 |
Health Law SectionMarch 1998 NewsletterArticles |
Highlights of Proposed Stark II Regulations
compiled by J. Chris Bangerter, Kim Crawford & Jay Hardcastle
New JCAHO Policy Encourages Reporting of Medical Errors by Cindy Hine
Does Medicare Have Your Number?
Options for Individual & Group Billing for Physicians’ Services
by Charles M. Key
The Jan. 9, 1998 Federal Register contained proposed regulations
pertaining to the enforcement of the prohibitions on physician
self-referrals and the anti-kickback statute. Many thanks go to
Chris Bangerter, Kim Crawford and Jay Hardcastle for providing
the following highlights of these lengthy regulations.
l The proposed regulations create a new compensation exception
for any transactions that meet a fair market value test but do
not fit within other exceptions (e.g., loans). Five criteria must
be met for the arrangement to fit within the exception. The criteria
include the following: the arrangement must be consistent with
fair market value, incorporate all the items or services to be
provided by that physician to the entity and specify the terms
of the agreement.
l The physician recruitment compensation exception was clarified
and limited to recruiting physicians from outside one’s geographic
area. However, HCFA noted that recruiting physicians from within
one’s geographic area, for example to retain residents, may be
permitted by the new compensation exception described immediately
above.
l An equipment lease rental amount may be based on a “per use”
basis as long as the agreement is typical, the rent is consistent
with fair market value, and the lease meets the other standards
of the lease exception. Note the rental payments can not reflect
“per use” payments for
patients which are referred for the service by the lessor physician.
l The proposed regulations create, subject to four criteria,
an exception for de minimis payments between referring physicians
and entities which provide designated health services.
l The proposed regulations clarified that leases may have a
“termination for good cause” provision as long as the agreement
establishes a minimum one year business relationship. If the
lease is terminated the parties may not enter a new lease agreement
until the completion of what would have been the original one
year term. Further, leases must be renewed for one year increments
(at a minimum). In other words, once the initial one year term
has expired, the lease may not be renewed on a month to month
basis.
l The proposed regulations clarify the direct supervision requirement
in the in-office ancillary services exception to allow for “brief
unexpected absences” and “routine absences of a short duration”
by the physician, to avoid “absurd and impractical results.”
l Under the proposed revisions to the
definition of group practice, a group can have more than one
billing number as long as the group bills under a billing number
that has been assigned to the group.
l The definition of group practice has been revised to provide
that physician employees and physician owners, including physician
owners of individual professional corporations that in turn own
the group practice entity, are considered members of the group,
but physician independent contractors are
Stark II continued from page 1
not members of the group. While the change in the treatment of
contractors will make it easier for some groups to meet the group
practice test, it also will mean than independent contractors
cannot personally perform or directly supervise services under
the in-office ancillary services exception.
l To qualify as a group practice under the proposed regulations,
overhead expenses of the practice and the practice’s income must
be distributed according to methods that indicate that the practice
is a unified business. In other words, the methods of distribution
must reflect “centralized decision making, a pooling of expenses
and revenues, and a distribution system that is not based on each
satellite office operating as if it were a separate enterprise.”
l HCFA is soliciting comments on broadening the exception in
the 1995 final rule that covers services furnished in an ambulatory
surgery center, end stage renal disease facility or by a hospice
when payment is part of a composite rate, to include other types
of services furnished under other similar payment rate structures
where no financial incentive for abuse exists.
l Under the proposed regulations, for a physician or physician’s
family member’s ownership of investment securities to fit within
the exception for ownership of publicly traded securities, at
the time the physician or family member obtained the securities,
the securities had to be available on the open market, even if
the physician or family member did not actually purchase the securities
on those terms.
Beginning April 1, 1998, the Joint Commission for the Accreditation
of Healthcare Organizations will expect accredited healthcare
providers to contact the JCAHO within five days of the discovery
of a sentinel event which actually results in an unanticipated
death or major permanent loss of function. Unless a serious patient
safety threat is deemed to exist, voluntary reporting, in accordance
with the policy, will afford the organization 30 days to submit
a thorough analysis and corrective action plan. During this 30
day period, the JCAHO will respond to general inquiries regarding
the organization’s accreditation status without reference to
the sentinel event. However, to inquiries about the specific event,
JCAHO would acknowledge that it is working with the organization
on the matter. Organizations that are aware of but do not report
a sentinel event within five business days will be at risk, if
the event is made known to JCAHO, of being placed on Accreditation
Watch, a probationary-type status which may be publicly disclosed
by the Joint Commission. In these instances, the organization
will be deemed to have waived confidentiality protections and
will be subject to site evaluations, each carrying a charge to
the organization of $3,500.
