You might be too young to get benefits, but you’re never too old to commit Medicare fraud: That’s the latest message in the constant string of fraud indictments filed by federal investigators.

A 61-year-old Texas doctor faces two fraud cases on charges of engaging in organized crime in connection with the illegal distribution of painkillers, and conspiring with others to reimburse Medicare and Medicaid about $30 million in nonexistent physical therapy services.

Christina Clardy was indicted last year for her alleged participation in the physical therapy scam against Umawa Oke Imo, owner of City Nursing Services of Texas Inc on Bissonnet. The company billed Medicare and Medicaid some $45 million worth of services—and got paid $30M—despite not employing a single licensed physical therapist or physical therapy assistant, according to a report by the Houston Chronicle.

Clardy was one of the supervising physicians at City Nursing Services, along with Dr. Thaddeus Hume, who was also named in a previous indictment.

“She is disappointed that they have brought her into this now,” says Clardy’s lawyer Chris Downey. “We cannot comment further because we’re just getting a look at the indictment.”

According to federal investigators, Imo, a Richmond-based Nigerian native, paid recruits $100 to $150 to sign blank forms for therapy sessions that were never performed. They also discovered that Imo owns a lavish 25-room home in Nigeria, as well as several luxury vehicles.

With her alleged participation in the scam, the US Attorney has charged Clardy with conspiracy to commit health care fraud, health care fraud and mail fraud. Downey maintains that his client looks forward to proving her innocence.

Pre-signed illegal prescriptions

Clardy also worked at Uptown Medical Clinic in Humble and at Texas Medicine Direct (formerly known as S&G Clinic). Following an arson investigation at Uptown Clinic, the authorities grew suspicious of the clinic’s operations because it had no medical equipment and operated on a cash-only basis.

Clardy allegedly prescribed and dispensed more than 2.5 million tablets of Vicodin, Xanax and Soma last year alone, the Houston Chronicle writes. The investigators found in the clinic “thousands of prescription pads that had been pre-signed by the doctor,” says the article.

The doctor ranks as the ninth biggest prescriber of pain pills in Texas.

Click here to learn how to avoid trouble if the feds show up at your health care facility.

Read on to find out several facts about the law that may apply to your practice.

1. You Now Have 1 Year to Submit Claims. In the past, Part B providers had 15 months or more to submit their claims to Medicare, but section 6404 of the new legislation requires you to submit your claims “one calendar year after the date of service” for service provided on or after Jan. 1, 2010.

Analysis: Medicare has a very good electronic filing system, and therefore, most practices don’t have big problems with old claims unless they have inefficient billing operations or if their office had some type of crisis.

Caveat: The legislation states that “the Secretary may specify exceptions to the 1 calendar year period,” but does not yet indicate what types of situations might qualify for exceptions.

2. Outpatient Therapy Caps Are Extended: Section 3103 of the law extends the exceptions process for outpatient therapy caps, which means that these providers “may continue to submit claims with the KX modifier (Specific required documentation on file), when an exception is appropriate,” for services furnished between Jan. 1 and Dec. 31, 2010, according to a March 31 CMS news release.

The current outpatient therapy cap is $1,860 for physical therapy and speech language pathology services combined, and a separate $1,860 limit for occupational therapy services provided in a calendar year.

3. Labs Can Bill for the TC of Hospital Services: Section 3104 of the PPACA indicates that effective retroactive to Jan. 1, 2010, independent labs can submit claims to Medicare for the technical component of physician pathology services furnished to hospital patients, “regardless of the beneficiary’s hospitalization status (inpatient or outpatient) on the date the service was performed,” the CMS news release indicates. Labs that were previously denied for such services should contact their MACs “for further instructions,” CMS advises.

4. Primary Care Practitioners Get 10 Percent Boost — If They Qualify. Section 5501 of the new law indicates that effective Jan. 1, 2011, primary care practitioners “shall be paid (on a monthly or quarterly basis) an amount equal to 10 percent of the payment amount for the service,” in addition to their normal fees.

Who qualifies? Doctors, nurse practitioners, clinical nurse specialists, or physician assistants with the primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatrics qualify for the bonus.

The catch: These practitioners will have to bill at least 60 percent of their allowed charges as primary care services, which are defined by codes 99201-99215, 99304-99340, or 99341-99350, according to the legislation. Many, but not all primary care practitioners will qualify for the 10 percent bonus using this definition.

