Once more, the law preventing the Sustainable Growth Rate (SGR) formula from wreaking havoc on Medicare payments to physicians is about to expire. Payments are scheduled to decrease by 21.2 percent on April 1.

On Thursday, March 26, the House of Representatives voted overwhelmingly 392-37 in favor of the bipartisan Medicare Access and CHIP Reauthorization Act (H.R. 2), which had already received an enthusiastic response from physician organizations, as well as strong support from President Obama.  On Friday, disappointingly, the Senate recessed without taking action on the bill.  The pressure is on for the Senate to bring the legislation to a vote soon after it reconvenes on April 13, and many observers expect passage.  We at ABC encourage all our readers to contact their Senators during this recess and urge them to support the legislation so that the SGR goes to its grave at long last.

In the short term, CMS may delay processing claims for a few weeks in order to keep the April 1st cut from being implemented.

Under H.R. 2, payments for physician services would be updated according to the following schedule:

Thus, for each of the years 2015-2019, there would be a 0.5 percent payment increase and no new changes to the current payment system.  Thereafter payments would be adjusted based on performance or on participation in “alternative payment models.”

Merit-Based Incentive Payment System (MIPS)

Beginning in 2019, providers including physician anesthesiologists and nurse anesthetists would be able to receive additional payment adjustments through the MIPS, which would consolidate the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBM) and the meaningful electronic health record (EHR) use in a cohesive program that seeks to avoid redundancies.  The penalties for failure to report PQRS quality measures and for failure to meet meaningful use requirements would sunset at the end of 2018.  Those programs would be replaced by the MIPS, which would assess the performance of eligible professionals (EPs) in four categories: quality; resource use; EHR meaningful use; and clinical practice improvement activities.  The first three categories would pick up where the PQRS, VBM and EHR incentive programs leave off.  The new category, “clinical practice improvement activities, would “give credit to professionals working to improve their practices” through a “menu of recognized activities [that] would be established in collaboration with professionals.” (Summary of the SGR Repeal and Medicare Provider Payment Modernization Act, on which H.R. 2 is closely based, prepared by the House Committees on Energy and Commerce and Ways and Means.)

The list of quality measures used in the MIPS would initially include the existing PQRS measures as well as the measures adopted by Qualified Clinical Data Registries (QCDRs) such as the Anesthesia Quality Institute’s National Anesthesia Clinical Outcomes Registry (AQI-NACOR).  These measures would remain in the MIPS program unless they are removed or revised under the rulemaking process.  New measures would be added annually and must, “to the extent practicable...address all five of the following quality domains: clinical care, safety, care coordination, patient and caregiver experience, and population health and prevention.”

A composite score for each EP would be based on performance in each of the four categories.  EPs would only be assessed on the categories, activities and measures that apply to their individual practices.  The composite score for each EP would be compared to a performance threshold consisting of the mean or median composite performance score for all EPs during a prior period to be established.  EPs in the lowest quartile would receive the maximum negative adjustment, which would be capped at four percent in 2019, five percent in 2020, seven percent in 2021, and nine percent in 2022.  EPs whose composite performance score is at the threshold would not receive any MIPS payment adjustment and those who score above the threshold would earn proportionally larger incentive payments up to a maximum of three times the annual cap for negative payment adjustments.

Alternative Payment Models (APMs)

The Medicare Access and CHIP Reauthorization Act also creates a two-tier payment system that provides incentives for doctors to shift more of their practice into value-based payment models, including accountable care organizations, bundled-payment arrangements and medical homes.  In order to qualify for higher payments, a doctor would need to have at least 25 percent of Medicare revenue tied to such payment models by 2019. That threshold rises to 75 percent in 2023, although physicians could opt to tally all revenue sources, not just Medicare, to meet that threshold.

Physicians who qualify for the alternative-payment system would receive bonuses of five percent annually bonuses from 2020 to 2024.  Thereafter their payments would increase by 0.75 percent per year, in contrast to the regular 0.25-percent rate of growth for physicians in the traditional payment system.

Other Provisions

The 263-page bill contains numerous other provisions, starting with those that would preserve and extend the Children’s Health Insurance Program (CHIP), which covers more than eight million children and pregnant women in families that earn income above Medicaid eligibility levels.  Two other sections of interest to our readers are those that would:

• Reverse CMS’ 2014 decision to eliminate the global surgical package that bundles payment for all related services performed within 10 or 90 days of the procedure.  Certain pain medicine procedures would benefit from this reversal.
• Delay implementation of the “two-midnight” rule that requires a patient stay of two consecutive midnights in order for a hospital to qualify for inpatient payment rates, through September 30, 2015.

Prospects for H.R. 2

As noted above, the legislation is now headed to the Senate.  Although the cost of repealing the SGR amounts to $141 billion over 10 years, according to the nonpartisan Congressional Budget Office (CBO), it is not the price tag that might prevent the bill from becoming law.  The CBO also estimated that enacting H.R. 2 would cost $900 million less over the next decade than continuing the annual practice of freezing payment rates for physician services, making repeal a relatively attractive option. 

There is a nearly unanimous sense that the time has come to redress the enduring inequity of the SGR formula, which has resulted in Medicare physician payment rates being 17 percent below 2001 levels, adjusted for increases in practice costs, according to CMS itself.  Some Senators have threatened to vote against legislation that provides for fewer than four years of funding for CHIP, two more years than in H.R. 2, but most observers are optimistic—as are we.  Again, to help bring about the right outcome, we urge readers to call their Senators’ offices this week and ask them to repeal the SGR immediately upon their return from the recess.

Let us begin with the basic answer to the question in the title of this Alert:  anesthesiologists continue to benefit from a specialty-based exemption from the Electronic Health Record (EHR) Incentive Program’s “meaningful use” (MU) requirements, so only those who are have chosen to earn the incentive will be affected directly by the new Stage 3 rules.  Pain physicians may be affected, unless their practice meets the EHR program definition of “hospital-based” or they have been granted a hardship exception (see Alert dated February 16, 2015).

The Stage 3 changes to the MU requirements, as described in a proposed rule issued on March 20, are part of what CMS calls its “broader efforts to increase simplicity and flexibility in the program while driving interoperability and a focus on patient outcomes in the meaningful use program.”  The most significant of the changes that would be implemented beginning in 2017, if the Stage 3 rule is finalized as proposed, are the following:

• give EPs the option of starting Stage 3 of meaningful use in 2017.  All EPs would be required to be in Stage 3 by 2018, regardless of what stage they were at previously;
• define the full calendar year as the EHR reporting period beginning in 2017, aligning EPs and hospitals, and eliminate the limited EHR reporting period of any continuous 90 days for EPs demonstrating MU for the first time; and, most important,
• replace all existing objectives and measures and reduce the overall number of objectives to the following eight, which would apply to EPs and hospitals alike, regardless of the stage they were at in the prior reporting period.  The Stage 3 objectives, and their associated measures are as follows:

While the first several of the proposed Stage 3 objectives are unchanged or only slightly changed from Stage 2, the patient electronic access, “coordination of care through patient engagement” and HIE objectives include higher thresholds as well as new requirements and would pose challenges to most physicians, not just to anesthesiologists.  For example, EPs would be required to communicate via EHR with patients (or with the patients’ authorized representatives) about clinical care and not just about appointments or insurance information.  Simply convincing patients to sign up to access their EHRs has been very difficult for many practices.

The government will be receiving comments on the proposed rule through May 29, 2015, as well as on a companion rule The Office of the National Coordinator also released a companion rule released by the Office of the National Coordinator that proposes vendor certification criteria and required standards and implementation specifications for EHR technology.  A significant volume of comments is expected.  The American Hospital Association has stated that “The release of [the proposed] rule demonstrates that [CMS] continues to create policies for the future without fixing the problems the program faces today,” and that “It is difficult to understand the rush to raise the bar yet again, when only 35% of hospitals and a small fraction of physicians have met the Stage 2 requirements.” (Tahir D. CMS issues draft Stage 3 rules for EHR incentive program.  Modern Healthcare, March 20, 2015.)  The American College of Cardiology has voiced its concerns over requiring all physicians, even first-time participants, to report for a full calendar year, as well as proposals to require all participants to immediately begin participation in Stage 3 starting in 2018, rather than allowing participants to proceed through the Stages in a progressive fashion.

We would expect quite a few changes to Stage 3 before it is implemented in 2017 and 2018.  In the shorter term, CMS is expected to release another rule that is expected to add some reporting flexibility and to shorten the 2015 Stage 2 reporting period to 90 days.  We will keep our readers informed, as always.

1. Senate Passes SGR Repeal Bill

We are very happy to advise you that late last night, the Senate passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 92-8 and did away with the Sustainable Growth Rate (SGR) formula at long last.  Had the Senate not acted, Medicare payments to physicians would have been reduced by 21.2 percent, effective April 1.  Instead, Medicare payments will increase by 0.5 percent for the next five years beginning on July 1, 2015.

Claims that Medicare held for services provided between April 1 and April 14, pending Senate action, will now be processed and paid at the rates that were in place during the first quarter.

Other changes in the legislation include an extension of the Children's Health Insurance Program by two years as well as a consolidation of Medicare’s quality reporting programs into a single merit-based incentive payment system (MIPS).  The MIPS and the schedule of payment updates established in MACRA were reviewed in our March 30 Alert (Getting What You Ask For: Will Anesthesiologists and Other Physicians See Repeal of the SGR, Finally?) in which we described MACRA as it had just been passed by the House of Representatives as H.R. 2.  For further details, see also the AMA’s Frequently Asked Questions about H.R. 2.

MACRA now awaits the President’s signature in the very near future—and President Obama has been a strong supporter of SGR repeal.  With his signature, the very problematic SGR will finally pass into history.  We congratulate all of the physicians, and their organizations, whose tireless efforts have been translated into this major milestone.

2.  CMS Has Instructed the Carriers to Recognize Modifier PT for Screening Colonoscopies

In the notice accompanying the final fee schedule rule for 2015, CMS announced that it would start paying for anesthesia for screening colonoscopies (CPT®/HCPCS code 00810) as preventive care, meaning that patients would not be liable for cost-sharing from January 1, 2015 on.  Because of the structure of the statute, diagnostic and therapeutic colonoscopies would still be subject to co-payments and deductibles, however, and colonoscopies that began as purely preventive but during which the endoscopist ended up removing a polyp or tissue for biopsy would incur a co-payment but not a deductible.  CMS indicated that anesthesiologists were to identify the applicable payment rule by reporting “pure” screening colonoscopies with modifier 33 and screening colonoscopies that were converted to therapeutic or diagnostic procedures with modifier PT.

The original instructions to the Medicare Administrative Contractors (MACs) did not mention modifier PT, however, and claims for anesthesia for screening colonoscopies that included modifier PT were rejected.  There were also reports of difficulties in getting paid for claims with modifier 33.

On April 3rd, CMS issued new instructions stating unequivocally that:

Effective for claims with dates of service on or after January 1, 2015, contractors shall not apply deductible and coinsurance to claim lines for HCPCS 00810 services when billed with modifier 33 and shall not apply the deductible when HCPCS anesthesia code 00810 is submitted with the PT modifier.
We hope that the policy is now clear to all the MACs and that they will process claims for screening colonoscopies reported with both the 33 and the PT modifiers correctly going forward.  Anesthesiologists who have followed their MACs’ directions and submitted claims for colonoscopies that began as screening but that ended with the removal of polyp(s) or other tissue without modifier PT should start reporting the modifier again.  Any denials should be appealed.

CMS has indicated that it will be providing further guidance on the correction of previously denied claims.  We will update you again when we learn what that process will be.

Leadership has never been more important in anesthesiology than it is today.  As the specialty demands and takes ownership of increasing levels of responsibility in healthcare reform, the quality of leadership becomes one the fundamental factors that determine success.  Developing the Perioperative Surgical Home (PSH), the most exciting organizational concept to emerge within anesthesiology this century, requires outstanding leaders.  So does maintaining the highest quality of patient care in each anesthesiology department or practice.

Recognizing the value of leaders and also their role in enhancing each others’ skills as well as those of the broader community, the Anesthesia Quality Institute (AQI) has created an Anesthesia Leadership Registry, a database of more than 250 ASA members who serve in leadership roles. The purposes of this registry are threefold, according to Richard P. Dutton, MD, MBA, Executive Director of the AQI (“Data, Data, and More Data—Where’s the Value?” Presentation given at the ASA Practice Management Conference in January 2015):

• National understanding of our “footprint”
• Networking for existing leaders
• Mentoring for new leaders

A recent article in the Harvard Business Review, The Skills Doctors and Nurses Need to Be Effective Executives, by Sachin H. Jain, MD,  chief medical officer of the CareMore Health System (HBR Online, April 7, 2015) described three distinct skills that clinicians must have in order to lead effectively.  These skills are the foundation for successful clinical practice in any specialty including anesthesiology and pain medicine; a shift in perspective is necessary, though, for the transition to managing a health care enterprise such as a hospital or health system, or even a payer organization.

