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

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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Purchasing a piece of medical equipment is often the largest single-item expense for a health care practice and must be treated as any other critical business decision.  The practice’s due diligence investigation must include independent research as to the quality and function of the equipment, a targeted cost-benefit analysis and a thorough review of the lines of business that the practice intends to offer with the new equipment. Unfortunately, practices tend to rely on the “pitch” and representations of the sales rep presenting the equipment and often lose track of the analysis that must be conducted.

Over the past few months I have been meeting with an increasing number of practitioners that, after entering a lease and/or finance for a very expensive piece of medical equipment, find that their practice (a) does not have a sufficient patient base to test/treat with the equipment, (b) has a sufficient patient base to test/treat with the equipment but the testing/treatments do not bring in enough revenue to support the cost of the equipment, (c) need additional equipment, software, and/or professionals to use the new equipment and/or (d) are not being reimbursed by insurance carriers for the testing/treatments. Many practitioners note that the sales reps who originally presented the equipment made certain misrepresentation and/or omitted certain information which later led to the practices inability to recover the expected revenue (i.e. “the rep did not tell me that I needed to buy the software for the equipment separately” or “I did not know that the manufacturer was distributing coupons which I would be obligated to honor.” Most of these practitioners find themselves before a court where the signed contract reigns supreme.

For these reasons, it is always important to approach any medical equipment purchase with the following questions in mind:

1. Is the testing/treatment indicated by the machine a “covered” procedure by major insurance carriers? In particular, practices will need to determine whether carriers readily reimburse for the testing/treatment implicated by the machine and what the average rate of reimbursement is.
2. Is the testing/treatment implicated by the machine considered “experimental” by major insurance carriers for the purposes intended by the practice and what is the “medical necessity” threshold for performing the testing and/or treatment? In most cases, procedures considered “experimental” by the insurance carrier are not payable without prior authorizations, if at all.  Moreover, practices will need to determine how common the intended testing/treatment is and what population of patients are authorized to receive the testing/treatment in the ordinary course of business.
3. What CPT codes and/or diagnosis codes are implicated for the equipment? In particular, practices will need to find out whether the intended CPT codes are considered exploratory "test" codes and what diagnosis codes support the intended CPT codes.
4. What amount of tests/treatments must be performed per month to cover the monthly expense associates with the equipment and whether the practice's current patient base requires that amount of testing/treatment? This information is necessary to budget for the new medical equipment.
5. Did the manufacturer/distributor of the equipment issue any rebates and/or coupons to end-users that the practice will be obligated to honor? If possible, the practice must try to narrow down the manufacturers/distributors prior and future incentives to end-users and incorporate the manufacturers/distributor representations into the written agreement.
6. Is there any additional software, training and/or components that the practice will need to purchase prior to or after using the equipment? Will the manufacturer/distributor provide software/hardware updates when available? Again, the practice can negotiate these issues and memorialize them in the written agreement.

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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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When hiring a third party collection agency to recover receivables due for unpaid health care services, health care practices tend to focus on fees and commissions and often lose sight of other equally important issues.  Below are a few key questions that health care practices are encouraged to ask and evaluate before entering a Debt Collection Service Agreement in order to avoid the common pitfalls associates with these types of transactions.

1. Will we need to disclose Protected Health Information (“PHI”) when working with the collection agency? If the answer is “yes,” the practice will need to enter a Business Associate Agreement that is compliant with The Health Insurance Portability and Accountability Act (“HIPAA”) and The American Recovery and Reinvestment Act of 2009 (including its expansion of the HIPAA rules and regulations) and must contractually require that the collection agency protect the privacy of the PHI. There may also be State mandated privacy regulations that are more restrictive than HIPAA and ARRA that must be taken into account.

2. What method of practice does the collection agency utilize? In addition to conducting itself in accordance with the Fair Debt Collection Practices Act and Fair Credit Reporting Act, State laws governing collection agencies and collection methods must be reviewed and incorporated into the Agreement to insure that the collection agency is complying with State specific rules and regulations when collecting debt for the health care practice.

3. How will the health care practice monitor the collection agency’s activities? It is important to incorporate language that will enable the health care practice to monitor the collection agency’s activities during the debt collection process, including: patient communications, complaints, requests for information, debts collected and/or settled, legal actions, judgments and garnishments. The practice will also want to include language establishing when and how this information will be obtained.  A consistent system of monitoring and reporting is especially critical in the event that the relationship is terminated and the health care practice is left to pick up where the collection agency left off.

4. What are the health care practice’s options and obligations when terminating the Agreement? Can the health care practice freely stop working with the collection agency or does the Agreement incorporate restrictive language? How will existing collection accounts be handled upon termination of the Agreement? These questions are easily overlooked yet often become obstacles in terminating relationships and retrieving crucial information.
 

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