Industry reaction: The American Academy of Family Physicians (AAFP) noted on its Web site that it “expressed concern to the Congress that this bonus payment is insufficient in amount.” In addition, the AAFP believes that “the eligibility requirement of 60 percent is too high, especially for family physicians in rural and underserved areas who are called on to perform more procedures than other family medicine practices.”

© Part B Insider

Click here to find out what non-Medicare payers expect for proper handling of Medicare secondary claims.

What’s the road to compliance when a SNF’s medical director also bills fee-for-service?

Question: My physician is the medical director for a skilled nursing facility and receives a stipend from the SNF for that service. Can he still bill for services he provides to the SNF’s patients?

Answer: Since you’re dealing with directorship of the skilled nursing facility (SNF), which is a facility, you first need to look at Stark regulations. Fortunately, in this case, you shouldn’t have to worry about potential Stark violations when you bill for the physician’s service in the SNF where he is the medical director.

Why: Medical directorships usually involve a set of advisory and oversight responsibilities that aren’t directly tied to the care and treatment of a single patient, but rather the entity as a whole as an administrator. Your physician can admit his own patients to the SNF and can see them in the SNF setting without interfering with his medical director responsibilities.

Caveat …

In cases in which the patient needs to be admitted to the SNF but doesn’t have a physician to manage his SNF care and your physician, as the medical director, is assigned to be the patient’s SNF attending physician, halt your billing. Consult an attorney before billing to be sure there aren’t any Stark issues in that sort of arrangement.

In fact, because Stark laws are so complicated and your physician stands to lose a lot if you violate the laws, consulting a Stark attorney is probably a good idea anyway.

Pay attention: Once you’ve determined that you can bill for the services, keep in mind that a patient’s SNF status determines how you should bill for your physician’s services. Because Medicare Part A typically covers SNF patients and consolidated billing rules apply, you can report only certain services to Medicare Part B. Whether the physician visits the SNF or the SNF patient visits your office, if the patient is in a covered Part A stay, the SNF rules apply and the facility is liable for the payment for the technical component of all diagnostic testing. You can bill physician services, such as E/M services, to Medicare Part B.

Stay tuned: Watch for an article about consolidated billing in an upcoming issue of Medical Office Billing & Collections Alert.

What Stark targets are the feds looking for next? Wayne Miller tells all in an upcoming audio training event.

If you’ve ever wondered whether the OIG collects on its audits, the agency’s new report answers that question to the tune of $20.97 billion.

In its Semiannual Report to Congress, released on Dec. 3, the OIG reported that during fiscal year 2009, the OIG recorded savings and expected recoveries of $20.97 billion, $492 million of which was recovered as a result of audits.

“We continue to make significant progress in our fight against fraud, waste, and abuse in HHS programs, particularly Medicaid and Medicare,”said Inspector General Daniel R. Levinson in a Dec. 3 news release.“But the results we’ve achieved are due primarily to the hard work of our professional staff and effective collaboration with our government partners. We will remain aggressive in our mission to protect the integrity of these vital programs.”

Consider These Examples

Following is a sampling of a few of the OIG’s recoveries as outlined in the report:

• Eye services: Medicare paid $97.6 million for E/M services that were included in eye global surgery fees but not provided during the global surgical periods. “We recommend that CMS consider adjusting the estimated number of E/M services to better reflect the number of E/M services actually being provided to beneficiaries or using the financial results of the audit, in conjunction with other information, during the annual update of the physician fee schedule,” the OIG noted.

• Chiropractic procedures: The OIG discovered that Medicare inappropriately paid $178 million for chiropractic services that were later determined to be maintenance therapy, miscoded, or undocumented.

“These claims represent 47 percent of chiropractic claims associated with beneficiaries receiving more than 12 chiropractic services within a year from the same chiropractor,” the OIG report indicated. As a result, the OIG urged CMS to strengthen its safeguards to prevent future maintenance therapy payments for chiropractic services.

• Ultrasound: In 2007, Medicare Part B paid over $2 billion in ultrasound services, 16 percent of which was concentrated in 20 “high-use counties,” according to the OIG report.

The OIG recommended that CMS monitor ultrasound claims carefully going forward “to detect questionable claims and review them prior to payment.”

With all of the OIG’s recommendations in the report, should your practice be concerned about future scrutiny?

“The OIG, and the federal government in general, are continuing to step up their efforts to prevent and detect fraud and abuse associated with federal health care programs,” says Mark C. Rogers, Esq. with The Rogers Law Firm in Braintree, Mass.

