on physician orders. When are they necessary? When are they required? What technical requirements apply? Stay tuned to this blog for additional articles and hopefully some fairly comprehensive coverage of physician orders.

Physician Orders Legal and Regulatory Article Series

Physician Order Reimbursement Issues

Physician Orders – Why Are They So Important?

The Verbal Order Minefield

Authenticating Verbal Orders : Compliance Requirements

Third Party Authentication of Verbal Orders

Physician Order – CMS Guidelines on Texting Physician Orders

Gainsharing Arrangement Addressed in New Advisory Opinion

Thursday, January 11th, 2018

 OIG Advisory Opinion 17-09

OIG Advisory Opinion Gain SharingThe Office of Inspector General (“OIG”) recently released a new advisory opinion (Advisory Opinion 17-09 – January 5, 2018), addressing a gainsharing arrangement between a group of neurosurgeons and a health center.  Under the proposed arrangement, a neurosurgery group agreed to implement measures to reduce the costs associated with a defined scope of surgical procedures.  As part of its agreement with the health center, the neurosurgeons were to participate in a portion of the cost savings that resulted from the implementation of the measures.

The OIG has historically issued around a dozen Advisory Opinions addressing gainsharing arrangements.  However, the OIG had not issued an advisory opinion in the gainsharing area since the passage of the Medicare Access and CHIP Reauthorization Act (known as MACRA) in 2015.  That law made modifications to Civil Monetary Penalty provisions that are applicable in the gainsharing area by removing some of the impediments to gainsharing arrangements that previously existing in the Civil Monetary Penalty laws.

Gainsharing arrangements have emerged as a way to align the economic interests of hospitals and physicians in efforts to work together to reduce cost and enhance quality of care.  A gainsharing arrangements provides doctors with economic incentives to adhere to practices that reduce the hospital’s costs associated with defined procedures or treatment courses.  Under traditional fee-for-service reimbursement, a financial incentive is created for physicians to provide more service to maximize reimbursement.  A properly structured gainsharing arrangement creates incentives for appropriate levels of service and rewards physicians for efficiencies and quality outcomes.  Interests are aligned because the facility and the physician, who is often the engine driving the level of care, share in the savings.

Prior to the passage of MACRA in 2015, the OIG expressed suspicion about gainsharing through Special Advisory Bulletins as well as advisory opinions.  This has the effect of chilling the proliferation of gainsharing arrangements because providers were cautious about potential regulatory issues. A major impediment prior to 2015 was the CMP law that restricted hospitals from compensating physicians in order to induce a reduction or limitation on services provided to Medicare and Medicaid beneficiaries.  MACRA clarified that the CMP law was only violated if the payment to the physician is for purposes of reducing services that are medically necessary.  This subtle yet significant change opened the door for the proliferation of gainsharing arrangements.

Coming full circle to Advisory Opinion 17-09, the OIG concluded that the specific gainsharing arrangement described in the opinion would not result in sanctions under the Civil Monetary Penalty rules or the Federal Anti-kickback Statute.  The OIG acknowledged that both the CMP laws and the Anti-kickback had potential implication but that the structural issues of the particular arrangement between the neurosurgeons and the health system would not result in the OIG pursuing sanctions.

By their very nature, Advisory Opinions only apply to the requesting party.  However, we can gain useful concepts from the analysis and conclusions of the OIG relating to the specific facts that formed the basis of their opinions.

Fair market value will always remain an issue in gainsharing arrangements.  The Federal Stark Law, Anti-kickback Statutes, and applicable state laws will require adherence to fair market value standards when payment is made between a referring party and the provider of a service. Advisory Opinion 17-09 provides us with some useful guidance regarding some of the consideration that should go into establishing fair market value and structuring a gainsharing arrangements.  Fair market value concepts in these arrangements are often subtle and must be well thought out to avoid regulatory issues. In addition, concepts of commercial reasonableness, which has emerged as a related but distinct issue impacting payments must be considered in addition to fair market value.

Advisory Opinion 17-09 is worth a review to anyone involved in structuring gainsharing arrangements. By no means should 17-09 be the only guidance that you rely upon because the opinion only touches on a few considerations that were relevant to the structure of the specific arrangement.  Some important factors to keep on your radar when structuring a gainsharing arrangement relate to the determination of baselines that are used to measure cost savings through program implementation.  The frequency and method of calculating available gainsharing amounts is subtle but important for regulatory compliance.  Of course the specific protocols or description of the method for reducing costs should be described in detail, together with a method for determining the level of compliance with those protocols.  Another issue that often arises in these arrangements involves the scope of costs that are allocated to the program.  It is important that costs allocated be reasonable to avoid potential disguised kickbacks.