First is operations management and execution.  According to Dr. Jain, “Many physicians and nurses excel at operations management because it requires the same kind of detail and complexity that is required to effectively manage a large clinical load.  In clinical work, we must constantly triage patients and parse significant amounts of low and high-level detail.  Many clinicians manage a small operation in the form of their own clinical practice or ward before shifting to leading larger operations.”  This is certainly true of anesthesiologists, many of whom are used to managing the care of several patients concurrently in an environment that depends on teamwork.  Determining how best to meet the needs of one surgical patient ready to be extubated, another patient with significant airway problems and a third patient about to deliver by C-section, while in the back of one’s mind is that morning’s discussion with hospital administration about needed improvements in room turnover times—for example—requires a well-honed ability to distinguish between urgent tasks and important, non-urgent activities.  In addition to possessing the ability to prioritize an ever-growing number of demands, the clinician must remain flexible in order to shift priorities.  Good anesthesiologists tend to match this description by training and perhaps by inclination.  As newly-minted executive leaders, they must learn to act with urgency and ownership to build an organization’s workflows and address its problems.

Another leadership skill that draws on the knowledge and experience of clinicians is setting and defining strategy.  Effective strategic management involves, in addition to the ability to identify opportunities, the wisdom to decide both what to pursue and what not to pursue, Dr. Jain reminds us, citing strategy expert Michael Porter.  Opening up an endoscopy suite may look like an attractive opportunity but it may be less compelling than staffing a cardiac cath lab even though the cath lab will consume all available resources for the near future.  By the same token, a health system may have to choose between two surgery center acquisition candidates.  A physician leader must acquire the skills to decide upon appropriate trade-offs.

The third requisite skill to which Dr. Jain points is people leadership.  Academic and residency training does not prepare physicians to hire and fire, or even to manage subordinates, any more than does the education for other professions.  As Dr. Jain notes, “When thrust into a management or leadership position, many clinicians have never hired or fired anyone in their life.”  He suggests, therefore,

To accelerate the development of their people-management skills, clinicians should partner closely with fellow business leaders and HR professionals. These colleagues can be instrumental in helping them surface their needs and identify tactics to build and manage high-performance teams. These colleagues can also serve as sounding boards when they must make hard decisions and hold inevitable hard conversations.

The above list of executive skills that can be studied and mastered is far from exclusive.  Some of the qualities that go into solid leadership are personal attributes, starting with the desire to lead.  As stated in Chapter 1 of ASA’s Manual for Anesthesia Department Organization and Management, “[t]he best leaders understand people and business, maintain fairness, create clear visions, build trust, and communicate effectively.”  These are skills that become better and better as the executive gains experience.  Their importance cannot be overstated.  James D. Grant, MD wrote in the Administrative Update in the September 2014 issue of the ASA Newsletter that:

Physicians need to take greater roles in health care leadership. Health system reform needs to be led by physicians building common goals and leading teams that effectively move health care delivery in the right direction. Physician anesthesiologists are seen as leaders and visionaries who have a keen understanding of the complexities of health care systems.

With the right combination of personal characteristics, motivation, training, the future looks bright for—and because—of anesthesiologists and pain physicians who step up to lead.

The Anesthesia Quality Institute’s Qualified Data Clinical Registry (AQI QCDR) became even more valuable with the recent addition of 16 new measures bringing the total number of measures adopted by the AQI for use in its QCDR to 27.  With the nine official Medicare Physician Quality Reporting System (PQRS) measures that can also be reported to the QCDR, the combined total of 36 measures will give most anesthesiologists, nurse anesthetists and anesthesiologist assistants ample opportunity to satisfy the PQRS requirements for 2015.  The array of available measures should also provide practices with sound choices for their own quality measurement and improvement programs.

PQRS Reporting via the QCDR

Eligible professionals (EPs) must successfully participate in the PQRS in 2015 in order to avoid a two-percent negative payment adjustment in 2017.  Successful participation means reporting on a total of nine measures from three different National Quality Strategy (NQS) domains for at least 50 percent of the individual EP’s Medicare fee-for-service patients.  At least one of the measures must be from the list of 19 cross-cutting measures.  Unless anesthesiologists perform a lot of Evaluation and Management services, it will be impossible for them to find nine PQRS measures that apply to their practice.  They may avoid the penalty even though they report fewer than nine measures, but CMS will apply the measure applicability validation (MAV) test to determine whether more measures in fact did apply to their practices.  And EPs may not know whether they have successfully reported to PQRS until after the reporting year is over—when it is too late to correct any deficiencies

The QCDR makes PQRS reporting considerably simpler, more rational and more predictable.  The requirements for EPs who report as individuals (rather than as a group) are:

1. Report at least 9 measures covering 3 (NQS) domains for at least 50% of the EP’s applicable patients seen during the 2015 participation period. [QCDR measures are reported for all patients, while only Medicare patients are targeted by traditional claims-based PQRS reporting.]
2. Report on at least 2 outcome measures. If the QCDR does not possess 2 outcome measures, then the QCDR must possess at least 1 outcome measure and 1 of the following other type of measure: 1 resource use, OR patient experience of care, OR efficiency appropriate use, OR patient safety measure.

As noted at the outset, the AQI QCDR now offers a choice of 36 different measures, including outcome measures and multiple measures each covering the various NQS domains.  See Table 1 (QCDR Measures) and Table 2 (PQRS Measures) below for the titles of all 36 measures.  There will almost certainly be at least nine that apply to any anesthesia EP’s practice (it is likely, however, that a much smaller number will be available for pain medicine.  The AQI is planning to introduce more pain measures in the future.) The downside of CMS’ allowing QCDRs to use up to 30 of their own non-PQRS measures in 2015 is that the absolute minimum number that must be reported is nine.  EPs who report fewer measures will not be able to use the MAV test to validate the lack of availability of other appropriate measures.

Readers who scrutinize the two tables above will observe that there appears to be some duplication.  Specifically, both QCDR Measure #18 and PQRS Measure #193 are entitled “Perioperative Temperature Management.”  This highlights the need to look carefully at the measure specifications, detailed guides that spell out the clinical action (numerator), the eligible population (denominator), the CPT codes associated with the numerator and denominator, exclusions and the rationale for the measure.  For the PQRS Perioperative Temperature Management measure, #193, the PQRS Measures Codes Specifications Manual in the zip file 2015 PQRS Individual Claims Registry Measure Specification Supporting Documents identifies the “Percentage of patients, regardless of age, undergoing surgical or therapeutic procedures under general or neuraxial anesthesia of 60 minutes duration or longer, except patients undergoing cardiopulmonary bypass, for whom either active warming was used intraoperatively for the purpose of maintaining normothermia, OR at least one body temperature equal to or greater than 36 degrees Centigrade (or 96.8 degrees Fahrenheit) was recorded within the 30 minutes immediately before or the 15 minutes immediately after anesthesia end time.”  The newer QCDR measure, #18, however, lowers the acceptable threshold to 35.5 degrees but does not give, ask for or recognize documented efforts to maintain temperature in the OR.  The complete instructions for reporting #18 and the other 26 QCDR measures appear in AQI QCDR Measure Specification, Year 2015.  According to a Frequently Asked Question answered by the AQI, “The new temperature threshold is more consistent with the clinical literature” and “PQRS Measure 193 and ASA Measure 18 can both be reported for 2015.”

Quality Reporting via the QCDR

A group that wants to maintain its contracts with its hospitals, and in an increasing number of cases, with its payers, needs to measure the quality of care provided systematically.  The QCDR can help.  The 27 evidence-based measures developed by anesthesiologists for anesthesiology practice can potentially serve to raise the quality of patient care, not just to avoid Medicare penalties.  Tracking and improving scores across a broader range of valid quality metrics can yield competitive advantages.

Groups that want to get started with QCDR reporting need only contact the AQI (ABC clients should ask their account managers to begin the process).  The AQI is prepared to work with everyone to make sure that they have an appropriate method for submitting reports that will satisfy CMS requirements and the groups’ own needs.  During the month of May, the AQI will be holding “Virtual Office Hours” every Tuesday from 11:00-12:00 a.m. CDT.  Register and prepare the questions you will want to ask of AQI staff.

ABC strongly encourages you to take the opportunity to learn more about the AQI QCDR, which is, in our opinion, one of the most important services ever offered by the ASA.

Anesthesia Business Consultants (ABC) is pleased to announce its latest partnership with the University of California at Irvine (UC Irvine).  The anesthesia department at UC Irvine has long been a leader in various projects designed to promote the alignment of Anesthesiologists with their perioperative colleagues; to further the goal of supporting the entire perioperative process.  ABC is thrilled to support UC Irvine with their billing operations as well as other programs into the future.

“The anesthesia department at University of California, Irvine looks forward to working with Anesthesia Business Consultants.  Their approach to comprehensive billing and technology platforms matches our organization's needs and strategic initiatives,” said Dr. Zeev Kain, Chancellor's Professor & Chair of the UC Irvine Department of Anesthesiology and Perioperative Care.  “UC Irvine is at the forefront of improving hospital-based care with projects such as the Perioperative Surgical Home (PSH) and quality initiatives and ABC’s commitment to this specialty will help us to move into the future, secure in the knowledge that as our needs grow, so will their capabilities.”

ABC’s client portal and mobile business intelligence dashboard are recognized industry leaders for their strength and adaptability and their adoption by UC Irvine was one of the many reasons for the new partnership.  ABC’s portal, F1RSTClient™, delivers secure, seamless single-sign-on (SSO) access in a fully integrated system utilizing the powerful F1RSTAnesthesia™ and the flexibility of the F1RSTAnalytics™ series of dashboards—now available on desktops as well as mobile access.  ABC’s partnerships with organizations such as TelePREOP provide a full range of offerings for the entire perioperative process that can’t be matched.

ABC continues its trend on mutually beneficial partnerships and UC Irvine has shown themselves to be forward-thinking, actionable, and dedicated to the pursuit of the most efficient and effective care possible for its patients.  ABC is committed to their success and the success of all of our clients as they continue to partner with the facilities they serve.  ABC will ensure that we support UC Irvine’s strategic goals in areas of quality, PSH and anesthesia operations.

The term “Enhanced Recovery After Surgery” and the acronym ERAS are familiar to most anesthesiologists and to other clinicians.  Anesthesia administrators and non-physician advisors may not have encountered the ERAS concept yet.  Because of burgeoning interest in better evidence-based perioperative care protocols leading to improved patient outcomes in this era of value-based payment, administrators and practice management staff should acquire a basic understanding of the ERAS concept.

“Enhanced recovery after surgery (ERAS) protocols are multimodal perioperative care pathways designed to achieve early recovery after surgical procedures by maintaining pre-operative organ function and reducing the profound stress response following surgery.  The key elements of ERAS protocols include preoperative counselling, optimization of nutrition, standardized analgesic and anesthetic regimens and early mobilization.”  (M. Melnyk, RG Casey, P. Black, A.J. Koupparis. Enhanced recovery after surgery (ERAS) protocols: Time to change practice? Can Urol Assoc J. 2011 Oct; 5(5): 342–348).   Also referred to as “optimized patient care” or “fast-track surgery,”  ERAS protocols and programs lead to improved outcomes, reduced rates of complications, shorter inpatient stays and significant cost-savings.  Initiated by Professor Henrik Kehlet in Denmark in the 1990s, ERAS programs have become an important focus of perioperative management after colorectal surgery, vascular surgery, thoracic surgery and radical cystectomy.

According to the ERAS^® Society website, there are “about 20 care elements that have been shown to influence care time and postoperative complications.  The following graph illustrates the components of the ERAS multimodal care pathway:

Also according to the ERAS Society website, use of the ERAS pathway has been shown to reduce care time by more than 30 percent and to reduce postoperative complications by up to 50 percent.  A 2014 study in the Journal of the American Medical Association of the protocol's use for colorectal surgery in a community hospital setting found it helped reduced stays from 6.7 days to 3.7 days without an increase in 30-day readmission rates.  Narcotic use dropped from 63 percent to 15 percent of patients.  Studies have shown the protocol could save anywhere from $2,000 to $7,000 per surgery.  The review by Melnyk et al. noted a recently published a cost analysis of ERAS in colorectal surgery in which the authors found that there was a significant reduction in total hospital stay, intravenous fluid use, complications and duration of epidural use in the ERAS group:  “The implementation of an ERAS program costs about $102 000, but this was offset by costs saved in reduced postoperative resource utilization, with an overall cost-saving of roughly $6900 per patient.”

