Category: Physicians Practice

September 1, 2012 is the current deadline for physicians who wish to opt out of Medicare —and record numbers are doing just that. According to a recent survey by the Texas Medical Association, the number of Texas physicians accepting Medicare patients dropped from 78 percent in 2000, to 58 percent in 2012. Texas is one of the few states that keeps Medicare opt-out information. HHS’ Office of Inspector General (OIG) in January reported it couldn’t pin down the extent of the problem nationally because Medicare and its contractors don’t keep adequate data on physicians who opt out.

Why are so many physicians opting out of Medicare?

Forced Pay Cuts
Doctors have suffered steep Medicare payment cuts every year for more than 10 years. Although Congress temporarily postponed a 29 percent cut in 2012, physicians face a nearly 30-percent cut Jan. 1, 2013. By many estimates, Medicare reimbursement rates fall far below the cost of providing services. Medicare prohibits physicians from balance billing patients. Thus providers must look to, (and as some allege “overcharge”) privately insured and uninsured patients, simply to remain solvent.

Bureaucratic Nightmare
It was difficult enough prior to the Affordable Care Act (ACA) for a physician to document a patient file sufficiently to satisfy CMS that prescribed care was correct and properly coded. The ACA continues the steady march toward even more arcane bureaucratic “metrics” which take into account “patient outcomes” and effectiveness of treatment before payment can be sought. An entire cottage industry has sprung up, offering sophisticated computer systems and processes, aimed solely at making the documentation of treatment — not the treatment itself — more satisfying to CMS. This bureaucracy is no better exemplified than by reference to the list of acronyms on the CMS website: 198 Medicare acronyms – and that’s just the ones which begin with the letter “R.”

RAC Auditors
As complex as documentation rules can be, payment of a claim by CMS was often the only way a physician could be sure he or she got it right. Getting paid is just the beginning. In 2003, the government began unleashing an army of Recovery Audit Contractors (RACs). RAC auditors are supposed to review patient files and billing records to identify both over- and under-payments. Not surprisingly, given that RAC auditors are compensated a percentage for finding over-payments, 97 percent of RAC findings favor the government. This means physicians must return payments, long after the claim has been paid, often because a non-physician auditor with a financial interest in contradicting the physician has overruled the doctor.

Stark Law
Since its passage in 1989, most every physician has some understanding that Stark Law prohibits referrals to outside providers, if the physician has an ownership interest in the provider. But in the 1980s, when the government paid 80 percent of the amount of a physician’s fees, most did not mind so much, being told by the government with whom they could go into business. In 2012, the government uses a pay scale which often pays a scant 20 percent of the charges. Physicians must seek outside income from investment in ASCs, PODs, DME suppliers, and a whole host of other acronyms. But Stark Law only applies if a physician accepts or refers Medicare patients. Without Medicare, there is no Stark Law, and physicians are free to engage in any free-enterprise arrangement, limited only by medical ethics rules.

Whistleblowers
One of the most vexing things about accepting Medicare dollars, is the operation of the whistleblower provision of the False Claims Act. This law allows employees of physicians, and virtually anyone else, to file an action on behalf of the federal government, with the promise of collecting 15 percent to 30 percent of the award. It is normally the most disgruntled, intractable, problem employees who file these cases. Although the vast majority of these cases are dismissed with no payment, defense can be hugely expensive. As with Stark Law, many physicians are discovering, without Medicare, there are no whistleblowers.

Criminal Prosecution
The OIG lists on its website the 10 Most Wanted Medicare Fugitives. Without exception, these violators have non- Anglo-Saxon surnames (African, Arab, and Russian names appear frequently.) One could argue this list is carefully designed to invoke nationalistic prejudice, leading to a belief that all the OIG does is protect the U.S. Treasury from hordes of foreign financial criminals. Nothing could be further from the truth. Since its creation in 1987, the OIG has been busy redefining “fraud” to mean anything the OIG doesn’t like, under the mantra “fraud, waste, and abuse.”

Perhaps most poignant is a report from the Texas Medical Association quoting a family practitioner who says the “straw that broke the camel’s back” landed in 2009. The physician, Chris Noyes, MD, recalls, “I had a patient who moved from out of state to be with his kids. He had lung cancer when he came in, and he ultimately died. We wrote off a fairly large balance,” Noyes said. “Two years after he died, we got a letter from Medicare saying they had overpaid for a flu shot for him by $2 and they wanted the money back with interest and a penalty, and if I didn’t pay it all within 30 days they would prosecute me.”

