Physician Law : Pennsylvania Health Law Lawyer & Attorney : Fox Rothschild LLP : serving Philadelphia, Pittsburgh, Allentown, Erie, Upper Darby Twp

A recent article on CNNMoney discusses the not-so-new news story about the financial struggles of private medical practices. However, buried within the article is an important financial issue that many physicians overlook: collection of patient balances. According to one of the experts cited in the article, private practices lose 10% to 15% of their profits in uncollected patient balance revenue.

I've worked with many medical practices over the years on dealing with this issue and understand why physicians are reluctant to pursue aggressive patient balance collection efforts. Perhaps chief among their concerns is that physicians are afraid unhappy patients will sue or file a complaint with the Board of Medicine. Given the ease with which patients can file complaints with medical boards or, even more easily, post negative feedback on the Internet, this line of thinking is not without merit. However, having strong collection policies and making your patients aware of them upfront can go a long way to improving your bottom line and improving your patient relationships. Here are a couple of tips for developing collections policies within your practice:

• It should be a standing policy that, with only an occasional exception, patients should pay their balances at the time of service. When staff send follow-up appointment reminders, they should also remind patients to bring payment at the time of service or they will need to be rescheduled. Obviously, exceptions may need to be made to this policy where a patient's health may be jeopardized by a delay in being seen.
• Office staff who deal with patients at scheduling and check out should be trained on the collections policies so that they know what to tell patients and what procedures they must follow to ensure payment.
• Patients should be made aware of the practice's collection policies. It's a good idea to post notices your office regarding collections policies. That way patients know what is expected of them and can't claim ignorance.
• If you use a collections agency, be sure you have a clear understanding with the agency regarding the procedures they will use to collect patient balances. Among other things, you should review and approve the language in collection letters to be sure that the language is professional and not overly harsh.
• Be sure to check applicable law and your third-party payors contracts to be sure your collection policies are compliant. 

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Many physicians I work with are talking about the possibility of new payment models such as bundled payments, episode-of-care payments and Accountable Care Organization (ACO) payment models. However, few medical practices have given much thought to how such payment models might actually work for them. Many physicians are still mired in the "fee-for-service" mindset and "productivity" is still a key buzzword among physician partners in most private practices. But, as evidenced by a recent article published by AISHealth, these new payment models (which could be fantastic opportunities for the right practices) are closer than you might think. According to the AISHealth article, Horizon Blue Cross Blue Shield of New Jersey is set to begin a pilot program with five orthopedic practices for bundled total-joint replacement payments.

The payors in your market may not yet be ready to start offering these types of payment programs, but the smart money will on those practices that have given some thought to what payors are looking for and how they would respond if the opportunities are presented. Even smarter money will bet on the practices that have figured out how they can save payors money and are actively seeking to create alternative payment opportunities with their payors. If you haven't already done so, consider establishing a physician committee within your practice to begin exploring ways in which you might take advantage of these coming opportunities. They will be here before you know it.
 

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My physician clients often ask me for advice on how best to negotiate with managed care payers for improved reimbursement. My advice is typically the same: if you want them to pay you more than your competitors, you have to offer them something more than your competitors do. Simply being good at what you do is not enough. You have to be better than the competition because just like you, the competition is undoubtedly asking for more money too.

And, being better alone is also not enough. In order to get the payers to take notice, you must be able to demonstrate that you are better. This means that you need to be able to show them that your services are either of a higher quality, are more convenient or less expensive than the competition. Consider a recent article published by Amednews.com which cites a growing interest by third-party payors in driving down the “unit” cost of a health care visit. According to the article, payers are beginning to recognize that the number of patient visits is not the only driver of cost and that savings can be found in pushing down the cost of each one of those visits.

Unfortunately, many physicians have no idea of their "per unit" visit costs, and if you don't know what your costs are, it's pretty hard to try to manage them. The first step in negotiating managed care contracts, therefore, really should be to take a hard look at your practice, the services you offer, the cost of those services and what you do better (or should be doing better) than your competition. With that information in hand, you can develop a presentation for your important payers which demonstrates why your practice is deserving of special consideration.
 

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In a last ditch effort to salvage their Holiday vacation plans, the U.  S.  House of Representatives has approved legislation which will delay the 27% Sustainable Growth Rate (SGR) cut to the Medicare Physician Fee Schedule.  The good news of course is that CMS will not need to put a hold on physician payments starting January 1 as they did last year.  The bad news is that a two-month fix can hardly be considered a fix at all and any kind of permanent fix for the SGR does not even appear on Congress' radar screen.  Hopefully Santa delivers some bipartisanship this weekend because it will be sorely needed in February.