It should be noted that the evidence of ERAS programs’ effect on costs is not unequivocal.  In another colorectal surgery study summarized by Alex Macario, MD, MBA in a 2014 Medscape Viewpoint article, Enhanced Recovery Protocol for Colorectal Surgery, the median length of stay was reduced from seven to five days with the enhanced recovery protocol compared with the traditional group.  Patients who received the enhanced recovery protocol also had fewer urinary tract infections (13% vs 24%) and fewer readmissions (9.8% vs 20.2%).  Even with a shorter length of stay and lower patient ward costs, nevertheless, there was no statistically significant difference in unadjusted total hospital costs for patients who received the enhanced protocol compared with traditional care ($18,377 vs $20,537).

Adoption of ERAS protocols has been slow, for reasons summarized by Vijaya Gottumukkala, M.B, B.S, M.D. and Henrik Kehlet, M.D., Ph.D. (Optimized Perioperative Care: Why Is Change So Difficult? And What Can We Do To Overcome Barriers?, ASA Newsl 2014 Dec;78(12): 14-16): “lack of awareness of advances in enhanced recovery programs among the anesthesia community, lack of interest in reviewing surgical literature, concerns of liability with initiating something new (deviation from standard teaching), realization that the process of implementation is too long and with many barriers (multi-disciplinary), the belief that enhanced recovery is a surgical and not anesthetic issue, and finally, resistance to new ideas.”

The development of the perioperative surgical home (PSH) is going to increase the popularity of ERAS programs, which reflect some of the features of the PSH but places less direct emphasis on patient care coordination.  As David C. Mackey, MD and Michael P. Schweitzer, MD, MBA state in their article  The Future of Surgical Care in the U.S.: State Surgical Quality Collaboratives, Optimized Perioperative Care, and the Perioperative Surgical Home  (ASA Newsl 2014 Dec;78(12): 13-165):  “For most U.S. health care institutions and health care systems, it is the PSH concept—which is fundamentally based upon patient-centric, systems-oriented, interdisciplinary, team-based, global surgical care, along with a payment model to support this surgical care delivery model—that will provide the necessary enabling environment for OPC [ERAS] to be sustainably implemented.  And these concepts will synergistically reinvigorate the value provided by physicians to health care delivery systems.”

As the potential for providing and demonstrating value continues to grow, readers should expect to read a good deal more about the PSH, ERAS and related concepts in future Alerts.

Medscape is one of the very few organizations that surveys physicians on compensation and practice patterns, breaks out the specialty of anesthesiology and publishes the results for free.  The Medscape Anesthesiologist Compensation Report also has one of the larger absolute response rates; in the most recent survey, reported in March 2015, 1179 responses were received from anesthesiologists during the period December 30, 2014 – March 11, 2015.  For those reasons alone, it behooves anesthesiology practices to be familiar with the Medscape data.  The sample is small.  It is probably not representative.  As science, the survey does not pass muster.  But since there is so little information of any better quality available, the Medscape compensation surveys are being used, usually in conjunction with other surveys such as those published (and sold) by the Medical Group Management Association (MGMA) and American Medical Group Association.

The weakness of the information is slightly mitigated by comparing several years’ worth of survey data.  Consistency over time may enhance the credibility of the values—or at least their direction.  Thus it is plausible that average compensation increased by 9.25 percent between late 2012 and early 2015 (from $337,000 to $358,000), but the absolute values may be on the low side because of an apparent overrepresentation of employed physicians among the respondents.  Very low reported compensation levels for academic and government-employed anesthesiologists, which includes military physicians, may have an undue influence.  Compensation for self-employed physicians (2015: $410,000) and those working in “office-based single-specialty groups” (2015: $429,000) as opposed to “healthcare organizations” (2015: $385,000) seems more in line with, but still lower than, the average compensation figures in the most recent MGMA Physician Compensation and Production Survey: 2014 Report Based on 2013 Data, which reported a national mean total compensation level of $439,509 (and a standard deviation of $121,743).  Then again, Doximity, a LinkedIn style social network for physicians featured in The Atlantic online (January 27, 2015) claimed to include data from more than 18,000 physicians with an average anesthesiologist salary of $357,116.

It is impossible to determine the extent to which the Medscape information is representative based on what was published.  That said, anesthesiologists need to know what the Medscape data appear to show, since hospitals and payers will be using them.  Table 1 below contains compensation information from the 2013, 2014 and 2015 surveys.  The data in each case were collected around the start of the new year.  According to Medscape, ”For employed physicians, compensation includes salary, bonus, and profit-sharing contributions.  For partners, compensation includes earnings after tax-deductible business expenses but before income tax.”

Three specialties—orthopedics, cardiology and gastroenterology—in that order, reported higher average incomes than anesthesiology in the most recent survey.  In 2014, urology and radiology also came in above anesthesiology.  Overall career satisfaction, as well as satisfaction with income, placed anesthesiologists behind dermatology, pathology and emergency medicine in 2015.

The South Central states (Texas, Oklahoma and Arkansas) reported the highest average compensation levels in 2015 and the North Central States (North Dakota, South Dakota, Nebraska, Kansas, Iowa and Missouri) placed first in 2013 and 2014.  The MGMA survey shows the Midwest and the Southern regions reporting the greatest average compensation, with the Eastern region coming in lowest, as it did in the 2013 Medscape surveys but not in 2014 or 2015.

Reactions to Obamacare include clear expectations that incomes will decrease with participation in Health Insurance Exchanges (HIEs).  As shown in Table 2 below, 65 percent of anesthesiologists responding to the 2014 Medscape survey expected a decrease, as did 58 percent this year.  The proportion of anesthesiologists who planned to participate in HIEs dropped from 27 percent to 19 percent even though the proportion that did not anticipate that HIE participation would bring about any change in their income grew from 31 percent to 39 percent—perhaps a reflection of uncertainty about the future of HIEs and Obamacare altogether.

In contrast, the interest in accountable care organizations (ACOs) has been growing—as has the interest in accepting cash only and no third party payment arrangements.  More anesthesiologists, especially the self-employed (approximately one-third of respondents), have begun offering ancillary services, typically postoperative pain management.

Medical practice surveys, in the end, remind us of Rorschach inkblot images—what one person sees in them is often very different from what the image says to another individual.  Most such surveys suffer from very small and unrepresentative response samples.  The questions asked are often ambiguous and the definitions alone can be as long as, or longer than, the questionnaire.  The response pool seems to grow ever smaller in anesthesia, as more and more practices join large national companies that eschew third-party surveys altogether and rely on their own internal information.

Nevertheless, negotiations over anesthesiologists’ compensation often involve third party surveys.  As in all negotiations, it is important to know the information available to the other party.  It is in that spirit that we offer the foregoing summary of the Medscape survey, and we do encourage readers to go to the source if you need a better understanding of the data.

When one reviews the Current Procedural Terminology (CPT^®) changes for 2015, a recurrent theme throughout is the consolidation of code combinations. The American Medical Association/ Specialty Society Relative Value Update Committee (RUC) identifies codes that are regularly reported together more than 75 percent of the time. The identified codes are then considered by the CPT Editorial Panel for bundling. The CPT Editorial Panel consists of physicians representing all specialties and other stakeholders who are all users of the CPT code set and thus have a practical perspective on the changes presented. It is the intention of the RUC, when presenting these code combinations, to provide the logic, rationale and function of these CPT changes. The following paragraphs will explore the rationale behind the bundled codes that are related to anesthesia and pain management.

Ultrasound is often utilized to improve the accuracy of intra-articular placement of the needle for safety and better patient outcomes. This is the reason why there are three new codes to describe ultrasound imaging guidance as an inclusive component of arthrocentesis, aspiration and/or injection of a joint or bursa (Table 1). Fluoroscopic-guided arthrocentesis will remain separately coded. It is important to note that the codes involving ultrasound guidance require the guidance to be recorded and a report to be included in the patient’s medical record. The original three codes were revised to describe these procedures without the use of ultrasound guidance as an option for the provider who is not utilizing ultrasound guidance for needle placement.

The RUC identified vertebroplasty codes 22520, 22521, 22522, 22523, 22524 and 22525 that were reported more than 75 percent of the time with 72291 (fluoroscopy). The decision was made to delete these codes and add six new comprehensive codes. The new codes are listed in Table 2. They all include imaging, moderate sedation and bone biopsy, when performed. The new codes require documentation of these comprehensive services in the patient’s permanent medical record. These new codes include primary as well as add on codes.

Table 3 sets forth one more set of procedures of interest to anesthesia and pain medicine providers. The myelography lumbar injection code 62284 and imaging guidance codes 72240, 72265 and 72270, for the professional component, were identified by RUC as codes reported together 75 percent or more of the time; therefore, four new codes were added to bundle the injection and imaging guidance for myelography procedures (62302- 62305). In addition, they retained the original codes, as these are occasionally performed by two separate providers and therefore would need to be billed separately.

Reviews of code combinations for possible bundling and revaluation of the services generally occur on an annual basis. One questions the motive behind this yearly review. Is it just to revalue services, or do the payers have an influence over this review to decrease the payment for separately billed services? Whatever the answer is, as utilization increases, combinations will occur. Interestingly enough, ICD-10 does an excellent job of creating combination codes in order to consolidate diagnosis codes that are regularly reported together. This is an overlapping occurrence between procedure and diagnosis coding.

On June 30, CMS is going to release information on payments made to physicians during 2014 by pharmaceutical, device and other manufacturers.  This will be an update to the information made public for the first time in September, 2014.  The current database is available at https://openpaymentsdata.cms.gov/.

Open Payments is a national program that promotes transparency by publishing data on the financial relationships between the health care industry (applicable manufacturers and group purchasing organizations, or GPOs) and health care providers (physicians and teaching hospitals).  In 2014, CMS published 4.45 million payment records, transfers of value, or instances of ownership/investment interest that occurred over the last five months of 2013. These financial transactions totaled nearly $3.7 billion.  (CMS, Annual Report to Congress on the Open Payments Program for Fiscal Year 2014.)

The program requires “applicable” manufacturers and GPOs to report payments of $10 or more, or of $100 or more per year in the aggregate, to CMS.  These thresholds have been adjusted since the program began in 2013 to track the consumer price index; the per-item threshold is now $10.21 and the aggregate is $102.07. 

The Open Payments law (Section 6002 of the Affordable Care Act, known as the Sunshine Act) does not impose any obligations on physicians—but readers may nevertheless want to check the information that CMS has posted about them.  The types of “transfers of values” targeted by the Open Payments program include:

• Consulting fees
• Speaker/faculty fees
• Honoraria
• Entertainment
• Food and beverage
• Travel and lodging
• Educational program fees
• Research
• Charitable contributions
• Royalties or licenses
• Investment or ownership interests, other than in publicly traded securities and funds
• Gifts such as flash drives, clocks, pens
• Grants
• Space rental or facility fees

Detailed information, including in particular a list of items that are excluded from the reporting requirements, appears in the MGMA’s paper The Physician Open Payments Program (or “Sunshine”) Act – What You Need to Know as well as on the CMS website, www.cms.gov/openpayments.

Although there are no requirements for physician action, anesthesiologists and pain specialists are encouraged to register with CMS so as to receive direct notice when their Open Payments data are available and to challenge inaccurate, misleading or incomplete data.   Only disputes that were initiated before this year’s 45-day pre-publication review period ended on May 20, 2015 will be flagged and posted when the 2014 data are publicly released on June 30.  Corrections resulting from later disputes will be made the next time CMS updates the Open Payment System.

Registration is a two-step process in which physicians first sign up at the CMS Enterprise Portal, something that many will already have completed as the gateway provides access to a number of CMS programs.  The second step is to register in the Open Payments system, through the portal.  CMS advises that “the entire registration process should take about 30 minutes to complete and must be finished in a single session.  Users cannot save entries or complete their profiles at later times.  To register in Open Payments you should have your NPI, DEA and state license numbers handy.”  Users have the option of nominating authorized representatives such as practice managers who will be able to review and dispute reports going forward.  Once the registration has been submitted, the Open Payments system will perform vetting to ensure that the user is a covered recipient physician.  Nurse anesthetists and other non-physicians are not targeted by the Sunshine Act.  The system will send out an email message confirming the success or the failure of the vetting process.

Perhaps the big question is whether the Open Payments system matters.  The intent of the law is to address concerns that financial ties between physicians and industry may have an undue influence on medical practice and research.  In a February 20, 2015 article in the Wall Street Journal online, What Money? Many Docs Haven’t Visited the Open Payments Database, Ed Silverman reported that 76 percent of physicians surveyed by MedPanel in late 2014 said that their participation with industry activities had not changed since the manufacturers began reporting to CMS in 2013.  Only 46 percent had visited the Open Payments website at all—15 percent admittedly to see what had been reported about their colleagues.  Only nine percent expressed any concern about what their patients might think.

