Anesthesia Business Consultants: Communique fall07

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2 ABC offers The Communiqué in electronic format

Anesthesia Business Consultants, LLC (ABC) is happy to announce that The Communiqué will be available through a state-of-the-art electronic format as well as the regular printed version. The Communiqué continues to feature articles focusing on the latest hot topics for anesthesiologists, nurse anesthetists, pain management specialists and anesthesia practice administrators. We look forward to providing you with many more years of compliance, coding and practice management news through The Communiqué. Please log on to ABC’s web site at www.anesthesiallc.com and click the link to view the electronic version of The Communiqué online. To be put on the automated email notification list please send your email address to [email protected].

THE THREE-PRONGCHANGES TO “STARK” THAT

YOU MUST UNDERSTANDBy Mark F.Weiss, J.D.

If you have any concern about complying with Stark, the federal prohibition against self-referral, you need to understand the three-prong changes that have occurred since the beginning of July. Without this understanding, you will be unable to make an informed decision as to whether your activities conform to Stark’s requirement of absolute compliance.

Although Stark is a civil, not a criminal statute, if you have a financial relationship, as defined by Stark, in an entity to which you make Medicare or Medicaid referrals for “designated health services,” you must strictly fall within an exception in order to avoid substantial civil penalties and exclusion from Medicare and Medicaid program participation. tions has spanned seven years, including

Complying with Stark is akin to trying four major regulatory pronouncements. to hit a moving target: Since the original Even though it is difficult to argue that statute’s enactment in 1989, the law has the government should not have a role in been amended multiple times and the fighting fraud and abuse within federally Centers for Medicare and Medicaid funded healthcare programs, Stark’s tor-Services’ process of issuing final regula- tured and esoterically complex legislative

Continued on page 4

➤ I N S I D E T H I S I S S U E :

THE THREE-PRONG CHANGES TO "STARK" . . . . . . . . . . . . . . . . . . . . 1 THE MEDICAL DIRECTION TEAM AND COMPARISONS . . . . . . . . . . . . . 2 ASA FEE SURVEYS – 1997 TO 2007 . . . . . . . . . . . . . . . . . . . . . . . . . 6 COMPLIANCE CORNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 KARIN BIERSTEIN JOINS ANESTHESIA BUSINESS CONSULTANTS . . . . . 11 CODING CORNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 EVENT CALENDAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

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THE COMMUNIQUE FALL 2007 PAGE 2

THE MEDICAL DIRECTION TEAM AND

COMPARISONS IN CLINICAL WORK MEASURESBy Amr Abouleish, MD, MBA

Department of Anesthesiology, University of Texas Medical Branch

When an anesthesiology group is more work and should be paid more. In practice.i,ii Listed in order of prevalence, small and covers only one facility, the issue this situation, the group will need to the systems used are based on (1) shift-of “who is working hard” is moot. In a reevaluate its compensation plans and worked (includes revenue split up small setting, everyone can “see” everyone, how it measures “work done,” the majori- equally), (2) charges or billed ASA units, and all the members take the same call and ty being clinical work. (3) time billediii, or (4) a combination. (I take the same time off. In contrast, as a For clinical anesthesiology work, sev- do not list “revenue-collected” since this is group grows and begins to cover more eral categories of measurements can be a measure of financial productivity, and than one facility, invariably there will be used – all reflect the different types of not clinical productivity.) members of the group who think they do compensation plans that exist in private- Each of these categories values work

I hope that all of our loyal readers have had a nice summer. There is something about fall in Michigan that always takes me back to my college days. I love the cool, crisp weather and the beginning of a new football season. For many of my classmates Fall marked the end of the summer, but for me it ushered in the beginning of a new year of opportunity, the promise of interesting new discoveries, making new friends and, most of all, the satisfaction of gaining new insights and skills to make me more successful.

And so it is for ABC as well. Our staff has spent the summer settling into our newly renovated offices in downtown Jackson. Our purchase and restoration of the old Jacobsen’s department store building has proved to be an uplifting experience not only for our employees but for the community as a whole. You cannot help but feel good about an investment like this in a community like Jackson.

As the collection of articles in this issue of Communique clearly indicates, there is still much to learn about our ever-changing business and the specialty of anesthesia. Once again, we touch all

the important bases, from the technical details of compliance and coding, to the legislative environment to the ongoing saga of anesthesia practice-hospital relations. Hopefully at least one of these thoughtful pieces will intrigue, fascinate, affirm or challenge you to look at your group or practice situation in a new way.

As many of you have already heard we have been especially fortunate this fall to have Karin Bierstein join our team. I think you will find her explanation for the transition quite intriguing. Not only do we consider her a tremendous asset and feel immensely grateful that she wanted to work with us, but we look forward enthusiastically to the insights and guidance she will give our people. We have always tried to be forward looking, to anticipate the next significant development and to make investments that anticipate our clients’ practice needs. I am thrilled that we can now do this at a whole new level.

Soon we will pack our bags to join many of you at the ASA annual meeting in San Francisco, the PGA in New York and the Practice Management

Conference in Tampa which our very own Karin Bierstein planned with Committee Chair Robert Johnstone, M.D. Each hold a unique promise of new insight, increasing our professional network of resources and exploring aspects of practice management that we never realized were so critical to our survival and success. May we all find it a time of discovery, adventure and personal fulfillment.

I would like to personally thank you for your interest in our efforts on behalf of the specialty and your support for the various services we provide the community. As always, we welcome your comments and suggestions. With your input and Karin’s vision in addition to the publication management skills of Cortney Shepherd, these pages will soon take on a whole new look.

Sincerely,

Tony Mira, founder and CEO

THE FALL PERSPECTIVE

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slightly differently and devalues different types of work. Briefly, shift-worked values availability to work and assumes everyone’s daily caseload will even out in the end (since it gives no value to the actual charges billed). Charges or billed ASA units values actual charges but those billed units are dependent on OR scheduling, surgical duration, and type of surgery.iv

Time billed values anesthesia time with a patient and not total time worked (since any turnover time and down time are non-billable). And finally, a combination represents a group’s attempt to minimize the downsides of each category.