“Certainly, a medical practice which is knowingly not in compliance with all applicable federal statutes and regulations should view the OIG’s Semiannual Report as a wake-up call to take all necessary steps to become compliant,” Rogers says. “However, the OIG’s Report should be viewed by all medical practices as an opportunity to review their existing policies and procedures to ensure adherence to applicable statutes and regulations. Medical practices should review those portions of the Report which pertain to their services.”

© Part B Insider. Download your 2 FREE sample issues here.

Coming Friday to AUDIO: Attorney reveals how physician practices can use the 2010 OIG Work Plan as a compliance road map.

One hospital system is taking the plunge on EHR standardization and spending millions to incentivize its physicians to adopt the program — and officials there remembered to check Stark law.

The North Shore-LIJ Health System announced in September that it will subsidize up to 85 percent of the cost of implementing and operating its new electronic health records (EHR) system in the offices of more than 7,000 affiliated physicians in New York City and Long Island. That 7,000 includes 1,300 full-time and 5700 affiliated physicians with privileges at the system’s 13 hospitals.

North Shore developed its protocols from quality control measures offered by CMS, the National Quality Forum, the Institute of Medicine, and other health experts, putting its own spin on them after consulting with physicians. The protocols compare physicians’ performance with each other, North Shore’s Terry Lynam says, and are designed to improve quality of care. “We want to make it more lucrative for those who follow the guidelines,” he explains.

North Shore-LIJ’s program might have raised some Stark concerns had the feds not changed some of the rules when it comes to EHR, acknowledges Lynam. “We were careful. This was reviewed very closely by our attorneys.”

Stark provisions that would have prevented hospitals in the past from providing financial incentives to physicians have been relaxed, he says.

AUDIO TRAINING EVENT: The 2010 OIG Work Plan for Hospitals. With Jim Sheldon-Dean.

Don’t rely overly on the employment exception — or discount a competitor’s ability to stir up trouble.

Covenant Medical Center in Waterloo, Iowa, recently agreed to fork over a hefty $4.5 million to settle a federal False Claims Act lawsuit involving alleged Stark law violations. The case provides a potential harbinger of things to come and some “lessons learned” for hospitals and physicians trying to survive a growing government crackdown on fraud and abuse.

The crux: The U.S. government claimed that Covenant submitted false claims to Medicare because it had gravely overpaid five employed physicians who referred patients to the hospital for services — a verboten practice under the physician self-referral Stark law. In a news release announcing the settlement agreement, the Department of Justice noted that the Covenant physicians ranked among the best paid hospital-employed physicians not only in Iowa, but nationwide.

As for the physicians’ fate: The DOJ doesn’t anticipate any sanctions being brought against the physicians in the case, Bob Teig, assistant U.S. attorney told Eli’s Medicare Compliance & Reimbursement Alert.

That doesn’t mean, however, that the government couldn’t impose a civil or criminal penalty against both the hospital and physician in Stark cases, warns attorney Wayne J. Miller, with the Compliance Law Group in Los Angeles.

“The physician risks losing status as a Medicare provider and/or there could be licensure and other actions at the state level that could follow.”

Case Portends 2 Troubling Trends

The Covenant case sounds a warning knell for two key reasons, say legal experts. For one, the government targeted employment relationships, which it typically hasn’t done under Stark or as  kickbacks, observes attorney William Mathias, with Ober Kaler, Grimes & Shriver in Baltimore, Md. Secondly, a disgruntled competitor of Covenant reportedly stirred up the legal trouble for the not-for-profit medical center. Mathias says that based on the background he’s heard, the competitor saw that Covenant’s IRS form showed Covenant was “giving its physicians a much better deal than the competitor” was giving its physicians. “It wasn’t a qui tam suit,” however, he adds. “The hospital reportedly complained to Senator [Charles] Grassley and to other government officials.”

Mathias predicts that we will see “more and more” of this type of activity on the part of competing providers. “Healthcare providers trying to go through a lot of hoops to comply with the law feel frustrated when they feel like their competitors” gain unfair advantage by ignoring the law, he notes.

Some providers, of course, are also invested in leveling a crowded playing field. “Encouraging the government to investigate [a competitor] is often an option in a very competitive healthcare market,” says Miller.

3 Take-Home Messages You Can’t Miss

To stay out of competitors’ and the government’s crosshairs for Stark violations, hospitals and physicians should cover the following bases.

1. Always perform a fair market analysis of physician compensation. To meet the employment exception under Stark, the employment compensation has to be “consistent with fair market value” (FMV), explains Miller. And “the Covenant case indicates very clearly that the government and the courts are not going to ignore FMV in employment compensation arrangements.”

