Health Care Compliance Watch : New York Health Care Compliance Lawyer & Attorney : Ilana Sable : NY Physician Representation Law

Obstetrics practices located in New Jersey and New York can increase revenue and efficiently allocate a substantial portion of their daily patient care by incorporating the services of certified midwives and/or certified nurse-midwives into their practices. Generally speaking, midwives are certified to attend to low risk pregnancies, attend during childbirth and to provide post partum care. Certified nurse-midwives may prescribe certain drugs, as authorized by the licensor-states and as outlined in their governing collaboration and/or affiliation agreements with a supervising physician.

In New Jersey, in order to provide patient care, “certified midwives” are required to enter into a written affiliation agreement with a New Jersey licensed physician who holds hospital privileges in operative obstetrics/gynecology. The affiliation agreement must set forth clinical guidelines that will outline the certified midwife’s scope of practice.

In New York, “licensed midwives” are required to establish and maintain a collaborative relationship with (i) a licensed physician who is board certified as an obstetrician-gynecologist by a national certifying body, (ii) a licensed physician who practices obstetrics or (iii) a hospital that provides obstetrics through a licensed physician having obstetrical privileges at such institution. The collaborative relationship must provide for consultation, collaborative management and referral to address the health status and risks of his or her patients and must include plans for emergency medical gynecological and/or obstetrical coverage.

As with other non-physician practitioners (“NPPs”), obstetrics practices can issue medical bills to commercial payors, Medicare and/or Medicaid for services provided by certified midwives and certified nurse-midwives. Depending on the method by which the midwife services are billed to the insurance carrier (i.e., using the name and national provider identifier (“NPI”) number of the midwife versus the name and NPI of the supervising physician’s as “incident to” the services provided by the physician) the midwife services, on average, will be reimbursed at a rate similar to that which would be paid if the services where performed by a physician. 

The “midwife” license is only offered in a small number of states (New Jersey and New York offer the midwife license). Because these services are payable and reimbursable by insurance carriers and they offer obstetric practices the opportunity to treat patients in an efficient, cost effective, manner without actively utilizing the time and supervising physician(s).

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Health care providers who have been excluded from participation with certain insurance carriers often approach me for guidance concerning their options (if any) for continuing their existing relationships - and possibly treatment – with patients who are insured by the “excluding” insurance carrier. While the reasons for “exclusion” are quite varied and have differing degrees of severity (depending on the particular insurance carrier and type of exclusion that is involved), in almost all cases, exclusion from network participation means that the excluded provider cannot treat patients insured by the excluding insurance carrier, whether directly or indirectly. Provider arrangements made to circumvent exclusion may, among other things, be deemed the “fraudulent practice of medicine” and may carry serious, permanent, consequences for both the excluded provider and any provider assisting the excluded provider with the circumvention.

In the Matter of Josifidis v. Daines, 2011 NY Slip Op 7891 (decided November 10, 2011, Appellate Division, Third Department) the Third Department confirmed a determination of the Hearing Committee of the New York State Board for Professional Medical Conduct (the “Committee”) which, among other things, revoked the medical license of Petitioner Harry Josifidis (the “Excluded Provider”) for the fraudulent practice of medicine. In doing so, the Third Department confirmed the Committee’s finding that the Excluded provider circumvented “his exclusion from insurers’ networks by using another physician’s name.” 

The relevant facts underlying the Third Department’s decision are as follows:

“[The Excluded Provider] was excluded by certain health insurers from being reimbursed as an in-network provider for treatment rendered to their insureds as the result of a prior disciplinary action. [The Excluded Provider] thereafter entered into an agreement with another physician (hereinafter the other physician) by which the other physician’s name appeared on claims submitted to the insurers for [the Excluded Provider’s] treatment of in-network patients.

The Excluded Provider, in an effort to “explain” the legality of the circumvention arrangement, argued that “he relied on the other physician’s representations that their arrangement was ‘lawful and appropriate’” and that “he entered the agreement to provide his patients with continuity of care rather than for profit.”