There was a time, in the old west, when the sheriff was in charge of escorting “snake oil” salesmen to the edge of town. Today, there is a new sheriff in town, the OIG and its posse of RAC auditors and whistleblowers. Each use allegations of wrongdoing to ration care, as if the problem will go away, if there is no one left to treat the elderly and permanently disabled.

In Texas, those accepting Medicare dropped from 78 percent to 58 percent in a decade. Medicaid numbers are even worse, with only 31 percent of physicians participating. Nationwide, this trend will continue, unless something is done to reinvigorate enthusiasm on the part of providers. At the moment, the government is steaming full speed ahead, in the opposite direction.

Next week, I’ll detail the mechanics of how physicians can opt out of Medicare.

Find out more about Martin Merritt and our other Practice Notes bloggers.

The case seemed “open and shut.” At least until June 26, 2012, when a California federal district judge threw out Gonzalez v. Planned Parenthood of California, on the grounds that overcharging the government isn’t always illegal. Filed as a qui tam whistleblower case by a former chief financial officer, the claim was simple: Planned Parenthood had been overcharging California Medicaid (Medi-Cal) for nearly a decade, because the provider billed Medi-Cal more than “actual cost” for contraceptives administered to patients.

Many private practice physicians live in fear of being informed by a benefits utilization review auditor that one of a physician’s billing practices is actually forbidden by a federal or state program manual. Worse, because the failure to comply with program guidelines automatically constitutes a violation of the False Claims Act, repayment of the amount of the claim plus a penalty of as much as $11,000 per bill may be assessed. This fear is compounded by the OIG’s recent testimony before Congress that many physicians are falsely accused, because Medicaid auditors don’t understand Medicaid law.

In the recent California case, Planned Parenthood actually did violate the provisions of the benefit manual, but argued that such a violation was not necessarily a False Claims Act violation, unless the company also lied about the claim. Under the Medi-Cal Family Planning Procedures Manual, Planned Parenthood could bill the government no more than “cost” for contraceptive devices. Planned Parenthood obtained contraceptives at a discount, but did not pass the savings on to the state. Cases of this nature can be prosecuted administratively or through whistleblower lawsuits.

Government enforcement agencies much prefer the administrative route for several reasons. First, in an administrative action, the people making the rules are in charge of enforcement. Second, there is no immediate “referee.” Finally, a provider can be summarily punished, simply for resisting. In the usual case, for example, the Office of Inspector General will normally take the position that a failure to comply with any HHS dictate triggers a violation. Letters are sent, audits performed, and a bill is presented to the provider. Even if the provider doesn’t agree, the threat of huge penalties, criminal prosecution, freezing of assets, and threats of program exclusion mean resistance is largely futile.

A whistleblower lawsuit on the other hand, comes with a federal judge who is called upon immediately to decide if the conduct is actually illegal. Here, District Judge Howard Matz agreed with the defendant, “No case creates or imposes [False Claims Act] liability merely where one overcharges the government — the overcharging must be committed in conjunction with a false statement that is a lie.”

Matz observed that Planned Parenthood never tried to hide the fact that it had not followed the government’s billing manual, but instead, “with consistent candor and truthfulness,” openly did not comply. Nor did Planned Parenthood “lie” or misrepresent that the amounts billed were based upon actual cost. Therefore, the bills presented were not “false.”

The court then reviewed the whistleblower’s “False Certification” claim. Such a claim might be valid if a provider had certified each bill complied with the provisions of the Claims (“FPACT”) Manual, when it did not. However, the court dismissed this claim because “Plaintiff does not even allege that Defendants signed the FPACT manual. What Defendants did allegedly sign was the Provider Agreement, which did not require or amount to a promise to comply with every provision in the manual.”

The Gonzalez opinion highlights the problem of a lack of judicial oversight in the ongoing battle between medical providers and governmental agencies. In the absence of court opinions to the contrary, a government agency will normally take a most aggressive view — both of its own rule-making power, and what behavior it believes violates those rules. Judicial review of administrative enforcement actions is often impossible because settlements are frequently coerced by threats of program exclusion, or the staggering $11,000 per-claim penalty under the False Claims Act.

In many cases, it seems almost better to be sued by a whistleblower. It is only where a qui tam relator beats the government to the punch that a court is called upon to decide immediately, in a pre-litigation Motion to Dismiss, whether questionable conduct actually violates the law.

Case: P. Victor Gonzalez v. Planned Parenthood, No. CV 05-8818 AHM (FMOx), U.S. Dist. Ct. C.D. Calif.

Martin Merritt is a Dallas-based attorney, representing physicians, practices, and others in cases involving Stark Law, state and federal regulations, Medicare fraud and abuse compliance, as well as transactions and contracts. E-mail him here.

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