As the public’s interest and experience in checking out their physicians’ reputation grows, however, the accuracy of the information in the Open Payments database may become more important.  Physicians employed by large corporate entities including health systems may find, too, that compliance officers start scrutinizing financial relationships with drug, device and other manufacturers more closely.  The American Medical Association’s advice to try to ensure accurate reporting is therefore worth considering.  The AMA’s Sunshine Act Toolkit recommends, among other things:

• Review and update financial or conflict of interest disclosures required by your employer several times a year.  The employer or other agency requiring such disclosures may compare information posted on the Open Payments website with information you have provided.
• Verify that your information in the National Provider Identifier (NPI) enumerator database is up to date; this information will be used by manufacturers to identify you accurately.
• Ask manufacturers’ representatives to provide you with information on transfers of value before they submit it to CMS.
• Download the “Open Payments Mobile for Physicians” app on your Apple™ or Android™ device.  This simple, easy-to-use tool will allow you to track transfers of value in real-time, as they occur throughout the year, and to validate information submitted by manufacturers about payments.

Although the Open Payments Program is about transparency only and does not prohibit transactions between manufacturers and physicians, the information that it publishes has the potential to affect physicians’ reputations. It is worth making sure that the information is correct.

The Comprehensive Error Rate Testing (CERT) Program is designed to measure improper payments in the Medicare Fee for Service Program (FFS), as required by the Improper Payments Information Act of 2002. The Program was initiated by Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) to achieve the agency’s mission to emphasize accountability and to pay claims appropriately. The Program produces national, contractor-specific and service-specific paid claim error rates, as well as a provider compliance error rate. The improper paid claim error rate is a measure of the extent to which the Medicare program is paying claims correctly. The provider compliance improper error rate is a measure of the extent to which providers are submitting claims correctly.

The fiscal year (FY) 2014 Medicare FFS program improper payment rate is 12.7 percent, representing $45.8 billion in improper payments, compared to the FY 2013 improper payment rate of 10.1 percent or $36.0 billion in improper payments. Table 1 outlines the improper payment rate and projected improper payment amount by claim type for FY 2014. The reporting period for this improper payment rate is July 1, 2012– June 30, 2013.

A review of the entire report Medicare Fee-for-Service 2014 Improper Payments Report including the Appendixes can help physicians and coders identify various documentation and coding errors being made by each specialty. First, let’s take a look at how the CERT Program works.

CERT Methodology

The CERT Program selects a stratified random sample of approximately 50,000 claims submitted to Part A/B Medicare Administrative Contractors (MACs) and Durable Medical Equipment MACs (DMACs) during each reporting period. According to HHS, the CERT program ensures a statistically valid random sample; therefore, the improper payment rate calculated from the sample is considered to reflect all claims processed by the Medicare FFS program during the report period.

The sample of Medicare FFS claims is reviewed by an independent medical review contractor to determine if they were paid properly under Medicare coverage, coding and billing rules. If the conditions are not met or the provider fails to submit medical records to support the claim billed, the claim is counted as either a total or partial improper payment and the improper payment may be recouped (for overpayments) or reimbursed (for underpayments). The last step in the process is the calculation of the annual Medicare FFS improper payment rate, which is published in the HHS Agency Financial Report (AFR).

It is important to note that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements.

For the CERT program, CMS defines “improper payment” as:

1. No Documentation
2. Insufficient Documentation
3. Medical Necessity
4. Incorrect Coding
5. Other (Duplicate payments/no benefit category/other billing errors)

Fiscal Year 2014 CERT Program Findings

The primary causes of Part B improper payments are administrative and documentation errors (69.8 percent) due to insufficient documentation. Insufficient documentation errors occur when either the medical documentation submitted is inadequate to support payment for the services billed, or when a specific documentation element that is required as a condition of payment is missing. Other causes of improper payments are classified as authentication (no signed order) and medical necessity errors caused by medically unnecessary services and, to a lesser extent, incorrect diagnosis coding. Medical necessity errors occur when the claim review staff receives inadequate documentation to make an informed decision that the services billed were medically necessary based on Medicare coverage policies. Data shows that many improper payments resulted from claims paid for services that are clinically appropriate, if provided in less intensive settings (26 percent). Of interest is that physicians and DME suppliers contributed substantially to insufficient documentation errors and hospitals contributed substantially to medical necessity errors. Coding errors were most prevalent in physician services.

Table 2 shows the improper payment rates and provider compliance rates for anesthesia and pain management providers, along with critical care/intensivists. The critical care/intensivists data has been included since more anesthesia groups are taking over full or partial responsible for the intensive care unit.

As previously discussed, the improper payment rate is the MACs error rate, that is, based on the documentation (which may or may not have been available when the claim was paid or denied) was the claim paid or denied correctly. The provider compliance improper payment rate is the measure of whether the provider is or is not submitting claims to the MAC correctly based on the Medicare documentation guidelines per national or local coverage determinations (NCDs/LCDs). As indicated in Table 2, one-third of the critical care intensivists services reviewed were found to be improper payments by the MAC while pain management providers had a high compliance error rate.

Table 3 provides a further breakdown by selected provider type and type of error, which allows one to drill down to where the problems are occurring. The lack of sufficient documentation is the largest category of errors. Most anesthesia providers submit the anesthesia record to their coding and billing staff. So what is required or what may be missing when the independent auditor reviewed the provider’s documentation? The complete anesthesia record requires three main components. They are:

1. A thorough evaluation of the patient by an anesthesia professional is mandatory prior to the administration of anesthesia. In addition to a review of systems and records, such an evaluation should contain personal communications; physical assessment, when indicated, and evidence that informed consent for the anesthetic has been obtained.
2. There must be an intraoperative anesthesia record or report for each patient who receives general, regional or monitored anesthesia. Anesthesia care during the procedure is normally documented in a graphic anesthesia record, which includes a sequence of entries reflecting the anesthesia care given, the drugs and fluids administered, and the patient’s responses to the care.
3. Post-anesthesia evaluation must be completed and documented no later than 48 hours after surgery or a procedure requiring anesthesia services. The evaluation is required any time general, regional or monitored anesthesia has been administered to the patient.

There are many specific data elements for each of the three major components of the required anesthesia documentation that must be documented in the medical record, including patient demographics, start/stop times, mode of anesthesia, signatures and medical direction requirements.

Information on the Wisconsin Physician Services (WPS) Medicare website provides an example of insufficient document for interventional pain management. WPS received notice from the CERT Contractor of errors assessed for Epidural and Transforaminal Epidural Injections due to insufficient documentation for CPT code 64483 (Injection(s), anesthetic agent and/ or steroid, transforaminal epidural, with imaging guidance (fluoroscopy or CT); lumbar or sacral, single level). Included in the CERT Contactor’s comments for two different claim submissions are the following:

Case 1

Missing documentation to support use of conservative therapies prior to administration of injection on 04/14/2011, and rendering physician's signature on the provided follow-up telephone call dated 04/22/2011. Of note, this record of phone call does report the beneficiary's current pain level and is signed by the CMA.

Case 2

Provider submitted copy of physician's order and procedure report for transforaminal epidural injection and eipdurography in support of billed services for 4/29/11. However, missing is documentation of medical necessity for the procedure, as required by LCD. Provider submitted a copy of the History and Physical; however, it was not signed by the physician and the form did not include physical exam, assessment, or plan entries. A Pain Management Information form was submitted; however, the form was not signed, thus we are unable to determine that entries were those of the billing physician.

WPS cautions providers of this service to review the Epidural and Transforaminal Epidural Injections, LCD L30481 in its entirety to ensure that the provider's documentation supports the services billed.

Another example of insufficient or missing documentation was documented on another MAC’s website. This case involved the billing of HCPCS J1030- Methylprednisolone 40mg 8 units of service and J3301- Triamcinolone 10mg 8 units of service (in addition to CPT 99213, 20610 and 20551-RT/LT). The name/dose of medication administered was missing in the medical record documentation. The records submitted included an unsigned office visit note that is missing the name/dose of medication to be injected and which joints were injected with Methylprednisolone and which joints were injected with Triamcinolone acetonide. Documentation submitted for this case did not meet requirements per Medicare guidelines.

It is important to accurately document the patient’s medical record with all services performed/ordered. Documentation for injections must include the following:

• Name of drug injected
• Location of injection
• Dosage of injection given
• Route of administration
• Signed and dated physician order to include the drug name, dosage, route of administration and duration of treatment

A CERT reviewer also found insufficient documentation to support a continued arthrocentesis procedure (CPT 20610 X3) and Methylprednisolone 80 mg injection (J1040 X3). The medical record was missing a plan of treatment to support continued need for injections as billed. This case also lacked medical necessity for ongoing extended treatment for a chronic condition that has not shown improvement in a reasonable time and treatment has become supportive rather than corrective in nature and is then considered maintenance treatment. Per claim history, arthrocentesis procedure (X3) and Methylprednisolone 80 mg injection (X3) billed every three months since 2009 and additional submitted documentation indicates ongoing injections prior to 2009.

Pain management physicians need to understand in treating chronic pain that maintenance services are not considered medically reasonable or necessary under Medicare. When further clinical improvement cannot reasonably be expected from continuous ongoing care, the treatment is then considered maintenance therapy. Upon medical review, maintenance treatment will be denied.

An example of incorrect coding was documented in a CERT review for CPT 99291, Critical Care (first 30-74 minutes). The documentation described a beneficiary with a history of falls. There was no location of any injury documented. The medical record noted that the beneficiary complained of feeling weak for a few days with low blood pressure and a rapid pulse. The submitted documentation was presented in the format of a regular Evaluation and Management service (E/M) (e.g., history, including HPI, ROS and PFSH; exam and medical decision-making). An attached rhythm strip showed "SVT vs aflutter at 158" non-specific changes. The provider documented 15 minutes for the history and physical, 15 minutes with orders, 10 minutes to check and evaluate lab and x-ray findings etc. No minutes were documented for the procedure time. A total of 45 minutes were documented as critical care time; however, the documentation submitted did not support that at the time the service was rendered, the beneficiary was at risk of imminent deterioration and required the constant or near constant attention of the billing physician. The CERT reviewer changed the billed code to CPT 99285 per 1997 E/M guidelines as the medical record did support a comprehensive history and exam and moderate/high complexity medical decision-making.

While Table 3 reflects a claim count of only 62 claims from critical care intensivists, the total claim count for critical care, first hour (CPT 99291) was 315 services indicating that many critical care services are reported by other specialties. The CERT review found that 29 percent were overpayments.

Anesthesiologists who provide critical care services need to ensure that all the criteria for critical care services are met in order to be considered for Medicare payment. Critical care is defined as the direct delivery by a physician(s) of medical care for a critically ill or critically injured patient. A critical illness or injury acutely impairs one or more vital organ systems such that there is a high probability of imminent or life threatening deterioration in the patient’s condition. Critical care involves high complexity decision making to assess, manipulate and support vital system functions(s) to treat single or multiple vital organ system failure and/or to prevent further life threatening deterioration of the patient’s condition.

Providing medical care to a critically ill, injured or post-operative patient qualifies as a critical care service only if both the illness or injury and the treatment being provided meet the above requirements. If you bill these services to Medicare it is important to be aware of these requirements to avoid claim payment denials or reductions.

The MACs closely monitor CERT review findings, and they may request overpayments or open a provider or service specific audit based on the CERT review. In addition, the Recovery Auditor Contractors (RACs) also use the CERT findings as support for pursuing specific service audits. It is important that all Medicare providers understand general Medicare coverage criteria to avoid the potential for additional claim reviews and costly recoupments.

The HHS improper payment rate target for 2014 was 8.3 percent. As a result of not meeting the target, providers can expect more reviews, including moving the Medicare FFS RACs to more prepayment reviews to prevent improper payments and away from the pay-and-chase model. In addition, HHS is continuing to build the Healthcare Fraud Prevention Partnership (HFPP), which is a publicprivate partnership to improve detection and prevention of healthcare fraud, waste and abuse. The HFPP is a collaboration of private and government payers using data exchanges, analytical tools, and anti-fraud best practices. Providers should review past and current CERT findings to ensure they are reporting similar services correctly.

Sources:

http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/index.html?redirect=/cert

http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/CERT-Reports-Items/AppendicesMedicareFee-for-Service2014ImproperPaymentsReport.html?DLPage=1&DLSort=0&DLSortDir=descending

The Office of the Inspector General (OIG) reported in May 2015 that Medicare made up to $33.4 million in overpayments for claims on which the place of service (POS) was coded incorrectly during the period from January 2010 through September 2012.  (Incorrect  Place-of-Service Claims Resulted in Potential Medicare Overpayment Costing Millions.)  Reports finding that Medicare has overpaid usually lead to heightened scrutiny of the conduct at issue.  Thus it is important that pain physicians, anesthesiologists and their billing staff understand POS coding.