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By David Restaino, Esquire

Federal prosecutors continue to focus their efforts on preventing health care fraud, as evidenced by a recent case arising in Texas. Earlier this year, a Houston doctor (Dr. Christina Clardy) was convicted of three counts of mail fraud, 14 counts of health care fraud and one count of conspiracy to commit health care fraud – all relating to over $45 million in false billings to Medicare and Texas’ Medicaid programs. In particular, the scheme involved a nursing service having billed over $25 million in physical therapy services under Dr. Clardy’s physician provider numbers.

The documents produced at trial included a letter from the doctor showing her knowledge of the fraudulent activities, specifically, requiring her employer’s owner to immediately cease all billing under her number or she would notify the authorities – which she never did even though the billings continued. The evidence against Dr. Clardy was compounded by her receipt of large cash payments from the owner soon after her letter was sent.

The Court recently announced its sentence against Dr. Clardy. The sentence serves as a clear warning to physicians who are tempted by the illegal profits to be made from defrauding Medicare and Medicaid: Dr. Clardy will be spending 135 months in federal prison and must personally pay over $15 million in restitution. This sentence is in addition to the separate sentences handed out against two other convicted defendants involved in the scheme; a fourth person will be sentenced this month.
 

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By David Restaino

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has been busy combating fraud and abuse over the last few years – the monies it has recovered more than doubled from 2006 to 2010, topping $4 billion in fiscal year 2010 alone. And OIG’s enforcement efforts will undoubtedly increase because of the balanced budget pressure in Washington.

With this in mind, the OIG’s recently released Work Plan for Fiscal Year 2012 provides the regulated community with a roadmap of the areas that will receive additional scrutiny from OIG. These include:

● Payment systems controls that identify high cumulative Part B payments made to physicians;
● Claim submission practices of, and private contracts entered into by, physicians who have opted out of Medicare;
● Physicians’ coding on Part B claims, for services performed in ambulatory surgical centers and hospital outpatient departments;
● Providers’ compliance with assignment rules relating to billings that exceed Medicare-allowable amounts; and
● Part B payments for chiropractic services.

This list only skims the surface of those “new” areas of OIG focus, and does not take into account its existing areas of investigation.

Moreover, these priorities also extend beyond fines and penalties and also cover exclusion of individuals from participation in federal health care programs. For instance, in fiscal year 2010, over 3,300 individuals and entities were excluded from such participation. A recent Government Accountability Office (GAO) report criticized HHS and suggested that it should be paying greater attention to its suspension and debarment programs, by perfecting its use of staff and developing guidance to implement these programs. Assuming HHS follows even some of these recommendations, we can also expect to see more suspensions and debarments in the coming year. 
 

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According to an article in the Arizona Republic posted on AZcentral.com, Health Net of Arizona has begun offering a new "narrow network" HMO product to employers in conjunction with Banner Health, a health system offering healthcare services in seven western states.  Under the new plan, employers will receive premium discounts for limiting their network of providers to the newly formed "Banner Health Network".  Presumably based on an ability to better manage care within an integrated network, Health Net believes the should offer a 20% savings over its traditional PPO products.

The emergence of narrow network HMO products is a trend worth watching for several reasons: first, it demonstrates that third party payers are aggressively seeking to better manage health care costs and are looking for innovative ways to do so; and, second, it is apparent that as new products are developed, those providers who are integrated (both horizontally and vertically) are most likely to be the players of choice, as they will presumably have a greater ability to control costs across the delivery continuum.  Physicians and other providers should take these developments to heart when developing their strategic plans for the coming year(s).

