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  • Turning Data into Dollars: How To use Quality Management information To Create Value for your Practice

    Turning Data into Dollars: How To use Quality Management information To Create Value for Your Practice

    Richard P . Dutton, MD, MBA
    Executive Director, Anesthesia Quality Institute, Park Ridge, IL

    The Anesthesia Quality Institute (AQI) was founded in 2009 to promote patient safety and quality management efforts across the specialty. The primary mission of the AQI is development of the National Anesthesia Clinical Outcomes Registry (NACOR), a repository for anesthesia case-specific data from across the country. NACOR is populated by transmission of electronic information from participating anesthesia practices and hospitals, including administrative (billing) data, Anesthesia Information Management System (AIMS) data, elements from the hospital’s electronic healthcare records, and purpose- gathered patient outcome information. The AQI began recruiting practices a year ago, and began accepting case data from January 1, 2010. To date, the AQI has contracts with more than 40 anesthesia practices (including several ABC clients) and is working with more than a dozen anesthesia software vendors to format, transmit and translate their data into NACOR. Although few AQI sites have all of the desired data in electronic form today, all are working toward a future state that is 100% digital. In the meantime, the quantity of data that is available is truly astounding: NACOR will include a million anesthetics by the end of 2010, representing the work of thousands of anesthesiologists and CRNAs at hundreds of surgical facilities. But data collection, by itself, does not produce value. Value arises when the data is put to work.

    This article will discuss the ways in which the data collected by the AQI—and reported back to participating practices—can be turned into tangible benefits for both patients and providers. I will cite examples that apply today using the relatively limited data now in NACOR, and I will suggest some examples that will apply in years to come. One of the first lessons of quality management, after all, is that the process is like peeling an onion: there is always another layer of understanding and improvement beneath the current one. The AQI and NACOR are just getting started, but will grow by incremental improvement in each year to come. More practices will be included, and more and ‘denser’ data will be gathered from the groups that are already signed up.

    Benefits Provided by the Data

    The purpose of quality management (QM) is to improve patient outcomes from their healthcare. ‘Improvement’ can take many forms, ranging from hard science (reduction in morbidity and mortality) to highly subjective (improvement in satisfaction scores). Improvement can also take the form of achieving identical outcomes at lower cost, or in higher- risk patients. Improved outcomes have direct value to the patients and practice, of course, but the data collected along the way can be applied for many other purposes. These are summarily listed in Table 1 and discussed in more detail below.

    Let’s start with a straightforward example. One QM measure is “central- line associated blood stream infection,” or CLABSI. The rate of occurrence of this complication is provided by the AQI to the contributing practice, along with the national rate in similar hospitals. As a serious complication, the local rate would be ‘adjusted’ for known risk factors: age, ASA class, case mix, and others as available. The rate is reported only for those groups contributing all of the necessary data. Groups with a higher rate than their peers (“high outliers”) would be empowered to address the issue, and adopt new local policies to reduce the incidence of this complication, perhaps using guidelines or standards developed by ASA and promulgated by AQI. In the end, patient care is improved. And a considerable financial benefit is realized: each CLABSI prevented will save the hospital as much as $80,000, and perhaps more than that if current federal plans to dock payment for this so-called “Never Event” reaches fruition. For the anesthesia practice, reduction of the CLABSI rate begins as an opportunity to benefit patients, but ends up generating an important financial return. While this is just one example, the generic observation is equally true. Complications cost money. Reducing complications saves money. Everyone wins. And there are indirect benefits as well.

    Improved QM data, with national benchmarks from AQI, will have value to the practice even before addressing specific outcomes. The core activity of QM is collection of data that documents a business, and the first result of most QM programs is simply a better understanding of how that business works. What activities consume the most time? What brings in the highest revenue? What just isn’t worth doing? These administrative endpoints, descriptions of process rather than outcomes, are nonetheless important for practice management. How many ORs should be staffed, and for how long each day? Which procedures take longer than they should? How much does it cost to perform an average anesthetic?

    More particularly, QM data can be used to make decisions regarding hiring and firing, OR staffing, and contracts with hospitals and surgeons. Documentation of improved outcomes can feed directly into ‘gain-sharing’ discussions with the hospital. Trends over time can be examined to determine which portions of the business are growing, and which are not. Increased quantity and specificity of data is also useful to meet regulatory requirements, and facilitating this use is one of the AQI’s goals. Reporting of practice outcome data in comparison with national benchmarks will meet many overall requirements for anesthesia department QM activity, while data available on a per-practitioner basis will be of use for Joint Commission Ongoing Professional Practice Evaluation (OPPE) and Focused Professional Practice Evaluation (FPPE), and for the Maintenance of Certification requirements of the American Board of Anesthesiology – as well as to the practitioner seeking to understand his or her own performance.

    The bottom line is that QM data equals business data. The numbers are the same, but the application is different. Putting the data to work for the practice is driven by the questions that need to be answered, and many times new questions can be answered by a different look at existing data. One of the goals of the AQI is to present data back to participating practices in such a way that they can make these new uses themselves. Rather than a static 2-dimensional stack of paper, the AQI practice report will be a web-based tool that allows the participating group to combine and manipulate the data in ways that are of most use to them, based on local circumstances. This includes specific reports for individual facilities and providers, specific looks at certain procedures, and detailed examination of outcomes data. As an example, consider the use of data surrounding the rate of post-operative nausea and vomiting in a given facility. Perhaps a question has been asked in the PACU Committee suggesting that the rate is too high. Practice data reported by the AQI could be used to confirm or deny this suggestion by comparison to national benchmarks. Even more important, AQI data could then be used to take a focused look at the problem, by showing which patients appear to have the greatest risk, based on provider, procedure, age, gender, specific anesthesia medications used, time of day, and combinations of all of these variables.

    Future Measures Will Include Patient Satisfaction

    Because they are hard to make perfectly objective, measures of patient satisfaction are under-represented in anesthesia QM at the present. Looking at the future state of regulation, however, it is hard to imagine that patient-focused outcome measures aren’t going to be important. These can range from obvious elements like the rate of postoperative nausea and vomiting or the quality of pain relief to more complex and synthetic measures such as the Net Promoter Score (e.g. “on a scale from one to ten, how likely would you be to recommend this anesthesiologist to a friend or relative?”).

    Working to improve patient satisfaction, based on benchmarks from the AQI or other sources, might involve a variety of different tactics targeting everything from standardized orders for postoperative analgesia to changing the magazines in the Surgicenter waiting room. As patients become more empowered to choose their own healthcare, including physicians, treatments and hospitals, attention to providing the patient what they want will have increasing value. Odds are that your hospital is already putting substantial effort into improving the so-called “hotel services,” and odds are that the OR is an important portal of entry for patients and their families. How long will it be before the anesthesia practice is ‘invited’ to participate in customer service training? Wouldn’t there be value in getting to this first?