The Medicare Physician Fee Schedule provides for payment at a higher rate for services performed in doctors’ private offices (the “nonfacility” rate) than for the same services performed in a “facility” such as a hospital or ambulatory surgical center (ASC).  The difference accounts for the increased practice expense that physicians generally incur by providing care in their offices and other nonfacility locations, including private clinics.  When a physician provides services at a facility location, Medicare reimburses him or her for the services and makes a separate payment to the facility to cover the facility’s overhead expense.

Physicians are required to identify the place of service by reporting the appropriate codes on the claim forms that they submit to their Medicare contractors.  (Medicare Claims Processing Manual Chapter 26 Section 10.5.) There are dozens of POS codes that distinguish between such locations as schools, prisons, pharmacies, urgent care clinics, etc.  Those that an anesthesiologist or pain physician will typically use are the following:

 Using POS 11 (Office) instead of POS 22 (Hospital Outpatient) when the anesthesiologist in fact performed the visit or the pain procedure in the hospital would trigger a higher Physician Fee Schedule payment than Medicare allows.  For example, the national allowable payment for a Level 3 outpatient visit for an established patient, Code 99213, is $72.94 in the office and $51.13 in a facility, both using the current Medicare conversion factor.  The comparable office payment for a lumbar epidural injection (Code 62311) is $92.25 while the facility amount is $245.70.

There is no POS payment differential for anesthesia services—or for a number of procedures that are unlikely to be performed in the office setting such insertion of a Swan-Ganz catheter, Code 93503.  Anesthesia claims, like all others, nevertheless require a POS code, and it is important to select the appropriate one because some procedures are only payable if performed on a hospital inpatient basis (POS 21) as opposed to in the outpatient (POS 22) setting.  Other procedures performed by anesthesiologists do trigger different allowable amounts depending on where they are done, e.g., central venous catheter insertion, Code 36556 ($237.77/nonfacility; $125.14/facility).

The OIG undertook the recent review because a series of previous audits for the years 2005 through 2009 revealed a total overpayment estimate of more than $62,700,000.  Specific contractor and provider audits added another $10,753,532 to the total amount overpaid.  The improper billing was particularly problematic when physicians and other suppliers furnished services in outpatient hospitals and in ASCs.  Accordingly, CMS released a MLN Matters article (MM7631) in 2013 to educate physicians and their billing staff on the use of the POS codes.  Of particular note, the article states that:

Physicians/practitioners who perform services in a hospital outpatient department will use, at a minimum, POS Code 22 (Outpatient Hospital).  Code 22 (or other appropriate outpatient department POS code as described above) will be used unless the physician maintains separate office space in the hospital or on the hospital campus and that physician office space is not considered a provider-based department of the hospital …. Physicians will use POS Code 11 (office) when services are performed in a separately maintained physician office space in the hospital or on hospital campus and that physician office space is not considered a provider-based department of the hospital….

By “at a minimum, POS Code 22" will be used, CMS indicates that POS 22 will be acceptable for services furnished in the outpatient hospital setting even if a more specific code is available:

If the physician/practitioner is aware of the exact setting the beneficiary is a registered hospital outpatient, the appropriate outpatient facility POS code may be reported consistent with the code list annotated in this section (instead of POS 22).  For example, physicians/practitioners may use POS code 23 for services furnished to a patient registered in the emergency room.

In the May report, the OIG concluded that the apparent POS coding errors and potential overpayments were attributable to internal physician billing control shortcoming and also to insufficient post-payment reviews at the Medicare contractor level.  The OIG therefore recommended “that CMS direct its Medicare contractors to continue to educate physicians and billing personnel on the importance of internal controls to ensure the correct place-of-service coding for physician services,” and in its response to the draft report, CMS concurred with the recommendation, as well as with the OIG’s recommendation “to expand and strengthen efforts to perform coordinated data matches of nonfacility-coded physician services and facility claims to identify physician services that are at a high risk for place-of-service miscoding and recover overpayments.”

Reasons given to the OIG for erroneously coding facility services as nonfacility included the following, which are consistent with a lack of adequate controls:

• Billing personnel were confused about the precise definition of a “physician’s office” or other nonfacility location or were simply following established practices in applying the nonfacility codes.
• Some billing personnel were unaware that an incorrect place-of-service code could result in an increased Medicare payment.
• Billing personnel made isolated data entry errors.
• Undetected flaws in the design or implementation of some billing systems caused all claims to be submitted with a nonfacility location as the place of service.

The OIG’s and CMS’ interest in preventing improper POS billing and in recovering overpayments for services incorrectly billed as “nonfacility” is clear.  Inadequate training and/or systems shortcomings create vulnerabilities that can be mitigated.  POS coding is not overly complex.  We encourage readers to review their own coding patterns and practices for conformity to Medicare’s POS rules.

In today’s anesthesiology environment, all groups are trying to size up their best option to survive and thrive into the future. Some try to go it alone and others sell out to practice management firms, while others seek or are forced into hospital employment.

Another option that many groups are considering is merging with other anesthesiology groups.

Why are anesthesiology groups considering mergers? Mergers:

• Allow them to maintain a higher level of autonomy than any other option,
• Prevent the groups from being played off against each other by hospitals or managed care companies,
• Build clout,
• Create the ability to hire needed management expertise, and
• Allow them to move towards economies of scale.

In addition, today’s healthcare environment is influencing many hospitals to merge or join systems. When hospitals integrate they often want to work with a single anesthesiology group to cover all their facilities. When this happens, many anesthesiology groups consider merging before the hospital system chooses winners and losers.

In order to be successful, medical groups that embark on a merger effort should know the answers to the following questions:

•  What does it mean to merge?
• What are the costs and risks associated with merging?
• How does a merger process typically work?
• What are the key issues usually addressed in a merger process?
• Who participates in the merger process?
• How do we get started?

This article presents strategies for pursuing a successful merger based on working with more than 135 practices representing more than 1,300 physicians on merger-related projects.

What Is a “Merger”?

For the purposes of this article, a merger occurs when separate anesthesia groups become one group. Mergers may come about in many ways (via a true merger of groups, an asset purchase or a consolidation transaction—your attorney and accountant will help you decide which option to choose), but result in the combined organization exhibiting the following characteristics:

•  One separate professional corporation or limited liability partnership is formed (or separate practices combined) and there is one tax identification number and single provider number.
• All physicians enter into an employment agreement with this organization.
• All employees from the previously independent practices become employees of the new entity.
• Operations are conducted by the new entity which bills and collects for physicians’ services in its own name.
• The combined entity owns the funds and revenues created by the work of its physicians.
• The merged group holds any exclusive provider agreements.
• Physicians typically contribute all assets from the predecessor organization. However, there are options where assets (such as real estate) can be kept in separate entities and leased to the merged practice.
• Benefit plans are standardized.
• Physicians become subject to one governing entity.

What are the Costs and Risks of Merging?

While there are significant benefits to be gained, there are also costs and risks:

• Work: Putting a merger together requires a significant amount of work and time from both the physicians and their administrative staff. Mergers often take six to twelve months to complete, and there are many issues to be discussed and decisions to be reached.
• Costs: Professional costs (attorneys, accountants, consultants) are significant. While professionals will often provide ballpark estimates at the beginning of the process, these estimates can change depending on the ability of the merger participants to negotiate and reach conclusions.
• Compromise: Many significant changes may be required by all involved. It is not feasible to merge and keep everything the way that it was. Some level of operational integration will be required and this requires compromise.
• Loss: Some individual physicians may not wish to merge and may leave the group. They may not like specific decisions that change their work life and/or limit their options (for example, when many practices merge they implement non-compete provisions in their employment contracts—this is unacceptable to some physicians). While the goal of the merger should be to keep all the physicians in the group, it may not be achievable.
• Failure: A merger might not be achieved. Anecdotal evidence indicates that 50 percent of all merger processes do not end in a merger. In some instances, this is a positive development as groups may turn out to not have the same long-term goals. In other situations, the lack of a disciplined effort to reach a decision often results in people becoming frustrated with the lack of progress and dropping out.
• Outsiders: External stakeholders might be uncomfortable with the merger. For example, hospital management may not be enthusiastic about a merger between hospital-based physicians.

Even with these costs and potential negatives, many anesthesiology groups believe that the potential benefits far outweigh the identified risks and decide to move forward with a merger process.

How Does a Merger Process Typically Work?

Merger processes involve a number of discrete yet inter-related steps. The general process is typically one of:

• Getting comfortable with each other,
• Understanding each other’s philosophy of practice,
• Discussion and negotiation of key merger issues,
• Developing Agreements in Principle,
• Closing the merger, and
• Implementing operational integration plans.

The specific steps of the merger effort are generally as follows:

1. Friendship and Courting: Prior to any substantive discussions, members of each practice often make contact with each other via informal means. Typically they talk about shared interests, the benefits of merging and generally how the merger might work. Unfortunately, they also tend to avoid talking about any issues which might involve conflict. While avoiding issues of conflict at this point can keep the ball rolling, the issues which involve potential conflict must be resolved for a merger to occur.
2. Commitment to Move Forward: At some point the groups agree that they should get down to brass tacks and look at the merger in a more formal manner. At this point they may engage someone to serve as a facilitator of the process. Such a facilitator could be a consultant, attorney or accountant.
3. Antitrust Review: Depending on the local market, one of the first steps is to engage an attorney to conduct an antitrust review. While the details of such a review are beyond the scope of this article, the groups should seek experienced legal counsel in this area if there are any concerns about creating significant market power.
4. Confidentiality, Non-Competitive Use, No-Shop Agreement: In order to protect their rights and the confidentiality of information, the groups should have their attorney draft an agreement in which each group agrees to:
1. Confidentiality: Both groups agree to keep the other group’s information confidential.
2. Non-Competitive Use: The groups agree to use the information obtained from the other group only for the purposes of merger negotiations.
3. No-Shop: In this part of the agreement the groups agree to not seek offers from or negotiate offers with others for a period of time (say, three to six months). While the no-shop provision is optional, we believe that is critical when anesthesiology groups negotiate a merger for three reasons:
   1. Groups that are looking to merge are typically trying to remain independent in order to retain as much autonomy as possible. If one or more of the groups are looking for a buy-out, that is antithetical to the goal of retaining autonomy. Groups hoping for a buy-out should pursue being acquired rather than a merger.
   2. The time and dollars spent on the merger process come directly from the groups involved (as opposed to being paid for by investors). Once again, if a group is involved in acquisition negotiations, one has to wonder if it is worth risking the time and dollars on the effort to merge with them.
   3. If the groups don’t agree to a no-shop agreement it will be difficult for them to make the compromises necessary in a merger negotiation (because they may believe there is another alternative that may not require that particular compromise).
5. Merger Committee Appointment and Empowerment: Unless the practices are very small, it is wise to appoint a Merger Committee to do the bulk of the discussion and negotiation effort in the merger. It is desirable that the rest of the physicians empower this group to discuss and negotiate on the key merger issues. Typically this committee includes one to three individuals from each of the groups.
6. Gather/Organize Data: In order to improve the efficiency and effectiveness of the merger discussions, a significant amount of information must be gathered from each group. Such information may include practice documents and financial information. In addition, it is typically appropriate to have each physician and administrator interviewed or surveyed to identify any merger concerns that they may have.
7. Merger Negotiation Meetings: Using the information gathered in the preceding step, the Merger Committee meets to discuss, negotiate and reach Agreements in Principle related to the key merger issues (discussed in the next section of this article). There are two basic approaches to how this process may be conducted:
1. For groups that have already had significant discussion or are very knowledgeable about each other, a Merger Retreat (typically two to two and one-half days) can be used to finalize most Agreements in Principle.
2. For groups that need more in-depth discussion and negotiation, a series of meetings are held during which Agreements in Principle are made. This is the more typical situation. During this effort other professionals (such as accountants, attorneys, benefits consultants, etc.) are involved as needed.
8. Letter of Intent: Once the major Agreements in Principle have been made, the groups typically execute a Letter of Intent in which they agree to merge under the negotiated terms unless certain events occur. Once this document is signed, the attorneys, accountants and group management begin working in earnest to close the merger and develop plans for integration.
9. Perform Due Diligence: During this step, the attorneys and accountants review a number of practice-related documents to identify any issue that might impact the merger from a legal, financial or tax perspective.
10. Create Merger Documents: Once the Letter of Intent has been signed, the attorneys will draft several documents, including:
1. Merger Agreement (the primary purpose of this document is to require each group to make full disclosure about its activities).
2. New Entity Corporate Documents.
3. New Entity Shareholder Agreement (Buy-Sell).
4. New Entity Physician Employment Agreements.
5. Other needed documents.
11. Financial: At the same time the legal work is being performed, the accountants will be developing the financial information needed to close the merger and will be working with the attorneys to propose the best corporate form for a combined group. Depending on how the groups come together, the accountants may assist with cash flow forecasting.
12. Develop Operational Integration Plan: The work we have discussed up to this point is focused primarily on the organizational, financial and legal aspects of the merger. Once the groups are on track to merge, an operational integration plan must be developed. This is normally prepared by the administrative management team selected.
13. Merge: The merger occurs when all papers are signed and all are committed to move forward.
14. Implement Operational Integration Plan: The operational integration plan is implemented.