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Have you or your practice been the subject of a negative online review? If not, there's a pretty good chance that you might be in the future. Online physician rating websites are proliferating and it is becoming increasingly common for disgruntled patients to vent their frustrations on the World Wide Web. Even worse is the fact that many of these websites permit anonymous posting, so you may not even know who your detractor is. It's finally, case law generally exempts rating websites from liability provided they are only facilitating publication of the personal opinions of posters. None of this however means that you must take a negative online review lying down. In fact, given that a physician's reputation is one of his or her most valuable professional assets, I would encourage you to proactively protect your online reputation. Here are a few things you can do:

• Regularly (at least monthly) do an online search of your name and your practice's name to see if comments have been posted. Some search engines allow you to set up an "alert" to notify you by e-mail if your name appears in a search.
• If you know who the poster is, consider calling them and trying to work through their concerns to see if they would be willing to retract their online comment.
• Review the website's “terms of use” to see if the posting is in compliance them. Some websites prohibit posters from personally naming or attacking an individual physician or claiming malpractice on the part of a physician. If you believe a posting does not conform to the terms of use, there is typically a mechanism to report the posting and often the website will remove a noncompliant posting.
• If you have patients with positive things to say about you or your practice, encourage them to post positive comments on one or more of the available rating websites. Not only does this counter any negative comments but it can also push negative comments further down in the list so that they are less prominent.
• Consider involving legal counsel to advise you on your options. Sometimes a well drafted letter from an attorney to either the website or the poster is enough to encourage them to take down the posting.

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One of the common struggles I often come across in private medical practices is what to do when a senior physician wants to go part-time. In busy practices, this issue can be emotionally charged and I have even seen it lead to practice breakups.

Some practices simply take the position that either you work full-time, carry a full patient load, do surgery and take full on-call duties or there is no place for you in the practice. This can be a big mistake, especially if the senior physician seeking part-time status has a large patient or referring physician following.

In my experience, the key to successfully handling a physician’s transition to part-time status is having a clear documented policy in place well before the issue even arises. This takes the emotion out of the process and gives everyone fair notice of what to expect if and when they seek part-time status. Some of the key considerations that should go into a part-time policy are as follows:

• If the physician seeking part-time status is a shareholder or owner in the practice, consider whether going to part-time status should automatically require sale of his or her ownership interest back to the practice. Remember that being an owner in a business carries with it a lot of financial responsibility. Someone who is only part-time and eventually looking to move on to full retirement may be unwilling to accept these financial risks.

• The policy should spell out clearly the options for going to part-time status (e.g., no call, one last day in the office per week etc.), as well as the financial implications associated with that decision. The policy should address what will happen with the physician’s salary, bonus participation, benefits and other practice expenses such as malpractice insurance.

• The policy should spell out clearly that part-time status is of limited duration. Physicians should not have the expectation that they can drop to part-time status indefinitely; otherwise you could end up with a practice of all part-time physicians. Part-time status for senior physicians should be used as an interim step in the transition to full retirement. It is generally advisable to make termination of part-time status automatic at the end of a defined period of time so that the practice’s governing body is not forced to make a politically charged decision to either terminate part-time status or allow it to continue.

• Finally, it is critical to the success of any part-time policy that it be implemented consistently. While there can be some flexibility in implementation to account for practice needs at any given time, applying the policy in a discriminatory manner can create legal exposure for the practice and also undermine the policy’s effectiveness.

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Physicians are feeling the economic burn of the down economy perhaps more than the average American. Not surprisingly, creative physician joint ventures are proliferating in the healthcare industry as a means of stabilizing revenue streams and referral patterns. Unfortunately, many of these arrangements may raise questions under applicable fraud and abuse laws. One such proposed arrangement was the subject of the most recent (and negative) Advisory Opinion issued by the Office of Inspector General (OIG) of the Department of Health and Human Services.

The arrangement involved a proposed management services agreement for pathology services pursuant to which a physician-owned management company would provide pathology laboratory management services to a pathology lab. Under the management services agreement, the management company would provide all pathology services, utilities, furniture, fixtures, space and laboratory equipment. In addition, the management company would provide both marketing and billing services. For all of these services, the pathology lab would pay the management company a "usage" fee based on a percentage of the lab's revenue. Moreover, the management company would offer ownership interests to physicians in a position to refer to the pathology lab.

Noting that the arrangement could not meet any of the available safe harbors under the federal anti-kickback statute and citing the fact that the management fee would fluctuate with the volume or value of services performed by the pathology lab, the OIG found that the arrangement would pose a substantial risk of fraud and abuse and, therefore, refused to bless it.

When revenue is flat and costs are increasing, it is hard to blame physicians for at least considering potentially lucrative joint venture proposals. Of course, many such arrangements may be perfectly legal and may even be eligible for safe harbor protection under the various healthcare laws. That being said, physicians must always be mindful that penalties for violating federal and state laws can be catastrophic. For example, violation of the federal anti-kickback statute is a felony a felony, punishable by a fine of up to $25,000, up to five years in jail, or both as well as potential false claims liability. Therefore, when it comes to joint venture arrangements, the best course is to proceed with caution.
 

