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.

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.

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.

As new rules go into effect for documenting E&M Codes, the government is now offering what they consider a more streamlined approach to documenting based on the medical decision-making. We are neither clinicians nor coders, but their rules don't seem so simple to us. They have offered a variety of guidances about how to document based on medical decision-making, but for the other option, documenting on time alone, they have offered almost no guidance as to what records are required. First, all clinicians documenting E&M services must be sure that the scope of the service they render was medically necessary. You can spend the time of a level 5, when that service is not appropriate for the patient's condition, a problem your good documentation cannot cure. Assuming the time spent with the patient has been necessary, using the suggested timeframes associated with the levels 2-4 now combined and level 5, we suggest that clinicians take a page out of the lawyers' playbook and keep hour sheets. This is a discipline that most young lawyers have to learn. The quality of time-keeping is directly associated with how contemporaneous the documentation is to the time spent. We suggest documenting time spent both in the medical record and on separate hour sheets.

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.

The OIG’s Work Plan for 2017 will focus on some issues we have already identified as problematic and others which will be of concern to our primary client basis.  Among these will be a focus on transitional care management and chronic care management for which there are, still today, no regulations or manual provisions. The requirements to bill for these services are set forth in FAQs, Fact Sheets and MedLearn network articles.  Alice has published 3 articles criticizing the general approach including one which examines closely the evolution of fee for service CPT codes which pay physicians for time when they are not face-to-face with the patient. Other topics the OIG will address present fair warning to those who would bill for them to make sure they are doing it right, including physician home visits, prolonged services, sleep studies, physical therapy utilization and chiropractic services.

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.

In April 2014, Alice was a keynote speaker at the highly regarded Siemens Health Executives Forum.  There, she made the point that hospitals are standing on a burning platformof reduced reimbursement with stronger demands for better value.  Together those forces mandate that hospitals find ways to work more effectively in clinical integration initiatives with physicians. Her presentation was provocative and picked up and highlighted by Hospitals and Health Networks Daily.

            

The health reform legislation called on the Secretary of HHS to develop a pilot program under Medicare to evaluate bundled payment. The Bundled Payment for Care Improvement (BPCI) initiative has launched. The law says the pilot will last five years, must be budget neutral, and if the Secretary finds it to be beneficial to do so can be extended in time and scope. In other words, bundled payment could become mandatory for Medicare for categories of conditions, after 2017! Commercial payors are also experimenting with bundled payment, but with relatively tepid results. In "Bundled Payment: Avoiding Surprise Packages", Alice explores what we know about bundled payment, bringing to bear her experience with the PROMETHEUS Payment® model which is the most sophisticated of these programs. She describes Medicare's previous experience with bundled payment and presents some of the methodological problems with the way the new program is unfolding. Following on her previous work on contractual and governance issues in bundled payment, she addresses those and also issues in payor-provider contracts. There are ways to avoid trouble in these transactions; and bundles for the sake of bundles alone are not worth experimenting with if the bundles are not designed properly. Caveat emptor!

All of the messages to physicians from the new health reform law and the market are that they need to improve the value of their performance in terms of efficiency and cost effectiveness, improved quality and patient-centricity and satisfaction. An obvious means to this is the deployment of less expensive clinical personnel to extend the physician's reach. In "Highest and Best Use Revisited", Dan Shay picks up a topic last considered by Alice in 1999. He describes the new pressures for physicians to focus closely on when and how to use non-physician practitioners to deliver care. He explains Medicare's rules with particular attention to nurse practitioners and physician assistants and reports on the positive impact that proper use of these ancillary personnel can have on the new mandates for improved performance.

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.

Now that the interim final Medicare ACO regulations have been published, and the first Pioneer ACOs announced, much of the furor over who will move to be an ACO should begin to subside. The regulations, while an improvement over the proposed regulations still describe a complex, infrastructure-intense, highly detailed set of requirements, with much of the potential reward still speculative. Alice has long been skeptical of the ideas embedded in the legislation. In many ways a more interesting opportunity has been presented by the Center for Medicare and Medicaid Innovation (CMMI) in its call for proposals to be a bundled payment pilot. Here, CMMI has provided four models for providers and 'conveners' to experiment with different models of bundled payment, with the proposers given the flexibility to define their own episodes of care around which payment would be bundled. The thirty day post discharge model is for physicians to prevent readmissions. There is a model for integrated systems. One for hospitals alone, and one which very much reflects the PROMETHEUS Payment approach. In "Here's how to participate in CMMI's bundled payment pilot" (Sept 2011). Alice describes some of the practical implications and legal issues associated with pursuing this opportunity. These projects will be worth watching.