    The Hawthorne Effect and Incidental Positive Outcomes

    In addition to improved clinical outcomes and enhanced patient satisfaction, there are cultural benefits to the use of QM data. Quality management is strongly sensitive to the Hawthorne Effect, which states that close examination of outcomes tends to affect them. While this is a source of bias in scientific research, it is an important benefit in QM. Knowing that outcomes data is being collected, and seeing evidence of this in periodic reports will lead to improvement in the measured outcomes over time, even without overt changes in department practice or procedures.

    There is also a ‘pull through’ effect, where focus on one outcome (e.g. PONV rate) may improve other seemingly unrelated outcomes (e.g. rate of satisfactory postoperative analgesia). Even without considering these subjective benefits of QM data reporting, the ability to present and discuss real numbers can make the process of implementing changes more digestible for members of the practice. Knowing the exact rate of inadequately documented procedures, for example, provides a powerful lever for making changes in the billing system.

    Tracking QM outcomes over time, which AQI data will facilitate, allows practice leadership to develop success stories that will meet regulatory needs externally and can help to improve culture internally. Being able to walk a surveyor or hospital executive or board member through a QM project from start to finish (see Table 2), using real data from real patient care is the most powerful possible illustration of the practice’s commitment to continuous improvement. Internally, being able to describe victories in tangible terms will help snap colleagues out of their normal cynicism towards increasing bureaucracy.

    Working for a practice that takes QM seriously will improve the morale of individual practitioners, and will enhance recruitment and retention efforts. Done right, QM helps to put the emphasis on evidence-based improvements in care, and encourages a team and systems approach over individual blame. Self- reporting is enhanced. Anesthesia providers feel empowered when they can see tangible improvements in outcomes developing over time. This facilitates participation in further effort and further change.

    External to the Department, the use of QM data to guide decisions and make improvements will create an important perception of the group as interested in patient outcomes, driven by data and committed to continuous improvement. Even beyond the use of specific pieces of data and QM stories to influence particular decisions, the reputation for collecting and acting on objective information will benefit the group in contracts with surgeons and hospitals, relations with other departments and service contractors and even with public advertising. One reason that the AQI has a licensing program for our preferred vendors and participating practices is that we believe that commitment to data- driven QM is the mark of an efficient, future-oriented practice, one that can be trusted to take good care of its patients.

    Benefits to the Specialty of Anesthesiology

    On the national level, the contribution of practice data to the AQI will bring benefits to the specialty as a whole. Aggregated data will have scientific purposes, of course, but it will also empower the advocacy efforts of ASA and its leaders. In an ever-changing landscape of healthcare reform the ability to help shape the regulations that we will live under is priceless, and there is no better way to influence discussions with regulators than to bring data from real clinical practice to the table.

    The practice of medicine is changing rapidly in the United States, and its final shape remains uncertain. One thing that is likely, though, is that every provider— hospital, practice and individual—is going to face an increasing need to demonstrate in a tangible way the value they bring to patient care. The AQI is committed to meeting this need on behalf of anesthesiology, and with the help of practices and practitioners across the country we will find many future ways to do so.

    Richard P. Dutton, M.D., MBA, is Visiting Professor of Anesthesiology, University of Maryland School of Medicine and AQI Executive Director. To contact Dr. Dutton or the AQI, visit

  • More Than Ever, It's About Data

    More Than Ever, It's About Data

    Tony Mira
    President & CEO

    By the end of 2010, the Anesthesia Quality Institute will have records for more than one million anesthetics in its database, the National Anesthesia Clinical Outcomes Registry. This is an impressive feat, considering that NACOR only began accepting data on January 1. We are proud of the fact that some of our clients were among the first practices to sign participation agreements and that our information system, F1RSTAnesthesia, was quickly adapted so that we could easily transmit client data to NACOR.

    The overall number of practices contributing data can be expected to grow exponentially now that the AQI has truly established its identity. The AQI booth at the ASA Resource Center in San Diego will certainly draw a great deal of interest. So will the various presentations and lectures on improving patient outcomes using case registries.

    To paraphrase Richard P. Dutton, MD, MBA, Executive Director of the AQI and author of the lead article in this issue of the Communique?, the volume of quality management data is just the beginning. The real value lies in the use of the data, and Dr. Dutton makes an excellent argument for the proposition that “the bottom line is that QM data equals business data.” Table 1 on page 4 lists some of the ways in which the use of AQI data can add value to an anesthesia practice, including reducing costly complications, meeting regulatory requirements, understanding the basic metrics of the practice, and “fueling resource allocation and contract discussions with facilities.”

    The AQI was the future; it is now the present. Also very much in the present is the need for anesthesia practice owners—the anesthesiologists themselves—to understand the basics of running their business and to continue studying the market. “Breaking Down the Business of Anesthesia” was written by two practicing anesthesiologists and one professional practice administrator. Attorneys Abby Pendleton’s and Jessica Gustafson’s article “Focus on Compliance” also contains here-and-now recommendations.

    Still in the future are various vehicles for sharing the savings from improvements in health care delivery such as Accountable Care Organizations. Re-reading Kathryn Hickner-Cruz’s and Carey F. Kalmowitz’s article on ACOs, I am struck by how heavily the Patient Protection and Affordable Care Act stacked the ACO decks in favor of maximizing patients’ choices. Even so, the ACO provisions offer so much opportunity to run afoul of the anti-kickback and Stark laws and federal antitrust principles that as we go to press, the FTC and CMS are holding a major joint public meeting to resolve apparent conflicts. The nascent ACO rules could, all by themselves, turn out to be the “Full Employment for Lawyers” legislation that we feared the Affordable Care Act might become.

    We expect to learn about additional developments and trends in anesthesia practice management at the ASA Annual Meeting that begins on October 15. Please come by our booth and talk with our staff and business partners. See you in San Diego!

    With best wishes,

    Tony Mira
    President and CEO

  • Breaking Down the Business of Anesthesia

    Breaking Down the Business of Anesthesia

    Joseph F. Answine, M.D. Assistant Secretary Treasurer, Pennsylvania Society of Anesthesiologists
    Fred Rosetty, Practice Administrator and Chief Operating Officer, Riverside Anesthesia Associates, Ltd.
    Kevin Slenker, M.D., President, Anesthesia Associates of Lancaster, Ltd.

    During most doctors’ undergraduate and medical education, understanding the business side of the industry is the furthest thing from their mind. They want to be a doctor, help people, and somehow miraculously it would come with a paycheck.

    Most go through their residency years expecting to compile significant debt. But that is OK because, the thinking goes, all the debt would go away and their ignorance to the financial side won’t be a factor.