What Are the Key Issues Usually Addressed in a Merger Process?

The key merger issues are different for any particular merger. However, typical key issues include:

• Overall practice philosophies
• Governance
• Physician compensation system, retirement plans, benefits
• Physician contract issues
• Buy-in/buy-out
• Value of capital contribution/ownership
• Call/workload
• CRNAs, anesthesiologist assistants: mid-level utilization and protocols
• Administrative management
• Billing and collections
• Personnel
• Relationships with professional service providers (attorneys, accountants, etc.)
• Operational infrastructure

As noted earlier, it is essential that those facilitating the negotiations capture the Agreements in Principle related to each of these issues. This information is critical for several reasons:

• It clarifies the actual agreements made (oral agreements can be remembered differently by different people).
• It can be used to communicate the agreements to those who are not on the Merger Committee.
• It will be used by the attorneys, accountants and administrative management to close the merger and implement activities related to the combined group.

Who Participates in the Merger Process?

Medical practice mergers involve a number of individuals and advisors to complete the process.

Naturally, the physicians in the practices are key to the success of any merger. They approve the final agreements. In many cases they should be interviewed individually to identify their specific concerns or key issues that must be addressed in the merger process. They should also be questioned about drop dead issues that need to be resolved.

As noted earlier, a Merger Committee should be established to negotiate the merger. In mergers of small practices typically all physicians are on the committee. For larger practices each group is usually represented by one to three physicians. If a subset of the physicians from any one group is on the committee, they should be empowered to speak for the others.

In most mergers, the practice’s administrative management is involved. They help with data-gathering, are often involved in negotiations, and are very involved in operational integration of the merger.

Many practices use a merger facilitator to organize the merger effort. The role of this individual is to serve as the objective third party who organizes the process and keeps efforts on track.

The facilitator sets the format and process for analyzing and discussing issues, and facilitates the negotiation meetings.

Once substantive Agreements in Principle have been reached, attorneys become heavily involved in the process. They advise the practices about various structural issues related to combining the organizations, develop merger agreements and other legal documents, perform due diligence and provide legal guidance on other issues.

Accountants are involved in forecasting the financial implications of the merger, providing guidance on tax and accounting issues, and preparing financial information needed to close the merger.

In some mergers others are involved, such as third party appraisers (if the merger involves real estate or other special assets) and benefits consultants.

Pitfalls to Avoid

There are many challenges that will need to be overcome when trying to merge two or more medical groups together. Here are a few pitfalls to avoid:

• Dueling Attorneys: Most have heard the aphorism that “one attorney in a small town starves, but two attorneys in the same small town make a nice living.” We have come across many cases where merger negotiations have bogged down or fallen completely off the track because the practices involved their attorneys in the negotiation process or tried to use the attorneys to negotiate for them. This is often because they spend so much time representing their client’s position and interests that it increases the likelihood that the two practices will not reach common ground.
• Naturally attorneys should review any agreements in principle, prepare merger documents, and be involved in the due diligence aspect of the merger. But care must be taken that there is someone representing the interests of the combined entity as opposed to the interests of each individual practice. This task usually falls to the merger facilitator.
• Lack of a Planned, Controlled Approach: More merger efforts are abandoned because they drag on and on than are terminated because of a disagreement over a particular issue. It is therefore essential that those involved use an organized, systematic approach to negotiating the merger.
• Lack of Full Disclosure: Full disclosure between the practices is critical for two reasons:
  1. Physicians won’t merge their practice with another unless they have significant knowledge about how the other practice is organized and operates.
  2. Unlike mergers in other industries where whoever is bought out leaves, when medical practice mergers are complete all (or at least most) of the physicians are still there, trying to live together in a new organization. To improve prospects for harmony, it is imperative to avoid surprises after the merger. Therefore, it is best to fully disclose information early on during the merger negotiations instead of waiting for it to be discovered in the due diligence process.
• Lack of Recognition that Changes Will Be Needed: In any merger, changes will be needed to make the combined organization work. If members of either practice are not open to such changes and compromises they should not embark on the merger negotiation process, as they will be disappointed in the outcome.
• Inability to Compromise: Upon beginning negotiations, each physician typically has his or her own viewpoint, opinion and expectations for the outcome. Each physician typically recognizes that there are a number of benefits to be gained from a merger (or they would not have initiated the merger negotiations to begin with), but during the heat of negotiations they often lose sight of the benefits to be gained and focus only on that they are not getting exactly what they want. When this occurs, whoever is facilitating the merger negotiations must be vigilant to remind the physicians of the benefits of the merger. The facilitator should always ask the question, “Are you willing to give up all the benefits of the merger over this one issue, or can compromises be made?”
• Talking but Not Deciding: In our experience, many physicians tend to be conflict avoiders. This hinders the ability to move a merger forward because when the groups come upon an issue where they don’t fully agree, they back away from it and start talking about other, less important issues. This can cause the negotiations to go on and on without making true progress. An objective third party is often needed to help the groups overcome this limitation and make the compromises necessary to merge.

Conclusion

These are challenging times for anesthesiologists and almost all groups are working hard to determine how to best move forward. Anesthesiology group mergers represent one of those options.

All anesthesiology group mergers have their challenges. However, in today’s rapidly changing healthcare environment, mergers continue to be an important option for anesthesiologists wishing to gain strength while retaining a significant level of autonomy.

Last week’s Alert brought a new Fraud Alert from the Office of the Inspector General (OIG) to readers’ attention.  The OIG is on the lookout for arrangements in which physicians receive compensation for medical director services that are intended to induce referrals of patients.  We wish the OIG were equally interested in the anti-kickback statute ramifications of the “company model,” in which anesthesiologists are asked to share their clinical revenues and thus compensate other physicians and/or facilities for referrals.

We last wrote about company model-like behavior in our Alert dated November 18, 2013 (The OIG Rejects Another Attempt to Take a Franchise Fee from Anesthesiologists), and some of our readers have asked us to address the issue again.

Third parties have continued to seek to enter into company model arrangements.  In February 2014, the American Society of Anesthesiologists (ASA) renewed its request that the OIG amend several of the anti-kickback statute safe harbors or issue a special fraud alert in a 19-page letter.  As ASA observed, company models “are expanding to referring physicians in increasing numbers of medical specialties.  They also are expanding beyond the ASC [ambulatory surgical center] environment to single specialty centers, offices, and even hospitals.”  To substantiate its concerns, ASA conducted two surveys of its members, one in 2012 and the second in 2013.  The later survey received 828 responses from all fifty states, Washington, D.C. and Puerto Rico.  The data showed that 420 practices (more than half) had been approached about engaging in a company model, an increase from the 125 practices in the initial survey. Of the 420 practices, 306 received a company model request at a facility where they already were providing services.  Rejecting the request to participate in a company model caused 42.5 percent of the practices that received such requests to lose their contracts.  (“A Growing Problem: Results of the Second ASA Survey on the Company Model,” American Society of Anesthesiologists Newsletter, December 2013, Vol. 77, N. 12, pp. 46-48.)

The reason that ASA asked the OIG for a special fraud alert or for modifications to the safe harbors for investments in ASCs and for investments in group practices was that many consultants, and many specialists such as ophthalmologists and gastroenterologists, are not dissuaded from creating company model, or other arrangements in which providers siphon off anesthesia revenues in exchange for referring cases to the anesthesiologists, by the OIG’s two key Advisory Opinions on the subject.  In both of these Advisory Opinions, the OIG found that the arrangement appeared “to be designed to permit the [referring physician group] to do indirectly what it cannot do directly; that is, to receive compensation, in the form of a portion of  [the anesthesia group’s] anesthesia services revenues, in return for”  referrals of patients to the anesthesiologists.

In the first Advisory Opinion, No. 12-06, the company model involved the proposed engagement of the ambulatory surgical/endoscopy center’s anesthesiologists by subsidiary companies at a negotiated rate lower than the anesthesia fees collected, or, alternatively, the payment of a management fee by the anesthesiologists to the ambulatory surgical center for use of the facility or its staff.  The payment of a management fee as a condition of the anesthesia franchise was clearly problematic:  the OIG said this arrangement would implicate the anti-kickback statute because the fee that the anesthesia group would pay would be for some of the same services that the ASC facility fee is intended to cover.  The ASC would essentially be paid twice for the same services.  As for the creation of the subsidiary companies to engage the anesthesiologists as independent contractors and to bill for their clinical services, retaining a share of the profits, the physician owners of the ASC argued unsuccessfully that the safe harbors for investments in ASCs, for employment and for personal services should immunize the arrangement.

The later Advisory Opinion, No. 13-15, featured an arrangement in which an anesthesiology group whose exclusive contract came up for renewal was forced by their hospital to accept a carve-out to allow a psychiatrist who was double-boarded in anesthesiology to provide anesthesia care for ECT patients.  Subsequently the contract was renewed with an “Additional Anesthesiologist Provision” allowing the psychiatry group to contract with an independent anesthesiologist of their choice if they were unable to negotiate an agreement for ECT coverage, as long as the last offer from the psychiatry group to the incumbent anesthesiology group was “at a fair market value rate, as reasonably determined by the Hospital.”  Of key importance, the psychiatry group proposed to bill and collect for the anesthesiology group’s professional services and to pay the group a fixed per diem rate.  The per diem rate was below fair market value and below the rate normally received.  This was not technically a company model case, but the intent was the same; the hospital’s role in obtaining below-market anesthesia services suggested a kickback to the psychiatrists for the ECT business and also a kickback sought from and given by the anesthesiologists in exchange for the continued referral of anesthesia patients.

Despite these Advisory Opinions, other physicians and facilities continue to pressure anesthesiologists to enter into company model arrangements, as consultants and various law firms continue to advise them that such arrangements do not necessarily violate the anti-kickback statute.  These consultants and lawyers argue that the Advisory Opinions do not stand in the way of other company model deals for reasons such as:

• Advisory Opinions all contain disclaimers stating that they have “no application to, and cannot be relied upon by, any other individual or entity.”
• The Requestors in Advisory Opinions 12-06 and 13-15 were the anesthesiology groups, not the endoscopists or psychiatrists.
• The arrangements do not violate the anti-kickback statute, so long as the referring physicians divide the anesthesia profits equally.
• If a safe harbor appears to apply, the arrangement will be considered legal.
• Since physicians and nonphysician practitioners can reassign their Medicare payments to an ASC by contract, such reassignment will be legal even if it is remuneration for access to anesthesia patients.
• There is a difference between the company model in Advisory Opinion No. 12-06, which involved a separate anesthesia company, and an “In-House Provider Model,” in which an ASC owned by referring physicians directly contracts with anesthesiologists, requiring them to reassign their anesthesia fees to the ASC rather than to the separate company.
• The proposed arrangement would be structured and “implemented, in a good faith manner and involve circumstances that reflect good intent, such as improving quality, efficiency and coordination of care or other permissible purposes.”  (Viewing the Recent OIG Company Model Advisory Opinion for What It Truly Is: Meaningful Guidance That Must Be Incorporated Into These Arrangements (But Certainly Not the Death Knell to All Company Models Across the Country), Health Law Attorney Blog, June 5, 2012.)

None of these reasons is sound.  OIG Advisory Opinions by the nature only apply formally to the situation on which they are based, but they provide valuable guidance as to likely OIG analyses of similar fact patterns.  The identity or interest of the requesting party is irrelevant, as is the proportion of profits taken by the referring physicians.  The safe harbors do not shield the company model in which the referring physicians rake off a portion of the anesthesia fees.  It doesn’t matter whether the ASC collects its payments for referrals directly or through a subsidiary or separate anesthesia company.  Finally, the OIG has stated over and over again that the anti-kickback statute is violated if even one purpose of the arrangement is to reward or incentivize referrals of Federally-insured patients, so countervailing “good intent” is not going to render the arrangement lawful.

What can an anesthesiologist do who is asked to enter into an arrangement that appears to involve paying referring physicians or a referring facility for the franchise?  The risks and consequences of violating the anti-kickback statute are considerable.  Violations are felonies, subjecting to maximum fines of $25,000 and/or imprisonment up to five years as well as to civil monetary penalties of up to $50,000/violation plus damages up to three times total remuneration.  Further still, claims arising out of violations of the anti-kickback statute can trigger the False Claims Act.  Penalties for violation of the False Claims Act include civil penalties of $5,500 to $11,000 plus three times the government’s damages per false claim.  On top of the federal laws, anesthesiologists must take into account state anti-kickback statute, which are on the books in most states, vary widely and do not necessarily have the safe harbors available under federal law.  Violations of any of these laws can also lead to exclusion from the Medicare and Medicaid programs, which is tantamount to a professional death sentence for most anesthesiologists.  Thus it is imperative that anesthesiologists who are solicited to participate in a company model arrangement obtain the advice of expert counsel.