In 2007, Alice conducted a unique survey of the extent to which physician groups compensated their employed physicians for quality.  As physicians consider deploying a range of strategies to enhance their performance, a new snapshot of the state of the art of compensating physicians seemed a worthwhile undertaking. Again, with the assistance of the American Medical Group Association (AMGA) Alice surveyed their membership. In "Compensating Physicians for Quality and Value: A Changing Landscape", she provides an initial report on the responses which came from three times as many organizations as four years earlier.  In 2008, in her longer Health Law Handbook chapter, Alice described the advent of Pay for Performance programs as the primary stimulus to these compensation models. Now, in "Bolstering Change: Physician Compensation for Quality and Value" she looks at the phenomenon of compensating physicians for quality performance and increasingly for value in cost effective approaches to care. In addition to setting the issue of physician compensation in the current enhanced value context, Alice also looks at data on how hospitals are dealing with their employed physicians on this front, and concludes that much like her observations with Jim Reinertsen of those hospital employment/integration strategies without content, she finds that many hospitals are missing a real alignment opportunity by focusing solely on wRVUs in compensating their employed physicians. And, more and more, attention will have to be paid to the cost effectiveness of physician behavior which drives the group's or hospital's revenues.

The health reform legislation provides an unprecedented emphasis on quality measurement, quality improvement, efficiency and value.  Value is improved quality at lower cost.  For providers, changing their clinical processes to meet these new demands will be essential.  Both hospitals and physicians will be facing Medicare value-based modifiers beginning in 2012.  Hospitals will further face reductions in payment for avoidable readmissions as well as for hospital-acquired conditions.  Because the two payment modifiers for hospitals and physicians, although separate, will be coordinated, this generates an extraordinary motivation for hospitals and physicians to work together.  In “The New Value on Provider ‘Value'” Alice elucidates the many aspects of health reform that reflect these new mandates.  She looks at the restrictions Congress has placed on the ability to use cost in comparative effectiveness analysis as an example of a failure of public policy.

When Medicare announced its program to not pay hospitals for ‘never events’ it was not at all clear how that would affect physician payment. Now CMS has published a Transmittal announcing that for at least three of the conditions, there will be no payment to physicians for these quality failures either.

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.

“Pay for Performance”(P4P) is a new phenomenon intended to incentivize physicians and hospitals to render high quality by paying them differently if they perform in accordance with criteria. From Leapfrog, to CMS, to the Bridges to Excellence program and the activities of the Integrated Health Association in California, there are many variations on this theme. That the government is in this game can also be seen in a little noted provision in HR 1 that the formerly ‘voluntary’ hospital quality reporting initiative is now not quite so voluntary since hospitals that do not report their data to CMS will experience a .4% reduction in their Medicare payment, each year they do not report. In “Contracting for Quality: Then, Now and P4P” we explore the impetus for these programs, describe and analyze their principal manifestations and consider how they relate to the contractual context within which they arise, both for hospitals and physicians. We conclude that while pay for performance is an important development, it is, at best, transitional and, as we first discussed in our White Paper “Doing Well by Doing Good: Improving the Business Case for Quality” these initiatives do not make an adequate case for offering physicians improved financial margins despite increased revenue. In addition, because these are ‘add-ons’ to the existing contractual environment and the P4P programs often unfold with no supporting contract at all, they present real and unexplored challenges for the providers who participate. We continue to believe that payment systems that carve out a new approach with many of the same goals and features of these P4P programs are better.

The health reform legislation has put a firm stake in the ground with respect to expanding the measurement of quality for many providers.  One of its principle vehicles was to solidify the former Physician Quality Reporting Initiative (PQRI) into a Congressionally mandated Physician Quality Reporting System (PQRS).  Although what is reported has nothing to do with whether either quality standards were met or quality itself improved, with the financial incentives available to those who report voluntarily, the idea is that physicians will learn to report quality effectively. By 2015, physicians who do not report will be penalized. In "PQRS and Its Penumbra", Dan Shay explores the implications of the program, how it relates to meaningful use financial incentives and the pitfalls, including false claims liability, that lurk in ineffective reporting. This program is a must know for physicians.

Among the very significant fraud and abuse changes in the health reform legislation, Congress made it clear that they expect the regulators to keep bad actors out of Medicare.  One of the techniques they will use to do this is the revamped and bolstered Medicare enrollment process.  In his new consideration of these issues, “‘Halt! Who Goes There?’: Coping with the Continuing Crackdown on Medicare Enrollment,” Daniel Shay elucidates the new rules, explains their practical implications, and then reviews 18 months worth of Administrative Law Judge opinions dealing with appeals of enrollment denials.  However, the challenge is not merely getting in the front door, but maintaining enrollment, and the administrative burdens have grown exponentially.  This is a burgeoning area that all providers need to pay attention to.