    However, in today’s world of being a doctor and anesthesiologist, the initial payout is larger, the debt is huge, overhead isn’t shrinking to say the least with malpractice premiums at the top of the list, and reimbursement is dwindling with projections of becoming significantly worse. In a private anesthesia group, many times the physicians in the group are too busy to realize when they have reached a critical mass and the need has arisen to hire a professional businessperson to take over the day-to-day management of the practice.

    The most successful private practice anesthesiagroupshaveahighlyfunctional and symbiotic relationship between the physician CEO and the layperson practice administrator, executive director or chief operating officer.

    Private anesthesia groups all have differing needs due to market demographics, payer markets, clinical needs of the facilities they cover and internal group dynamics. However, a seasoned practice administrator can work collaboratively with the group’s physician CEO, board of directors and/ or executive committee to improve three important underlying business dynamics: payer contracting process, governance/ strategic planning and managing the billing process.

    The billing process can be managed either internally with an in-house staff or externally by working with a competent and established anesthesia billing company.

    Both the Medical Group Management Association (Physician Compensation and Production Survey and Cost Survey for Single Specialty Practices) and the ASA (Fee Survey) have compiled statistics and metrics that can be successfully used to negotiate and benchmark payer contracts. Most payer contracts can be broken down into three or four different components: surgical anesthesia, obstetrical anesthesia, non-anesthesia procedures (TEE monitoring, insertion of Swan Ganz catheters, insertion of Arterial lines, etc.) and chronic pain management.

    Many anesthesia groups focus exclusively on negotiating a fair market value for the anesthesia unit conversion factor at the expense of factoring in how the remaining two or three components can dilute the overall expected value of the contract. Obstetrical anesthesia (labor epidurals, caesarian sections) claims can easily be underpaid or denied by payers because of the varying methodologies for billing anesthesia services for labor epidurals.

    Units for epidural insertion, infusion time, units for anesthesiologist face- to-face time with the patient and units for removal of the epidural catheter may all be partially reduced or denied entirely depending on each payer’s claim processing system ability. For simplicity and improving the effectiveness of post payment monitoring, some anesthesia groups have successfully negotiated global fees for obstetrical anesthesia, which removes several impediments in processing obstetrical anesthesia claims.

    Careful attention should also be paid to payer fee schedule rates for non-anesthesia procedures and chronic pain management. Historically most of these procedures have been assigned units via the ASA Relative Value Guide; unfortunately, since Medicare and most commercial insurers’ payment methodology is via a fee schedule unrelated to ASA units, most practices have abandoned the process of assigning ASA units to these procedures when managing their billing operations.

    Payer fee schedule rates should be converted into per ASA Relative Value unit rates to effectively monitor the effect of these items on the overall payer contract that is being negotiated. By maintaining this practice, which assigns relative value to all of the services that a typical anesthesia group provides, multiple payer contracts or terms can be compared to determine the most favorable arrangements.

    The following example illustrates how a seemingly innocuous payer contract with a unit conversion factor of $60 per unit can “net out” at significantly less money for the anesthesia group:

    In this example, the dilutive effect of obstetrical anesthesia, non- anesthesia procedures and chronic pain management reduced the overall expected reimbursement of the contract by $7.50 per unit or 12.5 percent. Further significant dilution will occur when a payer’s policy is to split the anesthesia claim (reducing reimbursement to the attending anesthesiologist for medical direction of non-group employed nurse anesthetists). In the example above, if the anesthesia group medically directs 50 percent of the total surgical anesthetics, group reimbursement will be further reduced by $21 per unit ($60 per unit times 70 percent times 50 percent).

    This is a simplistic example of how payers can dilute the value of an anesthesia contract without the anesthesia group knowing how and why the dilution occurs. Similarly, many anesthesiologists do not have a good understanding of some of the internalprocessesandmechanicsofthe health insurers that pay their claims.

    An important concept to understand when interacting with health insurance payers· is the concept of ‘float.’ Financial ‘float’ occurs when premiums are collected ‘up-front’ by payers and invested until those premiums are paid out later as claims. The longer the payer holds onto the premium money collected, the more valuable the float becomes. In its essence, float is money and health insurance payers are conduits for investable cash.

    Warren Buffett, whose holding company, Berkshire Hathaway, is one of the top 10 insurance companies in the world, described this concept wittily in “The Making of An American Capitalist:” “Initially, the morning mall brings in lots of cash and few claims. This state of affairs can produce a blissful, almost euphoric, feeling akin to that experienced by an innocent upon receipt of his first credit card.”

    These examples serve to illustrate that sophisticated market forces are at work and can adversely affect the financial fortunes of anesthesiologists. I would encourage all anesthesiologists to devote as much time as possible to understanding some of these forces and to obtain business education either by working with experienced practice administrators, attending the ASA PracticeManagementConferenceor registering for the ASA Certificate in Business Administration Program.

    It is not enough just to provide a great clinical service in today’s marketplace. To those anesthesiologists who venture into private practice without a fundamental understanding of market forces, I will close with “Caveat emptor.”

    Joseph P. Answine, M.D. is a past president of the Pennsylvania Society of Anesthesiologists and is currently serving as Assistant Secretary Treasurer. Dr. Answine is also a delegate to ASA’s House of Delegates.

    Fred Rosetty, MBA earned his Bachelor’s and Master’s of Business Administration degrees from Shippensburg University and has also done graduate and postgraduate work in Healthcare Administration at Penn State University Harrisburg. Mr. Rosetty worked for Highmark BlueShield from 1989-1992 as a Senior Financial Analyst. From 1992- 2007 he worked as Administrative Director for a 35+ physician anesthesia group and since June, 2008 he has served as Executive Director of a 45 physician anesthesia group.Mr. Rosetty’s expertise includes payer contracting, practice benchmarking, financial and revenue cycle analysis and physician/staff recruitment and development. Mr. Rosetty has also been an Adjunct Professor of Business Administration at Central Pennsylvania College in Summerdale, PA since 2002. He may be reached at

    Kevin F. Slenker, M.D., President, Anesthesia Associates of Lancaster, Ltd. and Staff Anesthesiologist, Lancaster General Hospital. Dr. Slenker may be contacted at

  • AQI and Related Presentations at the ASA Annual Meeting

    AQI and Related Presentations at the ASA Annual Meeting

    As a strong supporter and early adopter of the AQI, ABC encourages readers who will be attending the ASA Annual Meeting to visit the Anesthesia Quality Institute (AQI) booth October 15th-20th in the ASA Resource Center at the San Diego Convention Center - Sails Pavilion (Upper Level). AQI personnel will staff the booth and be available for questions and information.

