Reimbursement
The call for generating more value in the delivery of and payment for health care has encompassed a long-standing criticism of the fee for service payment model that has traditionally applied to physicians. How to compensate physicians, whether as a physician group or health system employer, is an on-going bulwark to those efforts. In "Coping with Merging Streams: Legal Issues in Physician Compensation", Alice reviews multiple new forms of revenue from payment for physician services including – 6 forms of commercial payment along with the challenges of the new evaluation and management codes, 5 federal programs and another 4 vehicles often associated with different payment. She considers their relative effects and the compliance issues each generates, as well as contractual pitfalls they present. Then she examines the practical impact these programs have had on the physicians they are intended to motivate, taking into account as well the widespread consolidation of physicians with health systems. Against that background, including the advent of the value-based enterprise exceptions and safe harbors, she explicates issues in physician compensation presented by the 2022 Stark rules on physician productivity and profit-sharing within a group. She includes the need to account for external audits and voluntary repayments and offers contract guidance. The complexity of these sources of revenue combined with the restrictions of Stark present a major challenge in physician compensation relationships and agreements.
Continuing her theme on the need for vigilance in billing company relationships, a second circuit Court of Appeals case [Retina Grp of New England PC v Dynasty Healthcare LLC, No 21-1622-cv (2dCir, July 7, 2023] rejected a medical billing company’s claims against a Medicare Administrative Contractor,(MAC) who misclassified the billing company’s client as non-participating when they intended to enroll as participating. The MAC never notified the billing company of the classification, but paid some claims at the lower rate for non-participating physicians. The problem was discovered a year after the relationship between the biller and client ended. The client sued the biller for negligence, breach of contract and fraud. The court found it had no jurisdiction because the biller neglected to exhaust its administrative remedies before suing the MAC. But the real story in this case is that the rate at which a physician practice is paid is one of the most essential responsibilities of a billing company. The failure of the biller to confirm the proper enrollment of its client is unfathomable. The client’s reliance on the billing company with little oversight of what was being paid and at what rate is also problematic and underscores Alice’s advice regarding the need for clients to monitoring billing even when the activity is outsourced.
It is widely believed that false claims liability attaches only to claims submitted to federal payment programs. This is wrong. An 11th Circuit case, recently upheld the criminal conviction of a physician assistant for submitting faked physical therapy claims with visits charged as well, for patients who were also paid kickbacks for coming to the clinic offices to use their Blue Cross Blue Shield coverage. While the facts were egregious, the point of highlighting this case is to underscore that all compliance programs should include attention to commercial claims submission as well. Besides criminal exposure, more likely is the use of mail fraud and false claims act charges, including cases instigated by whistleblowers, where the claims submitted were to commercial payers.
Many of our clients have struggled over the years with the effect of Local Coverage Determinations (LCDs) issued by their local Medicare Administrative Contractor (MAC) in Transmittals, FAQs and newsletters. They can be found on each MAC's website, but they don't always cover the same topics, MAC to MAC; and they sometimes seem inconsistent with National Coverage Determinations (NCDs) which are available in the NCD manual. In 2019 the Supreme Court said in Azar v. Allina Health Services, that the government, in Medicare, must use a formal notice and comment period to issue a rule that creates a 'substantive legal standard', as for coverage. The controversy since has been what types of decisions fall into that category. For example, when the split/shared visit rules were first published, they were not in regulation and after the Allina case, were withdrawn. (See AGG Note) The determination of what qualifies as a substantive legal standard is relevant not just to reimbursement and payment issues, but also in false claims cases. The common wisdom had been that the government could not rely on sub-regulatory guidance for enforcement of its programs. The 9th Circuit in Agendia v. Becerra (July 2021), acknowledging Allina, has staked out a position that LCDs need not be published pursuant to notice and comment if they do not establish a substantive legal standard. The standard in the LCD at issue was that the services be 'reasonable and medically necessary'. The MAC uniformly refused to pay for Agendia's diagnostic testing because it did not meet that standard. Interestingly, the statute itself sets forth the reasonable and medically necessary standard. But, the MACs have a lot of room for interpretation there. Taken together, this means LCDs can be imposed on providers without having been formally published subject to comments. These cases have also changed the way we do legal research. We now look for MedLearn Matters articles, newsletters, FAQs and other informal publications to inform our guidance. We suggest our clients do the same.