Best practices: If the physicians’ compensation is above the 50th percentile, there should be “clear, specific, documented reasons for the higher payment tied to quality or productivity – never to referrals,” urges attorney Steve Lokensgard, special counsel with Faegre & Benson LLP in Minneapolis.

It’s also a good idea to obtain the fair market value evaluation from a competent company that uses the appropriate factors in making the determination, advises attorney Andrew Wachler, with Wachler and Associates in Royal Oaks, Mich.

2. Document outlier situations very carefully. “There are factors that justify higher salaries, but the actual documentation showing why is critical,” says attorney Lisa Ohrin, with Sonnenschein, Nath & Rosenthal LLP in Washington, D.C. For example, she’s aware of one case where a doctor started a phenomenal “top notch specialty program at a hospital where you would never expect to see that level of care.” Thus, “you could justify why his salary was in the 75th to 90th percentile range.”

Ohrin thinks, however, that hospitals sometimes tend to shrug off higher salaries. People will say, “‘Well, it was an arm’s length negotiation. We wanted Dr. X and he wouldn’t come for less than $800,000,’” she notes. “But if everyone else like him or her is getting $400,000, that could be a problem.”

Bottom line: If the hospital is paying a physician “huge amounts of money” and lacks a “a rock-solid [FMV] analysis from a third party — and perhaps additional documentation regarding the hospital’s needs and the physician’s credentials and value to the hospital and its patients” — it’s going to be vulnerable, says Ohrin.

3. Be prepared for a competitor-turned-complainant.

If you suspect that a competitor “wants to denigrate your operation to authorities,” one option is to seek guidance about your conduct through a formal or informal opinion from the government, suggests Miller. “Otherwise, the best approach is to be prepared at all times for an unannounced government audit or investigation.”

No quid pro quo: “It’s not typically effective to try to make a counter claim against a whistleblowing competitor to divert a review of your practice,” Miller cautions. That strategy can be viewed “as retaliation or as an attempt to deflect the fact-finding.” However, “a provider under review can certainly ask an auditor to question the motivation of a competitor making a claim,” he adds.

© Eli’s Medicare Compliance & Reimbursement Alert.

AUDIO TRAINING EVENT ON NOVEMBER 19th: Stark II — Are you in compliance? Referral Changes You Need to Know.

Question:

Answer: Your coding seems appropriate. For removal of labial adhesions, which is performed using a blunt  instrument or scissors under general or local anesthesia,you should report 56441 (Lysis of labial adhesions). In a non-facility setting, the code has 3.94 relative value units (RVUs), according to the 2009 Medicare Physician Fee Schedule, which you can use to judge private payers’ rates.

The procedure includes a 10-day global period, which a payer may follow. You would link 56441 to 752.49 (Other anomalies of cervix, vagina, and external genitalia). Some insurers have a higher co-pay for codes in the surgery section of CPT. Insurers may treat minor procedures as “surgeries.”

Physician Billing Compliance Heads Up: You are legally obligated to correctly report the work performed, and cannot change your coding for payment (the patient’s or your) benefit.

Do this: Explain to the patient that you have appropriately coded for the work involved in opening the adhesion. Suggest the patient contact her employer’s human resources director to discuss the various rates.

The insurance plan that the patient has determines the patient’s co-pay. The patient, not your office, has the responsibility to discuss variations in code-triggered copays with the plan/employer/human resources department.

© Medical Office Billing & Collections Alert. Download your 2 FREE sample issues here.

AUDIO TRAINING EVENT: Learn how to identify and review compliance risk areas in your physician practice and how to address them in your compliance plan.

The OIG’s 2010 Work Plan is full of clear enforcement and compliance goals that will affect physicians. And then there are other issues the OIG will investigate that at first may not seem to have much to do with doctors — but reading between the lines could help physician practices prepare for some unexpected compliance issues next year.

Two such issues in this year’s work plan involve independent diagnostic testing facilities (IDTFs) and EMTALA oversight.

Fly-by-Night IDTFs Attract Feds’ Attention

The Work Plan indicates that the OIG is interested in two areas concerning IDTFs: services and billing patterns in areas with high concentrations of IDTFs; and compliance with the facilities’ Medicare enrollment standards.

“A 2006 OIG review found numerous problems with IDTFs, including noncompliance with Medicare standards and potential improper payments of $71.5 million,” says the OIG. “In areas with a high density of IDTFs, we will examine service profiles, provider profiles, beneficiary profiles, and billing patterns.”

And in a separate category, the OIG says it will examine, in particular, whether IDTFs are “in compliance with all applicable Federal and State licensure and regulatory requirements for the health and safety of patients, provide complete and accurate information on their enrollment applications, and have technical staff on duty with the appropriate credentials to perform tests.”

“This stems from the government’s concern that because you don’t have to be a doctor, anyone can set up one of these IDTFs and bill Medicare,” says Todd Rodriguez, a health care lawyer with Fox Rothschild in Exton, PA who’s been helping HC Compliance News parse the 2010 Work Plan. “In last year’s Work Plan, they had similar proposals to review IDTFs.”

Rodriguez points to recent OIG investigations of DME fraud in Florida that also uncovered IDTFs set up to fraudulently bill Medicare. “Investigators would show up, and these companies would have disappeared. There was no office, nothing,” he says. “So the government is trying to make sure they are legitimate.”

This only becomes a problem for doctors because increased scrutiny of IDTFs means that legitimate facilities need to have all their ducks in a row. “Doctors own or invest in IDTFs, so even though they bill mainly through their medical practices, these things can be separately credentialed,” Rodriguez says. “If you’re an investor-owner, make sure you are in compliance with each and every one of the conditions of coverage and enrollment requirements.”

EMTALA Review Could Open Hospital Contract Issues

The OIG also says it plans to review CMS’s oversight of hospitals’ compliance with the Emergency Medical Treatment and Labor Act — a goal that may not catch the attention of physicians. But it should, according to Rodriguez.

“A previous OIG review raised concerns about … long delays to investigate complaints and inadequate feedback provided to hospitals on alleged violations,” according to the Work Plan. “We will identify variations, if any, among regions in the number of EMTALA complaints and cases referred to States, examine CMS’s methods for tracking complaints and cases, and determine whether required peer reviews have been conducted prior to CMS’s making a determination about whether to terminate noncompliant providers from the Medicare program.”

While EMTALA is really a hospital issue, the OIG’s interest in this area could affect physicians as well, says Rodriguez, because increased pressure on hospitals to comply means increased pressure on physicians to meet on-call coverage requirements.

EMTALA requires doctors in appropriate specialties have to be prepared to treat patients in the ER, he explains, and there is usually tension between hospitals and doctors about their obligations as staff to take ER calls. “This becomes a question of coverage in their contracts,” Rodriguez says. “This review by the OIG will put pressure on hospitals to spruce up their EMTALA compliance, and as a result, we’ll likely see hospitals push harder on staff physicians to take emergency calls.”

AUDIO: 2010 Work Plan for Physicians. With health care attorney Todd Rodriguez.

Find out why the feds are looking even harder at HHA & hospice therapy services.

As if worrying about compliance with the False Claims Act wasn’t enough: As part of the follow-on to the 2009 stimulus package, Congress passed the Fraud Enforcement and Recovery Act (FERA), which expands the FCA’s reach in three critical areas that providers need to pay close attention to.

Those three areas are subcontracting, Medicaid, and overpayments, according to Robert W. Markette Jr., a partner with Gilliland & Markette LLP. FERA now provides “an even larger hammer to hit providers with,” Markette said in a recent presentation, “Prepare for Unseen Liabilities: FCA, FERA, and Their Impact on Health Care.”

In this article, we explore the first of the trouble areas, subcontractors. If you use or are a subcontractor, you need to know how the FCA now affects you.

Subcontractors Now Subject to FCA

According to Markette, Congress amended the FCA because of several federal cases dealing with subcontractors who avoided false claims liability because they themselves did not submit Medicare claims to the government. (The contractors did.) “The U.S. Senate was outraged by these rulings,” said Markette, and the result was FERA, as well as the False Claims Correction Act (H.R. 1788), which is still moving through the House.

Under FERA, Congress changed the intent requirement in the FCA so that you no longer have to “get paid” to trigger the FCA. “You just have to submit a false document that is material to the claim,” he explained. “That is a very, very broad definition.”

Plus, you don’t have to intend to defraud the government anymore; FERA makes it so that you only have to “knowingly” submit, which means you deliberately ignore or recklessly disregard the possibility you’re submitting false documentation.

Markette gave two examples that illustrate the change to the FCA intent requirement.

In one, a psychiatrist’s wife, who was his billing staff, assumed that every therapy session was a 50-minute session, even though that was not always true, and billed Medicare accordingly. She reasoned that the sessions that were shorter (and thus overpaid) would be balanced out by the sessions that were longer (and underpaid). “The court held that the provider was submitting claims with a reckless disregard for their truth, to the extent they exceeded a number of hours beyond which he could not have provided services,” said Marquette.

In another, a hospital learned it had been receiving overpayments because its intermediary made a mistake. “The hospital was aware not only that it was receiving the overpayments, but that the source of the overpayment was likely due to this mistake,” he said. “However, the hospital took no action to confirm the source of the problem or to fix it, and was found to be deliberately indifferent to the problem.”

“For subcontractors, this makes the FCA a much broader statute,” Markette concluded. “Subcontractors can now be liable for claims submitted to government contractors.”

What To Do Now

First, providers need to make sure they have a compliance plan in place that accounts for these changes to the FCA. The goal, Markette said, is to avoid false claims in the first place. And even if you already have a plan in place, he said, “review it in light of these changes.”

You should also audit and monitor your subcontractors’ claims. Ask them if they have a compliance program, and if you’re receiving claims from them, “make sure they are watching what they’re doing,” he said. “Do they know about your compliance hotline? You’d rather hear about problems from their employees than from the DOJ.”

For HHAs and hospices, the most common use of subcontractors is for staffing arrangement services, which are a particular area of concern. “Staffing often includes part-time and over-time staff, and while therapy services were a routine area of concern for the OIG even before FERA,” he said, “now it is an area with more FCA peril.”

And subcontractors themselves need to audit their claims to government contractors as if they were Medicare/Medicaid claims. “Even without an intent to defraud, if you are reckless in submitting claims to a contractor, you’re in trouble,” he said.

AUDIO TRAINING EVENT: Medicaid Fraud Enforcement is on the Rise — Are You in Compliance?

Where physicians perform procedures can make all the difference — in both their reimbursement levels and in how interested the government is in their business.

In its 2010 Work Plan, the OIG says it wants to evaluate physician coding for place-of-service errors and hospitals claiming provider-based status.

With more and more physicians in ancillary arrangements, this OIG scrutiny is worth noting, according to Todd Rodriguez, a health care lawyer with Fox Rothschild in Exton, PA.

Place-of-Service Errors

Federal regs provide for different levels of payments to physicians depending on where they perform their services. Higher payments go to services performed in physicians’ offices than to those provided in hospital outpatient departments or ambulatory surgical centers (ASCs). “We will determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments,” says the OIG.

“We’ve seen this before,” Rodriguez says. “It stems from the fact that doctors are entering into lots of ancillary arrangements involving surgery centers, or leased services with hospitals in outpatient departments.” Questions arise when physicians lease offices in ASCs, a situation that is becoming more and more popular: “You run into issues where the space that a physician leases falls within the space covered by an ASC license,” he explains.

So if you believe you should be coding for independent office services, and you bill Medicare at the higher rate, be careful if there’s any possibility that the OIG could determine that your space is actually in an ASC. It’s even trickier because the OIG has not necessarily defined how it determines whether something is an ASC. “The OIG could argue that by leasing space in an ASC, it would still be an ASC and not a doctor’s office,” Rodriguez points out.

Provider-Based Status

Along similar lines, physicians who affiliate with hospitals should pay particular attention to the financial ramifications of such arrangements, adds Rodriguez.

Many hospitals operate as single entities, even as they own and operate multiple provider-based departments, locations, and facilities. So long as those facilities are treated as part of the main hospital for Medicare payment purposes, they are billed under Part A. But if a freestanding facility owned by a hospital is granted “provider-based status,” it receives higher reimbursement under Part A — and thus more scrutiny from the OIG.

“We will determine the appropriateness of the provider-based designation and the potential impact on both the Medicare program and its beneficiaries of hospitals improperly claiming provider-based status for inpatient and outpatient facilities,” says the OIG in its Work Plan.

“The concern for doctors is if they sell their practice to a hospital, their office location may still be considered freestanding for reimbursement purposes,” says Rodriguez. “And if they sell an imaging service, it could still be billed under Part B.”

As these sorts of financial relationships proliferate, he warns, physicians should be sure to take into account whether their offices have this independent provider-based status, because the OIG is going to review cost reports of hospitals that claim it for both inpatient and outpatient facilities.

Go here to read the OIG’s 2010 Work Plan.

AUDIO TRAINING EVENT: Your guide to the 2010 Physician Fee Schedule — ’stand in the shoes’ Stark clarifications, imaging accreditation and more. With attorney Robert Markette.