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16 posts from March 2010

March 31, 2010

Will physician practices be required to implement a compliance plan under new healthcare reform?

The section in question amends 42 U.S.C. 1395cc(j) to include a requirement that all providers and suppliers establish a compliance program.  The definition of "supplier" in 42 U.S.C. 1395x(d) includes physicians.  So far, I haven't found a provision that exempts physicians from the requirement to have a compliance program. 

This is the language at issue (Section 6401 of H.R. 3590):


‘‘(A) IN GENERAL.—On or after the date of implementation determined by the Secretary under subparagraph (C), a provider of medical or other items or services or supplier within a particular industry sector or category shall, as a condition of enrollment in the program under this title, title XIX, or title XXI, establish a compliance program that contains the core elements established under subparagraph (B) with respect to that provider or supplier and
industry or category.

‘‘(B) ESTABLISHMENT OF CORE ELEMENTS.—The Secretary, in consultation with the Inspector General of the Department of Health and Human Services, shall establish core elements for a compliance program under subparagraph (A) for providers or suppliers within a particular industry or category.

‘‘(C) TIMELINE FOR IMPLEMENTATION.—The Secretary shall determine the timeline for the establishment of the core elements under subparagraph (B) and the date of the implementation of subparagraph (A) for providers or suppliers within a particular industry or category. The Secretary shall, in determining such date of implementation, consider the extent to which the adoption of compliance programs by a provider of medical or other items or services or supplier is widespread in a particular industry sector or with respect to a particular provider or supplier category.’’.

If you hear of anything let me know. Obviously stay tuned for further details.

March 29, 2010

Compensation concepts

Your group's compensation formula may be its most jealously guarded sacred cow. Whether sensible or not, it continues in place as long as members don't object. And your members will likely not object as long as the pot of available income keeps growing. Despite the possible upheaval, it's time to reconsider partner pay. These five basic principles form the foundation of any income division format you design:

  • Group members must trust the income division process and the people implementing it
  • The formula must be reasonably simple and clearly understood
  • The formula must provide some equity, although each member may not necessarily be treated equally
  • Include proper incentive to work for the growth of the group, and promote practice goals
  • The members must offer fair evaluations of each other and the practice's needs


March 26, 2010

Fit the physician leader into your structure

Years ago, many small and medium-sized physician groups struggled as they grew to determine if and when they needed a managing doctor, medical director, or physician-leader position. Today, the question is more likely, "How do we best utilize our leader and how do we structure our practice's leadership?"

Imagine a large corporation with no CEO but a dozen shareholders with equal say, or a large company with satellite offices but no "boss" running the show at each site. Many practices still run this way. Although practices of all types and sizes recognize the need for leadership, they still struggle with how to structure their top positions and how to best govern their practice from a business standpoint.

Practices can structure themselves much like the managed care companies they contract with for business. For example, a large primary care practice can hire a medical director to help guide member-physicians through difficult decisions they would have previously ducked.

March 23, 2010

Supreme Court Denies Certiorari to Doctors Challenging Denial of Business Deductions

The Supreme Court on March 22 denied certiorari to a group of doctors challenging the denial of business expense deductions for life insurance premium payments and to a couple challenging the IRS's denial of their offer in compromise.

A group of doctors and their spouses, the doctors' professional corporations, and a partnership deducted the amounts paid for life insurance premiums for the doctors as ordinary and necessary business expenses. The IRS denied the deductions, and the Tax Court upheld the denial, finding that the deductions were not ordinary and necessary business expenses under section 162. On appeal, the Second Circuit affirmed the Tax Court in a per curiam opinion, citing the reasons stated by the Tax Court. The group of doctors and their entities then petitioned the Supreme Court for review, arguing that the Second Circuit ignored long-standing precedent by looking at their subjective intent to minimize taxes in denying the deductions. The Supreme Court denied certiorari. V.R. DeAngelis M.D.P.C. et al. v. Commissioner, Sup. Ct. Dkt. No. 09-895 (Mar. 22, 2010), 574 F.3d 789 (2nd Cir. 2009)

