David M. Glaser, JD is a health care attorney at Fredrikson & Byron, P.A. He focuses his blog on health care legal issues and policy-related health topics, ranging from how to operate ancillary services to methods for shaping the health care reform debate.
A possible end to provider-based billing: What it could mean for you
Posted by David M. Glaser, JD January 20, 2012 10:25 AM
On Jan. 12, The Medicare Payment Advisory Commission (MedPAC) voted 15-2 to recommend that the Centers for Medicare and Medicaid Services (CMS) eliminate provider-based billing. Recommendations from MedPAC are not legally binding, but since Congress created the independent agency, its recommendations carry great weight. If provider based billing is eliminated, it could slow the pace of physicians being hired by hospitals.
What is provider-based billing?
Currently, under the Medicare program, when evaluation and management services (including physician office visits) are provided in a hospital setting, Medicare lowers the payment to the physician (the “professional component”), but it makes a separate “facility fee” payment to the hospital that is larger than the reduction in the professional fee. The total payment for a service in the provider-based setting is typically approximately 10% higher than the payment in a freestanding clinic. In other words, if identical services are provided in a hospital and in a freestanding clinic, the total payment to the hospital is about ten percent higher.
The payment differential is premised on the belief that the cost of providing services in a hospital is higher than the cost of providing care in other settings.
Why does this matter?
Hospitals regularly highlight the reimbursement differential when they seek to employ or contract with physicians. Hospitals note that if the physician works in a provider-based clinic, the total reimbursement will be higher, permitting higher compensation to the physician. While this payment differential is certainly not the only factor driving the current wave of integration, it is a significant factor.
What will happen?
First, it is important to understand that the MedPAC recommendation has no immediate impact. It is possible that provider-based billing will continue indefinitely. While predicting the future of health policy is inherently a humbling experience, if I had to guess, I would predict that provider-based billing will be eliminated. It is an artifact of cost-based reimbursement. The predominant theme in health care at the moment is lowering payments, and I believe the government will choose to eliminate a payment mechanism that encourages providing care in a higher-cost environment. This prediction may be wrong, and even if correct, the change may be phased in over several years.
Assuming that provider-based billing is eliminated, it will remove one of the incentives encouraging integration. There are, of course, other factors that lead physicians to join hospitals. The fact that hospital have capital to aid in EHR and other investment is one draw. The ability to have a “turn-key” practice is another. A third factor is closely related to provider-based billing. Private insurers often pay hospitals or health systems more per RVU than they pay physician clinics. If private insurers were to adopt the approach urged by MedPAC and pay physicians and hospitals comparably for identical services, that would eliminate yet another factor encouraging physician-hospital integration. It is extremely difficult to anticipate how private insurers will react.
Since some private insurers have expressed concern that physician-hospital integration is raising reimbursement rates, one might expect that private insurers would be eager to take an opportunity to lower their payments by leveling the reimbursement playing field. There have been reports that some insurers are making payments to independent physician practice to encourage them to remain independent. Currently, however, many hospital systems receive higher payment than independent clinics. Whether that is due to the negotiating clout of larger health systems or a decision by insurers to permit higher payments is unknown.
The bottom line is that while the MedPAC vote is not legally significant, it may be a sign of a slight shift away from the current bias toward hospitals. For physicians who wish to preserve independent practice, it provides an opportunity to emphasize that independent clinics have historically operated more efficiently than their hospital-owned brethren. Physicians employed by hospitals needn’t panic, but should recognize that this may ultimately provide a rationale for hospitals to “revisit” (management speak for “lower”) physician compensation. Finally, this should serve as an important reminder for everyone in the health care industry that the reimbursement rules are subject to change at any time.
Allocate liability among partners to limit the risk
Posted by David M. Glaser, JD January 4, 2012 11:29 AM
Perhaps one of the biggest sources of stress to a physician is liability. Malpractice, Medicare overpayments, employment practices and general liability all prompt anxiety. Many solo practitioners remain on their own in part because of fear of becoming responsible for a colleague’s liability. While it is impossible to totally eliminate the risk of liability, there are two actions you can take to greatly limit the risk. The first and most obvious option is insurance. In addition to malpractice insurance, it is possible to obtain insurance to, at a minimum, cover the defense costs associated with audits and investigations. Employment practices and general liability insurance is readily available. I encourage physicians to carefully consider obtaining coverage for all four.
But for physicians who practice with colleagues, there is a second step you can take to lower your risk. Each physician can agree to indemnify other physicians if the first physician causes the other physicians to incur liability. In other words, each physicians says “if you lose money because of my actions, I will make you whole.”
Obviously, such an agreement depends on the promising physician’s financial solvency. If the practice faces a liability that exceeds the responsible physician’s ability to pay, the agreement is useless. But for most routine debts, this is a good mechanism to place risk where it belongs. An agreement can be simple. Our firm has drawn up numerous agreements, and the cost is usually under $2,000.
If you are considering an indemnification agreement, there are a few cautions you should consider.
First, your corporate bylaws (or state law) may limit your ability to enter such an agreement. Before drafting the agreement, make sure counsel considers your corporate documents.
Second, there are some situations where you may wish to spread risk among the physicians. For example, imagine that the practice has a particular income distribution method used for all partners, but the IRS audits only one partner. In such a case, it seems fair for all physicians to bear the cost of the audit, since any one of them may have been audited.