The price of being wrong here is simply too great to tread with anything other than the utmost caution. 

The specialty of anesthesiology, and indeed all of health care, is somewhere in the middle of its long transition away from a volume-driven cottage industry. Details of the destination are not yet clear, but one change of which we can be confident is the shift away from in-hospital care toward outpatient settings. Nearly two-thirds of procedures are now performed on an ambulatory basis. With the advent of more and more minimally invasive techniques— not to mention ever-safer anesthesia—that proportion will continue to grow.

Stanford Plavin, MD gives us a window into the mindset necessary for anesthesiologists to succeed in the ambulatory surgical center (ASC) environment, where “the microscope is powerful and the lights are bright” and where even the identity of our customers is changing. “What do the ASC’s customers want?” he asks in Anesthesiologists and the World of ASCs: A Different Value Proposition. Dr. Plavin recommends surveys to identify their satisfaction with the anesthesiologists and nurses and with the services provided. Surveys can help to identify the strengths and weaknesses of the ASC and point toward the factors that contribute the most heavily to success, in the process giving direction to the practice’s strategic plan. The results of well-executed surveys will often come as a surprise.

“Succeeding” takes on a different meaning when used in the context of leadership transitions. That is the meaning used in Jody Locke’s article Lack of Succession Planning: Problem or Symptom. To meet the challenges of all the changes driving the practice of medicine in general and anesthesiology in particular, solid leadership is imperative. It cannot be left to chance; hence the need for succession planning. The traditional culture of many anesthesia practices is more like that of “professional fraternal organizations” than that of enterprises that take active charge of their own future. Leadership involves long-term responsibility for the actions of others, something that is not emphasized in training. Any organization that hopes to continue even after the departure of current leaders must engage in succession planning. Succession planning starts with three fundamental questions: (1) how does the group identify good potential leaders? (2) How does it ensure their preparation for the role? And (3) how does the organization manage continuity when a leader is replaced? Every group should be exploring these and the other questions raised by Mr. Locke.

Another form of change occurring with considerable frequency is the merger of anesthesiology groups. We are happy to welcome Will Latham, MBA, CPA back to these pages and to include his guide to the merger process, Anesthesia Group Mergers: Strategies for Success. This article is a keeper for any group going through a merger today—or possibly in the future. The 14 steps and the list of key issues addressed in the typical merger process can serve as a roadmap, especially when they are read in conjunction with the “pitfalls to avoid” such as “dueling attorneys”—attorneys representing the party that has engaged them, seeking the best deal for that party. The quest for advantage may torpedo the entire negotiation process. The need to advocate for the combined (post-merger) entity should be in the consciousness of every party interested in the merger’s going forward.

Jerry Ippolito, MBA, MHSA outlines an important avenue for adapting to changing hospital relationships in Chronic Pain Management: An Overlooked Opportunity to Financially Partner with Your Hospital & Preserve Your Contract. While many hospital administrators do not think of pain medicine as an attractive source of revenue, this can be very-shortsighted. Mr. Ippolito shows how “comprehensive pain management programs that are strategically positioned, energetically developed and well run can attain strong profitability within a relatively short time.” In fact, anesthesiologists contemplating setting up independent chronic pain practices ought to factor in the potential damaging effects of “denying the hospital the opportunity to generate additional revenue.”

What about making the best possible decisions to manage your anesthesia practice here and now? Some change in our professional lives is driven by internal, not external forces; improved financial reporting should be considered by any group that has less than total confidence in its reporting systems (and perhaps by others as well). Gregory Zinser gives a rundown of the essential financial reports, and of the format of those reports, that will “facilitate review, understanding and discussion” in his article Numbers Don’t Lie, but…

Also in this issue of the Communiqué are articles by regular staff contributors Darlene Helmer (The Trend Toward Code Consolidation) and Joette Derricks (Reviewing Anesthesia and Pain Management 2014 CERT Data to Improve Documentation and Revenue). In these two articles, Ms. Helmer and Ms. Derricks continue their mission of presenting current information that will keep readers abreast of changing codes and documentation requirements.

We hope to see many of you at the Advanced Institute for Anesthesia Practice Management (AIAPM) which we are presenting jointly with Tulane University Health Sciences Center and Medical Business Solutions, LLC at the Cosmopolitan Hotel in Las Vegas on April 17 through 19, 2015. If you are unable to attend, please watch your electronic mailboxes in July for highlights from the talks—and plan to join us for the next AIAPM in April 2016. As always, it will be our privilege to continue expanding the specialty’s practice management knowledge base whether face-to-face or through these pages.

“Don’t put anything in an e-mail message or on Facebook that you wouldn’t want to see on the front page of the New York Times.”  We have all heard that warning many times.  In the wake of a widely-reported malpractice and defamation judgment awarded by a Virginia jury to a patient whose anesthesiologist made unpleasant statements to colleagues during the patient’s colonoscopy, one wonders whether the warning should be updated to read:  “Don’t say or write anything negative about anyone, anywhere, or you may be sued.”

This case was noteworthy not merely for the contempt with which the doctor talked about her patient, but also for the fact that the conversation in the procedure room was recorded by the patient’s smartphone, which neither he nor the medical team realized had been left on.  The patient claimed he had inadvertently left his phone in the room, set to record, having neglected to turn it off after recording instructions for post-operative care. 

Recording instructions for post-operative care, however, seems like a worthy use of a cellphone.  This question has come up occasionally in the context of recording visits.  The American Medical Association’s Ethics Standards Group considered the issues involved in a patient using his or her phone (or iPad) to record the conversation at a doctor’s visit in a 2012 amednews.com column entitled Pros and cons of letting patients record doctor visits.  First the author addressed the legality of such recordings, noting that federal law and the law of many states, including Virginia, requires that only one party consent to the recording.  The bulk of the discussion centered on the benefits of recording, notably enhanced patient understanding and retention of information, and on the drawbacks.  The latter included the inhibited communication on both sides if they were conscious of being recorded as well as possibly increased temptation to practice defensive medicine and confidentiality concerns.  The author suggested an interesting compromise:

A middle path that could avoid these risks while preserving the benefits might be to record only the beginning and end of the visit, leaving out the physical examination and providing patient and doctor with some privacy to discuss matters that should not be shared. In this case, the patient and physician would decide together what is to be recorded. Perhaps the taped record would include only the patient’s discussion of symptoms (to let him or her discover later whether everything was presented to the doctor) and the physician’s summary of instructions, explanations of prescriptions, follow-up appointments and so on.
The new “clinical summary” documents provided to patients through many electronic health record applications include a list of medications, physicians’ recommendations and other summary information. A video or audio recording could complement this excellent new patient tool, especially in cases where a patient’s literacy was limited.
Adapting this “middle path” to the endoscopy suite or the operating room would fit in with anesthesiologists’ efforts to become perioperative care leaders.  A recorded discharge summary could be a valuable adjunct to postoperative care.  What transpired in the Virginia endoscopy center where the anesthesiologist’s hostile words were preserved for the jury had nothing to do with the patient’s well-being, of course.  Calling the anesthetized patient a “wuss” and a “retard,” comments made to him such as “After five minutes of talking to you in pre-op I wanted to punch you in the face and man you up a little bit” (Greenberg A. Anesthetized Patient Accidentally Records Doctors Insulting Him During Surgery, Time, June 24, 2015) and a deliberate addition of a false diagnosis of hemorrhoids purely to embarrass the patient (Ault A. Anesthesiologist Loses Lawsuit for Mocking Sedated Patient.  Medscape, June 29, 2015) were indefensible.  In fact, the American Society of Anesthesiologists took the unusual step of expressly denouncing the alleged conduct of the physician anesthesiologist in questions, noting that she was not an ASA member and directing readers to the Guidelines for Ethical Practice of Anesthesiology, which include the following:

Anesthetized patients are particularly vulnerable, and anesthesiologists should strive to care for each patient’s physical and psychological safety, comfort and dignity. Anesthesiologists should monitor themselves and their colleagues to protect the anesthetized patient from any disrespectful or abusive behavior.
The patient sought $1 million in compensatory damages and $350,000 in punitive damages for defamation, infliction of emotional distress and illegally disclosing his health records.  Following a three-day trial in Fairfax County, the jury awarded him a total of $500,000:  $100,000 for defamation, $200,000 for medical malpractice, and $200,000 in punitive damages of which $50,000 was to be paid by the anesthesiologist’s practice and $150,000 by her personally.

The case is a sad one on many levels.  The patient who brought the action clearly suffered.  A mid-career anesthesiologist’s career is in tatters; she is no longer associated with the practice that defended the lawsuit and it appears that she promptly resigned from the medical staff of the Orlando-area hospital where she had been working more recently.  It was reported across the mainstream print and broadcast media, doubtless doing harm to the doctor-patient relationship in many offices and ORs.  Gabriel Perna, a senior editor for Healthcare Informatics wrote on their blog:

I think it speaks to the innate challenges we see in the evolving doctor-patient relationship. That is, many doctors still look down on us patients.
I’m sure 99.99 percent of doctors are not as outwardly malicious as Ingham, but that condescending attitude is not something that can be dismissed entirely. It’s still there and it’s the biggest barrier to patient engagement.
As Mr. Perna notes, information technology can and should be used to strengthen patient engagement.  Portals and well-designed websites can help to make sure that patients have the information that will make their medical encounters as productive as possible.  Tools that foster engagement (such as ABC’s ePREOP) are a small but important step in closing the information gap.

“Don’t put anything in an e-mail message or on Facebook that you wouldn’t want to see on the front page of the New York Times.”  We have all heard that warning many times.  In the wake of a widely-reported malpractice and defamation judgment awarded by a Virginia jury to a patient whose anesthesiologist made unpleasant statements to colleagues during the patient’s colonoscopy, one wonders whether the warning should be updated to read:  “Don’t say or write anything negative about anyone, anywhere, or you may be sued.”

This case was noteworthy not merely for the contempt with which the doctor talked about her patient, but also for the fact that the conversation in the procedure room was recorded by the patient’s smartphone, which neither he nor the medical team realized had been left on.  The patient claimed he had inadvertently left his phone in the room, set to record, having neglected to turn it off after recording instructions for post-operative care. 

Recording instructions for post-operative care, however, seems like a worthy use of a cellphone.  This question has come up occasionally in the context of recording visits.  The American Medical Association’s Ethics Standards Group considered the issues involved in a patient using his or her phone (or iPad) to record the conversation at a doctor’s visit in a 2012 amednews.com column entitled Pros and cons of letting patients record doctor visits.  First the author addressed the legality of such recordings, noting that federal law and the law of many states, including Virginia, requires that only one party consent to the recording.  The bulk of the discussion centered on the benefits of recording, notably enhanced patient understanding and retention of information, and on the drawbacks.  The latter included the inhibited communication on both sides if they were conscious of being recorded as well as possibly increased temptation to practice defensive medicine and confidentiality concerns.  The author suggested an interesting compromise:

A middle path that could avoid these risks while preserving the benefits might be to record only the beginning and end of the visit, leaving out the physical examination and providing patient and doctor with some privacy to discuss matters that should not be shared. In this case, the patient and physician would decide together what is to be recorded. Perhaps the taped record would include only the patient’s discussion of symptoms (to let him or her discover later whether everything was presented to the doctor) and the physician’s summary of instructions, explanations of prescriptions, follow-up appointments and so on.
The new “clinical summary” documents provided to patients through many electronic health record applications include a list of medications, physicians’ recommendations and other summary information. A video or audio recording could complement this excellent new patient tool, especially in cases where a patient’s literacy was limited.
Adapting this “middle path” to the endoscopy suite or the operating room would fit in with anesthesiologists’ efforts to become perioperative care leaders.  A recorded discharge summary could be a valuable adjunct to postoperative care.  What transpired in the Virginia endoscopy center where the anesthesiologist’s hostile words were preserved for the jury had nothing to do with the patient’s well-being, of course.  Calling the anesthetized patient a “wuss” and a “retard,” comments made to him such as “After five minutes of talking to you in pre-op I wanted to punch you in the face and man you up a little bit” (Greenberg A. Anesthetized Patient Accidentally Records Doctors Insulting Him During Surgery, Time, June 24, 2015) and a deliberate addition of a false diagnosis of hemorrhoids purely to embarrass the patient (Ault A. Anesthesiologist Loses Lawsuit for Mocking Sedated Patient.  Medscape, June 29, 2015) were indefensible.  In fact, the American Society of Anesthesiologists took the unusual step of expressly denouncing the alleged conduct of the physician anesthesiologist in questions, noting that she was not an ASA member and directing readers to the Guidelines for Ethical Practice of Anesthesiology, which include the following:

Anesthetized patients are particularly vulnerable, and anesthesiologists should strive to care for each patient’s physical and psychological safety, comfort and dignity. Anesthesiologists should monitor themselves and their colleagues to protect the anesthetized patient from any disrespectful or abusive behavior.
The patient sought $1 million in compensatory damages and $350,000 in punitive damages for defamation, infliction of emotional distress and illegally disclosing his health records.  Following a three-day trial in Fairfax County, the jury awarded him a total of $500,000:  $100,000 for defamation, $200,000 for medical malpractice, and $200,000 in punitive damages of which $50,000 was to be paid by the anesthesiologist’s practice and $150,000 by her personally.