One factor that is essential to consider is the effect of anesthesia care team model on any comparisons of work done. When a group begins to consider measuring individual work, the group will invariably look at measuring work done “per doctor” or in business “per FTE” (where FTE = full-time equivalent). For a physician-only group, there is no problem with this methodology since the work done is done only by each member. On the other hand, once you introduce anesthesia care team model, then each doctor will be producing units billed in more than one room and the issue of staffing ratios becomes important to consider. It should be noted that this issue of staffing ratio is only important if billed units – either total ASA units/charges or time-billed – are used as the measurement of work.v

Since 2005, the MGMA has published an annual anesthesia survey entitled “Cost Survey for Anesthesia Practices.”vi In one of the breakdowns of the data, the data is presented by staffing models: physician only, <

1 CRNA/AA per physician, and >1 CRNA/AA per physician. The effect of staffing models is seen clearly when one looks at the data in these surveys. From the 2006 report, time and total units per case are almost identical among the three staffing models. (See Table) On the other hand, there is a marked differences between the models (especially between physician-only and >1 CRNA/AA per physician) when looking at time and total units billed per physician. This is not surprising since the medical direction groups bill more than one OR per physician while the physician-only group bills one OR per physician. On the other hand, when one takes the staffing model out of the equation, the work “per OR” shows fewer differences.

Within a group that covers more than one facility, differences in staffing models may confound comparisons of any measurements similar to the survey data. For instance, if a group covers a traditional inpatient facility and a newer ambulatory surgical center (ASC), the group may choose to cover the inpatient facility with 1:2 to 1:3 MD: CRNA ratio but 1:4 in the ASC. In this situation, billed units per FTE will favor the ASC due to the increased staffing ratio. Another example is the way some groups cover cardiac anesthesia cases with physicians only, and other cases with medical direction. In this situation, the differences in staffing models would confuse comparisons using “units per FTE”.

In conclusion, measuring and comparing clinical productivity is difficult. It is not surprising that so many anesthesiology groups choose to split the money up evenly or only track shifts worked. If a group does choose to use units billed as a measure, staffing ratio differences should be reviewed. Even if the group does not use units billed for compensation, they may use them to track group productivity.vii

NOTE: The Cost Survey for Anesthesia Practice is sent out every Spring, and the report is published in the late fall. The 2007 report has just been released. It is available at a discount for ASA members. Even better, every group completing the survey receives a copy of the final report free of charge. This article discusses only a small portion of the comprehensive survey.

i Abouleish AE et al. Measurement of individual clinical productivity in an academic anesthesiology department. Anesthesiology 2000;93: 1509-16

ii Blough GG, Scott SJ. Presentation of AAA survey on practice patterns at the ASA Practice Management Conference in San Antonio, Texas, on January 31February 2, 2003

iii Feiner JR et al. Productivity versus availability as a measure of faculty clinical responsibility. Anesth Analg 2001;93:313-8

iv Abouleish AE et al. The effects of surgical case duration and type of surgery on hourly clinical productivity of anesthesiologists. Anesth Analg 2003;97:833-838

v Abouleish AE et al. Comparing clinical productivity of Anesthesiology groups. Anesthesiology 2002;97:608-616

vi Medical Group Management Association. Cost Survey for Anesthesia Practices: 2006 Report Based on 2005 Data. (Denver 2006)

vii Abouleish AE et al. Organizational Factors Affect Comparisons of Clinical Productivity of Academic Anesthesiology Departments. Anesth Analg 2003;96: 802-812

Table: Median Values Physician-only <1 CRNA/AA per physician >1 CRNA/AA per physician

Per Physician Total time units 4,939 4,887 6,965 Total units 9,888 9,078 12,692

Per OR Total time units 5,001 5,907 5,413 Total units 8,306 10,729 9,249

Per Case Total units (sum of time and base) 12.5 12.0 12.9 Time units 6.4 6.8 6.9 Base units 6.1 6.2 6.0

Adapted from Table 5.9f, 2006 Report Cost Survey for Anesthesia Practices, MGMA

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THE THREE-PRONG CHANGES TO “STARK” THAT YOU MUST UNDERSTAND

Continued from page 1

and regulatory scheme makes clear that the law’s authors, and the government employees charged with writing the interpretive regulations, have little understanding of business reality. They certainly have no appreciation of the impossibility of planning and executing complex business transactions in a regulatory environment is continually changing – what was legal under Stark yesterday is illegal today.

Three recent legislative and regulatory actions have increased this complexity.

PRONG ONE: PHYSICIAN FEE

SCHEDULE PROPOSALS

This past July, the Centers for Medicare and Medicaid Services (“CMS”) issued its Proposed Revisions to Payment Policies Under the Physician Fee Schedule. Those revisions impact the Stark regulations, including:

• Suggestions of possible changes to the “same building” and “centralized location” definitions pertaining to Stark exception.

• Suggestions that percentage based compensation deals would be considered to meet the “set in advance” requirement only in those circumstances in which they are based on revenue from services personally performed by the physician receiving the compensation.

• Proposed changes to the definition of an “entity” to include both the person or entity that presents the claim and the person or entity that either provides the designated health services or causes the claim to be presented. The impact of this would be to make illegal “under arrangements” services contracts between physicians and hospitals.

• Expanding the definition of owner

ship and investment interests to include a physician’s, or her family member’s, interest in a retirement plan, such that if the retirement plan has an interest in a DHS entity, the physician’s referrals to that entity would be prohibited unless subject to an exception.

• The requirement that the burden be on the entity submitting the claim to prove that the service was not furnished pursuant to a prohibited referral.

PRONG TWO: SCHIP LEGISLATION

In August, the United States House of Representatives passed the Children’s Health and Medicare Protection Act of 2007, commonly referred to in the press as the “SCHIP amendment legislation,” which includes language severely limiting Stark’s “whole hospital” exception.

As presently in effect (that is, unaffected by the proposed new law), there is

an exception to the general Stark law prohibition on referrals by a physician to a hospital in which the physician has an ownership interest. This exception is referred to as the “whole hospital” exception as it permits an ownership interest in the whole facility, as opposed to an interest in merely a part of the facility.