For the 2008 Medicare Physician Fee Schedule (MPFS), Medicare published rules with regard to the prohibition on marking up diagnostic testing which became effective January 1, 2008. On January 3, they were ‘suspended’ until the end of the year. With the 2009 MPFS, they were republished in final form offering two tests as to whether the prohibition is applicable: (1) whether the supervising or interpreting physician spends 75% of his time with the group; and if so, then there are no further restrictions to consider; if he does not then (2) whether the location where the service is provided is co-located with the office of the ordering physician, where that physician provides substantially the full range of his services on a regular basis. This is more restrictive than Stark; and it applies to all diagnostic testing, not just Stark DHS. Stark is about whether the service can be provided and be covered by Medicare. The anti-markup rules are about how much the billing entity can charge. The calculation of the ‘net charge’ when the prohibition does apply, if not obtained on a ‘per transaction’, ‘per click’ or ‘per study’ basis, is metaphysical at best. These rules relate to, although were not published with, the rules under Stark on “under arrangements” which also now extend far beyond the traditional hospital setting to all arrangements where a physician owned entity furnishes DHS to another entity which bills the DHS to Medicare --- most particularly, but not exclusively, hospitals.

The Medicare physician reimbursement program has been criticized, for years, as a fee-for-service program which, by definition, incentivizes physicians to overuse because the more you do the more money you make. In addition, there is no question that Medicare quality results have lagged, as quality results across health care have failed to reach optimal levels. In her polemic in the 2009 HEALTH LAW HANDBOOK, “Getting The Team Paid: How Medicare Physician Payment Policies Impede Quality”, Alice looks at four principles now known to enhance quality, and how Medicare’s own payment policies thwart the ability of physicians to deliver high quality care. Addressing specific Medicare rules that are widely applicable, she also confronts head on the now almost insufferable challenges presented by the Stark statute and its interpretations. As she points out, Pete Stark, himself, now regrets the law’s enactment. The regulators have created a monstrous regulatory program which rivals the Tax Code in its complexity without adding value. It doesn’t even work. Alice contrasts the burdens that Medicare imposes with the PROMETHEUS Payment® model (www.prometheuspayment.org) which is a provider payment model explicitly designed to improve quality, pay providers more rationally, lower administrative burden and enhance patient engagement.

The implications of the Stark Phase II regulations when considered in light of Medicare reimbursement restrictions merit a new look.. In our AGG Note "Medicare Reimbursement Through The Stark Looking Glass", we elucidate some of the contradictions and unappreciated pitfalls lurking in issues pertaining to physician-to-physician referrals, in-office ancillary services, incident to billing, reassignment, and diagnostic testing. Unlike our previous AGG Notes, “Stark II, Phase II: The Interim Final Story”, (May 2004) and “Much Better Late Than We Thought: Stark II Final Regulations”, (February 2001) rather than reporting on the contents of the Stark regulations, this new AGG Note is more analytical. It should be read with the other two for a complete understanding of the internecine workings of Stark.

“Incident to” principles in Medicare have confused providers for years and have confounded regulators. This topic has appeared repeatedly in the OIG’s Work Plans, but efforts to revise the rules have failed to come to fruition. Now the OIG has finally issued a report criticizing the “Prevalence and Qualifications of Nonphysicians Who Performed Medicare Physician Services”. It has always been the case that for payment of any personnel under Medicare you must first comply with state law. But this report chastises the fact that many state laws permit physicians to delegate tasks to non-licensed individuals whom they supervise. As long as that relationship complied with the ‘incident to’ standards which require that a physician be on premises while the personnel render services in a course of treatment directed by the physician, such delegation is consistent with Medicare law. The OIG was not amused. “Nonphysicians performed almost two-thirds of the invasive services that Medicare allowed the physicians. An invasive procedure involves entry into the living body (as by incision or by insertion of an instrument). Nonphysicians performed almost half of the noninvasive services that Medicare allowed the physicians. Unqualified nonphysicians performed 21 percent of the services that physicians did not perform personally.” These nonphysicians did not possess the necessary licenses or certifications, had no verifiable credentials, or lacked the training to perform the service. It is unclear how the OIG came to these conclusions, but they recommend that everyone be compliant with state law (hard to argue), that incident to services be identified by a modifier (this has been done before) or that physicians be required to perform all services requiring licensure (this will bring medical practice to a halt). That said, we can expect in the current environment of pressure to save money in the program that ‘incident to’ services will become a target. Physicians are well advised to revisit their use of ancillary personnel under state law and the Medicare program rules.

CMS has been tinkering with the Medicare enrollment process for years. As part of the increasing fraud and abuse prevention arsenal, the theory has been that if they gather more information at the outset, they will be able to weed out ‘bad actors’ from obtaining access to Medicare dollars. As a result, the burdens in applying have multiplied; and now they have severely limited the ability to reach back in time to bill retroactively for claims which have accumulated pending approved enrollment. Worse yet are the burdens on already approved providers to update Medicare when there are changes in various aspects of their operations, ownership and more. Some of the rules are confusing. You don’t have to tell them that you employ physician assistants when you enroll, but you must notify Medicare if you terminate a PA! In his chapter in the 2009 HEALTH LAW HANDBOOK, “Enrollment in Medicare: Fraternity Hazing or Keeping Out Bad Actors?” Dan Shay examines the history of the process, basic requirements, penalties and appeals, and then, with specific attention to physician practices, he sets forth a range of common scenarios where there are reporting pitfalls lurking for groups which do not understand these increasingly burdensome rules.