Because it is nearly impossible to anticipate every type of liability, I favor agreements that establish basic principles (i.e., physicians agree to indemnify colleagues for any liability over which they have control, specifically including poor documentation, relationships with device companies, etc.) but that leave the final determination of whether indemnification is trigged to the board.
An indemnification agreement doesn’t eliminate all risk of practicing with other physicians, but it certainly lowers it. And given the very real benefits associated with a group practice, it is an wonderful tool to improve upon a well-proven practice model.
How to prepare for — and deal with — Medicare audits and investigations
Posted by David M. Glaser, JD October 14, 2011 09:20 AM
You don’t need me to tell you that the number of audits and investigations in health care has increased steadily over the last 20 years. The next few blog entries will deal with how you can prepare for an audit or investigation, and how to respond if you are involved in one.
There are several things you should do now to prepare for an audit. First, you should make certain that you conduct regular documentation reviews to confirm that your documentation supports the bill. These reviews can be done internally or externally. If you conduct internal reviews, I recommend you periodically have an outside expert verify that your internal reviewers are neither too lenient or too harsh. Selection of an outside reviewer is important. Talk with the expert to determine his/her approach to reviews. Some consultants tend to view themselves as extensions of the government, while others will act more as your advocate. Before you hire a consultant, understand the consultant’s general view and make certain it is consistent with your expectations.
Be sure to label any documentation analysis as a “review,” not an “audit.” The review is not an audit for several important reasons. Perhaps the most important point is that the review only examines documentation, and the conventional wisdom is that “if it isn’t written it wasn’t done,” for Medicare that is not the law. While I strongly encourage you to document in accord with the Evaluation and Management Documentation Guidelines, the Medicare statute, and guidance issues from CMS makes it clear that if you are able to support that you provided a service, that service is properly billable even without proper medical record documentation. In other words, if you do a 99123, but your documentation, when scored using the E&M Guidelines is only enough for a 99212, I believe it is permissible to bill a 99213. However, since the Medicare statute says that the burden is on a physician to demonstrate that the service was performed as billed, it is important to recognize that a judge will be deeply skeptical of your assertions that you provided services that were not documented.
Rather than trying to convince a judge about the merits of your claim, it is much wiser to document consistent with the guidelines. However, you want to be sure that whoever is conducting your review understands that as the name confirms, they are documentation guidelines, not documentation requirements. The bottom line is that poor documentation creates risk for the organization — but it does not automatically create a Medicare overpayment, nor does it require a refund. If the code billed accurately reflects the work done, you can use the review as a “teaching moment” and move on. (Of course, if the code billed is higher than the work that was actually done, then a refund is almost certainly necessary.)
Make sure that whoever drafts the reviews chooses their wording carefully. I have seen reviews label documentation as “fraudulent” or use other inflammatory and legally inaccurate assertions. I encourage reviews to include the following disclaimer:
“This chart review is not an audit designed to determine whether we have been overpaid or underpaid. First, it is not a statistically valid sample. Moreover, it only reviews the documentation, without attempting to determine the amount of work actually performed. Therefore, these figures are far from scientific. However, since a Medicare review would base the initial overpayment determination solely on the documentation, these figures give you some idea of how your charts would fare in the first phase of a Medicare review.”
You will also want to educate your staff about a few other points before any audit or investigation starts. While most staff recognize that audits are now common, it is helpful to remind them that they are so normal that the existence of an audit or investigation does not automatically threaten the health of the clinic. Preparing staff for the possibility of an investigation can lessen fear if one occurs.
A very, very important part of the educational process is informing the staff how to handle contacts from auditor or investigators. Unfortunately, it is increasingly common for investigators to suggest or even overtly state that it is improper to notify you of the government contact. For example, one orthopedic surgeon I work with received a subpoena that said, “The United States Attorney requests that you do not disclose the existence of this subpoena. Any such disclosure would impede the investigation being conducted and thereby interfere with the enforcement of the law.” The government has absolutely no right to prevent one of your employees from notifying you if they are contacted by an agent. However, your employees will not know that. If a government agent tells them, or even asks them, to refrain from notifying you of the contact, the odds that the employee will disregard that instruction are low even if you have educated them of their rights. However, if you have not prepared them for this occurrence, there is no realistic chance they will inform you of the investigation.
You also want to make sure that staff understand that when they are contacted by a government agent, they are not required to talk. As any fan of cop shows knows, you can refuse to talk with a government investigator. (You do need to know that there are some state licensing boards that can discipline a licensed professional for refusal to cooperate with an investigation. While you can always refuse to speak with an investigator from the Office of Inspector General or the Federal Bureau of Investigation, be careful before refusing to speak with an investigator from a licensing Board. You are, however, generally allowed to take the time to retain legal counsel before speaking with a Board investigator.)
Some care must be exercised when you tell staff that they may refuse to speak with an investigator, because you cannot forbid them from talking with the government. Prohibiting contact with the government is viewed as obstruction of justice. Therefore, you want to notify the employees of their right to refuse to talk with an agent while also telling them they are free to speak to anyone they so choose.
In many states, the law requires you to provide an employee with legal representation if the employee requests it and the investigation is related to their job and the employee has acted in good faith, complied with the law and reasonably believed that their actions were in the best interest of the corporation. Even where the law does not require it, I highly recommend you notify your employees that in the event of an investigation you will hire a lawyer for them.
I have prepared laminated wallet cards that notify physicians and their employees of their rights in the event of an investigation. These cards are free. If you would like me to send you some for your practice, please just send me an email or give me a call.
The next blog entry will focus on how physicians should allocate liability for an audit within the group.