The House version of the Children’s Health and Medicare Protection Act of 2007 eliminates that exception. It grandfathers in hospitals with physician ownership that were in operation with Medicare provider agreements as of July 24, 2007, as long as they do not increase the number of beds or the number of operating rooms that were in existence on that date. However, it requires grandfathered hospitals to reduce physician ownership to an aggregate of no more than 40% of the facility and to no more than 2% individually within 18 months of enactment. It also mandates new disclosure of ownership rules as well as the disclosure to patients if the hospital fails



to have 24 hour physician coverage. The version of SCHIP amendment

legislation passed by the Senate does not include this Stark law change. Although it is unknown in what final form the Act will emerge from conference committee or whether it will be signed into law, the prospect of loss of the whole hospital exception is already having a chilling effect on physician ownership of hospital deals.

If the Stark amendment language of the House version of the Act becomes law, the market for, and valuation of, hospitals will be affected greatly. Facilities which are owned largely, or entirely, by referring physicians will face particularly tough challenges: Divest to whom? Who must be cut from the investor roster entirely and who may remain? Stop participating in Medicare and Medicaid? Close? Cease any plans for expansion? Divestiture may create bargains in the hospital market; however, as physician ownership patterns change, so too will referral patterns, placing, in some instances, doubt on the continuation of historical operating margins and, therefore, on valuation.

PRONG THREE: PHASE III STARK

REGULATIONS

On September 2007, CMS released its purportedly final phase, Phase III, of the Stark regulations.

As it did with the proposed revisions to the Physician Fee Schedule, CMS used the Phase III regulations to further attack percentage based compensation. CMS has a history of flip-flopping on this issue. Originally, CMS took the position that percentage compensation failed because it did not meet the “set in advance” requirement. Next, under pressure from the industry to recognize percentage payment as a common practice, CMS retreated from its former position, such that a percentage set in advance was seen as compensation that is set in advance. However, in the Phase III regulations,

CMS reverses itself on the larger issue of percentage arrangements, taking the position that percentage compensation arrangements will often fail because they will not meet the additional requirement that compensation not take into account the volume or value of referrals.

In its Phase II final Stark regulations, issued in 2004, CMS created a safe harbor definition for fair market value of physician compensation that was based upon specific compensation survey data. CMS eliminates that safe harbor definition in the Phase III regulations.

CMS made clear in Phase III that for an independent contractor to qualify as a “physician in the group practice,” the group’s contract must be with the individual physician or his professional corporation and not via a separate entity, such as another physician practice or a staffing company. Leased physician employees are not within the definition of physicians in the group practice.

The Phase III regulations include clarifications by CMS that within group practices, productivity bonuses may be paid based on services that the physician has personally performed and/or services and supplies “incident to” such personally performed services. However, the allocation of profits within a group is subject to different rules, in that they must be allocated in a manner that does not relate directly to designated health services referrals, including those services which are billed “incident to.”

The regulations include new policy statements by CMS in connection with shared space and equipment. Specifically, physicians in more than one medical group may not simultaneously share space or equipment. A physician sharing a DHS facility in the same building must control the facility and the staffing at the time the that DHS is furnished to the patient. The practical effect is that block-leasing arrangements may be required. All shared facility arrangements must be carefully

structured and operated in order to be compliant.

The definition of “indirect compensation arrangements” has been changed. A physician is deemed by the Phase III regulations to “stand in the shoes” of her group practice such that an arrangement between the group and an entity contracting with the group to provide DHS creates a direct compensation agreement with the physician. Previously, those sorts of relationships created “indirect” compensation relationships or perhaps no compensation relationship at all.

Phase III restates CMS’s position that when DHS is personally performed by the referring physician, there is no Stark law “referral.” However, CMS states in the preamble to Phase III that this position is not likely to apply to the provision of durable medical equipment, as there are few, if any, situations in which the referring physician is enrolled in Medicare as a DME supplier and personally performs all of the duties imposed on such suppliers.

CONCLUSION

The rules for Stark law compliance have changed and they will undoubtedly change again soon. The “finality” of the regulations is transitory. Existing referral relationships, in addition to new ones, must be tested for compliance with Stark’s ever changing requirements in order to avoid significant monetary penalties and exclusion from participation in Medicare and Medicaid.

Mark F. Weiss is a nationally recognized expert, and a frequent author and speaker, on the business and legal issues affecting physicians. He practices law with Advisory Law Group, A Professional Corporation, representing clients across the country from offices in Los Angeles and Santa Barbara, California. He is a Clinical Assistant Professor at USC’s Keck School of Medicine. Mr. Weiss offers our readers a series of complimentary educational materials. Mr. Weiss may be contacted via e-mail at markweiss@advisorylawgroup.com or via phone at 877-883-2803.

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ASA FEE SURVEY OF COMMERCIALPAYMENT RATES 1997 - 2007

By Joe Laden Business Manager, Anesthesia Associates of Louisville, PSC

ASA FEE SURVEYS – 1997 TO 2007

The American Society of Anesthesiologists published its sixth biennial survey of commercial payment rates in the July ASA Newsletter. The surveys have been conducted by the ASA Washington office and the results reported in the ASA Newsletter Practice Management column written by Karin Bierstein, J.D. M.P.H. The first two surveys (1997 and 1999) were distributed to members of various ASA committees and given to attendees at the annual ASA Practice Management Conference. Beginning in 2001, the Anesthesia Administration Assembly of the MGMA was asked to participate. Participation in the survey has risen significantly each year culminating this year with 284 respondent anesthesiology practices employing a total of 5,870 anesthesiologists.

In consultation with AAA leaders Shena Scott and Genie Blough, Ms. Bierstein has refined and improved the survey methodology each year and as the number of participants increases, the results become more reliable. All of the past survey articles and the survey instruments are available on the ASA web site. The URLs are at the end of this article. Ms. Bierstein’s columns explain how this survey can be conducted legally within the antitrust enforcement policy guidelines set forth by the Department of Justice and Federal Trade Administration.

WHY IS THE SURVEY IMPORTANT?