JCAHO expects that the new Sentinel Event policy will encourage
healthcare organizations to develop effective internal incident
reporting systems which involve a mechanism for conducting a root
cause analysis of any sentinel event, defined as any unexpected
occurrence involving death or serious physical or psychological
injury or the risk thereof. Thus, JCAHO does not expect to be
notified of all sentinel events, but it does expect organizations
to conduct, and be able to demonstrate to JCAHO surveyors, a thorough
root cause analysis of each sentinel event. In addition, the Joint
Commission plans to create a database of information about those
events that occur most frequently.
Health care clients have traditionally involved legal counsel
in the earliest stages of responding to and investigating a serious
medical incident. Health care attorneys should be prepared to
assist clients with the decision as to whether an event meets
the threshold of being reportable to JCAHO under this new policy
as well as to facilitate the root cause analysis and development
of a corrective action plan.
Origins of The Medicare Provider Number System.
1. Introduction.
In the discussion of Medicare provider identification, several
confusingly similar but distinct terms are used, including the
“Unique Provider Identification Number” or “UPIN,” and the “National
Provider Identifier” or “NPI.” The following discussion provides
an explanation of the origins and use of those terms, and the
use of the numbers to which they refer.
2. The Original UPIN Initiative, 1985-92.
The Medicare and Medicaid programs are administered by the Health
Care Financing Administration (HCFA), a division of the United
States Department of Health and Human Services. In 1985, Congress
directed HCFA to develop a national registry with a unique identifying
number for every physician in the United States who may furnish
or refer patients for Medicare-covered services. Consolidated
Omnibus Budget Reconciliation Act of 1985,
§ 9202(g), Pub.L.No. 99-272; see also Social Security Act
§ 1842(r) (subsequent legislation essentially restating the 1985
requirement). The Registry of Medicare Physician Identification
and Eligibility was subsequently established by HCFA, assigning
to each physician a unique provider identification number (UPIN),
which is intended to remain constant throughout the physician’s
Medicare affiliation. Medicare Carriers Manual, Part 4, § 1000;
Medicare & Medicaid Guide (CCH) ¶ 11,150. In 1990, the law was
amended to require the name and UPIN of the ordering or referring
physician to be shown on all Medicare bills, effective January
1, 1992. Social Security Act § 1833(q).
3. The New NPI System, 1996.
In 1996, HCFA and other federal agencies joined together in
an initiative to develop a National Provider System which would
assign a unique National Provider Identifier (NPI) to each health
care provider in order to standardize and simplify the provider
identification process. Medicare & Medicare Guide (CCH)
¶ 11,146. This initiative resulted in enactment of § 1173(b) of
the Health Insurance Portability and Accountability Act of 1996
(Pub.L.No. 104-191), directing the Secretary of Health and Human
Services to adopt standards for the development of unique health
identifiers for each individual, employer, health plan, and health
care provider. According to a HCFA release dated May 1, 1996:
The goal of the National Provider System is to give providers
one uniform number (called a National Provider Identifier) to
use for all government health care programs. All providers will
receive an eight-position NPI-the first seven positions will identify
the provider, while the eighth position, also known as a “check
digit,” will allow for a special calculation to insure no keying
errors are made when using the NPI. Individual providers and group
practices will receive two additional positions to indicate different
practice locations. Individual providers and group practices may
have multiple location identifiers, but their eight-position NPI
will always remain the same.
For Medicare, the NPI will serve both as a unique identifier
as well as a billing number. When submitting Medicare claims,
providers will use their NPI on all bills, claim forms, and correspondence.
(Medicare & Medicaid Guide (CCH) ¶ 11,146.60). The HCFA release
also indicates that the following government agencies will use
the same NPI: CHAMPUS, Department of Labor, Department of Veteran’s
Affairs, Social Security Administration, Food and Drug Administration,
Drug Enforcement Administration, Office of Personnel Management,
and Public Health Service.
While it was originally anticipated that the new system would
be developed through formal rulemaking, no such rulemaking has
been initiated. Medicare & Medicaid Guide (CCH) ¶ 11,146. A notice
was published at 61 Federal Register 20508, May 7, 1996, however,
indicating HCFA’s intent to revise the Medicare Physician Identification
and Eligibility System, to, among other things:
1. Restate the purpose of the system as to maintain unique identification
of each physician, practitioner, and medical group practice requesting
or receiving Medicare reimbursement;
2. Change the name of the system to the Unique Physician/Practitioner
Identification Number (UPIN) System;
3. Change the name of the Unique Physician Identification Number
(UPIN) to the Unique Physician/Practitioner Identification Number,
without changing the acronym, which will still be “UPIN;” and
4. Adopt a ten-digit identifier so as to uniquely identify all
physicians, practitioners, and medical group practices.
The Federal Register notice indicated that the system would
become effective forty days from the publication date. Accordingly,
one can assume that this 1996 notice was issued in lieu of formal
notice and comment rulemaking, and reflects the system currently
in use. This assumption is confirmed by reference to the current
instructions for Medicare billing provided in the Medicare Carriers
Manual.