The case is a sad one on many levels.  The patient who brought the action clearly suffered.  A mid-career anesthesiologist’s career is in tatters; she is no longer associated with the practice that defended the lawsuit and it appears that she promptly resigned from the medical staff of the Orlando-area hospital where she had been working more recently.  It was reported across the mainstream print and broadcast media, doubtless doing harm to the doctor-patient relationship in many offices and ORs.  Gabriel Perna, a senior editor for Healthcare Informatics wrote on their blog:

I think it speaks to the innate challenges we see in the evolving doctor-patient relationship. That is, many doctors still look down on us patients.
I’m sure 99.99 percent of doctors are not as outwardly malicious as Ingham, but that condescending attitude is not something that can be dismissed entirely. It’s still there and it’s the biggest barrier to patient engagement.
As Mr. Perna notes, information technology can and should be used to strengthen patient engagement.  Portals and well-designed websites can help to make sure that patients have the information that will make their medical encounters as productive as possible.  Tools that foster engagement (such as ABC’s ePREOP) are a small but important step in closing the information gap.

In order to engage fully with their hospital partners, anesthesiologists need to understand some of their institutions’ concerns.  While our readers may not hold the solutions, familiarity with pressures on the hospitals can only help in negotiating the relationships, day-to-day and at contract renewal time.  The Two-Midnight rule is a current hospital hassle of which anesthesiologists should have some awareness.

Background

Whether a patient is admitted as an inpatient or treated as an outpatient has a considerable impact on hospital payment and on patient cost sharing.  Medicare covers inpatient admissions under Part A and pays $3,100 more on average for an inpatient stay than for an outpatient observation stay, which is paid under Part B, according to claims data reviewed by the Medicare Payment Advisory Commission (MedPAC).

By 2012 the Medicare Recovery Audit Contractors (RACs) had become so aggressive in pursuing medically unnecessary hospital admissions that hospitals started keeping patients for extended outpatient observation stays.  Keeping patients in observation, i.e., in outpatient status avoids the risk that an inpatient claim might be denied at a future date.  The rate for extended outpatient stays spiked dramatically.  Among the unintended consequences were a decrease in the number of patients eligible upon discharge for Medicare coverage of skilled nursing facility services, which requires a minimum three-day inpatient stay, and an increase in patients’ out of pocket expenses.

The Two-Midnight Rule

In a doomed attempt to reduce the confusion among hospitals and physicians as to when an inpatient admission would be considered reasonable and necessary for payment purposes, CMS adopted the Two-Midnight rule for admissions in 2013.  This rule stated, as CMS noted in its Fact Sheet issued on July 1, 2015, that:

Inpatient admissions will generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supports that reasonable expectation.
 
Medicare Part A payment is generally not appropriate for hospital stays not expected to span at least two midnights.

The Two-Midnight rule also specified that all treatment decisions for beneficiaries were based on the medical judgment of physicians and other qualified practitioners.   The Two-Midnight rule does not prevent the physician from providing any service at any hospital, regardless of the expected duration of the service.
Despite CMS’ use of the word “generally” and the presumption that inpatient treatment during a stay that crosses two midnights is medically necessary, hospitals and physicians have found the rule disruptive of clinical decision-making, inflexible and burdensome, and they have continued to lobby for repeal.  The rule also appeared to penalize hospitals for innovations designed to reduce length of stay.  Implementation of the rule was delayed several times.

The Proposed Modification

CMS announced that it would modify, not repeal, the Two-Midnight rule in its annual proposed rule on Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems (OPPS) which it released on July 1, 2015.  The revision, if adopted, would give providers much greater latitude and perhaps less predictability.  Repeating its expectation “that it would be rare and unusual for a beneficiary to require inpatient hospital admission for a minor surgical procedure or other treatment in the hospital that is expected to keep him or her in the hospital for a period of time that is only for a few hours and does not span at least overnight,” CMS proposed:

For stays for which the physician expects the patient to need less than two midnights of hospital care (and the procedure is not on the inpatient only list or otherwise listed as a national exception), an inpatient admission would be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician.  The documentation in the medical record must support that an inpatient admission is necessary, and is subject to medical review.
Inpatient admissions of fewer than two midnights’ duration would thus be payable, but claims would be subject to first-line reviews for reasonableness by the Quality Improvement Contractors (QIOs).  Factors that would indicate reasonableness would include the severity of the patient’s symptoms and the risk of an adverse clinical event occurring in the hospital.  QIO involvement would be a welcome change from initial review and enforcement by the RACs.  QIOs will continue to focus on education of providers, according to CMS, while the RACs will pursue those hospitals that have consistently high denial rates based on QIO patient status review outcomes.

CMS will be accepting public comments on the proposed rule through August 31, 2015 and is expected to issue a final version late this year.

Impact

An American Hospital Association spokesperson quoted in an article on Medpage Today dated July 7, 2015 called the OPPS proposal “’a good first step,’” saying that “’It opens the door to create a new exception that certain hospital inpatient services don't need to cross two midnights in order to be considered inpatient and appropriate for payment under part A’” but that “the real impact of the rule will depend on how it is finalized and implemented.”

The decision to admit a patient is almost always made by a physician other than an anesthesiologist or pain specialist.  Consequently, as suggested in the first paragraph of this Alert, the proposed change to the Two-Midnight rule will not have a direct impact on most of our readers.  It is an important issue for hospitals and other physicians, however, and therefore one that’s worth a few minutes of our time.

On July 6, 2015, the Centers for Medicare and Medicaid Services (CMS) and the American Medical Association (AMA) jointly announced efforts to help physicians prepare for the October 1st changeover to ICD-10 diagnosis coding.  The AMA and CMS will be offering webinars, on-site training, articles and national conference calls to educate providers and ease the transition throughout the summer.

This announcement makes it seem less likely than ever that there will be a delay in CMS’s implementation of ICD-10 coding.  CMS’s new set of Frequently Asked Questions (FAQs) entitled “CMS and AMA Announce Efforts to Help Providers Get Ready for ICD-10” stated clearly and in boldface type “a valid ICD-10 code will be required on all claims starting on October 1.”  (CMS, of course, does not have the discretion to put off the deadline, for which Congressional action would be required.)  The AMA’s participation in the final set of educational programs and the July 6th AMA Wire post by the organization’s president, “CMS to make ICD-10 transition less disruptive for physicians,” strongly suggest that the organization is shifting its goal from an outright delay to a smoother glide path.

That glide path is intended to give practices and Medicare contractors time to adapt to the new ICD-10 codes and to work out problems without threat of crippling payment delays or penalties.  It involves the following commitments by CMS, as spelled out in the FAQs:

No denials based on specificity of ICD-10 codes.  For a full year from October 1, 2015, Medicare contractors will not deny physician claims “based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family.”  Nor will Medicare review contractors, e.g., the Recovery Audit Contractors, audit claims as long as the physician submits an ICD-10 code from an appropriate family of codes.
No PQRS, VBM, MU penalties based on specificity of ICD-10 codes.  For quality reporting for the year 2015, physicians and other eligible professionals (EPs) using ICD-10 codes from the appropriate family will not be penalized under the Physician Quality Reporting System (PQRS), Value Based Modifier (VBM), or Meaningful Use (MU) programs based on sufficient specificity of the code(s) reported.  EPs will also be exempt from penalties if CMS experiences difficulties in accurately calculating quality scores.
Advance payments if Medicare contractors cannot process claims on time.  “When the Part B Medicare Contractors are unable to process claims within established time limits because of administrative problems, such as contractor system malfunction or implementation problems, an advance payment may be available.”  Details on how to apply for an advance payment will be forthcoming.
CMS will establish an ICD-10 ombudsman.  An ombudsman will be set up within CMS’ new “communication and collaboration center for monitoring the implementation of ICD-10.”  The ICD-10 ombudsman’s role with be to “help receive and triage physician and provider issues” and to “work closely with representatives in CMS’s regional offices to address physicians’ concerns.”
Underlying the four safeguards above is the expectation that there will be technical problems with the submission and processing of ICD-10 claims.  There will certainly be some, but the issue is less daunting than it was a few months ago.  In the latest round of acknowledgement testing, in which providers voluntarily submit claims with ICD-10 codes to Medicare and receive acknowledgements that their claims were accepted, 1,238 providers participated, submitting more than 13,100 claims.  Nationally, CMS accepted 90 percent of the test claims.  (CMS, ICD-10 Medicare FFS Acknowledgement Testing:  June 1 through 5, 2015.)  Importantly, no claims systems issues were identified during the testing week.  Most of the rejected claims contained errors such as invalid provider identifiers or beneficiary numbers or incorrect dates or zip codes.

Although the first week of June was the last special CMS acknowledgement week, providers are welcome to submit acknowledgement test claims any time up to October 1, 2015.  (The American Academy of Professional Coders (AAPC) offers a free “ICD-10 Code Translator” where one can enter a current ICD-9 code and see how it maps to one, or multiple ICD-10 codes.)  Readers may also wish to participate in the August 27th CMS National Provider Call “Countdown to ICD-10,” for which they should sign up at MLN Connects Event Registration.

While AMA President Steven J. Stack, MD said in the joint announcement,

We appreciate that CMS is adopting policies to ease the transition to ICD-10 in response to physicians’ concerns that inadvertent coding errors or system glitches during the transition to ICD-10 may result in audits, claims denials, and penalties under various Medicare reporting programs. The actions CMS is initiating today can help to mitigate potential problems. We will continue to work with the administration in the weeks and months ahead to make sure the transition is as smooth as possible,

other organizations including the Medical Group Management Association are still in quest of a legislative solution that would allow parallel tracks or a “grace period” in which both ICD-9 and ICD-10 codes would be accepted.  At least three grace-period bills had been introduced in Congress, and had gained multiple co-sponsors, but were stuck in committee, before Reps. Marsha Blackburn (R-TN) and Tom Price, MD (R-GA)  introduced the Coding Flexibility in Healthcare Act (H.R. 3018) in early July.  This legislation would establish a dual-coding transition period of six months following the October 1st deadline.  H.R. 3018 would also require the Secretary of Health and Human Services to submit a report to Congress assessing the impact of ICD-10 code sets on healthcare providers and other stakeholders no later than 90 days following enactment of the legislation.

October 1st will be here in less than 90 days.  Practices should be completing training, systems modification and testing by now if they have not already done so.  ABC clients might note that we have been ready for ICD-10 for several months already.  There will not be any more delays.  ICD-9 diagnosis codes will cause claims to be rejected starting October 1st—but a more flexible implementation of the ICD-10 system should help protect cash flow and resolve at least some of the problems that may be encountered.  We hope that all will be settled and functioning smoothly before the Medicare contractors start rejecting claims for lack of specificity in October, 2017.

Anesthesia Business Consultants (ABC), a leading provider in billing and practice management for the anesthesia and pain management specialty, is pleased to announce its latest partnership with Stat-App. Developed and piloted by Anaesthesia Associates of Massachusetts, the largest private anesthesia practice in New England, Stat-App focuses on improving the efficiencies of anesthesia practices to better serve the facilities they work in.

The Stat-App infrastructure is designed to allow clinical providers to securely communicate with their colleagues, and to better understand who is available presently within their own facility utilizing GPS technologies. Leveraging devices that are already utilized today, the Stat-App brings a new capability to an anesthesia practice to better manage schedules, utilization and costs.

"The profitability, and even survival, of an independent multi-facility practice group depends upon correctly aligning valuable clinicians with an appropriate workload. Stat-App exists to optimize multi-facility practices, open lines of communication and to equalize provider workload," said Christopher W. Connor, MD, Ph.D., Associate Professor of Anesthesiology and Biomedical Engineering, Anaesthesia Associates of Massachusetts. The capability of the Stat-App infrastructure extends to better visualization of long-term staffing trends, but at the same time is sensitive to the individual provider’s privacy. The reporting and tracking capabilities are centered only on the locations being served and do not go beyond the boundaries of that clinical location. No extraneous information is gathered or reported, thereby limiting potential information disclosure.

ABC is always seeking ways to streamline the anesthesia documentation process and increase efficiencies for our clients and Stat-App is a new and innovative way to utilize a resource that is readily available. From the improved communication among providers in a facility to better visualized staffing requirements, Stat-App provides the expertise and function to keep clients effective, efficient and innovative.