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April 2000
Volume 64 |
Number 4
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PRACTICE MANAGEMENT
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| Rent Charged by
Hospitals for Office Space Raises Legal Issues |
Karin Bierstein,
Practice Management Coordinator
Hospitals are asking anesthesiologists to pay rent for the use
of office space or procedure rooms with increasing frequency.
Payments by physicians for physical space or other goods or services
provided by the hospital raise legal issues under the Medicare/Medicaid
antikickback laws. The Office of the Inspector General (OIG) within
the Department of Health and Human Services has just issued a
"Special Fraud Alert" that clarifies some of these issues.
The alert applies to rentals from hospitals by analogy only,
since it focuses on "Rental of Space in Physician Offices by Persons
or Entities to Which Physicians Refer." The principles are basically
the same, however. The statute (Section 1128B[b] of the Social
Security Act) prohibits "knowingly and willfully soliciting, receiving,
offering or paying anything of value to induce referrals of items
or services payable under a federal Health Program." Thus it would
bar rental payments that are disguised kickbacks from, for example,
suppliers of orthotics that set up "consignment closets" for their
equipment, or mobile diagnostic equipment vendors that perform
diagnostic-related tests in physicians' offices. The statute would
also bar rentals of office space within a hospital if the payments
are disguised kickbacks in exchange for access to the hospital's
patients.
The deciding factor is the parties' intent. Does the rental
agreement make commercial sense standing on its own? Or is it
a subterfuge, with the real purpose being compensation to the
hospital for allowing the anesthesiologists to serve the hospital's
patients? The OIG alert discusses three areas of inquiry that
will help distinguish between legal and illegal rentals:
- The appropriateness of rental agreements -- "Payments
of 'rent' for space that traditionally has been provided for
free or for a nominal charge as an accommodation between the
parties for the benefit of the physician's patients ... may
be disguised kickbacks."
- Rental amounts -- "Rental amounts should be at
fair market value, be fixed in advance and not take into account,
directly or indirectly, the volume or value of referrals or
other business generated between the parties." The alert lists
as suspect arrangements, among others, rental agreements that
may be modified at less than yearly intervals.
- Time and space considerations -- "The lessees
should only rent the amount of space that they reasonably need
for the time during which they will use it. The agreement cannot
require payment for space that is not used, and if the space
is to be shared (because, for example, it is only needed three
days per week), the payment must be equitably prorated."
Based on requests for advice received by the ASA Washington Office,
it appears that the typical scenario affecting our members involves
a hospital demanding rental payments for space that it has historically
provided free of charge. In most instances, the free space --
for the preparation of medical records or providing pain management
services -- is and has long been an "accommodation for the benefit
of the hospital's patients," and the appropriateness of instituting
a charge is highly questionable.
Even if the free space had been intended to benefit the anesthesiologists
at least as much as the patients, an important threshold question
is whether anesthesiologists are in a position to refer patients
for hospital services. If their only cases are surgical, it is
the hospital, not the anesthesiologists, that is doing the "referring,"
and thus the free space cannot create an inducement to the anesthesiologists.
On the contrary, the hospital's demand for rental payments could
amount to a request for a kickback in exchange
for the right to provide anesthesia services to the hospital's
patients.
If the anesthesiologists have a chronic pain practice, they
may be able to refer patients and generate a facility payment
for the hospital (or, for that matter, ambulatory surgical center).
Then the question becomes one of volume. Is the hospital offering
space of significant value in order to earn a high volume of facility
fees? Or is the referral income truly negligible? If the pain
patient volume is low, the space may well be given as a patient
accommodation rather than as an inducement, especially since the
anesthesiologists might not bother to rent facilities elsewhere
for a caseload that would not cover costs.
Some hospitals are telling anesthesiologists that the antikickback
laws require them to institute or increase rental payments.
