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.

Physician Compensation – Recent Cases Illustrate Risks of Excessive Payments Under Medical Director Agreements

Physician compensation is changing along with the reconfiguration of payment incentives within the health care industry.  Physician compensation issues may be one of the biggest issues affecting the relationship between health care systems and physicians as these changes continue.  These changes are reflected in a number of recent decisions that provide some guidance on the legal topics that affect physician compensation.

One of the most important laws that affect physician compensation for physicians who are employed by a health care system is the Federal Stark Law.  The Stark law prohibits financial relationships between physicians and other providers to which the physicians make referrals for “designated health services.”  It is fair to say that virtually every relationship between a physician and a hospital will involve the referral of designated health services.  Therefore, the Stark Law will nearly always come into play and the payment pursuant to the employment agreement must be structured to comply with the Stark Law.

The Stark Law is a strict liability statute and does not require a showing of intent to violate its terms.  It is implicated based on referrals unless there is an applicable exception that applies to the referral arrangement.  In the case of employed physicians, there is an exception that covers bona-fide employment relationships that can be used to exempt the relationship provided that all of the conditions of that exception are strictly followed.  A bona-fide employment relationship must meet all of the following requirements:

• the employment must be for “identifiable services”

• the amount of remuneration must be consistent with fair market value

• the amount of the remuneration cannot be determined in any manner that takes into account the volume or value of referrals by the referring physician

• the compensation must be “commercially reasonable” even if no referrals were made between the physician and the organization

The recent cases have focused on the issue of “fair market value” and “commercial reasonableness” of the compensation paid from the hospital or health system to the employed physician.  These cases provide some guidance and parameters to examine when negotiating physician compensation.  However, the factual situations in the recent cases are unique and the extent that they will be of guidance to any specific compensation issue is uncertain.

The most recent case United States v. Campbell, 2011 U.S. Dist. LEXIS 1207 (2011) and arises out of the United States District Court of New Jersey.  The case involved the University of Medicine and Dentistry of New Jersey (UMDNJ) which was at risk of losing its Level I Trauma Center license due to a shortage in the number of cardiac procedures performed at the facility.  In order to secure its Level 1 Trauma Center status, UMDNJ developed a recruitment initiative directed towards increasing the number of cardiothoracic patients being served at the hospital.  This initiative focused on entering part-time employment arrangements with local cardiologists who were in a position to refer cardiology patients to the hospital.

The part time arrangements involved entering Clinical Assistant Professor Agreements with these cardiologists which enumerated a list of teaching, lecturing and research activities that the physician were to perform.  The physician in turn received salaries ranging from $50,000 to $180,000 per year.  The physician at issue in the case, Dr. Campbell, entered a part time employment agreement to perform a specific list of teaching related services for UMDNJ.

The US Attorney brought charges against Dr. Campbell and UMDNJ based upon alleged violations of the Stark Law and the Anti-kickback Statute.  The government contended that the primary service actually performed by Dr. Campbell under his part time employment contract was to refer cardiology patients to the hospital and that the contract was actually a sham arrangement designed to cover up payments for referral of cardiology patients.  Through the process, a federally appointed monitor reviewed the arrangements and concluded that the hospital’s program was an illegal device to compensate cardiologists for patient referrals.

The Court in the case was faced with deciding whether the case should be dismissed for failure to state a claim.  In refusing to dismiss the claims made by the government, the Court analyzed the Stark Law employment exception which requires that the payment of compensation to an employee who is in a position to make referrals for designated health services be at fair market value for the services  that are actually provided and that the arrangement be commercially reasonable.

The Court refused to dismiss the case noting that if “there was no requirement to actually perform the duties of [the contract] then the compensation could not be the fair market value for those services….”  The Court concluded that the payment above fair market value for the services that were actually required to be performed would serve some other purpose, such as compensation for referrals.  In the Court’s opinion, the excess payments would violate the Stark Law and would make claims made to Medicare for those services false claims.

This case points out an important point under the Stark Law fair market value employment exception.  Even though there might be a detailed listing of obligations under a contract, there must be some assurances that those services are actually provided.  If the services are not provided, the excess compensation will be considered to be for another purpose such as the inducement for referrals.  As a compliance matter, health care organizations should monitor their contracts to assure that the specific services are actually being performed.  The employed physician and the facility have equal interest in assuring this as both would be in violation of the Stark Law if the services are not provided.

A recent criminal case under the Anti-kickback Statute provides another illustration of the risks associated with medical director agreements that are not properly monitored or, in extreme cases are entered for improper purposes.

The recent criminal case of United States v. Borrasi further reinforces this point and illustrates that there are cases where “sham” medical director payments can lead to criminal liability under the federal anti-kickback statute.  In Borrasi, a physician was convicted criminally under the Anti-kickback Statute for conspiring to receive bribes from a nursing home for referring patients to the facility.  The jury found that the physician and others were placed on the organization’s payroll as “service medical directors.”  They were provided with compensation for a list of services that, according to testimony at trial, they were never really expected to perform.  There was also testimony from employees that the “medical directors” were rarely seen around the facility and that time reports had been falsified in order to make it appear that they performed services at the facility.

In addition to compensation for what were found to be “sham” medical director services, the nursing home also paid for a secretary for the physician’s company and paid lease payments for the building owned by the physician.  There was also testimony that the physician had said to others that he was receiving “free money” from the facility.

From the published case, it appears that the facts in this case were extreme.  However, the case holds value because it further indicates the risks involved with medical director contracts.  In this case there were criminal consequences for the “sham” medical director agreement.  In Borrasi, the government carried its burden of demonstrating that the payments were intended to induce referrals.  In order to prove a criminal conviction, the government must show that “intent” to induce referrals was one of the purposes for the payment arrangement.

Cases where intent cannot be proved may still lead to liability under the Stark Law.  Although no one goes to jail under the Stark Law, the financial consequences can be severe and involve repayment of reimbursement and civil penalties.  Penalties are not inconsequential and can be large enough to cause a great deal of financial damage to the party who is found to be in violation.

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.