Updated on: April 16, 2014

Place of Service Under Scrutiny; Physician Payment Data Release Causes Uproar

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Original story posted on: April 15, 2014

As many of you know, several weeks ago the Centers for Medicaid & Medicare Services (CMS) issued Transmittal 505, which would have allowed auditors to deny what they labeled “related claims” without any further record review.

There was rejoicing, as this would allow the denial of physician claims when an admission is denied, meaning doctors would finally have some skin in the game.

The transmittal gave two examples: when denial of a physician claim for an admission is found to be not medically necessary, and when denial of a claim results from a faulty interpretation of a diagnostic test that is found to be not medically necessary. There was an immediate uproar from specialists, who have no control of admission decisions, and radiologists and pathologists, who have no control over the ordering of the tests. Sadly, but not unexpectedly, that transmittal was quickly withdrawn, and once again it seemed physicians were off the hook.

But that all changed.

First, CMS released their April Quarterly Provider Compliance Newsletter, which included an example of a RAC denial that occurred when a physician billed a high-level office visit for a new patient who was on her second day of an inpatient hospital stay.

The RAC even queried the database to ensure that the patient was not on a leave of absence that day. Since it was physically impossible for the physician to have seen the patient in the office, and because the physician used an office visit code for that inpatient visit, the claim was denied. This review did not require a record review; the RAC performed it just by comparing the place of service listed on the hospital claim and physician claim, and it was a simple, inexpensive, automated process.

The physician’s only hope of getting paid now is if the denial occurred within a year of the date of service, in which case the doctor would need to go back to the hospital, review the chart, and determine the correct hospital visit code, then rebill for the service (a labor-intensive, time-consuming process in which most physicians are unlikely to engage). It will be interesting to see if the RACs do this on a widespread basis; without inpatient claims to audit, a single keystroke could possibly return their cash flow to its old levels very quickly.

Physician Payment Data Release

The other development was the release of physician billing and payment data by CMS. And boy, did that cause an uproar. The data is raw billing and reimbursement data metrics, presented with no explanation but plenty of room for misinterpretation. And the media, the public, and even physicians already were misinterpreting it the same day it was released.

For example, if a physician administers a medication in the office, the payment listed as going to the physician includes the cost of that medication, but most of that money goes right from the doctor to the supplier. In fact, doctors have to pay for the medication up front and then wait weeks or months for reimbursement from the insurer. Furthermore, as Mary Engstrom from Elmhurst Hospital pointed out on the RAC Relief user group, depending on coding rules, a single dose of a medication may be coded as multiple units, making it appear that the physician treated far more than the number of patients actually treated. For example, Erbitux, a chemotherapy drug used to treat colon cancer, is coded as one unit per 10 milligrams, and the average dose is 400 mg – so the database will indicate that the doctor performed this service 40 times for this one dose given to one patient. Pathology services at a hospital often are billed using the name of the pathology lab director, so a large hospital could have all payments going to a single physician, suggesting aberrant billing practices. And finally, if a physician works with nurse practitioners or physician assistants, the “incident to” rules often allow the charges to be submitted under the physician’s NPI, again inflating the number of services. All of these scenarios could lead the casual observer to suspect that a doctor is cheating the system.

On the other hand, it does not take much effort to find doctors with questionable billing practices. The easiest way is to search for the doctors one knows personally, and about whom there were always lingering questions. I found one pulmonary doctor from my hospital who was the highest-paid physician in Illinois in his specialty; he billed a total of 4,727 critical care visits in 2012. That’s an average of almost 14 a day, every day of the year. And coding rules require each visit to be at least 30 minutes. That means he spends seven hours of each day with critically ill patients, yet he still had time for more than 2,000 other hospital visits and his office patients. The pulmonary physician with the next-highest total billed 1,100 critical care visits. I had always wondered about this doctor as well; he had a personal chauffeur who drove him from hospital to hospital.

In Laredo, Texas, likewise there is an optometrist who was paid more than $2 million one year, whereas next highest-paid optometrist in the city was paid $164,000. That optometrist put in 6,400 punctal plugs, an average of 18 per day. These are used to treat dry eyes. Texas is dry, but not that dry. As pointed out by David Glaser on Monitor Monday, outlier data does not mean that fraudulent billing is happening, but the data on these two providers certainly stand out and deserve a closer look.

The big question that many are asking is this: If any one of us can find a doctor with questionable billing practices in just a few minutes of searching, why hasn’t CMS done anything about it, since it is their data? These possible fraudsters stick out like a sore thumb. In 2011, Northrup Gruman was given a one-year, $77 million contract to set up a predictive modeling program for early detection of fraud, yet it took the public release of this data and probing by the media to get attention. Now, it remains to be seen if CMS or the OIG will investigate the outliers. There are many legitimate reasons why a doctor may be an outlier, but if the fraud fighters would spend more time looking at the outliers instead of picking on the providers who make innocent billing mistakes, it seems there would be a whole lot less fraud.

If you want to read Transmittal 505 or the Provider Compliance newsletter from CMS, or if you’d like a look at the Wall Street Journal’s physician Medicare billing and reimbursement search tool, go to my website, www.ronaldhirsch.com, and look for the links right below the picture of my personal bobblehead.

About the Author

Ronald Hirsch, MD, is a vice president of the Regulations and Education Group at Accretive Physician Advisory Services at Accretive Health. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic.

He is a member of the American Case Management Association and a Fellow of the American College of Physicians.

Contact the Author

RHirsch@accretivehealth.com

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