    A variety of educational opportunities relating to anesthesia data and registries is being offered (see the list below) during the meeting. More information and registration for these programs can be found on the ASA Anesthesiology 2010 Web page at

    Saturday, October 16, 2010

    • Implications of Patient Outcomes Registries for the Practice of Anesthesiology
      San Diego Convention Center, Upper 5B
      9:30 – 11:30 am
    • Anesthesia Information Management Systems: How to Choose and How to Use
      San Diego Convention Center, Upper 6C
      2:10 – 3:00 pm

    Sunday, October 17, 2010

    • AIMS Outside of the OR
      San Diego Convention Center, Upper 2
      10:00 – 12 noon
    • ASA Closed Claims Project and its Registries: Value to Patients and Pocketbook
      San Diego Convention Center, Upper 6F
      1:00 – 3:00 pm

    Monday, October 18, 2010

    • Rovenstine Lecture/Anesthesiology: From Patient Safety to Population Outcomes
      San Diego Convention Center, Upper Ballroom 20A-C
      11:15 – 12:20 pm
    • Should My Group/Department Share Patient Data with National Data Repositories?
      San Diego Convention Center, Mezzanine 16A
      3:00 – 4:30 pm

    Tuesday, October 19, 2010

    • So You Want to Install an AIMS System
      San Diego Convention Center, Upper 33A-B
      8:00 – 11:00 am
  • ABC Partners with ePREOP

    ABC Partners with ePREOP

    Anesthesia Business Consultants, LLC (ABC) has entered into a partnership with ePREOPTM Integrated Preoperative Services. ePREOP is a revolutionary software system designed by anesthesiologists who want to ensure that the right pre- anesthesia tests are ordered and the correct patient instructions are given for each procedure. The software also facilitates the transfer of patient data between parties. This eliminates duplicate interviews and data entry requirements. A standardized mobile anesthesia preoperative evaluation form is available that allows timely access and completion of the record. It also provides an anesthesiologist with the ability to capture and track quality measures. ePREOP helps anesthesia groups secure their standing with their contracting institution by improving outcomes and eliminating waste.

    Using a web-based platform, ePREOP is specifically intended to bridge the gap between the surgeon’s office and the surgical facility. ePREOP interfaces with various electronic health records like Google Health, Allscripts, and HealthVault. The software’s algorithms are based on a large,viewable database of peer-reviewed articles on preoperative testing from the anesthesia and surgical literature. The program analyzes hundreds of thousands of data points and delivers preoperative clinical guidelines tailored to the individual patient. These recommendations can significantly improve postoperative outcomes, decrease case delays and cancellations, and reduce wasteful spending.

    ePREOP allows for a seamless transfer of patient data between parties — surgeon, anesthesiologist and hospital or surgery center — and eliminates the need for duplicate patient interviews. When an existing electronic health record is not in use, ePREOP creates a stand-alone preoperative EHR that is accessible from an electronic kiosk, iPad, or other computer, even one in the patient’s home. The patient data go directly to the surgical facility along with lab recommendations and results.

    ePREOP, the company, was founded by a team of independent, board-certified physicians. As the delivery of healthcare services becomes increasingly complex, ePREOP, provides a service that simplifies the communication between patients and the multiple physicians and hospital staff that will be involved throughout any surgical experience. Among the most immediate, measurable clinical and cost saving benefits is the invaluable opportunity for customers to demonstrate their value by increasing OR efficiency and quality of care within their institutions.

    For further information, visit, or contact:, or visit the ABC exhibit at the ASA Annual Meeting in San Diego, where ePREOP will be on display.

  • Should I Change Banks? Understanding Bank Ratings

    Should I Change Banks? Understanding Bank Ratings

    Stephanie J . Zvolenski, MBA
    Financial Manager, ABC

    With headlines of economic downturn, health care reform, decreased reimbursements and the government’s 2008 taxpayer banking bailout, many physicians are asking the questions, “Is My Money Safe?” “Should I Change Banks?”

    The first step to take in answering these questions would be to determine your bank’s rating. To help educate the average depositor, we researched the methodology behind bank ratings. Bauer Financial is a nationally recognized independent bank rating firm. The information that Bauer uses to rate banks is obtained from an approximately 30 page report that each bank is required to file quarterly with government regulators. No bank with assets greater than $1.5 million can be excluded from this rating process nor does a bank pay to be rated or for the rating that it receives.

    There are a number of factors considered in the rating process including:

    • Capital ratio;
    • Number and value of delinquent loans;
    • Number and value of charge offs;
    • Repossessed assets;
    • Profit/(loss) trends;
    • Value of investment portfolio;
    • Regulatory supervisory agreements;
    • Community reinvestment rating;
    • Historical data; and
    • Liquidity

    This rating process occurs each quarter and the results are published about six months after the rating process occurs, so the data that we review is somewhat dated.

    An overview of the ratings a bank can receive are as follows:

    • 5 Superior
    • 4 Excellent
    • 3 1?2 Good
    • 3 Adequate
    • 2 Problematic
    • 0/1 Troubled

    Bauer Financial prepares a report each quarter of banks that fall in the “Troubled” category, and it recommends banks that are rated either a 4 or a 5.

    The FDIC, until December 31, 2013, will continue to insure each deposit account up to $250,000, whether it is a personal or business checking or savings account per institution. The amount could change after December 31, 2013 but is fixed at this point. There is somewhat of an opportunity to insure more than $250,000 as there are some banks that belong to a unique network called Certificate of Deposit Account Registry Services (CDARS). When you place a large deposit with a CDARS Network member, that institution uses the CDARS service to place your funds into CDs issued by other bank members of the CDARS Network. This occurs in increments below the standard FDIC insurance maximum so that both principal and interest are eligible for full FDIC insurance. By working directly with just one institution, you can receive insurance coverage from many and all transactions are recorded on one consolidated account statement. Because the funds are locked into a CD, there is a time commitment associated with access to the funds, which can vary from 4 weeks to 13 weeks to 26 weeks to multiple years. The longer the asset is invested, the greater the return rate.

    In an effort to gain some comfort around the stability of the bank holding group funds and in addition to the fact that interest returns are minimal right now, some physicians have made the decision to modify the frequency of their payroll and/or bonus schedule... choosing to withdraw their funds more frequently in smaller amounts rather than building in the bank account. There is no perfect way to protect that your bank will not fail or be bought by a larger financial institution; however, looking at what makes fiscal sense for your specific practice may result in a change in your banking practices. Of course, it is necessary to discuss your concerns and ideas with your accountant and practice business advisors so that funds are readily available for your various expenses and opportunities as they come due.