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According to a recent study published in the September issue of Health Affairs, one of the key drivers behind the skyrocketing healthcare costs in the United States is the amount of fees payable to the physicians. According to an article published on MedPage Today, the study found that the United States spends in excess of $7500 per person on health care and more than 21% of that is for ambulatory care services performed in physician offices. The next closest country in spending to the United States is a Canada which spends roughly $4000 per person on health care services.

According to the study, reimbursement to physicians in the United States far outpaces that paid to physicians in other countries. For example, Medicare pays physicians approximately $60 for a primary care visit while public insurance reimbursement for a primary care visit in France is approximately $32 and in the United Kingdom is $66. The largest discrepancy in the physician reimbursement and between the United States and other countries is in the specialty of orthopedic surgery. According to the study, orthopedic surgeons in the United States are paid 70% more by Medicare than orthopedic surgeons are paid for the same service on average by public insurance plans in other countries.

Although the authors of the study pointed out that whether or not higher reimbursement rates it to US physicians is warranted was beyond the scope of the study, surely the last thing the practicing physicians in this country need is more evidence suggesting that they're overpaid.
 

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Even after many years of working with physicians, I am still surprised by the poor record-keeping habits of private practices.  I'm not talking about medical record documentation -- that's a whole other issue.  What I'm talking about is business records -- and more particularly legal agreements.  When a physician client contacts me with a problem, very often it involves some contractual relationship such as a managed contract, employment agreement, service agreement or lease.  Of course, my first request is that they send me a copy of the signed agreement underlying the relationship.  Amazingly, more often than not I am told that they don't know where the signed agreement is or they send me an unsigned draft or an expired agreement.

I have written previously on this blog that legal contracts serve a number of very important purposes.  Of course, without a signed agreement in place, any "contract dispute" will by default be a he said/she said battle -- and the outcome is usually anyone's guess.  Moreover, how can you know if you or the other party is meeting your or their obligations under an agreement if you don't have a copy of the agreement for reference?  Finally, a number of healthcare laws (think Stark) require that certain agreements be in writing, signed by the parties and in effect (i.e., not expired).  If you don't know where your agreements are, you probably don't know if they are still in effect.  

If the above description applies to your practice, now's a great time to begin collecting your agreements and reviewing them to be sure they are compliant and in effect.  Put them in a safe place and keep a list of expiration dates handy so that you address renewals on a timely basis.  If you can't find agreements (e.g., managed care contracts), consider contacting the other party and asking them to send you another copy.  If they can't find one either, it's a good idea to sign a new one.  Also, one of the important functions your attorney can do for you is keep legal documents either in your minute book or your client file so that if you lose your copy, another copy is just a phone call away.  Of course, your attorney's file will only be complete if you remember to send your signed contracts to him or her!

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This month, the Centers for Medicare and Medicaid Services (CMS) published a final rule for 2011 Electronic Prescribing Incentive Program.  Importantly, for physicians who are in the process of becoming compliant but not quite there, the new rule pushed the deadline for seeking a hardship waiver from the applicable penalty to November 1, 2011.

Unless a hardship waiver is applied for and granted by CMS, Physicians who fail to meet the minimum e-prescribing thresholds under the program are subject to a one-percent (1%) Medicare payment penalty on payments in 2012 based on their e-prescribing activity in the first six months of 2011.  Penalties then increase by .5% in 2013 and again in 2014. 

There are a number of types of hardship exemptions that can be requested including limited prescribing activity and insufficient opportunities to report the electronic prescribing measure -- but to qualify for an exemption, requests must be submitted by November 1, 2011.  More information on the program can be found at the following link:  http://www.cms.gov/ERxIncentive/20_Payment_Adjustment_Information.asp

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One of the major trends in health care today is to allow greater patient access to health information.  In keeping with that, the Department of Health and Human Services has proposed amendments to the CLIA regulations which would require labs covered by the health Insurance Portability and Accountability Act (HIPAA) to provide test results directly to patients. According to HHS Secretary Kathleen Sebelius, the amendments are designed to cut down on the administrative delays currently experienced by many patients in getting their results from their doctors.  I wonder however whether patients will be able to effectively interpret their own lab results or, perhaps more importantly, whether they might be inclined skip a critical follow up visit because they think everything looks fine.  For more information, take a look at the following article from Reuters.

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