Unless the anesthesiologists have a pain practice and can indeed
refer patients for hospital services, there is no merit to the
claim. The hospital might be justified, on the other hand, if
it has leased the premises to anesthesiologists who can refer
for below-market rates, or has provided them free of any charge.
The legitimacy of the hospital's demand may be evidenced by its
including, or intending to include, the rental payments in its
Medicare cost reports.
To summarize, the critical factor is the parties' intent. Any
remuneration to the hospital must be at fair market value and
must not have, as any part of its purpose, the inducement of referrals
or the preservation of the "anesthesia franchise." Compliance
with the principles described in the Special Fraud Alert (which
can be found at http://www.hhs.gov/oig/press/office%20space.html)
as well as with the space rental safe harbor to the antikickback
statute (42 C.F.R. Section 1001.952[b]) will help to establish
the benign purpose of the rental arrangement.
Anesthesiologists Serve on Carrier Advisory Committees
Every Medicare carrier has a carrier advisory committee (CAC)
of practicing physicians on which every specialty is entitled
to representation. The CACs generally meet every quarter. Their
official role is to review drafts and advise the carrier medical
director (CMD) on local medical review policies (LMRPs). The LMRPs
address issues of medical necessity that have been left to the
carriers' discretion. Anesthesiologists in various parts of the
country are familiar with LMRPs on preoperative tests, chronic
pain management services, the number of trigger point injections
that will be reimbursed and on monitored anesthesia care.
Inevitably, physician representatives on CACs also bring up
other Medicare policy questions, and unless there is a clear national-level
answer, the CMDs will sometimes write a needed policy themselves.
A stellar example is the set of questions and answers on the medical
direction rules adopted and published by the Georgia carrier at
the behest of Georgia CAC anesthesiologist, Charles "Chip" Clifton,
M.D. This policy demonstrates the value of a strong personal relationship
between the CAC member and the CMD that most anesthesiologists
on the 40-plus CACs try to maintain. Their role is to serve as
liaisons between their fellow practicing anesthesiologists and
the CMD, and in that capacity, they may be able to help you in
your efforts to understand or even change your own carrier policies.
To see a roster of anesthesiologists serving on the CACs click
here(Some states do not appear on the list because we have been
unable to identify the CAC anesthesiologist. If you can provide
either missing or updated information, please contact Karin
Bierstein.
[ Chart ]
New "Correct Coding" Edits for Some Pain Procedures -- Use
the -59 Modifier
Effective April 1, you will need to append the 59 modifier
to your Medicare claims for three of the new pain management services
when performed for postoperative pain management:
64475 Injection, anesthetic agent and/or steroid,
paravertebral facet joint or facet nerve; lumbar or sacral, single
level
64479 Injection, anesthetic agent and/or steroid,
transforaminal epidural; cervical or thoracic, single level
64483 Injection, anesthetic agent and/or steroid,
transforaminal epidural; lumbar or sacral, single level
The Medicare Correct Coding Initiative (CCI) bundles "component
codes" into "comprehensive codes" for a variety of reasons. Some
of these "edits" of code pairs for which payment will be denied
can be bypassed, however, with a Medicare modifier. The customary
reason for the bundling of pain procedures with anesthesia services
is that the former are integral to the latter, but the 59
modifier will indicate that a separate and distinct procedure
was performed and is payable. Fortunately, it appears that the
claims processing software that will be sent to the carriers shortly
will recognize and allow the 59 modifier. If your carrier
begins denying claims for the three injections listed because
they are performed in conjunction with anesthesia, you should
appeal.
Why Is a Kickback a Felony?
The Special Fraud Alert explains the OIG's antipathy toward
kickbacks:
"Kickbacks can distort medical decision-making,
cause overutilization, increase costs and result in unfair competition
by freezing out competitors who are unwilling to pay. Kickbacks
can also adversely affect the quality of patient care by encouraging
physicians to order services or recommend supplies based on profit
rather than the patients' best medical interests."
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