Reimbursement, enforcement are key issues for ophthalmologists in 2006

In this report from the OSN Section Editor Summit, Alan E. Reider, JD, reviews recent changes that will affect practitioners.

Issue: August 1, 2006

A note from the editors:

At the OSN Summit in Las Vegas, OSN Regulatory/Legislative Section Editor Alan E. Reider, JD, gave an update on regulatory and legislative issues facing ophthalmology and medicine. The following is a summary of his remarks.

Physicians were spared a 4.4% reduction in Medicare reimbursement in 2006. That is the good news. The bad news is that this means the reduction for 2007 will increase.

Each year the reimbursement level is saved from a scheduled reduction by a temporary fix in the budget, but the following year we have the same threat of a reduction. This stems from an ongoing problem, the flawed sustainable growth rate formula, which went into effect several years ago and is designed to put a hold on Medicare spending. Every time a reduction in physician reimbursement is imminent, we go and petition Congress, and Congress says, “OK, we’ll give you a break.”

The 4.4% reduction is not going into effect this year, but what will the impact of that be? It will be slated to go into effect next year, and it is additive. As long as we have the sustainable growth rate provision in place, it is going to get worse.

On the ASC side, in 2000 payment rates were capped at the same level as hospital outpatient department rates, and we are likely to see reintroduction of the proposal to phase in reimbursement at 75% of the hospital outpatient rate beginning in 2008.

I am sure you have all seen projections of the effect that this will have on reimbursements for ophthalmic procedures in ASCs. For the most part they will go up, although a few will go down.

CMS ruling

In 2005, the Centers for Medicare and Medicaid Services issued a ruling that bifurcated covered and noncovered services for presbyopia correction. Medicare had never done that before — taken a single item, a single device or a single service and said a portion of this is covered and a portion of this is noncovered.

We have seen over the course of the past several months questions relating to the limits on the charges for the lens and the other noncovered services. You have to keep in mind that what makes this so difficult is that this is a combined procedure. Part of the procedure is covered by Medicare. That means that the traditional Medicare rules govern. You have an assignment responsibility, which means you cannot charge for the Medicare-covered portion any more than Medicare will allow. That also means that you cannot make up on the noncovered side what you think Medicare underpaid you on the covered side.

This ruling has created a lot of uncertainty and confusion. It has given us informed consent implications and liability issues. We all must be careful.

Enforcement

Alan E. Reider

There have been significant and dramatic developments in the legal field. In a case that ended late last year, the government alleged that David Chase, MD, of Vermont, performed unnecessary cataract surgery. The government said some of his patients had a best corrected Snellen visual acuity of 20/40 or better. It seemed that no one told the government that the objective criteria have been thrown out, not only by the American Academy of Ophthalmology but also by CMS as a standard for determining medical necessity. The enforcers did not seem to know that, and when they were told that, they did not seem to care.

Second, the physician used contrast sensitivity testing to justify the need for cataract surgery. In Vermont, the carrier does not recognize this as justification for surgery. So it seems that the government is saying that it might be OK to use contrast sensitivity in New Hampshire, but if you do it in Vermont you are subject to a criminal prosecution.

Dr. Chase was prosecuted not only because he allegedly performed unnecessary surgery, but because he allegedly recommended unnecessary surgery. Two-thirds of the patients in this case never had surgery, and there never was a claim submitted for surgery for these patients. The judge threw those claims out. However, Dr. Chase had to go through the entire trial before the judge dismissed those charges. That gives you a flavor for how aggressive the government can be in these enforcement cases.

The government also said that Dr. Chase failed to distinguish patients’ visual acuity when using contrast sensitivity from that of the Snellen visual acuity score. In Dr. Chase’s records, he did not record the fact that the Snellen visual acuity listed there was based on contrast sensitivity testing. This was in the medical record, not in the claim that was submitted to the government, but prior case law has established that the medical record is an extension of the claim. If there is a false statement in the medical record, prosecutors can use that to justify a charge that the physician made a false statement. The government said that because Dr. Chase did not document in the medical record the basis for the visual acuity (that is, by Snellen vs. contrast acuity), that amounted to a false claim and was a prosecutable event.

Finally, the government said that Dr. Chase falsified patients’ subjective complaints. The prosecution brought in patients who testified, “I never said I had trouble driving at night; I never said I couldn’t see to read the small print.” Fortunately, Dr. Chase’s records included forms filled out in the patients’ own handwriting in which these patients articulated their subjective complaints. When these patients were cross-examined they were given a piece of paper and the defense attorneys said, “Mrs. Jones, is this your handwriting?” “Yes.” “Is this your signature?” “Yes.” “Did you say here that you were having trouble driving at night?” “Yes.” “Why did you just testify that you didn’t?”

So what is the message of this? Get it in writing.

Deficit Reduction Act

There are two new provisions in the Deficit Reduction Act of 2005 that are intriguing: an incentive for states to institute their own false claims legislation and mandatory compliance training for health care facilities.

The federal government pays states part of the bill for Medicaid through what is called the Federal Financial Participation (FFP). The federal government pays anywhere between 50% and 83% of a state’s total Medicaid expenses, and the states pays the rest. There is an incentive in the 2005 Deficit Reduction Act, providing that if a state passes a false claims act, another 1% is added to that state’s FFP.

There is also now mandatory compliance training for facilities that receive $5 million or more in Medicaid reimbursement. We have been talking about compliance for 10 years, and compliance training has always been voluntary, until now. Facilities that receive $5 million or more in Medicaid reimbursement, which predominantly include hospitals and nursing homes, will have to provide compliance training to their employees, what the rules are, what the whistle-blower provisions are and what the false claims act is.

For more information:

Alan E. Reider, JD, OSN Regulatory/Legislative Section Editor, can be reached at Arent Fox PLLC, 1050 Connecticut Ave. NW, Washington, DC 20036; 202-857-6462; fax: 202-857-6395; e-mail: reider.alan@arentfox.com.