The Third Department concluded that “[s]ubstantial evidence in the record shows that [the Excluded Provider] repeatedly submitted bills in the other physician’s name for services he had provided in order to receive payment from insurers who had specifically excluded him from being reimbursed for such services…. Accordingly, [the Third Department found] that the Committee properly rejected [the Excluded Provider’s] explanation and substantial evidence in the record supports its determination.”

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Traditionally, it was only “doctors” that provided medical care to patients – likely with the help of some sort of unlicensed assistant – and doctors would, therefore, limit their billing (and revenue) to the services that they, individually, provided. In recent years licensed and/or certified non-physician practitioners (“NPP’s”) have begun to provide an increasing amount and variety of medical care to patients and, accordingly, increase the amount of reimbursement and revenue to health care practices that utilize the services of an NPP.

The regulations and statutes regarding NNP education, scope of practice, supervision and training are primarily based on state laws and, in many ways, differ from state to state. The designation and variety of NPP’s also vary from state to state, but, generally speaking, NPP’s can be categorized as follows:

• Advanced Practice Nurse
• Certified Registered Nurse Anesthetist
• Clinical Nurse Specialist
• Clinical Psychologist
• Clinical Social Worker
• Nurse Midwife
• Nurse Practitioner
• Occupational Therapist
• Physician Assistant
• Physical Therapist
• Speech Pathologist
• Surgery Assistant

Billing and Reimbursement for Non-Physician Practitioner Services

Reimbursement received by health care practices for services provided by NPP’s varies substantially among federal, state and commercial payors, and should be thoroughly evaluated prior to submission of medical bills. For instance, Medicare will reimburse for services provided by certain NPP’s in private physician practices when:

(1) The bill for NPP services is submitted using the NPP’s own name and national provider identifier (“NPI”) number. The NPP is reimbursed at eighty-five (85%) percent of the Medicare physician fee schedule.

(2) The bill for NPP services is submitted using the supervising physician’s NPI as “incident to” the services provided by the physician. The NPP’s services will be reimbursed at One Hundred (100%) percent of the Medicare physician fee schedule. Further, if covered NPP services are furnished, then services and supplies furnished incident to the NPP’s services may also be covered.

In order for a health care practice to submit a bill to Medicare for NPP services provided “incident to” the services of the supervising physician, the following criteria must be met:

(a)   The NPP services must be performed under the direct supervision of the physician as an integral part of the physician’s personal in-office service (this does not mean that each occasion of an incidental service performed by a NPP must always be the occasion of a service actually rendered by the physician.

(b) There must be a direct, personal, professional service furnished by the physician to initiate the course of treatment of which the service being performed by the NPP is an incidental part, and there must be subsequent services by the physician of a frequency that reflects the physician’s continuing active participation in and management of the course of treatment;

(c)   The supervising physician must be physically present in the same office suite and be immediately available to render assistance if that becomes necessary;

(d) Also, a physician might render a physician’s service that can be covered even though another service furnished by a NPP as incident to the physician’s service might not be covered.

In practice, this translates to the following criteria:

(1) The supervising physician initially sees the patient (or sees the patient at a previous visit) and initiates the plan of care that the NPP is carrying out.

(2)The supervising physician remains involved in the patient’s care and continuously documents this involvement in the patient’s medical record.

(3)The NPP is an employee and/or independent contractor associated with the physician practice.

(4)The supervising physician (or another physician of the physician practice) must be in the medical office at all times that the NPP provides services and must be immediately available to intervene in the patient’s care if medically necessary.

Commercial payors, on the other hand, are free to set their own policies and guidelines for credentialing NPP’s and providing reimbursement for their services. Some commercial payors are willing to credential NPP’s and allow NPP services to be reimbursed using the NPP’s own provider number or instruct physician practices to bill for services provided by the NPP under the supervising physician’s provider number as “incident to” the services provided by the supervising physician. Other commercial payors simply refuse to reimburse for services provided by an NPP altogether. It is also important to note that a health care practice may be able to negotiate the reimbursement rate provided by certain commercial carriers for services provided by NPP’s.