Most anesthesia fee-based revenue

comes from government health programs and, in greater proportions, from contracted commercial payers. There is not much control an individual anesthesiology practice can exercise over government rates, but a practice can negotiate the terms on which it will contract with commercial payers. Typically 2-5 commercial payers represent the bulk of a practice’s non-government revenue. Negotiating favorable rates with these payers is one of the most important functions of anesthesiology practice managers. Having good data on the rates paid by commercial carriers nationally and regionally can help in the negotiation of fees. These data will be most helpful in the case of a commercial payer with a low unit conversion factor relative to others in your geographic area. If the payer is reasonable and wants to pay a fair price for anesthesiology services, the survey data may help your negotiations.

Or course, there are payers with near monopolistic market power that can pay low rates with impunity. In this situation, you may be able to use the survey to justify financial support from your hospital to the extent that your services are underpaid

by this payer relative to the cost for you to provide anesthesiology services.

If the rates paid by your contracted commercial carriers are at or above the median, you can use the survey data to show your anesthesiologists that you have done a good job negotiating your conversion factors.

HOW HAVE COMMERCIAL PAYER RATES

EVOLVED SINCE 1997?

The survey has asked for three conversion factors from each anesthesia group. The first four questionnaires simply requested the respondent’s three highest-volume payers’ rates. In 2005 and 2007 the questionnaires instead called for the conversion factors paid to the group by its low payer, median payer and highest payer. Using these three numbers, ASA published the survey mean (average), median (mid point), minimum, maximum, 25th percentile and 75th percentile for each on a national and regional basis. A simplified way to look at the results over the past 10 years is to plot a graph of the statistical mean of the high, median and low of the biennial national results. (see Chart 1) It may be helpful to plot the conversion factor received by your practice by its major commercial contracted payers for comparison purposes. An illustration of this is also plotted on Chart 1.)

Over the 10 years from 1997 to present, the mean (average) of the median conversion factors has increased 32.3% from $42.82 to $56.66 which is an annual compounded rate of 2.8%. This rate is below inflation over this time period and



ASA National Commercial CF vs. My Practice

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

High

Mid

Low

My Practice

CHART 1

therefore no gain has been made in dollars adjusted for inflation. The mean of the low payer’s conversion rate has increased 27.5% from $42.26 to $52.16 which is an annual compounded rate of 3.1%. The mean of the high payer’s conversion rate has increased 46.5% from $44.41 to $65.08 which is an annual compounded rate of 3.9%. It is interesting that the better payers’ rates are increasing the most rapidly.

USING THE SURVEY DATA TO YOUR

ADVANTAGE

It is well known that anesthesiologists are underpaid by the government programs, Medicare, Medicaid and CHAMPUS/Tricare. The ASA survey shows that payment increases from commercial payers over the past 10 years do not exceed the national inflation rate. If one plots practice expenses over the same time period (e.g. malpractice, health insurance, CRNA salaries) the results will undoubtedly show that these practice expenses have increased at a rate far greater than inflation. This explains why many anesthesiologists express concern that they are working harder for the same or less pay. Also, there has been an increase over this time period in the number of anesthesiology practices that have had to ask hospitals for financial support because revenue from fees is insufficient

to pay anesthesia personnel for required operating room coverage.

In order to advance the payment rate for anesthesiology services, anesthesia practice managers will need to become better negotiators with their principal contracted commercial carriers. A good way to start is by reviewing the six ASA fee survey articles and comparing the historic rates paid by your top commercial payers with the survey data. If there are one or more payers that fall below the survey averages, you will need to develop a strategy to bring these rates to parity.

To download the data table in Microsoft Excel format, please visit www.communiquenews.com.

SUPPORT LEGISLATION

to Fix the Medicare

Anesthesiology Teaching Rule

Last month Sen. J.D. Rockefeller (D-WV) introduced legislation that would eliminate the discriminatory Medicare payment policy toward teaching anesthesiologists.

For information on how to support this legislation visit the “What’s New?” section of the ASA website at http://www.asahq.org/news/ asanews091807.htm.

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As part of our desire to keep both clients and readers up to date, the Communiqué has been printing compliance information since its inception. In the Compliance Corner, we will now formally keep you abreast of the various compliance issues and/or pick out a topic that would be of interest to most of our readers.

GET READY FOR INCREASED MEDICARE

AUDIT ACTIVITY AS RECOVERY AUDIT

CONTRACTORS ARE GOING NATIONWIDE

The financial pressure on hospitals, physicians and other healthcare providers, as a result of increased scrutiny of claims and audit activity by third party payors, will not end soon. To the contrary, as part of the Tax Relief and Health Care Act of 2006, Congress directed that the Medicare Recovery Audit Contractor (“RAC”) demonstration program expand to all 50 states by no later than 2010. CMS plans to aggressively move forward with this expansion. CMS has already announced the expansion of its program from three states to an additional nine states, with intentions for nationwide RAC auditing to take place by spring 2008, three-years ahead of schedule. Providers, including anesthesiology and pain management groups are well advised to prepare now for the expansion of the RACs and increasing Medicare audit activity.

RECOVERY AUDIT CONTRACTORS

The original three-year RAC pilot demonstration project was a result of

By Abby Pendleton, Esq.Jessica L. Gustafson, Esq.

Wachler & Associates

Section 306 of the Medicare Modernization Act, which directed CMS to investigate Medicare claims payments using RACs to identify overpayments and underpayments. The pilot demonstration targeted the three states with the highest Medicare expenditures (New York, Florida and California), and has proven highly successful from the financial perspective of CMS and the RACs. The CMS RAC Status Document for FY 2006 reflects $303.5 million as total “improper” payments identified by the RACs for FY 2006, with a high percentage being linked to inpatient hospital claims.1

The RAC process is designed to identify and recover overpayments (and underpayments) made by Medicare to providers. This process has ramifications that may significantly impact the financial status of providers. The current RAC experiences of many California hospitals highlights the significant impact the RACs will have on Medicare providers as the project goes nationwide. To date, providers have found the RAC process burdensome; significant resources have been dedicated to responding to volumes of record requests and defending claims denials.