    Stephanie J. Zvolenski, MBA, is a Financial Manager for ABC. Stephanie is responsible for the financial, strategic and operational management of our financial management clients and also serves as an industry consultant and business advisor. Some of her responsibilities in this role include: provider compensation assessment and comparison to market, shareholder/employment agreements, hospital subsidy negotiation/agreements, feasibility studies for new and existing practice opportunities, governance support review and restructuring and design and administration of benefit programs. Stephanie has been with ABC for 4 years and has 15 years of experience in physician practice management including serving as an Administrative Director for a multi-specialty physician practice network within a three hospital system and as a system service line Director. She holds a BA from Washington and Jefferson College and a MBA from Waynesburg University. Stephanie can be reached at 724-952-1361 or at

  • Ten Facts That Anesthesiologists Should Know About Medicare Accountable Care Organizations (ACOs)

    Ten Facts That Anesthesiologists Should Know About Medicare Accountable Care Organizations (ACOs)

    Kathryn Hickner-Cruz, Esq. and Carey F . Kalmowitz, Esq.
    The Health Law Partners, P.C., Southfield, MI

    1. Medicare Accountable Care OrganizaTions (ACOs) Are A Product Of Federal Healthcare Reform Legislation.

    By now, to a greater or lesser extent, most healthcare providers have at least a basic understanding of the recent and broad sweeping federal healthcare reform legislation commonly known as the Patient Protection and Affordable Care Act (“PPACA”). PPACA was enacted on March 23, 2010 and then amended by the Health Care and Education Reconciliation Act of 2010, which was signed into law on March 30, 2010.

    One aspect of federal healthcare reform eliciting significant interest among healthcare providers is PPACA’s Medicare Shared Savings Program, under which ACOs that meet certain quality performance standards will be eligible to receive Medicare shared savings payments.PPACArequirestheSecretary of the United States Department of Health and Human Services (the “Secretary”) to establish the Medicare Shared Savings Program no later than January 1, 2012.

    2. ACOs Will Be Eligible For Financial Incentives (Enhanced Reimbursement) Based Upon The Quality And Efficiency Of Care Provided To Their Patients.

    Under the Medicare Shared Savings Program, physicians and other professionals (including without limitation physician assistants, nurse practitioners, certified registered nurse anesthetists, clinical social workers and clinical psychologists) manage and coordinate the care of Medicare fee-for-service beneficiaries in a multi- disciplinary manner through ACOs. ACOs that meet certain quality performance criteria, which will be established by the Secretary, will be eligible to participate in the resulting Medicare savings.

    The quality performance standards will measure clinical processes and outcomes, patient and caregiver experience, and utilization. As time goes on, the quality performance standards will become increasingly stringent as the Secretary will continuously impose higher standards and/or additional benchmarks that will need to be achieved in order to participate in the shared savings.

    It is important to note that the payments through the Medicare Shared Savings Program are enhancements to the otherwise available Medicare reimbursement. The ACO physicians and other professionals will continue to receive payment under part A and part B of the Medicare fee-for-service program in the same manner as they would otherwise. ACOs will not be penalized if quality benchmarks are not attained. That being said, the Secretary will have the ability to terminate ACOs that do not satisfy such quality standards.

    3. ACOs Will Not Be Permitted To Directly Choose The Patients For Which They Are Accountable.

    PPACA provides that each ACO will be assigned at least five thousand (5,000) Medicare fee-for-service beneficiaries based upon those beneficiaries’ utilization of primary care physicians (i.e., beneficiaries that receive services from the ACO’s primary care physicians). Assignments will be made through a method that will be determined by the Secretary. ACOs will be prohibited from taking steps to avoid at-risk patients that are likely to negatively impact the ACO’s receipt of shared savings.

    4. Primary Care Physicians Will Play An Integral Role In Each ACO.

    PPACA promotes the adoption of patient-centered “medical homes” to achieve improved quality of care through coordination of care. As stated above, each ACO will be assigned Medicare fee-for-service beneficiaries based upon those beneficiaries’ primary care physicians. Since assignment of patients to an ACO is based upon the primary care physicians participating in the ACO, it is anticipated that, as a practical matter, primary care physicians will be required to have a relationship with only one ACO and will have substantial influence within the their respective ACOs. In contrast, anesthesiologists and other specialists will probably have more flexibility to belong to additional ACOs.

    5. Those ACOs That Retain Patients And Refer Patients Within Their ACO Network Will Have The Greatest Opportunity For Success.

    It is noteworthy that, although ACOs will be responsible for the care of their assigned beneficiaries, Medicare beneficiaries will be able to choose their healthcare providers even if such providers do not participate in the ACO to which the Medicare beneficiaries are assigned. Thus, ACOs are accountable for achieving quality of care goals without having the ability to necessarily control whether those goals are achieved. There will certainly be an incentive for ACO physicians to refer patients to other physicians within their own ACO. Legal counsel for the ACOs will be challenged to think creatively while acting within a legally defensible framework to structure permissible patient and physician incentives that promote the objectives of the ACOs.

    6. ACOs Must Satisfy Numerous Eligibility Requirements In Order To Participate In The Medicare Shared Savings Program.

    PPACA mandates that each ACO shall:

    • Be willing to be accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it;
    • Enter an agreement with the Secretary to participate in the Medicare Shared Savings Program for at least three (3) years;
    • Have a legal structure that enables it to receive and distribute shared savings;
    • Have a sufficient number of primary care professionals for the number of beneficiaries assigned;
    • Provide (and have the necessary in- formation technology infrastructure to provide) the Secretary with the in- formation that the Secretary requires in connection with assignment of beneficiaries, implementation of quality standards, and determination of shared savings payments;
    • Maintain a management structure that includes clinical and administrative systems;
    • Adopt processes to promote evidence based medicine and patient engage- ment, report on quality and cost measures, and coordinate care; and
    • Demonstrate to the Secretary that it meets patient-centered criteria.

    As mentioned above, the Secretary will promulgate regulations to refine each of these broad and amorphous requirements. The proposed regulations are expected to be published during Fall 2010.

    7. Healthcare Providers Have Substantial Flexibility When Structuring Their ACOs.

    PPACA specifically provides that each of the following types of organizations can become an ACO, assuming that they have shared governance and that they satisfy the additional criteria that will be adopted by the Secretary:

    • Physicians and other professionals in group practices;
    • Physicians and other professionals in networks of practices;
    • Partnerships or joint venture arrangements between hospitals and physicians and/or other professionals (e.g., physician – hospital organizations);
    • Hospital employing physicians and other professionals; and
    • Other groups of providers of services and suppliers as the Secretary determines appropriate. The various types of models can be conceptualized as highly integrated models (e.g., hospital employment and group practices), models with limited integration (e.g., joint venture, physician organization (PO) and physician hospital organization (PHO) models), and contractual models (e.g., management services and service line models).

    8. The Ability To Efficiently And Effectively Share Information Will Be Key To The Success Of Any ACO.

    As a condition of receiving Medicare shared savings payments, ACOs will need to submit information to the Secretary that is necessary to determine the quality of care furnished by the ACO. Each ACO will need to have the information technology and other electronic health record (“EHR”) infrastructure in place to maintain, share, retrieve and report meaningful and usable data. It is expected that many ACOs will find that this can be achieved only through the use of health information exchanges. It is interesting to note that this ACO requirement relating to use of EHR dovetails with the Medicare and Medicaid incentive payments that will be available to certain health providers that adopt EHRs and achieve certain specified objectives.