If you require additional information regarding this article, gainsharing arrangements, or health care issues in general, please contact us through the contact section of this blog.

Dermatology Fraud Risk Areas – Impossibly Long Days

Tuesday, June 27th, 2017

Failure to Supervise and Impossibly Long Days

Payment of $302,000 and Forced Corporate Integrity Agreement – July 2016

fraud and abuse dermatologistsThe government alleged the dermatologist in this case repeatedly billed for services under the “incident to” billing rules during periods when the dermatologist was not present in the office.  Some of the services were allegedly performed when the doctor was traveling out of the country.  The government also alleged the doctor billed for impossibly long days including one day where 26 hours were billed.

This case illustrates the need to comply with the “incident to” billing rules.  Those rules permit a physician extender’s services be billed under the physician in certain circumstances.  In order to qualify to bill incident to, the physician must be physically present within the office suite at the time the extender performs the service.  The physician cannot order the procedure and then leave the office while the procedure is being performed.  There are new Medicare rules clarifying some aspects of the “incident to” billing rules.  There was a previous ambiguity that some providers interpreted as permitting the physician that ordered the service to bill for the services, even though another physician actually supervised the performance of the service.  The rules revision clarified only the supervising physician can bill the services as “incident to” his or her service.  The ordering physician can only bill the service if he or she also supervises the extender.

Dermatology Practice Fraud and Abuse Risks Identified in Florida Case

Tuesday, June 27th, 2017

Dermatologist Fraud and Abuse Risks – Identified from Florida Case Targeting Demotologist

Dermatology Risk Areas Fraud and AbuseAn allegation from a competing dermatologist resulted in a Federal government investigation of a Florida dermatologist.  The dermatologist was accused of charging the Medicare program for unnecessary biopsies and radiation treatments that were not rendered, not properly supervised, or given by unqualified physician assistants.  It was alleged the doctor was not even in the country when some of the procedures at issue were performed.  The unnecessary charges were alleged to have totaled around $49 million over a 6-year period.

The dermatologist did not admit wrongdoing in the settlement.  Rather, he alleged the overbilling resulted from his unique practice that relied on radiation, instead of disfiguring surgery, to help patients.  The doctor claimed he had cured “over 45,000 non-melanoma skin cancers with radiation therapy” over a 30-year period.  The problem with that argument appears to be the fact that the dermatologist was not trained or qualified in providing radiation oncology treatments.

There are a number of interesting things about this case.  The case was brought by a competing physician as a whistleblower.  The physician who brought the case expressed concern about having to treat patients that the accused doctor had misdiagnosed with squamous cell carcinoma.

The case also alleged significant billing for services allegedly provided when the doctor was not even in the office.  The accused doctor alleged he was available by phone while the procedures at issue were being performed.  This raises interesting issues under the rules regarding “incident to” billing.  Those rules permit a physician to bill for physician extender services.  In order to qualify to bill a service as “incident to” a physician’s service, the billing physician must meet supervisions requirements.  The physician must be physically present within the office suite during the performance of the procedure in order to qualify to bill a service as “incident to” the physician’s services.

It appears there were a number of things going on in this case.

  • There appears to have been a pattern of diagnosing a higher level of severity than was supported by the patient’s condition.
  • There was a routine use of radiation therapy, even in cases that were not medically appropriate.  This placed patients at potential risk.
  • There appears to have been questions whether the accused doctor was authorized to perform radiation therapy.
  • There were issues regarding improper use of the “incident to” billing rules when the doctor was not present to actively supervise the service.
  • There was also some evidence the doctor had offered incentives for staff to misdiagnose and over utilize the radiation treatment.
  • There was an alleged kickback arrangement with another physician who operated a clinical laboratory.

Challenging Physician Payment Sunshine Act Disclosures

Tuesday, June 27th, 2017

The Affordable Care Act added the Physician Payment Sunshine Act (Sunshine Act) as section 1128G to the Social Security Act. The Sunshine Act requires applicable manufacturers of drugs, devices, biologicals, or medical supplies and certain group purchasing organizations to report annually to the Centers for Medicare & Medicaid Services (CMS) certain payments or items of value that are provided to physicians and teaching hospitals.  The Sunshine Act also requires CMS to publish payments reported on a public Web site.

