One Florida based hospital management company (Hospital Managers) owns or operates many hospitals and has devised a way to improve its financials (and presumably satisfy shareholders).  Unfortunately, the strategy exposes hospital-based physician groups that provide services inside Hospital Managers hospitals to huge risk.  Here’s the background:


Many hospital based groups receive subsidies or revenue guarantees to compensate the group for providing care to indigent patients.  The subsidy is used for one thing:  paying the salaries and benefits of physicians and their assistants (e.g. CRNAs).  As such, once the subsidy is paid to the group, the group then pays salaries and benefits, and the employees use the money to pay bills!  Unlike many other kinds of businesses, there is usually no profit in these hospital based practices.


The trouble, as Hospital Managers seems to see it, is that the subsidy payment may fluctuate each month and, according to Hospital Managers, may not be written off as an “asset.”  Their solution:  have the groups sign an amendment to their contract wherein the group must repay the Hospital Managers hospital all of the subsidy money if the hospital terminates the contract for cause!


Here’s the problem:  how can a group repay anything if the money it received just goes to pay salaries and benefits?  The money is gone.  Mortgages and grocery bills are paid.  That’s it.  Physicians faced with such a prospect need to be informed and prepared.


To the issue of “Hey, we’re nice people and a nice company and would never really terminate for cause and require repayment,” the response is clear:  Then why do I have to sign this?  Why would I?  Why agree to an agreement that will never be implemented?


To the issue of “We would never trigger repayment unless we terminate for cause, and you have 30 days to fix any for cause event,” the response is clear:  contracts are wrongfully terminated every day for financial reasons.  A Hospital Managers hospital (or some successor hospital company) could simply decide it makes good financial sense to terminate a contract for cause.  And you don’t have to be right in order to “win” a lawsuit, since many suits are won simply by one party outspending the other.  In short, a Hospital Managers hospital (or some other successor hospital company) probably has a lot more money than a hospital based practice to fund a lawsuit about whether a contract was rightfully or wrongfully terminated.  The ground is certainly not level.


What then can a hospital based group do when faced with such a prospect?  Two things:  negotiate and prepare.  Negotiation would entail exploring ways to meet the Hospital Managers hospital’s concerns and also the group’s.  Preparation would entail, at least, making sure the group has restrictive covenants with all employees.  Otherwise, the Hospital Managers hospital (and any other hospital) can terminate the group and then rehire many of the employees.  If a hospital based group cannot act together and work together for the common good of the group, they are likely to lose ground when dealing with a hospital or hospital system.



What’s Hot on the OIG’s Workplan for 2013

 It’s that time again, when the OIG publishes its annual Work Plan for the coming year, providing insight and a proverbial “heads up” on the areas where potential concern and program integrity efforts are being focused.  Many of the focus areas are ongoing or have been the subject of previous Work Plans, and come as no surprise.  Nevertheless, it is important for practitioners to familiarize or reacquaint themselves with the 2013 Work Plan projects in order to recognize and prioritize compliance areas currently on the OIG’s radar.

Of particular interest for practitioners are the various OIG review projects involving ancillary services.  For example, the OIG is looking at outpatient therapy services by independent therapists, and will focus on high utilization of physical therapy to determine if claims were reasonable, medically necessary and properly documented.  Similarly, high-cost diagnostic radiological tests ordered by primary care and specialty physicians are being reviewed to determine whether utilization rates match industry practices.  The OIG also will review Part B payments for imaging services with an eye towards determining if utilization rates reflect industry practices and if practice expenses components within payment rates are commensurate with costs incurred.  Electrodiagnostic testing (needle electromyogram and never conduction) is a new area under review, particularly with respect to utilization rates by specialty, the concern being that such services are vulnerable to abuse and inappropriate financial gain.

Errors in billing and claims administration are also the subject of OIG review, with perennially recurring projects directed at incident-to services, place of service coding and E/M services.  A 2009 OIG review of prior claims found that non-physician practitioners often were not properly supervised or that unqualified non-physician practitioners performed services, in each case, resulting in payments that were not compensable.  Since Medicare payment for services in a non-facility setting, like a physician’s office, is often higher than in the rate that applies in other service locations, there is also concern over whether claims for Part B services performed in ASCs and Hospital outpatient departments were coded with the proper place of service.  Another, more recent area of focus involves the documentation supporting E/M services and questions whether Electronic Medical Record documentation processes may result in “cloned” entries (and potentially improper claims) rather than a deliberate process of selecting proper codes based on content of actual service.   Part B payment for chiropractic services are also being reviewed, with this area being the subject of ongoing OIG concern since chiropractic maintenance therapy being considered not medically necessary.

Apparently echoing a series of fairly recent OIG Advisory opinions, the 2013 Work Plan also identifies Polysomnography and Sleep Disorder Clinics as areas of potentially questionable billing patterns and possible overutilization.  High utilization rates have also raised questions regarding whether services are duplicative of diagnostic testing performed previously by attending physicians.  Another ongoing and increasing focus of OIG scrutiny is physician-owned distributors (POD) of high utilization orthopedic implant devices.  The Work Plan for 2013 specifically identifies PODs which provide hospitals with spinal fusion implant devices as being under OIG review to determine if such arrangements are associated with high utilization.

These are just some of the many areas of OIG review with which practitioners and facilities alike should become familiar in order to remain current with the health care regulatory compliance curve.