    9. ACOs Will Serve As A Catalyst For Further Integration Among Healthcare Providers.

    In order to achieve the clinical and administrative coordination and sharing of information that will be necessary to the success of ACOs, physicians, hospitals and other professionals will need to integrate (both clinically and either corporately or contractually) but within the constraints of applicable law. Significant bodies of federal and state law impose numerous barriers to integration among healthcare providers, including without limitation the federal Anti-Kickback Statute, the federal Stark Law, and the federal Civil Monetary Penalty Law (all of which are designed to prevent fraud and abuse with respect to the federal healthcare programs), federal tax exempt laws (prohibiting, for example, impermissible benefits to private individuals), the federal and state patient privacy laws, including without limitation the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”) (setting forth standards for the security and privacy of patient information) and the state corporate practice of medicine doctrines (adopted, in part, to preserve the unique attributes of the physician-patient relationship). Furthermore, ACOs will need to be designed with sensitivity towards the federal antitrust laws, which are designed to encourage competition and limit market concentration. Many experts envision progressive changes in many of these substantive areas of the law as governmental authorities attempt to reconcile the tensions created between current legal requirements and the integration required to operate a successful ACO.

    10. The Healthcare Community Is Currently Preparing For Future Participation In The Medicare Shared Savings Program Through ACOs.

    As of today, there are many uncertainties surrounding the requirements that ACOs will need to satisfy in order to receive payments under the Medicare Shared Savings Program. While the Centers for Medicare & Medicaid Services (“CMS”) has published certain ACO guidance on its website titled “Preliminary Questions & Answers” and has held a Special Open Door Forum regarding the Medicare Shared Savings Program, health care providers are anxiously awaiting additional information. Some of our unanswered questions will certainly be addressed during the upcoming ACO workshop that will be hosted on October 5, 2010 by the Federal Trade Commission, the U.S. Department of Health and Human Services’ Office of Inspector General and CMS. Furthermore, additional guidance will be provided through CMS’s Notice of Proposed Rulemaking regarding this program, which is expected to be published during fall 2010.

    Notwithstanding this current state of affairs, many providers are wisely looking beyond the basic contours of the proposed Medicare Shared Savings Program and developing strategies to prepare for its future implications. More specifically, groups of physicians, hospitals, and other providers are developing structures and relationships that will allow them to transform themselves into ACOs upon the commencement of the Medicare Shared Savings Program. This proactive approach is advisable considering the substantial time and monetary resources that will be required in order to effectively organize most ACOs.

    Kathryn Hickner-Cruz is a health care attorney with The Health Law Partners, P.C. Ms. Hickner-Cruz specializes in health care transactional matters and compliance with federal and state health care regulations. She regularly assists her clients by structuring and facilitating corporate reorganizations, mergers, asset acquisitions and divestitures, private placements, and joint ventures. Ms. Hickner-Cruz has expertise in federal and state self-referral laws, including without limitation Stark, federal and state anti-kickback laws, HIPAA and state privacy laws, and federal tax exempt laws. She can be reached at (248) 996-8510 or

    Carey F. Kalmowitz, Esq. is a founding member of The Health Law Partners, P.C. He graduated from New York University Law School in 1994. Mr. Kalmowitz practices in all areas of healthcare law, with specific concentration on the corporate and financial aspects of healthcare, including structuring transactions among physician group practices and other healthcare providers, development of diagnostic imaging and other ancillary services joint ventures, physician practice, IDTF and home health provider acquisitions, certificate of need, compliance investigations, and corporate fraud and abuse/Stark analyses. He is a member of the State Bar of Michigan, the Michigan Society of Hospital Attorneys, the American Health Lawyer’s Association, and the American Bar Association. Mr. Kalmowitz can be reached at

  • Focus On Compliance

    Focus On Compliance

    Abby Pendleton, Esq. and Jessica L . Gustafson, Esq.
    The Health Law Partners, P.C., Southfield, MI

    It is estimated that over 1.2 billion claims will be submitted to Medicare during fiscal year 2010 alone(1). This means that Medicare will process 4.5 million claims per work day, 574,000 claims per hour, and 9,579 claims per minute. Because of this volume, Medicare contractors process most claims without investigation or even reviewing medical records. As a result, the Medicare Trust Funds are vulnerable to the submission of false and fraudulent claims. Because of this, the Department of Justice (“DOJ”), the Department of Health and Human Services (“HHS”) and the Centers for Medicare and Medicaid Services (“CMS”) have taken steps to combat activities perceived to constitute Medicare fraud. Within this highly-regulated environment, it is important that health care providers focus on compliance, so that submitted claims can withstand any government scrutiny that may arise. This article will outline some of the initiatives taken by the DOJ, HHS and CMS to fight Medicare fraud and abuse and will identify rules all Medicare providers should remember when submitting claims to Medicare.

    Increased Auditing Activity

    As noted by President Obama in a recent White House Memorandum, “Reclaiming the funds associated with improper payments is a critical component of the proper stewardship and protection of taxpayer dollars, and it underscores that waste, fraud, and abuse by entities receiving Federal payments will not be tolerated.” Describing Medicare’s Recovery Audit Contractor (“RAC”) program, President Obama stated his support for the use of “Payment Recapture Audits” to identify improper Medicare payments(2).



    Medicare claims are subject to increasing audit scrutiny. Not only do Medicare Affiliated Contractors (“MACs”) (or Medicare Carriers and Intermediaries) conduct their own audits, but also Medicare’s RAC program is now operational nationwide (and has recently been expanded to include Part C and Part D claims), and Zone Program Integrity Auditors (“ZPICs”) (or Program Safeguard Contractors (“PSCs”)) are conducting nationwide benefit integrity audits. Health care providers must be cognizant of this increased claims scrutiny and conduct themselves accordingly.

    Civil False Claims Act Liability

    Codified at 31 U.S.C. § 3729 (a), the Civil False Claims Act (the “Act”) is the government’s primary enforcement tool against providers. The Act prohibits any person from “knowingly” making, using, or causing to be made or used “a false record or statement to get a false or fraudulent claim paid or approved by the Government.” The Act defines the term “knowingly” to include a person having actual knowledge; acting in deliberate ignorance of the truth or falsity of the information; and acting in reckless disregard of the truth or falsity of the information. No proof of specific intent to defraud is required(3). On May 20, 2009, the Act was amended by the Fraud Enforcement and Recovery Act of 2009 (“FERA”). FERA amended the Act to extend liability under the Act to a provider who knowingly retains an overpayment, even if no false or fraudulent claim is actually submitted to the government. The Patient Protection and Affordable Care Act of 2010 (“PPACA”) requires that a known overpayment be reported and returned within 60 days from the date the overpayment is identified. Any overpayment retained after this date gives rise to liability under the Act. Any person found in violation of the Act is liable for treble damages, plus a penalty of not less than $5,000 and not more than $10,000 for each claim submitted(4). In 2009 alone, more than $1 billion was recovered under the Act(5).