Additionally, federal, state and commercial payors each have unique restrictions and guidelines concerning an NPP’s ability to examine and treat new patients, patients with new or worsening conditions, and so forth. Accordingly, health care practices should always request and keep on file each payor’s written policy concerning qualification, billing, coding and reimbursement of NPP services.  

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Over the past few years health care providers have reported an increasing surge in the outsourcing of medical billing and collections  to third party medical billing companies.  The outsourcing surge stems from a number of factors, most of which are focused on increasing revenue and surviving payor scrutiny.  

First, health care providers rely on medical billing companies to assist them with processing claims in accordance with applicable rules, regulations, laws and statutes (“health care laws”).  With the increasing complexity of the health care industry, the demand for familiarity with health care laws can be overwhelming for health care providers and will often require the education, knowledge and skill of an independent professional.

Second, health care providers are increasingly consulting with medical billing companies to provide them with timely and accurate advice regarding reimbursement matters and overall business decisions.  Medical billing companies normally support a variety of providers and organizations with different specialties and, therefore, have a unique insight to reimbursement issues, as well as diagnosis and procedure code utilization and optimization.  The critical component is a medical billing company’s ability to conduct practice-to-practice comparisons and data mining of coding, billing and collection patterns.

Third, medical billing companies normally have professionals dedicated to specific specialist and/or process areas, thereby increasing employee efficiency, skill and knowledge within the assigned area.  For instance, professionals skilled in collecting unpaid cardiology claims will have the benefit of uncovering and monitoring payor patterns of rejection and denial, and will have the insight to determine which coverage determinations are worth fighting or which coding practices to alter.  

Fourth, in most cases a medical billing company will consistently provide clients with customized practice reports and analytics that offer an in depth look at key metrics an allow the provider to make informed, strategic, decisions concerning billing, coding and collections.  While most of this data and analysis can be conducted in-house, is often underutilized or overlooked altogether with small physician practices. 

Finally, another issue that small physician practices face with in-house medical billing is hiring, training and maintaining an adequate medical billing staff.  Normally, small physician practices allocate one to two designated staff members for medical billing and collection purposes and suffer the consequences of insufficient and inefficient staff in the form of timely filing issues, timely appeal issues, lack of follow up and collections, contractual allowances and, ultimately, write offs.

It is important to note that third party medical billing companies significantly vary in terms of the type of services provided and the manner in which these services are provided for their respective clients. For example, some medical billing companies provide coding services for their clients, while others only process pre-arranged Superbills that have already been coded by the provider.  Additionally some medical billing companies offer a spectrum of management services, including patient intake support, accounts receivable management and debt collections. 

The main question to consider when determining whether to use an in-house medical billing professional or to outsource to a outside medical billing company is “what are you coding and billing, and why?” If the answer to this simple question is not supported by customized practice reports and analytics, strategic and informed, decisions concerning the coding, billing and collections choices made for each patient, and driven by the voluminous rules, regulations and statutes affecting health care practice, then the answer is flawed and is likely costing the practice critical revenue.

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The Centers for Medicare and Medicaid Services ("CMS") have launched a series of outreach tools and social networking initiatives in an effort to effectively educate and update providers on the constantly changing rules, regulation and coverage activities affecting their practices. Below are three new informational tools that providers are encouraged to access and follow:

(1)   CMS YouTube Channel. While geared toward both beneficiaries and providers, the CMS You Tube channel features a catalog of educational videos on an array of healthcare-related topics, including Recovery Audit Contractors and Process Based Quality Improvements. The YouTube Channel is a recommended for providers looking to access basic information on key media issues.

(2)   Medicare Quarterly Provider Compliance Newsletter. The quarterly newsletter is intended to help physicians, providers, suppliers and their billing staffs understand how to avoid certain billing errors and other improper coverage activities when dealing with the Medicare Fee-For-Service program. You can find Volume 1, Issue 1 here (pdf). 