Among the designated health services (DHS) which are the subject of the Stark law restrictions are outpatient prescription drugs. When the Stark statute was enacted, Part D of Medicare didn't even exist; so, while it was obvious that drugs paid for under Part B, (many of which are provided in physician offices in infusions and otherwise) were covered, the answer was not so clear for drugs paid for by Part D, which may come from pharmacies, including physician owned pharmacies in some places. In fact, there is a specific regulation which sweeps Part D drugs into the ambit of Stark DHS. Physician groups which own pharmacies need to take this into account in their compensation and profit-sharing formulas.
Medicare has the right to recoup Medicare overpayments, pending a provider’s appeal through the byzantine appeals process. Here we address two cases on recoupment: one refusing relief from recoupment pending review – the traditional response to these complaints – and, one forestalling recoupment by issuing a TRO. Since the paralysis of the Administrative Law Judge review process, which has stalled appeals for two years and more despite Federal court orders to move things along, the courts have approached the recoupment issue variably. A Federal court in Ohio refused to enjoin the recoupment of almost $11 million dollars from a home health agency based on extrapolation of a review of 30 records after an initial overpayment determined the year before found about $60,000 in overpayment. Accident Injury and Rehabilitation PC et al v. Azar (C/A No4:18-Cv-02173-DCC). Even though the agency argued that it would be irreparably harmed before it could exhaust its appeal rights, the court found the agency’s success on review was unlikely and that the agency could not show it was deprived of a due process right. By contrast, a SC Federal Court found that a chiropractic practice, from which Palmetto GBA had withheld $1.8 million in response to an AdvanceMed ZPIC audit, was entitled to a temporary restraining order against the recoupment, PHHC, LLC v. Azar, No1:18CV1824 (ND Ohio) since exhaustion of administrative remedies would harm the practice in a way that could not be recompensed, despite what the traditional law requires. The court found that the ALJ process was the most important step in the appeals gauntlet, since new evidence can be introduced there. Since ALJ’s overturn lower decisions 60% of the time (!), this court found the likelihood of success on appeal was great. The TRO was issued. These decisions highlight the types of arguments that can succeed when the government’s appeal process is broken. It has been virtually impossible in the past to get any relief from recoupment pending appeal. There is some light now in this tunnel of process.
The Medicare enrollment system represents an ongoing, high-stakes administrative headache for Medicare Part-B providers. Keeping enrollment data current is a complex, detail-oriented process, but the price for failure is the potential loss of Medicare billing privileges. In his article, “The Medicare Part-B Enrollment Obstacle Course: It Hasn’t Gotten Any Easier,” Daniel Shay revisits the complexities of the Medicare enrollment system, looking at what has and hasn’t changed in the past eight years. He examines real-world examples of Part-B providers running afoul of Medicare’s enrollment requirements, and their largely unsuccessful attempts to challenge their subsequent loss of billing privileges. Finally, he offers practical strategies for maintaining accurate enrollment data to avoid problems in the first place.
Although physicians have long thought that the E/M codes might better be referred to as the S/M codes, in the 2019 Medicare Fee Schedule, new codes which will pay for non-face-to-face services, and some minor liberalizations in documentation requirements have been adopted. We address these in our new AGG Note "Time Becomes Money, And Yet", along with a review of the policies which will go into effect in 2020 for advanced diagnostic imaging and in 2021(!) for new E/M codes, although they are adopted now. Unlike most commentators who have merely reported on the content of these new codes and approaches, we think the fact that they are largely not in published regulations or even Manuals will have major significance for how the government can use them in enforcement or False Claims actions. We highly recommend a review of the Note, which is crisp and to the point.