    (3) 31 U.S.C. § 3729 (b).

    (4) 31 U.S.C. § 3729 (a).


    There are many activities that give rise to liability under the Act. Among other activities, examples include not only billing for services that were not performed, but also performing inappropriate or unnecessary procedures in order to increase Medicare reimbursement; upcoding; bundling and/ or unbundling services; and retaining known overpayments.

    Criminal Liability

    Note, there are also laws that give rise to criminal responsibility (as opposed to just civil liability). For example, the Criminal False Claims Act, codified at 18 U.S.C. 287, states that:

    Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine... (6).

    On June 9, 2010, a Texas pain management physician was indicted on charges of health care fraud. The government is seeking the forfeiture of the physician’s assets and a monetary judgment of $41.8 million. The 99-count indictment alleges that the physician caused to be submitted to Medicare, Medicaid TRICARE and the Texas Workers’ Compensation Commission claims for reimbursement for peripheral nerve injections, facet injection procedures, and Level four office visits, which were never performed (7).

    (6) In addition to the Criminal False Claims Act, other statutes giving rise to criminal responsibility include (among others)Obstruction (18 U.S.C. § 1516), Mail Fraud and Wire Fraud (18 U.S.C. § 1341 and 1343), Conspiracy to Defraud the Government(18 U.S.C. § 286), RICO (18 U.S.C. § 1961 et seq.), and Making and Causing to be Made False Statements or Representations (42 U.S.C. § 1320a-7b(a)).

    (7) Department of Justice Press Release, available at

    Health Care Fraud Prevention And Enforcement Action Team (“HEAT”)

    While acknowledging the success the government has experienced combating Medicare fraud and abuse through the Civil False Claims Act and other statutory enforcement mechanisms, the government still desires to do more. In May 2009, the DOJ and HHS announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”). The mission of HEAT is to prevent fraud, waste and abuse in the Medicare and Medicaid programs. HEAT will build upon and strengthen existing programs to combat Medicare and Medicaid fraud, waste and abuse.

    One activity taken by HEAT is to develop Strike Teams in metropolitan areas with high rates of health care fraud and abuse. To date, Strike Teams are operational in Baton Rouge, Louisiana; Brooklyn, New York; Detroit, Michigan; Los Angeles, California; and the Miami-Dade and Tampa Bay areas of Florida. These Strike Teams have been instrumental in obtaining numerous health care fraud indictments and convictions in these areas.

    Focus On Compliance

    1. Physician practices must adopt and implement effective compliance programs.

    While previously the adoption and implementation of a compliance plan was “voluntary” for physician practices, the Patient Protection and Affordable Care Act of 2010 (“PPACA”), mandates that providers and suppliers adopt a compliance program containing certain “core elements” as a condition of Medicare enrollment. Pursuant to a recently- issued proposed rule, published in the September 23, 2010 Federal Register(8), CMS has proposed that physicians’ compliance plans contain the following elements (comprised of the elements described in the U.S. Federal Sentencing Guidelines Manual):

    • A physician practice must develop and distribute written policies, procedures and standards of conduct to prevent and detect inappropriate behavior;
    • A physician practice must designate a chief compliance offer (and other appropriate bodies) to operate and monitor the compliance program. The compliance officer and/or other governing body must report to high level personnel;
    • The physician practice must use reasonable efforts not to include any individual in a position of authority that the organization knew or should have known has engaged in illegal activities or conduct inappropriate for an individual in such a position;
    • The physician practice must develop and implement regular and effective education and training programs for the governing body, all employees and agents, as appropriate;
    • The physician practice must maintain a complaint process, which protects the anonymity of complainants and protects whistleblowers from retaliation;
    • The physician practice must develop a system to respond to allegations of improper conduct and enforce appropriate disciplinary action against employees who have violated internal compliance policies, statutes, regulations and Federal health care program requirements; and
    • The physician practice must use audits and/or other evaluation techniques to monitor compliance and reduce identified problem areas; and
    • The physician practice must investigate and remedy identified systemic problems, including making any necessary modifications to the organization’s compliance and ethics program.

    2. A physician is legally responsible for claims submitted under his or her billing number.

    Physicians are legally responsible for all claims submitted under their billing numbers. This is true even if a physician uses an in-house or outside coder and biller for the submission of claims. Accordingly, physicians must ensure that they stay educated and apprised of billing activities taken on their behalf.

    3. A physician is responsible for knowing Medicare policy.

    Physicians are legally responsible for knowing Medicare policies regarding the services and procedures they perform, including policies on documentation. Pursuant to federal regulations, a physician will be deemed to have knowledge of a Medicare coverage policy if the Medicare Affiliated Contractor (“MAC”) (i.e., Medicare Carrier or Intermediary) provides actual notice to the physician regarding coverage; if CMS has provided notices related to the subject service (e.g., Manual issuances, bulletins or other written guides); and/or if a National Coverage Decision has been adopted with respect to the service (9).

    Many physicians believe that Medicare policies address billing and coding issues only; this simply is not true. Physicians must keep in mind that Medicare policies address not only billing and coding practices but also documentation. As a best practice, physicians should set up a system to obtain, distribute, provide education regarding and maintain information relevant to the services and procedures provided.


    (9) 42 C.F.R. § 411.06 and Medicare Claims Processing Manual (CMS Pub. 100-04), Chapter 30, § 40.1.

    4. If billing “incident to,” a physician must understand the “incident to” rules.

    Medicare policy recognizes that physicians often receive assistance from non-physician practitioners (i.e., nurse practitioners, physician assistants, etc.) in the course of providing services to their patients. Where such services are an integral, although incidental part of the physician’s professional service; commonly rendered without charge or included in the physician’s bill; of a type that are commonly furnished in the phy- sician’s offices or clinics (i.e., not in the hospital setting); and furnished by a phy- sician or by auxiliary personnel under the physician’s direct supervision, such services may be billed “incident to” the physician’s service and are reimbursed at 100 percent of the physician fee sched- ule. Although anesthesia providers do not bill services “incident to,” some pain practices choose to take advantage of this concept.