(3)   MLN Matters Articles. MLN Matters are national articles designed to inform the physician, provider, and supplier community about the latest changes to the Medicare program and are prepared in consultation with clinicians, billing experts, and CMS subject matter experts.  The MLN Matters Articles provide ready access to Medicare coverage and reimbursement rules in brief, accurate and easy to understand format and explain critical and up-to-date provider information in an effort to reduce the amount of time that providers need to incorporate these changes into their Medicare-related business functions. 

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For the past few weeks, my inbox has been flooded with a wave of literature focused on the upcoming conversion to the ICD-10 coding system. In almost every instance, the subject line has an extremely serious message such as “don’t be left behind” or “avoid delays in claims processing.” While I am typically an advocate for preparation and being a “go to” person, I do not see the benefit in a health care practice’s extremely early study and implementation of the ICD-10 coding system. The CMS mandated conversion date is three years away (currently set for October 1, 2013) and the entire health care industry currently uses ICD-9.

To date claims processors, insurance carriers, billing and coding programs, electronic health records systems - not to mention Medicare and Medicaid - have not yet converted to ICD-10 and are not prepared to support, receive and/or process medical bills coded to ICD-10. Furthermore, a health care practice will be hard-pressed to find a billing and coding program or an EHR system that fully supports ICD-10. 

The alarm surrounding the conversion to ICD-10 is reminiscent of the alarm surrounding the health care industry’s conversion to electronic claims processing a few years back. The similarity exists in that whether or not a practice is ready to implement a new system, namely, electronic claims processing or ICD-10 coding, the practice’s unilateral implementation is useless until processors, carriers and payors are ready to interface with the new system. The lesson learned is that the health care industry, as a whole, needs to jump on board with this type of massive system overhaul. Once the industry is ready for conversion, there will be a plethora of information, training, demonstrations and hassle for the taking.

For more information on the implementation date, logistics and so forth, see the dedicated ICD-10 page on the CMS website.

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While it is impossible to pinpoint the exact areas that Recovery Audit Contractors (“RACs") will target when reviewing medical bills sent to Medicare, each regional RAC is required to post its current “issues under review” and disclose to the public the specific codes and/or procedures currently being audited by automated reviews (where no medical record is involved in the review). 

For instance, the “issues under review” identified by Region A - Diversified Collection Services (which audits New York and New Jersey, among other states) are:

•         IV Hydration

•         Bronchoscopy services

•         Blood transfusions

•         Untimed Codes

•         Neulasta: J2505; injection, Pegfilgrastim, 6mg

•         Once In A Lifetime codes

•         Newborn/Pediatric codes (i.e. newborn pediatric codes Billed for patients exceeding age limits)

•         New patient visits

•         Duplicate claims - Part B only

•         Global billing of radiology or diagnostic tests in the facility setting

•         Add-on codes

If your medical practice provides services that are identified as “issues under review,” the first step in any internal review and self-audit is to have the practices medical biller(s) and performing physician(s) review: (a) the applicable local coverage determinations (“LCDs”) and (b) the “issue description” and “issue references” disclosed with the specific “issue under review.” In most cases, the practice can easily correct the “issue” being audited by using an alternate code, submitting claims that are more detailed and/or limiting the services to allowable: beneficiaries, duration, frequency or levels.

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All medical pracites participating in and submitting medical bills to the Medicare program must comply with the following documentation requirements:

1. There must exist sufficient documentation in the provider’s records to verify that the services were provided to eligible beneficiaries;
2.  Medicare’s coverage and billing requirements must be met (including that requirement that the services be reasonable and necessary); and
3. Services must be provided at the appropriate level of care and must be coded correctly.

These requirements are especially important when providers receive Additional Documentation Requests (“ADR’s”) from Medicare contractors or are subject to an audit. It is important to note that, upon request by a Medicare contractor (including a Recovery Audit Contractor), medical documentation must be submitted within forty-five days of the date of the request. If the provider (a) fails to submit documentation or (b) provides insufficient documentation for the services billed, Medicare takes the position that that there is no justification for the services or level of care billed and will either deny the claim or consider any prior payment an “overpayment” and request that the provider repay the amount previously paid on the claim. Moreover, now that Medicare’s RAC program has been extended to each state, ensuring that your medical practice is compliant with Medicare’s documentation requirements is an absolute necessity.