Notably, CMS compensates RACs on a contingency fee basis, and RACs are entitled to keep their fee if a denial is upheld at the first level of Medicare appeal (i.e., redetermination to the Carrier or Fiscal Intermediary), regardless of whether the provider prevails at a later stage in the appeals process. Amazingly, subsequent appeals after the first level of appeal do not impact a RAC’s ability to retain the



contingency payment. This fee arrangement appears troublesome, as it provides incentives to private companies to aggressively review and deny claims. This includes denying claims alleging that services were not medically necessary or appropriately documented, areas that contain much subjectivity and are often highly disputed by the provider. CMS’ payment agreement seems to guarantee that RACs will audit with a highly motivated work ethic to identify as many overpayments as possible.

Given what New York, Florida, and especially California providers are experiencing in the pilot RAC demonstration project, Medicare providers are well advised to begin the process of preparing for the RACs now. Although providers may not be able to stop RAC audits, providers can engage in activities that should assist with the process. For example, providers need to prepare by dedicating resources to:

1) Internal monitoring protocols to better identify and monitor areas that may be subject to review;

2) Responding to record requests; 3) Compliance efforts including, but

not limited to, documentation and coding education; and

4) Dedicating personnel and resources to properly work up and defend denials in the appeals process.

MEDICARE APPEALS PROCESS

Claims denied as a result of a RAC audit are subject to the standard Medicare appeals process. Medicare providers should utilize the appeals process. In addition to substantive arguments, such as attacking claim denials on the merits, it is important for providers to understand that other legal arguments and strategies exist and can be utilized in the appeals process. These legal arguments and strategies may prove invaluable to the case. For

example, the Social Security Act contains provisions, such as the Medicare Provider Without Fault and Waiver of Liability provisions, which can be used and developed with certain facts and circumstances that may exist in the case.

In 2005, a new uniform Medicare appeals process was created resulting in the same appeals process for both Part A and Part B providers. This process includes:

• A redetermination appeal to the Carrier or Intermediary;

• A reconsideration submitted to a Qualified Independent Contractor (“QIC”);

• An appeal to an Administrative Law Judge (“ALJ”);

• An appeal to the Medicare Appeals Council (“MAC”); and

• An appeal to Federal district court.

In order to pursue the various levels of appeal, certain requirements must be met at certain stages in the appeals process. Although many providers have not seen much success at the redetermination stage

of the appeal, the later stages of appeal, particularly the ALJ stage, may prove more successful. Providers must use due care in complying with the timeframes and other requirements set forth in the appeals process. Failure to do so may result in the inability to pursue the appeal.

The first level in the appeals process is redetermination. Providers must submit a redetermination request in writing within 120 calendar days of receiving notice of an initial determination. There is no amount in controversy requirement.

Providers dissatisfied with a Carrier’s redetermination decision may file a request for reconsideration to be conducted by the QIC. This second level of appeal must be filed within 180 calendar days of receiving notice of the redetermination decision. As with the redetermination stage, there is no amount in controversy requirement. The QIC reconsideration stage of appeal has important ramifications for both Part A and Part B providers. With respect to Part B providers, the QIC reconsideration stage replaces the in-person Carrier Hearing that

Continued on page 10



GET READY FOR INCREASED MEDICARE AUDIT ACTIVITY

AS RECOVERY AUDIT CONTRACTORS ARE GOING NATIONWIDE


was afforded under the prior regulations. In an important negative change for Part B providers, the QIC reconsideration is an “on-the-record” review, rather than an in-person hearing. The previous process afforded Part B providers with an actual in-person hearing.

Moreover, it is important to note, as many providers may be unaware, that the reconsideration stage of the appeals process contains an early presentation of evidence requirement. This means that a provider’s failure to submit evidence to the QIC at the reconsideration stage of appeal will likely preclude the provider from introducing the evidence to an ALJ or later stages in the appeals process. Accordingly, it will be crucial for providers to fully work up their cases at the reconsideration stage of appeal.

The third level of appeal is the ALJ hearing. A provider dissatisfied with a reconsideration decision may request an ALJ hearing. The request must be filed within 60 days following receipt of the QIC’s decision and must meet the amount in controversy requirement. ALJ hearings can be conducted by video-teleconference (“VTC”), in-person, or by telephone. The final rule requires the hearing to be conducted by VTC if the technology is available; however, if VTC is unavailable, or in other extraordinary circumstances the ALJ may hold an in-person hearing. Additionally, the ALJ may offer a telephone hearing. Notably, the provider is not automatically entitled to an in-person hearing at the ALJ stage of appeal.

The fourth level of appeal is the MAC Review. The MAC is within the Departmental Appeals Board of the U.S. Department of Health and Human

Services. A MAC Review request must be filed within 60 days following receipt of the ALJ’s decision. Among other requirements, a request for MAC Review must identify and explain the parts of the ALJ action with which the provider disagrees. Unless the request is from an unrepresented beneficiary, the MAC will limit its review to the issues raised in the written request for review. The final step in the appeals process is judicial review in federal district court. A request for review in district court must be filed within 60 days of receipt of the MAC’s decision. In a federal district court action, the findings of fact by the Secretary of HHS are deemed conclusive if supported by substantial evidence.

SUMMARY

CMS has announced its intention to aggressively expand the RAC pilot demon

stration project, with plans for nationwide auditing to take place as early as spring 2008. The contingency payment arrangement between CMS and the RACs ensures that the RACs will aggressively audit providers, with an eye towards denying as many claims as possible. Providers are well advised to act now to prepare for the expansion of RAC activity. Providers should dedicate resources towards compliance education and towards timely addressing any document requests and/or claim denials. Because claim denials made by the RACs will be subject to the Medicare appeals regulations, providers must be cognizant of the appeal rules.

1 November 22, 2006, CMS RAC Status Document FY

2006, available at http://www.cms.hhs.gov/RAC/Downloads/

RACStatusDocument—FY2006.pdf (last accessed

September 10, 2007).