Current Billing Instructions.
1. Identification of the Ordering or Referring Physician.
Claims for reimbursement for physician services under Medicare
are made using HCFA Form 1500, the Health Insurance Claim Form.
Instructions for the HCFA-1500 are provided in the Medicare Carriers
Manual, Part 4, § 2010.4, reprinted in Medicare & Medicaid Guide
(CCH) ¶ 10,261.50. The instructions require, among other things,
that the name and National Provider Identifier (NPI) of the referring
or ordering physician be entered on the Form.
Provision is made for the use of “surrogate NPIs” where the
ordering/referring physician has not been assigned an NPI. The
instructions direct the entry of only the seven-digit base number
and the one-digit check digit. Id.
The sole purpose of the entry of the name and NPI (UPIN) of
the referring physician is to satisfy the purposes of Social Security
Act § 1833(q). i.e., to track referrals and detect fraud and abuse
in the
Medicare system. See generally, Medicare & Medicaid Guide (CCH)
¶ 11,150.
2. Obtaining Provider Numbers.
HCFA announced a new initiative to improve the assignment of
Medicare provider numbers in mid-1997. Medicare & Medicaid Guide
(CCH) ¶ 45,626. The initiative includes various improvements in
the Medicare Health Care Provider/Supplier Enrollment Application,
HCFA Form 855. The instructions for revised HCFA Form 855 provide
in part as follows:
A separate application must be submitted for each classification
of provider/supplier type (e.g., physician in private practice,
physician in group practice). (Providers/suppliers enrolling in
the Medicare program as a group/partnership or as a group member/partner
must also complete HCFA Form 855G (individual group member application).
The instructions go on to specify that any changes in the information
reported in the HCFA-855 must be reported to the Medicare contractor
(Medicare carrier) within thirty calendar days following the change.
The instructions for HCFA Form 855G provide that Form 855G must
be completed when any one of the following situations is present:
1. An individual practitioner is currently enrolled in the Medicare
program and is joining a group/partnership that is currently in
the Medicare program “where the individual practitioner will reassign
benefits to the group/partnership.”
2. A new group/partnership is formed.
3. A group/partnership wishes to update the status of its current
members/partners, e.g., removing a member, assigning a member
to a new practice location, or adding a member.
A “group member” is identified as “a physician or non-physician
practitioner who renders services in a group practice and who
reassigns their benefits to the group.”
Conclusion.
In a situation in which a new group is formed among pre-existing
practices or an existing group is reorganized, a number of possible
scenarios are presented for continuation of billing of Medicare
services:
1. The individual members of the existing group can stop billing
as a group by simply not reassigning benefits to the group, in
which case each former group member would bill showing his or
her individual UPIN (in box 33 of HCFA-1500).
2. Some individuals in the group can adopt billing scenario
number one, while other members of the group remain a group practice,
continue to reassign their individual benefits to the group, and
complete HCFA-1500 as a group (with the group identifier in item
33 and the individual identifiers in item 24).
3. New group entities can be formed and can obtain new, distinct
provider identification numbers.
Whichever scenario is chosen, appropriate Forms 855 and/or 855G
should be filed reflecting the intended billing methods.
It takes anywhere from 60 to 120 days to obtain a new provider
identification number. During the period prior to issuance of
new group provider numbers, individuals providing services should
be able to bill under their individual provider numbers. This
is true even if the terms of the member’s employment or other
group affiliation require the member to assign all income to the
group. The common law assignment of income is separate and distinct
from the issue of assignment or reassignment of benefits under
the Medicare program. The billing scenarios address only reassignment
of income by the Medicare carrier, i.e. designation of the Medicare
payee. Where new groups are formed but have not yet obtained new
provider numbers and benefits are paid by Medicare directly to
the individual members of the group, this income may still be
deemed effectively assigned to the group at common law and for
federal income tax purposes, even though not “reassigned” to the
group for Medicare payment purposes.
If a new group has any of the following ancillary services,
additional planning and counseling must be provided to assure
compliance with the Stark law. Social Security Act § 1877, 42
U.S.C.
§ 1395 nn (refer to “Highlights of Proposed Stark II Regulations”
on page one):
l clinical laboratory
l physical therapy
l occupational therapy
l radiology, including MRI, CT and ultrasound
l radiation therapy
l durable medical equipment
l parenteral and enteral nutrition (IV therapy)
l prosthetics and orthotics
l home health
l outpatient prescription drugs
l inpatient and outpatient hospital services
Violation of the Stark law would mean that Medicare-covered
ancillary services provided by the group to Medicare beneficiaries
could not legally be billed or collected from any source. Willful
and repeated violations could also result in civil monetary penalties
of up to $15,000 for each claim, $100,000 for each unlawful arrangement
and exclusion from the Medicare program. Id.