Physicians have for years complained about the burdens payors impose on them. None of these burdens is decreasing; and physician dissatisfaction with private payors as well as Medicare has been increasing. In response, physicians are finding new ways to avoid or blunt the effect of these burdens through different pathways, including direct contracting with employers, direct contracting with patients, concierge care, and opting out of Medicare. All of these options and the contracts which support them are addressed by Alice in her article "End Running The Payers." She also considers the extent to which these programs do lower physician burden. While the numbers of physicians choosing these pathways is small, all physicians should understand what these programs are, what they offer and the risks and benefits of adopting any of them.
Cancer care represents a major segment of health care expenditures in the USA and the payment to physicians has been perversely oriented around the drugs they administer rather than the services they perform in meeting the complex needs of their patients. Recent history has demonstrated multiple attempts at reforming this payment, including most recently in CMS’ Oncology Care Model which will become Oncology First Model after 2021. In “Paying Physicians for Cancer Care”, Alice explains the inception of this out of whack system, considers reform efforts in commercial payment, looks closely at the OCM and criticisms of it and then sets forth the principles which apply in a new design suggestion which has been presented to CMS. She also sets forth contractual issues to make cancer care payment viable. The new proposal, initially presented in a White Paper which set forth five principles for program design, also figured as the focus of a Health Affairs blog post and an interview with Alice and two other members of the design team.
We have written extensively on the voluntary repayment rules and Dan has added to that with his new publication “Key Questions and Answers for Medicare Voluntary Repayments,”. Alice focuses on a specific unappreciated trap lurking in the audit process as it relates to voluntary repayments in “Heightened Peril From Physician Audits” because an external audit by one of the myriad federal contractors is prima facie credible evidence there is something to be looked at. It is more important today than ever to approach an audit properly in order to come out with a positive result. Internal audits create their own separate obligations to take action. Physician practices and anyone else paid under Parts A and B would do well to take heed.
Physician and other practitioner documentation of Medicare services has been made easier. In the 2020 Medicare Physician Fee Schedule, regulations now permit a physician to merely review and verify (by signing and dating) notes in a patient’s medical record that were made by other members of the medical team, including students, rather than re-documenting the notes. This change both shortens the time physicians spend documenting, will cut down on “note bloat,” where physicians and other health care practitioners have had to reiterate past notes to otherwise comply with documentation requirements. These new rules do not apply only to E/M services: they apply regardless of the type of services including diagnostic testing and procedures. Physicians, however, still need to be careful regarding how they document their services, and ensure that their documentation can withstand scrutiny by auditors.
Because of COVID-19, CMS issued an emergency waiver of certain telehealth requirements, and made additional changes in coverage and reimbursement for a range of telehealth services. Physicians can be paid for the performance of certain telephone visits for both new and established patients; telehealth services no longer need to be provided only in rural settings only; additional telehealth visits may be performed more frequently than previously; nursing home residents may be “visited” using telehealth instead of requiring in-person visits; and direct supervision for services may be provided virtually using real-time audio-video technology. These and other changes are shifting how care is provided to patients for the duration of the federal COVID-19 emergency declaration (still in effect, as of November, 2020). In a video interview, Dan discusses how COVID-19 and increased usage of telemedicine has changed how health care practitioners are caring for their patients now, as well as what may come in the future, in a video interview with Infection Control Today. As he has observed, with health care providers forced to meet with patients remotely, the health care industry is learning just how effective and efficient telemedicine can be. As a result, it is likely that telemedicine will become more widely covered and, hopefully, reimbursed at equal rates in comparison with in-person visits. Watch the 15 minute interview for more of Dan’s thoughts on this issue.
The use of off shore services and personnel to contribute to the delivery of health care has a long standing presence in health care. Yet, state law, federal reimbursement principles and other federal laws create barriers to the use of overseas personnel, resources, information technology and more in the delivery of health care. Issues of whether supervision can be rendered from afar, licensure requirements, HIPAA restrictions and Medicare reimbursement prohibitions create a challenging context to make these arrangements work. Dan Shay explores all of this and offers practical contractual language to use in any of these undertakings in his article "The Lure of Foreign Shores: Outsourcing of Overseas Health Care Functions" in the 2021 edition of the Health Law Handbook.