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KARIN BIERSTEIN, J.D., M.P.H.JOINS ANESTHESIA BUSINESS CONSULTANTS

Anesthesia Business Consultants is pleased to announce that Karin Bierstein, JD, MPH has joined our team as Vice President for Strategic Planning and Practice Affairs. Ms. Bierstein comes to ABC from the American Society of Anesthesiologists, where she served for nearly 13 years, most recently as Associate Director of Professional Affairs. At ASA, her major responsibilities included advising anesthesiologists and administrators on practice management issues and developing the annual Practice Management conferences, representing the specialty before the Centers of Medicare and Medicaid Services (CMS), making anesthesiology a player in the Pay-for-Performance world, and working closely with the Committee on Quality Management and Departmental Administration and its Hospital Consultation program. Using her expertise to provide consulting and planning services to ABC’s clients is the logical next step, Karin believes – and Tony Mira, ABC President and CEO, strongly agrees.

Karin originally came to the Washington, D.C. area to become the first Socioeconomic Affairs Coordinator for the American Academy of Otolaryngology-Head and Neck Surgery. Between specialty organizations, she served as Washington Counsel for the American Medical Association.

Karin hastens to point out that her prior experience is not limited to nonprofit physician organizations. Upon graduating from Cornell Law School, she enjoyed taking care of private-sector clients as an associate in the labor department of a large New York City law firm and then moved to Los Angeles to engage in corporate litigation. She obtained her Master’s degree from the Harvard School

of Public Health on her way to Washington.

Her base will continue to be the Northern Virginia suburbs while she travels frequently to ABC’s headquarters in Michigan and to ABC clients’ locations. The next home state for Karin, in a few years, will be Colorado. Beginning now, though, she will be happy to ski the celebrated powder and glades with any member of the ABC family whose vacations in Steamboat Springs coincide with her own.

If you don’t want to wait for snowfall to see Karin, you can attend her upcoming speaking engagements at the ASA Annual Meeting in San Francisco:

WHAT’S WRONG WITH THIS

CONTRACT?

Sunday, October 14, 2007; 4:00PM – 4:50PM

Moscone Center West; San Francisco, CA

Objectives: Attendees will learn to identify and negotiate certain disadvantageous terms appearing in hospital contracts. Using examples of clauses in recent contracts between anesthesiologists and hospitals, this course will analyze a number of common onerous provisions and suggest negotiation strategies and potential counter-offers. A financial modeling tool to support stipend requests will be presented.

THE ASA CONSULTATION PROGRAM: COULD IT BE JUST WHAT THE

DOCTOR NEEDS TO ORDER?

Panel presentation with William H. Montgomery, M.D.; Walter G. Maurer, M.D.; and James S. Hicks, M.D.

Saturday, October 13, 2007; 1:30PM – 3:30PM

Moscone Center South; San Francisco, CA

Having served as counsel to the hospital consultation program for 12 years, Karin will elaborate on the topic “You Knew There Would Be Legal Issues, Didn’t You?”

SEPARATE WRITTEN INFORMED

CONSENT IS NECESSARY FOR

ANESTHESIOLOGISTS

Point-counterpoint presentation with Timothy B. McDonald, M.D., J.D. (Karen B. Domino, M.D., M.P.H. moderating)

Wednesday, October 17, 2007; 11:00 AM – 12:30 PM

Moscone Center West; San Francisco, CA

Objectives: The point-counterpoint panel will review pros and cons of a separate written consent for anesthesiologists compared to using the written surgical consent and performing a verbal informed consent for anesthesia care. After attending this panel, participants will: 1) Understand the essential elements of appropriate informed consent for anesthesia care; 2) Pros and cons of using a separate written informed consent for anesthesia care.

Karin is very enthusiastic about joining ABC and states: “I am proud to be part of a team that includes so many first-rate professionals in the fields of anesthesia and pain medicine practice management, financial services, compliance, and planning for growth. ABC has the resources and the lengthy national experience in anesthesia business operations to justify my confidence that together we can do everything possible to ensure our clients’ success.”

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Coding CornerCoding Corner

ARE YOU REPORTING PRE-OPERATIVEANTIBIOTIC PROPHYLAXIS UNDER THE

PHYSICIAN QUALITY REPORTINGINITIATIVE (PQRI)?

The Tax Relief and Health Care Act of 2006 (TRHCA) Section 101 authorized,in Title I, the Physician Quality Reporting Initiative. This voluntary quality reporting program began on July 1st and ends on December 31, 2007. Unlike its predecessor, the Physician Voluntary Reporting Program (PVRP), the PQRI will pay physicians a bonus if they report the applicable quality measure(s) on at least 80% of the claims for eligible services performed during the second half of 2007. The only PQRI measure applicable to anesthesia care is #30, the timely preoperative administration of antibiotic prophylaxis.

Although groups seeking the bonus already have more than three months’ experience with the program, questions about the mechanics are still surfacing. A set of Frequently Asked Questions (FAQs)and answers furnished by members of the MGMA Anesthesia Administration Assembly (AAA) and by American Society of Anesthesiologists (ASA) staff recently appeared on the AAA list serv. These FAQs, as amended in October, appear below.

Without additional legislation and funding it is not clear whether the PQRI will continue into 2008. Although Congress has failed to pass Medicare

By Sharon Hughes, MBA, RHIA, CCS

legislation thus far, it still has more than two months to do so. The Centers for Medicare and Medicaid Services (CMS) expects to be administering the PQRI or a similar program next year.

PQRI FAQs The following answers to the Frequently Asked Questions were produced by MGMA and ASA staff in consultation with the Centers for Medicare and Medicaid Services (CMS) and are intend

ed as an educational resource and reference guide only. They should not be considered legally binding or definitive statements of law. Differing answers may be warranted, based on varying facts and/or circumstances.

PQRI comments related to Perioperative Prophylactic Antibiotics:

Measure #20 is intended for the ordering physician and pertains to the surgeon. Measure #30 is intended for the administering physician – typically an eligible professional providing anesthesia services – giving the prophylactic antibiotic at the correct time.

Eligible professionals include anesthesiologists, CRNAs and Anesthesiologist Assistants (AAs).

Question 1: Can both the Anesthesiologist and CRNA or AA receive credit if PQRI Measure #30 (antibiotic prophylactic timing) is submitted? Answer 1: Any eligible professional with privileges to perform the clinical action described in Measure #30 can report CPT® II codes on the Medicare FFS claim. Therefore, both the anesthesiologist

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and the CRNA or AA may report Measure #30 (antibiotic prophylactic timing) if the actions described in the measure specification were performed for a given case. There is no medical direction issue or need to allocate the measure to one or the other of the clinicians.