Health Care Reform – The Tax Side

On 3/21/10, the House passed the Patient Protection and Affordable Care Act, which was passed by the Senate on 12/24/09, and a separate package of modifications (the Reconciliation Act), which must go the Senate for approval. [For the Joint Committee on Taxation's technical explanation of the legislation (JCX-18-10), go to www.jct.gov/publications.html .] Some of the major provisions along with their effective dates include a requirement that individuals either obtain health insurance or pay a penalty (2014); a penalty on certain employers that do not offer health insurance (2014); Medicare tax increases on high income individuals (2013); an excise tax on "Cadillac" group health plans (per reconciliation agreement—2018); fees on health insurance providers (per reconciliation agreement—2014); fees on drug manufacturers and importers (per reconciliation agreement—2011) and medical device manufacturers and importers (per reconciliation agreement— 2013); raising the itemized deduction limits for medical expenses to 10% if age 65 and under (2013); and limiting salary contributions to flexible spending arrangements to $2,500 (2013).

March 20, 2010

AMA Launches New Tool to Help Physicians Correct Unfair Managed Care Contracts Nationwide

Physicians seeking a reasonable alternative to the one-sided contracts offered by some managed care organizations can now rely on a new AMA online resource.  The American Medical Association (AMA) today unveiled its new National Managed Care Contract (NMCC) and database to help physicians analyze and negotiate contracts with insurers and help provide relief from unfair corporate business practices.

“The concentrated market power of large health insurers gives them an unprecedented advantage in dictating key aspects of health care to physicians,” said AMA President J. James Rohack, MD. “The AMA’s new resources will be a welcome guide for negotiating fair contracts with health plans angling for an even greater advantage over physicians.”

The NMCC is the first comprehensive managed care contracting resource geared specifically to the needs of physicians. The AMA created the NMCC in an attempt to create model contract language that complies with the managed care laws of all 50 states and the District of Columbia and to comprehensively cover the broad range of physician concerns with managed care contracts. It provides physicians with a valuable frame of reference to compare and evaluate any prospective managed care contract.

The searchable database associated with the NMCC provides physicians with easy access to updated statutes and regulations in all 50 states and the District of Columbia. It covers the managed care contracting process, the managed care contract itself and the business relationship between physicians and managed care organizations after an agreement has been signed.

The NMCC and its database are invaluable tools that can be used by physicians and their advocates to:

· provide alternative language to support contract negotiations with managed care organizations;

· ensure managed care contracts and managed care organizations comply with applicable state legal requirements;

· clarify key contract issues and manage ongoing relationships with managed care organizations;

· assist with legislative, regulatory and legal efforts to reform unfair managed care business practices;

· monitor emerging state and federal legislative and regulatory trends.

AMA members can access the NMCC and database at www.ama-assn.org/go/nationalcontract . The NMCC is not designed to take the place of competent, individualized legal advice. It is one of many tools available from AMA’s Private Sector Advocacy that will help physicians in the generally lopsided negotiations with health plans.

March 18, 2010

Ensure payment for noncovered services

With reimbursement levels shrinking, you may begin looking toward elective procedures for added income. But how can you be sure you'll get paid for these noncovered services? The best solution is to open communication with insurance companies and managed care plans and have the patient sign a form that states he or she understands that the procedure may not be covered.

Some plans never cover certain services or cover certain procedures under specific plans. In either case, know what is and isn't covered by each insurance company and plan with which you participate. Further, know what services require authorization before being performed. If you believe a service may not be covered, first verify its coverage status with the insurance company or plan. Then ask the patient to sign an agreement to make payment in full before you provide the service.

March 17, 2010

Charitable Contribution Denied – Medical Equipment

The Tax Court has recently ruled that taxpayers were not entitled to charitable deductions on contributions of diagnostic and laboratory equipment since the documents submitted with their tax returns provided only general descriptions and lacked essential information. Taxpayers failed to substantially comply with Reg. 1.170A-13 by not including adequate property descriptions, valuation methods used, manner of acquisition, and cost basis of equipment. In addition, taxpayers did not obtain written acknowledgements for the contributions under Section 170(f)(8) . Newton Friedman , TC Memo 2010-45 (Tax Ct.).