The role of the billing function in physician practices is critical-- so critical that many groups do not trust themselves to do it effectively. They outsource this role. Hospitals are increasingly doing the same thing. The billing function is also essential in emerging transactions such as leasing a practice to a health system, private equity management contracts, MSOs and more. In her article "Billing Company Contracts: Accountability and Pitfalls" Alice elucidates who does this work, explores and challenges the traditional compensation model for these tasks and offers an alternative approach. She addresses performance metrics to be considered, and then dissects the allocation of responsibilities to be set forth in these agreements. She further assesses the implications of the Medicare reassignment rules, the OIG's Model Compliance Guidance and its import, and then presents information on what happens when things go wrong. This little addressed area of the law merits significantly more attention than it has gotten to date.
Participation in the Medicare system is an issue that trips up many health care practitioners, and is one on which Dan has written previously 4 separate times. Medicare Enrollment: A Never-Ending High Hurdles Race, Successfully navigating the Medicare enrollment appeals process, Potential problems exist in the Medicare enrollment process, The Medicare Part-B Enrollment Obstacle Course: It Hasn't Gotten Any Easier While obtaining Medicare billing privileges is complicated in and of itself, maintaining such privileges on an ongoing basis can likewise prove complicated. A failure to adequately maintain Medicare enrollment records can lead to a loss or suspension of billing privileges, which can lead to denied claims and potential Medicare overpayments. In two new articles, Dan comes at the issue of Medicare enrollment from opposite angles. In “The Ongoing Ordeal of Maintaining Medicare Enrollment,” Dan addresses the many hurdles which physicians must clear just to maintain Medicare billing privileges. In “Medicare and Non-Covered Services,” Dan examines how physicians provide services outside of the Medicare system, and what that can mean for their continued participation with Medicare.
With the questions about the health reform legislation's constitutionality resolved, the pace of change in the provider community has accelerated. In a well documented, sweeping review of physician practice developments, with special attention to how physicians can remain independent, Jeff Goldsmith in his very interesting commissioned paper for the Physicians' Foundation looks at significant trends. These include rising costs for physician practices, widespread retirement of baby boomer physicians in the near term, and the ways in which health policy gives preference to hospital employment, which likely is unsustainable in current forms. Looking at The Future of Medical Practice and The Need to Innovate he offers examples of approaches including micro-practices, well supported IPAs, and groups which take professional services risk payments, among other innovations. He offers policy recommendations for change. He makes the case that hospital employed physicians are vastly less productive than their private practice colleagues and their financial performance lags substantially as well. He posits that many of the current arrangements will be unsustainable. We have been making the same points since 2009 as well as more recently.
We would take issue with his views of innovative payment initiatives though, since he does not address the PROMETHEUS Payment® model which does not give physicians insurance risk, but rather risk to manage care effectively. Not only that, but its budgets (Evidence-informed Case Rates®) begin with good, clinical practice guidelines. Jeff's arguments regarding financing the medical home don't go as far as what we have described as to how PROMETHEUS Payment can sustain the medical home. Physicians today are paid fee for service for a non-insulin dependent diabetic about $311 for a year of care. Using the PROMETHEUS Payment model, the same physician would be paid for the same patient for the same year of care $2329 AND the system would save substantial amounts of money currently spent on potentially avoidable complications. Physicians should learn about this!!!
New payment models are only part of the innovations physicians will have to adopt. We now offer a suite of useful tools that can be deployed by physicians in shaping their own new futures including (1) our two versions of the clinical integration self-assessment tool -- one for networks and the other for group practices, organized medical staffs or newly coalescing ACO-type organizations; (2) our Three Tuesday Teleconferences addressing leasing the practice, co-management, and bundled payments; (3) our teleconference on compensating physicians for quality and value as well as our articles on the subject. Physicians can be far more proactive in designing their futures. The moment is now.
Bundled payment has been touted as the next, new aligned incentive payment model. Although rarely defined in the many discussions about it, bundled payment by definition combines two different providers, typically traditionally paid differently, into one budget or, in more radical versions, subject to a single prospective payment. Today's bundled payment models usually include an episode based payment. The Medicare ACO program anticipates a bundled payment model in its requirement that participating entities have the ability to allocate dollars to the disparate participants. In fact, though, in that program hospitals, physicians and others will be paid on a business as usual basis, and then, at the end of three years, if they have saved money over a benchmark there will be one payment to share. PROMETHEUS Payment offers a different model. If providers want to be paid separately, they are at risk together in a single budget, but PROMETHEUS Payment has a software program that can allocate savings appropriately to the diverse participating providers, based on good clinical practice guidelines which form the basis for the case rate. The incentives are the same, but the payment methods differ. Many commercial bundled payment and ACO programs follow the Medicare model. Herein lies the rub. Unless there are clear rules at the outset, providers may end up in the rancorous fights that characterized the few instances in the 1990s when PHOs received dollars, usually held by the hospital. CMMI asked Alice to present a technical assistance webinar for potential participants in their Medicare Bundled Payment Initiative on contractual and governance issues among providers in administering bundled payment models, and in "Avoiding Food Fights: The Value of Good Drafting to ACO Physician Participants" she elucidates the types of policy decisions that should be made today and documented governance documents and contracts among providers to avoid the problems of tomorrow. The third of our Three Tuesday Teleconferences addresses many of these issues with an opportunity for participants to ask questions.
A case decided in the Commonwealth Court of Pennsylvania has taken the quality-payment nexus further without any “never event”, or a finding of fraud, or even a bad outcome to the patients involved. In Pinnacle Health System v. Department of Public Welfare (2008 WL 140985) the hospital appealed from payment denials affirmed by the Bureau of Hearings and Appeals. The Medicaid agency denied payment for psychiatric hospitalizations where the patients were not seen by a psychiatrist on a daily basis. The hospital argued there was no regulation requiring it. The agency argued that this failure caused care to fall below the regulatory requirement that care be rendered in accordance with "accepted medical treatment standards." Both sides had experts -- the hospital's testifying to the fact that daily visits were not medically necessary, the agency's that daily visits were the standard of care. While the standard of judicial review for administrative purposes was whether the determination by the agency was supported by substantial evidence, the court held that even though the standard of ‘accepted medical treatment standards’ was general, it was not improperly vague and did put providers on notice of what was expected of them.
Considering (1) standard managed care contract language regarding treatment in accordance with accepted standards of care, (2) the burgeoning expectations that American health care should be provided at higher levels than it is, (3) increasing fraud and abuse liability for quality failures and (4) that malpractice caselaw which addresses the standard of care has imposed as the standard of care treatment regimens not widely applied, the Pinnacle case offers a tightening view of the quality imperative. Without a finding of malpractice, fraud, or a “never event” payment denial for failure to deliver services properly is a new reason to do the right thing at the right time in the right way.
Pay for performance programs show no signs of abating in popularity, yet their impact remains equivocal. Whether quality would be better if physicians within groups also paid themselves based on quality performance is unknown. If the incentives of P4P are to have impact, how are those monies distributed to the individual physicians once the group gets paid? There is virtually nothing in the literature on point. In “Physician Compensation for Quality: Behind The Group’s Green Door,” Alice looks at the data on P4P programs, the basics of traditional compensation within groups and then presents the findings from a unique survey which was sent out on her behalf by the AMGA producing responses from 14 groups around the country who are variably paying for quality as part of physician compensation. Some report significant improvement in quality performance too. Alice then looks at the payment reform models on the horizon and concludes that traditional notions of productivity, on which most current group compensation models turn, will not reward what the new systems, and most particularly the PROMETHEUS Payment® model (www.prometheuspayment.org) is designed to generate. She examines whether the Stark rules on compensation will be a barrier to changed, creative approaches, concludes that it will not, and then looks at what employment contracts will have to accommodate to make physician compensation for quality within groups real and of value to both patients and physicians.
Pay for performance, while a positive development in terms of focusing attention on the relationship between quality results and payment systems, cannot sustain itself as a business model. How PROMETHEUS Payment® addresses the shortcomings of P4P is important to understand. In addition, group practices are ideally suited to take on PROMETHEUS Payment®, but only if they also change their systems to be more efficient with measurable quality. In "Getting Beyond P4P: PROMETHEUS Payment® and Group Practice", Alice elucidates the potential positive nexus between the new payment model and group configurations.