    In order to bill for “incident to” services, the physician must employ or contract with the non-physician practitioner. In addition, the physician must have an existing physician-patient relationship; that is, the physician must first conduct an initial visit with the patient to establish the physician-patient relationship prior to billing any services pursuant to the “incident to” guidelines. Further, the physician must directly su- pervise the services rendered. In order to provide “direct supervision” as required by Medicare, the supervising physician need not be in the same room with the non-physician practitioner; however, the physician must be present in the office suite and immediately available to pro- vide assistance and direction throughout the time the practitioner is performing services.(10).

    In the course of appealing numer- ous recent post-payment audit determi- nations, this office has seen an increase in denials related to “incident to” ser- vices. For example, in one recent audit with which this office was involved, the Medicare contractor denied numerous services billed “incident to” the physi- cian’s services, where the physician had not visited the patient to conduct an initial patient visit, and accordingly there was no existing physician-patient rela- tionship. All visits were performed by a nurse practitioner and billed “incident to” the physician’s service. Although “in- cident to” remains an acceptable way to bill Medicare for services incidental to the physician’s services rendered by non- physician practitioners, physicians must be cognizant of the rules surrounding such services, and ensure that such ser- vices (and, importantly, the supervision provided) are fully documented.

    (10) 42 C.F.R. § 410.26 and Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 15, § 60 et seq.

    5. Services a physician provides must be medically necessary in order to obtain Medicare reimbursement.

    Social Security Act confers to patients entitlements to a range of medical services defined by broad categories. Pursuant to Sections 1831 and 1832 of the Social Security Act, Medicare Part B provides coverage for a variety of services not covered under Medicare Part A. The Social Security Act also describes exclusions from coverage, most notably including payment for expenses incurred for items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Generally speaking, a service may be covered if it is reasonable and necessary under Section 1862 (a) (1) (A) of the Social Security Act.

    Auditors and medical reviewers routinely deny claims on a post-payment basis because an item or service is found not to be medically necessary. This office has seen an increase in post-payment audits of pain practices over the past year, several of which are being conducted by Zone Program Integrity Contractors (“ZPICs”) (or Program Safeguard Contractors (“PSCs”). It is essential that when a physician documents a service performed, such documentation must establish for the reviewer of the medical necessity for the service rendered.

    6. Documentation is key.

    In order to establish the medical necessity for the service performed, documentation must be thorough. According to the Office of Inspector General (“OIG”) Compliance Program for Individual and Small Group Physician practices, “[O]ne of the most important physician practice compliance issues is appropriate documentation of diagnosis and treatment. Physician documentation is necessary to determine the appropriate medical treatment for the patient and is the basis for coding and billing determinations.”(11).

    Keeping in mind that auditors and claim reviewers oftentimes are nurse reviewers without specific expertise in a physician’s practice area, it is essential that documentation paint a picture for the reviewer of medical necessity. Each note should establish the medical necessity for the service provided. Specifically:

    • The record should be complete and legible;
    • Each encounter should include the reason, relevant history, exam findings, prior test results, assessment, clinical impression or diagnosis, plan of care, date and identity of the observer. Records should take into account any applicable National Coverage Decision or Local Coverage decision;
    • If not documented, the rationale for ordering a test or service should be easily inferred, and past and present diagnoses should be accessible.

    By way of example, with respect to pain management physicians, documentation of visits should include the patient’s diagnosis; the patient’s pain history; a description of prior treatments and the patient’s response to each treatment; the rationale for the encounter; documentation of the location and intensity of pain; any other information required by a Medicare Local Coverage Decision; and any other information that will help establish the medical necessity for the service or procedure performed.

    One key issue for anesthesia providers is to ensure appropriate documentation of compliance with the medical direction requirements. Pursuant to 42 C.F.R. § 415.110 (b):

    The physician alone inclusively documents in the patient’s medical record that the conditions set forth... have been satisfied, specifically documenting that he or she performed the pre-anesthetic exam and evaluation, provided the indicated post-anesthesia care, and was present during the most demanding procedures, including induction and emergence where applicable.

    CMS has not provided specific instruction regarding the way that this documentation must be accomplished. There are numerous ways that medical direction can be documented (e.g., individual attestation statements with a comment section; a combination of attestation statements and time line initialing; handwritten notations with no formal attestations; etc.). Whichever way is chosen, documentation should establish that the anesthesiologist fulfilled its regulatory obligations with respect to all of the following responsibilities:

    • The anesthesiologist performed the pre-anesthetic exam and evaluation;
    • The anesthesiologist prescribes an anesthesia plan;
    • The anesthesiologist participates in the most demanding procedures of the anesthesia plan including, if applicable, induction and emergence;
    • The anesthesiologist ensures that any procedures in the plan that he or she does not perform are performed by a qualifying individual;
    • The anesthesiologist monitors the course of the anesthesia at frequent intervals;
    • The anesthesiologist remains physically present and available for the immediate diagnosis and treatment of emergencies; and
    • The anesthesiologist provides post-anesthesia care, as indicated.(12)

    (11) 65 Fed. Reg. 59434 at 59440 (October 5, 2000).

    (12) 42 C.F.R. § 415.110.

    8. Physicians may not routinely waive co-payments.

    Physicians must not routinely waive copayments. Routinely waiving copayments could result in potential Civil False Claims Act violations (e.g., liability arises under when a claim misstates an “actual charge”). Routinely waiving copayments also could create exposure under the Anti-Kickback Laws (e.g., advertising to waive co-payments in order to solicit new patients). The waiver of copayments is allowed in special circumstances in consideration of a patient’s financial hardship. If a physician chooses to waive a co-payment for this reason, the physician should document the hardship and document the physician’s collection efforts.

    9. Credit balances must be returned.

    A physician may not keep monies that are not owed to him or her. Credit balances must be returned. As noted above, the Fraud Enforcement and Recovery Act of 2009 (“FERA”) amended the Civil False Claims Act to extend liability to a provider who knowingly retains an overpayment, even if no false or fraudulent claim is actually submitted to the government. The PPACA expanded on the amendments made by FERA to the Act and requires that an overpayment be reported and returned within 60 days from the date the overpayment is identified. Any overpayment retained after this date gives rise to liability under the Act. For these reasons, it is imperative that credit balances are returned.


    All physicians must be cognizant of the increased scrutiny under which Medicare claims are reviewed. In the highly-regulated health care environment, physicians are well advised to keep compliance activities in the forefront and keep the billing tips outlined herein in mind when submitting claims to Medicare and other payors.

    Abby Pendleton and Jessica L. Gustafson are partners with the health care law firm of The Health Law Partners, P.C. in Southfield, Michigan. The firm represents hospitals, physicians, and other health care providers and suppliers with respect to their health care legal needs. Pendleton and Gustafson specialize in a number of areas, including but not limited to: Recovery Audit Contractor (RAC), Medicare, Medicaid and other payor audit appeals, healthcare regulatory matters, compliance matters, reimbursement and contracting matters, transactional and corporate matters, and licensing, staff privilege and payor de-participation matters. They can be reached at and