March 16, 2010

Incentive pitfalls in physician hospital employment agreements

More and more physicians are seeking hospital employment. Health care reform and widely anticipated federal Medicare reimbursement cuts are fueling another round of physician employment fever in hospitals.  Some observers predict that as many as eighty five percent of physicians will be hospital employees in the next ten years. There seems little doubt that there will be tremendous pressure from a variety of sources to rein in unrestricted “fee for service” retail medical practices in the future.

Many hospitals that toyed with physician practice acquisitions in the 1990s, found that they were ill equipped and inept in the management of physician practices. They didn’t understand the physician motivation, culture and mindset. They turned many of the acquired practices into non-performing assets. One of the major mistakes was the lack of incentive for physicians to perform. Greg Piche of Holland & Hart (http://www.hollandharthealthcare.com/) reminds us of these three major incentive pitfalls experienced by hospital in their physician employment contracts.

1. Failure To Incentivize Productivity . Pure salary contracts isolate a physician from the reality and impact of his or her economic performance. Without a bonus or financial incentive based on Relative Value Units (“RVUs”), collections or other form of personal productivity measure, employed physicians had a compelling tendency to move toward the performance levels of the lowest common denominator. If productivity is not rewarded, it is not valued and it does not materialize. The productivity threshold must be reasonably reachable, otherwise it has the same discouraging impact of no incentive at all.

2. Failure To Collect Physician Revenues . The collection rates for physician practices tend to plummet significantly when the billing and collection is taken over by hospital billing departments. These departments tend to drop below national regional norms for percentage of collections as a ratio of billings. Hospital billing and collection departments often do not grasp the urgency or efficiency of physician billing and followup and a lot of things fall through the cracks. Both hospitals and their employed physicians have an economic interest in the production of physician income revenues consistent with national and regional norms. Failure to fully glean the collection potential of physician billings will reduce hospital revenues, reduce potential physician  bonuses and devastate physician morale. Even those physicians on a fixed salary will be in a diminished bargaining position when contract revision time arrives. While astute negotiation of physician employment agreements can include “cover” for physicians requiring that they be credited for revenues on the basis of historic, national or regional collection percentages, the gulf between physician compensation and tepid collection performance can raise serious tax and regulatory issues as well as internal organizational dissonance. Physician billing and collection should be outsourced if it cannot be efficiently and effectively done in house.

3. Overloading Hospital Cost Structure into Bonus Compensation Formulas . Hospital incentive compensation formulas tend to load physician practice costs into a recovery obligation before bonus incentive compensation is distributed. Hospital overhead, including personnel compensation, rent, management and other costs trend substantially higher than in physician practices. It is not uncommon for hospitals to deduct their higher expense structure costs  as a reduction prior to calculation of physician incentive compensation. Where possible, hospitals should keep the physician expense structure consistent with private practice models. Otherwise the charging of physicians with the hospital expense structure substantially in excess of physician practice norms will chill incentive to produce more. Physician practices need to be mean and lean and hospitals and their employed physicians have an overarching need to keep them so and to reward the reasonable productivity of physicians who generate their revenue, separate and apart from the hospital revenue generated  by physicians, who just happen to be employees.

March 15, 2010

Questions and Answers on Reporting Physician Consultation Services Released

CMS has released an Q & A article on its Medicare Learning Network regarding billing for physician consultative services. The article is for physicians and non-physician practitioners (NPPs) who perform initial evaluation and management (E/M) services previously reported by Current Procedural Terminology (CPT) consultation codes for Medicare beneficiaries and submit claims to Medicare Carriers and/or Medicare Administrative Contractors (MACs) for those services. It is also intended for Method II critical access hospitals, which bill for the services of those physicians and NPPs who have reassigned their billing rights, and hospices where the hospice bills Part A for the services of physicians on staff or working under arrangement with the hospice.


To read the article, following this link: