Maryland State Bar Association Health Law Section

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Maryland State Bar AssociationHealth Law Section

• Understanding Medicare Billing Issues
• Anti-Markup Rules, Independent Diagnostic Testing
  Facility Rules, and Liability Risks Associated
  with Non-Compliance with Medicare Billing Rules
• Kathleen M. Stratton
• Crowell Moring LLP
• 1001 Pennsylvania Avenue, N.W.
• Washington, D.C. 20004
• [phone]

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Anti-Markup Rules

• Current Medicare statutes and regulations
  prohibit the markup of the technical component
  (TC) of certain diagnostic tests performed by
  outside suppliers and billed to Medicare by a
  different individual or entity.

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Anti-Markup Rules

• 42 C.F.R 414.50 payment to the billing physician
  is limited to the lowest of the following
  amounts
• 1. The suppliers net charge to the physician
• 2. The billing physicians actual charge or
• 3. The Medicare fee schedule amount that would be
  allowed if the supplier billed directly.

4
Anti-Markup Rules

• Significant changes made to anti-markup rules in
  the 2008 Medicare Physician Fee Schedule Rule
• Restrictions would apply to technical and
  professional component billing
• Restrictions would also extend to billing for
  diagnostic tests performed at a site other than
  the office of the billing physician
• Significant controversy arose with these changes
  CMS delayed implementation until January 1, 2009

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Independent Diagnostic Testing Facilities

• Free-standing facilities providing (and billing
  for) diagnostic tests, i.e. MRI, CT, PET (not
  clinical lab or pathology tests) to patients
  referred by their treating physician (the
  physician responsible for treating the patients
  medical condition and who will use the results of
  the diagnostic test in the care of the patient)
• Must comply with Medicare Performance Standards
  specific to IDTFs.
• Standards related to business operating
  procedures, location, medical record-keeping,
  patient solicitation, etc.

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When Must a Supplier of Diagnostic Tests Enroll
in Medicare Program as an IDTF?

• An entity may bill for diagnostic tests as a
  physician office rather than an IDTF only if it
  meets the following four characteristics
• Physician practice is owned by physicians or
  hospital
• The entity primarily bills for physician services
  (e.g. evaluation management (EM) codes and not
  for diagnostic tests
• It furnishes diagnostic tests primarily to
  patients being treated by physicians in the
  practice
• The tests are performed and interpreted at the
  same location where the practice physicians also
  treat patients for their medical conditions.

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When Must a Supplier of Diagnostic Tests Enroll
in Medicare Program as an IDTF?

• If a substantial portion of the entitys business
  involves the performance of diagnostic tests, the
  diagnostic testing services may be sufficiently
  separate business to warrant enrollment as an
  IDTF in addition to enrollment as a physician
  group practice.
• In this case, the group would bill as an IDTF for
  tests performed on patients who are not patients
  of the practice the group would bill under its
  group billing number for tests performed on
  patients of the group.

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Radiology Groups

• Radiology group practices are generally different
  from those of other physicians because
  radiologists usually do not bill EM codes, nor
  do they treat a patients medical condition on
  an ongoing basis
• Generally not required to enroll as an IDTF
• Requirements may vary from carrier to carrier

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New IDTF Standards

• 2008 Medicare Physician Fee Schedule Rule imposed
  a new performance standard related to shared
  space
• A fixed-based IDTF (as opposed to hospital-based
  or mobile IDTFs) may not
• share a practice location with another
  Medicare-enrolled individual or organization
• Lease or sublease its operations or its practice
  location to another Medicare entity or
  individual or
• Share diagnostic testing equipment with another
  Medicare individual or entity
• Disruptive to common leasing arrangements such as
  block leases between IDTFs and physician group
  practices seeking to take advantage of Stark Law
  in-office ancillary services exception which
  was in large part CMS intent

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What Happens When Medicare Rules are Violated?

• Routine errors, mistakes vs. intentional
  violations
• Pattern of routine errors reckless disregard
  for the law?
• When does a routine overpayment become a false
  claim?

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The False Claims Act

• Primary government weapon in combating health
  care fraud
• - Huge penalties
• Favorable burden of proof
• Intent element is somewhat vague
• Scope of activities covered very broad
• Since 1986 20 billion recovered under FCA
• In 2007, FCA recoveries exceeded 2 billion 54
  million in 1986
• Whistleblower provisions are incorporated in FCA
• 72 of FCA whistleblower recoveries are
  health-related

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Elements of the False Claims Act

• Submitting, causing to be submitted, or
  conspiring to submit
• A claim for payment to the government
• When the claim is false or fraudulent and
• When the defendant acted knowingly
• In addition, using a false record or statement in
  support of a claim is also actionable
• Knowingly means deliberate ignorance or
  reckless disregard of the truth or falsity of
  the submission
• Intent to defraud need not be proven

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Applying the FCA Beyond Mere Truth Falsity of
the Claim

• Anyone in the chain of events leading to an FCA
  violation is potentially liable
• E.g. Physician, physician office staff, billing
  company, etc.
• Implied Certification Theory
• Failure to comply with any applicable law or
  regulation

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FCA Damages and Penalties Enormous

• Treble the governments damages
• Additional penalties of 5,500 - 11,000 per
  claim
• Parallel consequences suspension/exclusion from
  participation in health care payer programs the
  death knell for most physicians
• Not to mention
• Time and effort
• Attorneys fees
• Likely Corporate Integrity Agreement
• Damage to reputation

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Examples of Enforcement Actions Related to
Physician Billing

• Anesthesiologist in Oregon double billing
• Cardiologist in Maryland billing for left and
  right heart catheterizations only performing
  left heart catheterization
• Psychiatrist in New York Overbilling resulting
  from glitch in billing software