In 2013, CMS issued final regulations interpreting and clarifying the requirements of the Sunshine Act.  The final regulations clarify the reporting process, identify exceptions and exclusions from the reporting requirements, and provide further details regarding what constitutes a reportable relationship.  The final rule delineates the specific data elements reporting organizations are required to include and the required reporting format.  Reporting organizations failing to make required reports are subject to potential civil monetary penalties.  Continued

Dental Practice Compliance Programs – Essential Elements of Compliance Policies

Monday, February 13th, 2017

Should a Dental Practice Have a Compliance Program?

Compliance programs are an accepted requirement in most of the health care industry.  There seems to have been less importance attached to the establishment of systematic compliance programs in the dental practice area.  I believe part of the reason why the dental industry has lagged behind other health care providers in the compliance area is that there is very little Medicare reimbursement involved in the usual dental practice.  Certainly much of the reason for compliance program involve Medicare enforcement actions.  However, dental practice that under-emphasize compliance are assuming a great deal of unnecessary risk.

Certainly some dental providers receive Medicare reimbursement for a portion of their services.  Oral surgeons for example regularly perform services that are covered under the Medicare program.  Many practices accept Medicaid reimbursement or reimbursement from other Federal health programs.  Additionally, practices that receive reimbursement from federally funded health care plans are required under Federal law to establish and effective compliance program that contains the “core elements” set forth in Federal law.  The Federal standard required dental providers who receive this type of reimbursement to actively operate a compliance programs that is effective in preventing and detecting criminal, civil and administrative violations and in promoting the quality of care that is provided by the practice consistent with federal regulations.

There are many reasons beyond reimbursement requirements to operate a compliance program.   Dental practices must maintain systematic process to assure compliance with OSHA regulations, HIPAA and state privacy regulations, and a variety of other federal and state rules and regulations.  Some of these regulatory areas are subject to aggressive governmental oversight including periodic audits and inspections.  Other areas are not subject to aggressive enforcement.  All of these areas, even those where there is no aggressive enforcement, can expose the dental practice to liability if a complaint is made by an employee, former employer, patient, competitor, or other individual.  Some of these potential complainants can even establish whistleblower status and can bring private action for recovery.

Some practices that implement compliance programs and perform audits over billing and collection practices are pleasantly surprised when they discover that they have actually been under-billing.  Audit of potential risk areas can indeed identify missed revenue opportunities.  This does not happen in every instance, but there are circumstances where the audit process actually identifies new revenue streams.

For most providers, operating a compliance program will have the benefit of deterring potential future liability.  If detected early, it is much easier to deal with a potential infraction when it is self-discovered before the potential damages become insurmountable.  It is one thing to deal with potential over-payment or failure to follow a regulation.  It is much more difficult to resolve these issues when they are brought into the open from an outside party.  By that time, potential sanctions may have multiplied to an unmanageable level.  For example, if the False Claims Act applies, a simple over-payment can be multiplied by 3, plus $11,000 to $21,000 per claim can be added to the otherwise manageable over-payment amount.

In summary, there is every reason for a dental practice to actively operate a robust compliance program.  Those that believe that a compliance program is not needed because Medicare reimbursement is not present should think again.  Eventually, it is highly likely that the failure to maintain an active compliance program will catch up with you.  I have represented many health care providers who have been subject to the negative impact of not operating a compliance program.  I can tell you that they all share the same regret that they did not deal with compliance proactively while they had the opportunity.

For those of you who are still reading, I want to briefly describe the 7 basic elements of a compliance program.  Each of these elements can be expounded on further, but I will touch on them briefly here.

  1. Appointment of a high ranking member of management to act as compliance officer. In a smaller practice, a compliance responsible individual can be used.  Compliance program structure can be scalable to the size and resources of the provider and the nature and complexity of the business.
  2. Compliance policies should be put in place that describe the process to be used to conduct ongoing compliance activities. Compliance policies will define compliance operations and will also outline requirements in risk areas that are specific to the nature of the practice.
  3. Employees, contractors and others must be trained on basic compliance program elements and risk areas that are applicable to their job functions.
  4. Creating a compliance reporting system and protecting those who make complaints from retaliation or retribution.
  5. Enforcing disciplinary standards that hold employees responsible for following compliance requirements.
  6. Operating a system to continually identify areas of potential compliance risk within the practice.
  7. Maintaining a system of appropriately responding to identified compliance problems through creation of appropriate corrective action, self-disclosure or other appropriate action.

Putting these elements in place through adoption and operation of appropriate policies and standards establishes the central elements of the compliance process.  It is critical that the activity does not stop at the establishment of policies.  A compliance program must be continually operated as a living a breathing process to identify and address risk in a practice manner.  The compliance officer or responsible individual is responsible for assuring the continued operation of the program.

Risk areas in a dental practice include reimbursement rules, licensing and certification standards, OSHA regulations, HIPAA and state patient privacy laws, infection control standards, radiation regulations and standards, documentation requirements, controlled substance regulations and a host of other state and Federal regulatory requirements.  Your compliance program in effect creates the process to identify risk and proactively examine potential areas of risk to determine compliance.  An actively operating compliance program is a necessary elements of every dental practice.

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“Incident to” Billing Rules Clarified by CMS for 2016

Thursday, September 1st, 2016

Recent Changes to Medicare “Incident To” Billing Rules

incident to billing rules supervision requirementMedicare permits a physician to bill for certain services that are furnished by a nurse practitioner or other auxiliary personnel under what is referred to as the “incident to” billing rules.  The “incident to” rules permit services or supplies furnished as an integral, although incidental, part of the physician’s personal professional services in the course of diagnosis or treatment of an injury or illness to be reimbursed at 100% of the physician fee schedule, even if the service is not directly furnished by the billing physician.

A significant requirement to permit the services of physician extenders to be billed as “incident to” services requires direct personal supervision by the physician. The supervising physician does not necessarily need to be present in the same room where the procedure is being performed.  The “direct supervision” standard requires the supervising physician to be “physically present in the office suite and immediately available to furnish assistance and direction” during the time when the  auxiliary personnel is providing the service.

The 2016 Medicare physician payment rule provided some clarification on how the direct  supervision requirement under the “incident to” billing rules operates.  The new rule clarifies that the physician who directly supervises the applicable auxiliary personnel is the only party that can bill the service of the auxiliary personnel as “incident to” his or her service.  CMS considers this to be a clarification of its longstanding policy, but many providers will see this as a new restriction on the application of the “incident to” rules.

To understand the significance of this “clarification,” it is useful to note that more than one physician is often involved in the care of a patient.  It is not uncommon for one physician to visit the patient and order a test or procedure that is supervised by another physician.  Prior to this “clarification,” the physician that originally ordered the service might have billed the service as “incident to” even though another physician actually supervised the performance of the service.  The revised regulatory language clarified that this is not permitted and that only the physician that is actually present in the office suite and supervises the service can bill for the service as “incident to” their service.  When making a claim for services billed “incident to” a physician’s services, the billing number of the physician that actually supervises the performance of the service must be used rather than that of the ordering physician.

CMS clarifies the reasoning behind this rule as follows: “[B]illing practitioners should have a personal role in, and responsibility for, furnishing services for which they are billing and receiving payment as an incident to their own professional service.”

In view of this regulatory clarification, providers may wish to reexamine their billing process and procedures to clarify the correct billing for “incident to” services.  Staff should also be trained on the proper supervision of services that are billed under the “incident to” rules.

Incident To Billing Rules Changed In New CMS Regulations

Wednesday, November 18th, 2015

New regulations issued by the Center for Medicare and Medicaid services on November 16, 2015 change the way that services that are furnished “incident to” the service of a physician must billed. The new regulations provide clarification that the billing provider must be the provider that actually supervises the incident to service.

Previously, regulations stated that the physician supervising the auxiliary personnel need not be the same physician upon whose professional service the “incident to”services base. The provisions in previous regulations that permitted another physician to supervise the incident to service have been removed. Now, the physician who is actually available and actually supervises must be the party whose billing number is connected with the incident to service.

The service that is performed “incident to” the services of a physician can generally be billed at 100% of the physician’s rate under the Medicare fee schedule.  However, supervision and billing standards must be complied with to avoid creating a compliance issue and potential overpayment.

All providers must look at their billing policies and procedures to be certain that they integrate the new “incident to” billing standards into their compliance policies and procedures and appropriately implement the new standard through proper training of their billing staff, physicians and support staff.  This is also a good time to refresh provider training on the extent of supervision that is required in various care settings.

HCQIA and Clinically Integrated Provider Networks

Tuesday, July 7th, 2015

Health Care Quality Improvement Act and Clinically Integrated Provider Networks 

Clinical Integration HCQIAClinically integrated networks present unique credentialing issues that are normally not present in hospital or facility credentialing.  These unique issues stem from the very nature of integrated networks which require providers to comply with evidence-based protocols, individualized care plans, quality metrics, efficiency standards, and other system standards.

In order to assure compliance with these standards, integrated networks need to assert much more control over the clinical practices of its provider members than has historically been exercised in the hospital setting.  Credentialing and recredentialing processes need to be put in place to assure that providers practice in conformance with evidence-based practice protocols, coordinate care with other network providers, and otherwise work well within the system.

Integrated networks face a number of choices when determining how to structure their credentialing and recredentialing processes.  A threshold decision is whether the credentialing process should be structured to take advantage of the immunities that are available under the Health Care Quality Improvement Act (“HCQIA”).

Qualifying under the HCQIA has some benefits but also carries some burdens.  In order to qualify for HCQIA immunities, the organization must implement a formal credentialing, hearing, and appeal process in order to qualify for immunities.

A CIN must also register with the HRSA and is required to make reports to the Practitioner Databank if adverse peer review determinations are made.  The CIN receives a Data Bank Identification Number and can be penalized for not reporting adverse determinations.  The reporting requirement is an issue that provider networks may wish to avoid.  The obligation to report has the practical effect of making peer review actions much more controversial and prone to litigation because a database report is a serious negative mark on a physician’s record.

On the other hand, the immunities offered by the HCQIA can be extremely valuable to a clinically integrated network.  One of the immunities that is available under the HCQIA is from the treble damage provisions under federal antitrust laws.  This immunity cannot be discounted; particularly with provider networks that make more aggressive credentialing decisions based on achievement of quality and cost issues and infirmity with system protocols.

If a choice is made to secure the HCQIA immunities, a comprehensive credentialing, peer review and fair hearing process is required as is use of the Practitioner Databank.  Furthermore, in order to qualify, adverse actions only be taken in furtherance of quality healthcare, after a reasonable effort to develop the facts, with adequate notice and hearing to the affected practitioner.  The Act and interpreting case law have created rather detailed requirements for notice and hearing.  The end result is that extensive procedural processes must be in place and consistently followed by the organization.  This of course adds another layer of complexity and cost to the organization.  At the same time, it greatly decreases the organization’s potential liability exposure which under certain circumstances could greatly exceed the cost of complying with HCQIA requirements.

OIG Fraud Alert – Medical Director Compensation Arrangements

Tuesday, June 23rd, 2015

medical director compsnation

Medical Director – Fraud Alert – Physician Compensation

The Office of Inspector General of the Department of Health and Human Services release a new Fraud Alert on June 9, 2015.  The Fraud Alert relates to physician compensation for medical directorships and other services and warns that the compensation arrangements under these arrangements must be at fair market value and must require legitimate services to be performed in return for that compensation.  This is nothing new for those involved in physician compliance issues. However, the fact that the OIG chose this issue for a special Fraud Alert is significant in itself.

Medical director compensation has gained the attention of governmental enforcers over the years with some high profile cases that have focused on fraudulent medical director arrangements.  The compliance industry has tightened its belt on these issues; requiring strict adherence to policies and guidelines for medical director compensation. Clearly there is a legitimate need for health care providers to retain physicians to provide medical direction of various service lines.  In fact, regulations require medical director oversight in many areas.  Even where there is a legitimate need, it is necessary to carefully structure the medical director arrangement to be legally compliant.

You may find your compliance officer of health lawyer advising even more restrictive structuring of medical director arrangements as a result of this Fraud Alert.  The OIG uses Fraud Alerts to place emphasis on areas of concern.  These issuance must be taken seriously and should cause providers to review their policies, procedures and contracts to assure that they are legally compliant and could withstand scrutiny by external government investigators.

A few things to consider include:

  • Specifically defining the precise services that are required of the medical director.
  • Assuring that contracts are current, validly executed, and have not expired.
  • Require regular logs to be provided by the medical director which detail the services that are actually performed.
  • Require the service logs to correspond to specific duties that are described in the director agreement.
  • Support compensation with external fair market value opinions.
  • Cap compensation to assure that fair market value is never exceeded.

These are just a handful of issues providers need to consider when entering these arrangements with physicians.  For further details, contact your health care attorney or compliance officer.  By all means, pull your medical director agreements off the shelf and make certain that they are legally compliant.  You cannot assume that those arrangements will not be scrutinized by government enforces.

See – Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability June 9, 2015.

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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