Question 2: Can an anesthesiologist and CRNA or AA report and get credit for delivery of prophylactic antibiotics if they are “hung” in the pre-op area and there is documentation that that they have been given pre-op as specified in PQRI Measure #30? Answer 2: Yes, the anesthesiologist and CRNA or AA can report Measure #30 to indicate the prophylactic antibiotics were “hung” pre-operatively as long as there is a documented order and documentation of the timing of prophylactic antibiotic administration in the anesthesia record.

Question 2a: What about with a patient who comes down from the floor on antibiotics, so none are given prophylactically, how is this reported? Answer 2a: In the scenario described above, there is no order for prophylactic antibiotics and the dosing schedule of the therapeutic antibiotics is unrelated to the procedure start or incision; therefore, Measure #30 would not apply to anesthesiology.

Question 3: PQRI Measure #30 “Timing of prophylactic antibiotics-administering physician” contains only two available numerators; 4048F-Given in timely manner and 4048F-8P-Not given in a timely manner. Modifier 1P is not listed with Measure #30. Can this modifier be used even if it is not listed on the measure for when a patient comes down from the floor already on an antibiotic? Answer 3: No, there are no allowable performance exclusions for PQRI Measure #30 identified by the measure developer.

Reportable numerator codes include 4048F or 4048F-8P as instructed in the measure specification.

Question 4: In a case with a deep abscess or wound infection, the surgeon states, “I do not want the prophylactic antibiotics to be given until after I obtain cultures from the wound” (i.e., after the incision has been made and the abscess has been located). May I report on PQRI Measure #30 using 4047F-8P and 4048F8P? Answer 4: Since there was no order for prophylactic antibiotics to be administered prior to the surgical incision (or start

of procedure when surgical incision is not required), Measure #30 does not apply. 4047F-8P is not a reportable code for measure #30.

Question 5: Is the reporting of PQRI Measure #30 “Timing of Prophylactic Antibiotic-Administering Physician” only for surgical site prophylaxis or will SBE (Subacute Bacterial Endocarditis) Prophylaxis, when indicated, be included as well? Answer 5: No, SBE prophylaxis is not included. The clinical recommendation statements and rationale refer to surgical

Continued on page 14



ARE YOU REPORTING PRE-OPERATIVE ANTIBIOTIC PROPHYLAXIS

UNDER THE PHYSICIAN QUALITY REPORTING INITIATIVE (PQRI)?


wound infections which do not include SBE. See guidelines referenced for this measure in Measure #30 worksheet (available on the CMS website at www.cms.hhs.gov/pqri ).

Question 6: When reporting PQRI Measure #30 should we use the same diagnosis used when reporting the surgical procedure? Answer 6: Yes, codes should be submitted via the CMS 1500 as part of your routine claims processing.

Question 7: How should one report PQRI codes on the claim form when Medicare is the secondary insurance? If the measure is applied to the primary insurance claim will it result in denials? Has CMS worked this out with other insurance carriers? Answer 7: As referenced in FAQ #8467 on the CMS website: “Providers should not include the PQRI codes on claims submitted to primary payers (when Medicare is secondary) unless notified or approved to do so by that payer. Providers should, however, place the PQRI codes on the claim when submitting that claim to Medicare for secondary payment. When Medicare is primary there is an automatic cross-over of claims to payers who enter into agreements with CMS. Some payers may also elect to receive claims where Medicare is the secondary payer.”

Question 8: Should one report both the 4047F and 4048F for PQRI Measure #30 or does 4048F indicate an order was given? Answer 8: Measure #30 requires you to

submit both 4047F for the order and 4048F (with or without the 8P as indicated) for the administration of the prophylactic antibiotic. The denominator coding for Measure #30 includes 4047F (Documentation of order for prophylactic antibiotics) and the numerator coding includes 4048F with or without the 8P modifier (Documentation should note that prophylactic antibiotic was given within one hour (if fluoroquinolone or vancomycin, two hours) prior to surgical incision (or start of procedure when no incision is required).

Question 9: If 4047F has to be checked off by the anesthesiologist, must there be documentation that the surgeon ordered the prophylactic antibiotic for PQRI Measure #30? Answer 9: Yes. For the purpose of reporting for PQRI, standing orders (clinical pathways and protocols) may be included; however, what is submitted on the claim should match the documented actions in the patient’s chart. Each physician or other eligible professional would need to refer to internal policies and standards from other governing bodies to determine whether the use of standing orders is permitted.

Question 10: How should reporting of the perioperative care measures be documented in the medical record? Should they be taken from the pre-operative nurse notes? Do they need to be noted in the anesthesiologist’s pre-operative evaluation and plan? Do they need to be on the anesthesia record? Answer 10: Medical record documen

tation is required for all clinical actions described in a measure. Each eligible professional will need to determine the appropriate forms (paper or electronic) that require documentation (i.e. nurse’s notes, anesthesia record, etc.). The anesthesia provider should document the time the prophylactic antibiotic was initiated verifying the timing was appropriate for reporting the measure.

Question 10a: In the event that a pre-op or hospital RN administers the medication in the presence of an Anesthesiologist or CRNA, who should report the measure? Answer 10a: Only eligible professionals can report PQRI Measure #30. However, if an Anesthesiologist or CRNA or AA is responsible for the administration of the prophylactic antibiotic, including observation of the pre-operative nurse administering the medication, they may report Measure #30. Note: The measure must be reported on the same claim as the procedure with which it is associated.

Question 11: Regarding PQRI Measure #30, does the time of administration of the antibiotic and the time of incision (or start of procedure if no incision) need to be documented together on the anesthesia record or other document? Answer 11: Each physician or other eligible professional would need to refer to internal medical record documentation policy. For Measure #30, the timing, dosage, and route of administration of the prophylactic antibiotic must be documented in the medical record at the time of administration. Appropriate documen



tation may be more easily accessible for anesthesia providers if it were documented in one place, i.e. the anesthesia record. The incision time should be noted either in the anesthesia record or the operative record of the patient’s chart. (For more information on reporting measure #30 see www.communiquenews.com/)

Question 11a: Does the type of antibiotic used, the time and signature have to be on the record? Answer 11a: Yes, please refer to internal policies and standards from other governing bodies (i.e. JCAHO), which require this documentation.