In addition to Medicare and Medicaid, medical practices must be mindful of documentation requirements imposed by their specific state as well as insurance carriers.  Accordingly, when evaluating a practice’s medical records and medical documentation, providers are encouraged to conduct internal audits and investigations, and identify corrective actions that promote compliance with all of the administrations and agencies that regulate medical practices.

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When implementing the Recovery Audit Contractor (“RAC”) program, Medicare incorporated a variety of limitations and requirements that RACs are required to abide by when conducting audits of Medicare providers. Most significantly, Medicare providers should be aware of the following mandates when being audited by a RAC:

1. When conducting audits, RACs are limited to looking back up to three years from the date a claim was paid, with a maximum look back date of October 1, 2007.

2. RACs are limited in the number of medical records that they can request from a provider within a forty-five day period (medical record limits depend on the type and size of the practice).

3. RACs must accept and review extension requests if providers are unable to submit documentation in a timely manner.

4. After submission of an Additional Documentation Request (ADR) letter, RACs must initiate at least one additional contact with the provider before issuing a denial for failure to submit documentation.

5. When reviewing Evaluation and Management (“E/M”) services, RACs cannot look for incorrect levels of service (reviews of E/M services are limited to, among other things, reviews for duplicate claims and/or payments, unbundling and violations of global surgery rules).

6. RACs are prohibited from reviewing claims that were previously reviewed by another Medicare contractor (i.e. Medicare Administrative Contractors (“MACs”) or that underwent a Prepayment Review.

These points are not exhaustive and demonstrate the need for providers to understand their rights and protections when going through the audit process. The RAC program was designed with ample controls and provider protections, and it can be extremely costly and time consuming (if not debilitating) when Medicare providers fail to enforce their rights and protections when being audited by a RAC.

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While Congress continues to tackle the difficult decision of when (not “if”) to implement a 21% cut in Medicare payments to physicians, medical practices are facing the equally difficult decision of whether they can afford to keep treating Medicare patients.

On June 24, the House of Representatives passed a six month deferral of the proposed 21% cuts in the Medicare physician fee schedule and retroactively reversed the June 1, 2010 payment cut for 6 months. Physicians were also given a 2.2% fee schedule increase. This temporary deferral marks the tenth time in less than eight years that Congress has blocked the proposed 21% cut in Medicare payments to physicians. Although Congress has pushed the proposed cuts a bit further down the road, the deferral is nothing more than a temporary fix. The Medicare Trust is rapidly depleting and lawmakers have no long term option other than to drastically reduce the country’s Medicare spending.

The bigger issue is that even without the proposed 21% payment cut, physicians across the country have been facing the hard business decision of whether they can afford to keep treating Medicare payments for several years. Many doctors – mainly primary care physicians such as internists and gynecologists – have increasingly stopped treating Medicare patients due to Medicare’s low reimbursement rates, growing demands for supporting medical documents and audits. On average, Medicare pays providers approximately 78% of what commercial insurers pay yet demands a great deal more effort and time in receiving, and often times retaining, payment for services rendered. Plus, with the advent of the RAC program, physicians are finding that they need what amounts to a secondary degree in billing and coding just to stay ahead of the audits and recoupments.

The end result: an increasing amount of physicians are choosing to put the needs of their medical practices above the needs of their senior patients and have either stopped accepting new Medicare patients or have opted-out out of the Medicare program entirely. According to the Centers for Medicare and Medicaid Services, approximately 10 % of physicians have opted out of the Medicare program, with the number of physicians opting-out of the program steadily rising ever year.

If your practice is considering reducing the amount of Medicare patients that it accepts or opting-out of the Medicare program entirely, there are several critical questions that must be asked an evaluated when making these decisions.

·         How much time, effort and secondary support (including staff members and physicians) is allocated toward preparing, processing and submitting medical bills to Medicare? 

·         How much time, effort and secondary support (again, including staff members and physicians) goes into requests for supporting documents and audits? 

