Billing & Reimbursement

The 7th Circuit Court of Appeals recently issued a decision of interest to physicians and teaching hospitals. It concerns the method of rotating teaching physicians between multiple surgeries and billing Medicare for those services.  

The case involves so-called "qui tam" claims (essentially, a whistleblower case) against a teaching hospital, by which a successful claimant gets to keep a portion of the penalties recovered.  Basically, the Medicare program pays teaching hospitals for work by residents that is supervised by teaching physicians.  Here, however, a hospital was alleged to have made its teaching physicians simultaneously supervise multiple surgeries — and then submit fee-for-service bills to the Medicare program for certain unsupervised work.  


After addressing legal issues concerning claimants’ right to sue when the facts were generally in the public domain by way of government reports (those reports were not specific to this hospital), the suit was allowed to continue for now.  

Note to physicians: The Court emphasized that a teaching hospital does nothing wrong if the teaching physicians are "immediately available" during all parts of the surgeries even if making a circuit between multiple operating theaters.  The breadth of that holding, and whether it would apply to other circumstances, is not clear.  Nevertheless, hospitals who bill Medicare for activities supervised by teaching physicians, and the physicians themselves, must pay special attention to these activities to stay within the law.

Physicians who reassign their right to bill the Medicare program can still be liable for false claims submitted by the entities who obtained that reassignment, as discussed in a recent "Alert" issued by the Office of Inspector General (OIG). [PDF].

OIG also referenced settlements it reached with eight physicians who had reassigned their payments to physical medicine companies in exchange for Medical Directorship positions — when those companies subsequently billed Medicare for services that the physicians had not actually performed.

This OIG Alert highlights the ability of physicians to monitor all services billed using their reassigned provider numbers, and strongly urges physicians to do so. If not, physicians face liability for false claims asserted under their provider numbers.

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 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.

Under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), all Medicare suppliers of the technical component of advanced imaging services have until by January 1, 2012 to become accredited by an accreditation organization designated by the Secretary of Health and Human Services . This includes physicians, non-physician practitioners, and physician and non-physician organizations paid for the technical component of advanced imaging services under the Medicare Physician Fee Schedule. 

Advanced diagnostic imaging procedures include diagnostic magnetic resonance imaging (MRI), computed tomography (CT), and nuclear medicine imaging such as positron emission tomography (PET).

CMS has named the American College of Radiology (ACR), the Intersocietal Accreditation Commission (IAC), and The Joint Commission (TJC) as the accrediting organizations.


In case you missed it, the Centers for Medicare and Medicaid Services (CMS) eliminated use of the evaluation and management Consultation Codes.  Consultations are now to be billed using the standard E/M visit codes.  According to CMS Transmittal 1875:

"Effective January 1, 2010, the consultation codes are no longer recognized for Medicare Part B payment. Physicians shall code patient evaluation and management visit with E/M codes that represent where the visit occurs and that identify the complexity of the visit performed. In the inpatient hospital setting and the nursing facility setting all physicians (and qualified nonphysicians where permitted) who perform an initial evaluation and management may bill the initial hospital care codes (99221 – 99223) or nursing facility care codes (99304-99306). As a result of this change, multiple billings of initial hospital and nursing home visit codes could occur even in a single day."

According to a recent Transmittal from the Centers for Medicare and Medicaid Services, physicians and others are using modifier -PC to designate the "professional component" of diagnostic tests.  However, the -PC modifier is actually to be used to designate "Wrong Surgical or Other Invasive Procedure Performed on a Patient." 

Apparently many providers assume that because the modifier for technical component services is -TC, the corresponding modifier for professional components is -PC.  In fact, the correct modifier for professional component services is -26.

Note that Claims submitted with the wrong modifier will be denied.

It is apparent that preventive care will take on greater importance in the "reformed " health care system and while Medicare historically did not cover routine or preventive screening services, the list of preventive services now covered by Medicare has grown in recent years.  Physicians should familiarize themselves with the applicable coverage and billing rules so as not to miss an opportunity to capture revenue for these services where appropriate.  To help physicians in this regard, CMS has published a guide to preventive and screening services for physicians and other providers.  Also, for a good overview on the OIG’s current thinking on offering free screening services, physicians and other providers should have a look at the recent OIG Advisory Opinion 09-11 addressing free blood pressure screenings to walk-in visitors at a hospital.

Physicians enrolling in the Medicare program should be aware that Medicare recently changed the rules applicable to when a physician’s enrollment is deemed to take effect. Specifically, the FY 2009 Medicare Physician Fee Schedule establishes that the effective date of billing for physicians and non-physician practitioners is the later of: (1) the date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor; or (2) the date an enrolled physician or non-physician practitioner first started furnishing services at a new practice location.

The rule also provides that physicians and non-physician practitioners who meet all program requirements may bill retrospectively for services furnished up to 30 days prior to the billing effective date (as opposed to the 23 months allowed under current regulations).  Note also that physicians and non-physician practitioners have 30 days to notify their Medicare carrier of a change of ownership, final adverse action (e.g., exclusion, debarment, felony conviction, license suspension or revocation), or a change of location.  Failure to notify the carrier within 30 days can result in an overpayment from the date of the reportable event. 

The 2009 Medicare Fee Schedule can be viewed here.

Does your practice bill Medicare for diagnostic tests?

If so, you have until January 1, 2009 to make sure your arrangements comply with the now very complicated anti-markup rule. The Centers for Medicare and Medicaid Services (CMS) published the Final Medicare Physician Fee Schedule for 2009 in the Federal register on November 19, 2009. Among other things addressed in the Fee Schedule regulations are clarifications of the diagnostic testing anti-markup rule.

Prior to the 2009 Fee Schedule changes, the anti-markup rule provided that if a physician or other supplier bills for the technical component (TC) or professional component (PC) of a diagnostic test that was ordered by the physician or other supplier and the diagnostic test was either purchased from an outside supplier or performed at a site other than the office of the billing physician or other supplier, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts:

• The performing supplier’s net charge to the billing physician or other supplier;

• The billing physician or other supplier’s actual charge; or

• The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

In the 2009 Fee Schedule, CMS has now clarified that the anti-markup provisions will not apply to the TC or PC of a diagnostic test where the performing physician shares a practice with the billing physician or other supplier. With respect to a TC or PC of a diagnostic testing service, the performing physician is considered to share a practice with the billing physician or other supplier if either of the following is met:

(Alternative 1) He or she furnishes substantially all (at least 75 percent) of his or her professional services through the billing physician or other supplier; or

(Alternative 2) The TC is conducted and supervised, or the PC is performed, in the office of the billing physician or other supplier. For purposes of Alternative 2, the “office of the billing physician or other supplier” is defined as the same building where the ordering physician performs substantially the full range of patient care services that the ordering physician generally provides.