Question 12: If a case is scheduled as an orthopedic “closed procedure/possible open procedure” how should this be handled for PQRI reporting purposes? The antibiotics may not be ordered until after the closed procedure is not successful and the open procedure is planned. Answer 12: Note that prophylactic antibiotics may be given for planned open or closed procedures: “or start of procedure when no incision is required”. In this scenario, the antibiotics would be ordered to be given within 60 minutes of the incision and the relevant PQRI codes may be reported. It does not matter that the closed (non-eligible measure) intervenes between induction and incision.

Question 13: What should occur when a surgeon fails to write an antibiotic order, for a procedure or does not give the verbal order until the incision has been made? In this situation there would be no time to prepare and administer the prophylactic antibiotic “on time” because of this “late” order. Answer 13: Late ordering of prophylactic antibiotic will result in performance

failure for Measure #20. The surgeon responsible for the “late” order could report 4047F-8P (antibiotics were not ordered within one hour….) providing the surgical procedure performed was part of the denominator inclusion codes for the measure. The eligible professional providing anesthesia services would not be accountable to report Measure #30 since there was no documentation of the order for prophylactic antibiotics prior to the incision.

Question 14: The patient is an inpatient and has been receiving regular scheduled doses of one or more therapeutic antibiotics. When the patient arrives in the operating room, the previous dose of

antibiotics may not have been given within the “one hour prior to the incision” timeframe. How should the anesthesia provider report Measure #30? Answer 14: In this scenario, the patient is receiving therapeutic, not prophylactic, antibiotics and the dosage schedule is unrelated to surgical incision or procedure start. Measure #30 is inapplicable unless an additional dose or additional antibiotic agent is ordered to be administered in the specified timeframe for wound prophylaxis. For more information please visit www.communiquenews.com.

For additional information please visit http://www.cms.hhs.gov/PQRI/15_Measu resCodes.asp.

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PROFESSIONAL EVENTS

DATE EVENT PLACE CONTACT INFO

Oct. 12, 2007

Oct. 12, 2007

Oct. 12, 2007

Oct. 12, 2007

Oct. 13-17, 2007

Oct. 13, 2006

Oct. 28-31, 2007

Nov. 2-4 2007

Nov. 12, 2007

Nov. 15-18, 2007

Dec. 7-11, 2007

Jan. 25-27, 2008

Feb. 12-16, 2007

Feb. 14-17, 2008

Apr. 30-May 4, 2008

Jun. 18-22, 2008

May 15-18, 2008

May 17-18, 2008

May 18-21, 2008

May 30-Jun 1, 2008

June 18-22, 2008

American Society of Critical Care Anesthesiologists 20th Annual Meeting Society for Ambulatory Anesthesia Mid-Year Meeting Society for Pediatric Anesthesia Annual Meeting Society of Neurosurgical Anesthesia & Critical Care Annual Meeting ASA Annual Meeting

American Association of Clinical Directors Annual Meeting MGMA Annual Conference Association of Anesthesiology Program Directors/Society of Academic Anesthesiology Chairs Annual Meeting Minnesota Society of Anesthesiologists

American Society of Regional Anesthesia and Pain Medicine New York State Society of Anesthesiologists Postgraduate Assembly in Anesthesiology ASA Conference on Practice Management

American Academy of Pain Medicine Annual Meeting Arizona Society of Anesthesiologists Annual Mtg. Society of Obstetric Anesthesia and Perinatology Annual Meeting Society of Cardiovascular Anesthesiologists Annual Meeting and Workshops Association of University Anesthesiologists 55th Annual Meeting MGMA Pain Management Preconference

MGMA AAA Annual Conference

CSA/UCSD Annual Meeting & Clinical Anesthesia Update Society of Cardiovascular Anesthesiologists Annual Meeting and Workshops

Grand Hyatt Hotel, San Francisco, CA San Francisco Hilton, San Francisco, CA Hilton San Francisco, San Francisco, CA The Westin Market Street Hotel, San Francisco, CA Mascone Center, San Francisco, CA San Francisco Hilton Hotel, San Francisco, CA Pennsylvania Convention Center, Philadelphia, PA Mandarin Oriental, Washington, D.C. Crowne Plaza Northstar, Minneapolis, MN Boca Raton Resort and Spa, Boca Raton, FL New York Marriott Marquis, New York, NY Tampa Marriott Waterside Hotel, Tampa, FL Gaylord Palms, Orlando FL

Scottsdale Resort and Conference Center, Scottsdale, Arizona Renaissance Chicago Hotel, Chicago, IL Vancouver Convention Center, Vancouver, BC, Canada Washington Duke Inn & Golf Club, Durham, NC Philadelphia Marriott Downtown, Philadelphia, PA Philadelphia Marriott Downtown, Philadelphia, PA Hilton Los Angeles/Universal City, Los Angeles, CA Vancouver Convention Center, Vancouver, BC, Canada

www.ascca.org

www.sambahq.org

www.pedsanesthesia.org

www.snacc.org

www.asahq.org

www.aacdhq.org

www.mgma.com

www.aapd-saac.org

www.mmaonline.net/Specialty Societies/msa.cfm www.asra.com

www.nyssa-pga.org

www.asahq.org

www.painmed.org/annual meeting/ www.az-anes.org

www.soap.org

www.scahq.org

www.auahq.org/annualmtg.html

www.mgma.com

www.mgma.com

www.csahq.org

www.scahq.org

ANESTHESIAANESTHESIABUSINESS CONSULTANTSBUSINESS CONSULTANTS

255 W. MICHIGAN AVE.

P.O. BOX 1123

JACKSON, MI 49204

PHONE: (800) 242-1131 FAX: (517) 787-0529 WEB SITE: www.anesthesiallc.com

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PAID

Holland, MI

Permit No. 45

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Health & Medicine

Anesthesia Business Consultants: Communique fall07