·         On average, how do Medicare reimbursement rates measure up against reimbursement rates from commercial carriers for: (a) rate of claims paid and (b) amount paid on claims?

·         How much additional time would physicians and staff members have to allocate toward other projects if the practice reduced or eliminated its treatment of Medicare patients?

·         Would the practice require less staff, space and/or secondary support if it reduced or eliminated its treatment of Medicare patients? 

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After reading a recent article posted by Angela Boynton, a frequent and informative writer with the American Academy of Professional Coders, titled "The Cost of ICD-10 Implementation," I am left wondering who will, realistically, finance the cost of conversion to ICD-10.  In the article, Angela cites a study conducted by the The Medical Group Management Association which predicts astronomical ICD-10 implementations costs.  The study found that, on average, it would cost :

• $84,000.00 for the average small physician practice to upgrade to ICD-10;
• $3,000,000.00 for large practice implementation;
• $500,000.00 - $14,000,000.00 for health plans, depending on size.

While the article does not go into details regarding the scope and time frame for the projected costs (i.e. Are these "lifetime" costs or one-time conversion costs?  Do these costs include new equipment, software, technical support, training and so forth?), it is clear that the health care industry will be addressing more than the burden associated with training and education.

However, I am not sure that these figures are accurate, nor that they will be paid by the health care providers.  For instance, if a small physician practice is currently leasing billing software, or working with a medical billing company, wouldn't these service providers absorb most of the conversion costs?  

My assumption is that current ICD-9 billing and coding software can easily be converted to, or updated for, ICD-10 functionality and compatibility.  And even if my "easily converted" assumption is wrong, isn't it in the service providers' best interest to keep the costs to the end users - like small physician practices - as low as possible so that they can retain  their client base?

As for those practices that use in-house billing and coding software that they own, it is probably best to hold off and buy a comprehensive software that incorporates ICD-10 billing and coding, and a certified electronic health records system ("EHR").  Most practices will be expending money for the EHR software no matter what happens with ICD-10, so waiting for one unified system will likely be the most cost effective approach.  The problem for these practices is that they will be pressed to purchase the EHR software much sooner than ICD-10 will be in use.

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Recently I have been getting an increasing number of questions regarding the conversion from ICD-9-CM to ICD-10-CM/PCS. I think it is important to have a general understanding of the educational and financial burden that the health care industry is about to tackle, so I put together the following overview in an effort to inform those of you that have not had a chance to research this subject further.

• The compliance date for conversion to the new coding system is October 1, 2013.
• The number of diagnoses codes will escalate from 14,025 (ICD-9) to 68, 069 (ICD-10). Yes, you read that right; there is going to be a 54,044 increase in the number of diagnoses codes under the new coding system.
• The number of procedure codes will escalate from 3,824 (ICD-9) to 72,589 (ICD-10); an increase of 68,765 in the number of procedure codes.
• Structural differences will include an increase from 3-5 digits in diagnoses codes (ICD-9) to 3-7 digits in diagnoses codes (ICD-10), and all ICD-10 codes will be alpha-numeric
• ICD-10-CM will replace ICD-9-CM Diagnoses and ICD-10-PCS will replace ICD-9-CM Procedures.

If you are wondering why the coding system is going through this exhaustive conversion, the answer is actually quite simple. ICD-9 is over thirty years old and it did not keep up with the evolution of the health care industry. ICD-9 is not exact enough to identify diagnoses and procedures precisely, and it is not flexible enough to incorporate emerging diagnoses and procedures.

CMS offers the following example in a CMS overview presentation on ICD-10 (pdf) to help illustrate the concept:

Example – fracture of wrist
Patient fractures left wrist. A month later, fractures right wrist.

ICD-9-CM does not identify left versus right.

However, ICD-10-CM describes:

• Left versus right
• Initial encounter, subsequent encounter
• Routine healing, delayed healing, nonunion, or malunion

While the road to conversion will likely be rough (I am recalling my first few experiences with Microsoft Vista), the result will be an accurate, accountable and measurable coding system that increases productivity, while decreasing audits, the need for supporting documentation and the delay in receiving reimbursement from health insurance companies.

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