Getting Skin in the Game

Orthopedic surgery can be a demanding specialty, and with its rewards comes its challenges and opportunities. No one knows this better than J.F. James Davidson, MD, who specializes in sports medicine, shoulder and knee surgery and who is part of Canyon Orthopaedic Surgeons and also practices at Gateway Surgery Center, both in the metropolitan Phoenix area. He discusses life inside and outside of the OR.

Q: Why was the specialty of orthopedics right for you?

A: I greatly respect physicians in other fields such as family practice, oncology and trauma surgery, to name just a few. Good physicians can solve a complicated medical puzzle and potentially save a sick person’s life. These physicians carry the burden of a weighty responsibility. One reason I chose orthopedics and specifically the area of sports medicine is because our patients usually have treatable problems and the capacity for relatively rapid improvement. They usually do not have life threatening conditions and are highly motivated to improve in order to maximize their quality of life. I remember rotating through cardiology and nephrology in medical school and learning the serious consequences of chronic disease. On the first day of the orthopedic clinic we examined a man with a fractured patella. The patient jovially answered our questions regarding how he managed to be kicked in the knee by a goat. In spite of the discomfort of the fracture the patient laughed at his unusual predicament. I though, now I have found the right specialty.

Q: The practice of medicine is becoming more challenging in terms of medical malpractice, tighter reimbursement, etc., so how do you cope with these modern challenges?

A: I have had some very good teachers and role models. Bill Brainard, MD, one of the founders of our group, Canyon Orthopaedics, taught by example the benefit of finding enjoyment in working with patients and colleagues, and in performing surgery. Our practice has the innate rewards of helping people, solving problems, interacting with others. My partners and I feel fortunate to do what we do. The negatives certainly can be a drain on the system, but we try to focus on the positive reasons that we come to work each day.

Q: Most physicians are never trained in business, and when they become medical entrepreneurs, they can be unprepared for the rigors of business. What has been the most valuable lesson you have learned about being a medical entrepreneur?

A: As I mentioned, I have had some very good teachers. Dave Ott, MD, was the driving force developing our successful orthopedic ASC, Gateway Surgery Center. He proved that bringing traditional competitors together for a common business goal can lead to a win for all. Prior to Gateway’s development, Canyon Orthopedics consulted with a national firm regarding the viability of creating a small ASC as an extension of our six-man group. The consultant determined that the project would be worthwhile, but with lower volume than ideal. Instead we became part of the 30-physician Gateway ASC. This has proven to be far more efficient and successful than the project we could have done on our own. Currently under construction is the Southwest Orthopedic and Spine Hospital, an orthopedic specialty hospital in Phoenix. For this project 37 orthopedists and spine specialists have partnered with Catholic Healthcare West and USPI to build what we are determined to be the highest quality orthopedic facility in the region. Finally, a number of currently independent orthopedic groups in greater Phoenix are now working on the merger of our established practices to form a single large orthopedic group. We are hopeful that this of relationship will benefit from similar synergy as Gateway Surgery Center.

Q: What clinical lessons have you learned from sports medicine that you carry over into your other practice, and vice versa?

A: A high school athlete with the goal of a college scholarship is driven to return to the playing field as quickly as possible. A few extra days off the field may mean missing a game and a chance to help his team win and shine for a college scout. The athlete wants aggressive treatment to get him back in the game as quickly as possible. In worker’s compensation cases, an injured worker may or may not have similar motivation to get back to work quickly. However, fast-tracking treatment leads to more rapid return to the job, and less time on sick leave. Similarly, the injured worker (and his employer) benefit from avoiding unnecessary operations, but meanwhile not delaying the inevitable procedure. If a surgery ultimately will be required then spending time on additional therapy is not advantageous. Making this determination requires experience and judgment. The same is true in the treatment of the athlete. On the other hand, many middle-aged athletes as well as injured workers have degenerative changes seen on an MRI. It is important to make clinical decisions as to what changes seen on scan are degenerative and incidental versus acute and painful. An over-read of an MRI can lead to a potentially avoidable surgery in both the athlete and laborer.

Q: What are the technological/clinical advancements in orthopedic surgery that get you most excited?

A: I’m excited by a number of new devices and procedures. I’m always on the look-out for methods leading to better or more reproducible results; easier or less invasive ways of doing procedures; and faster or less painful recoveries. Throughout the year the Arthroscopy Association of North America (AANA), hosts cadaver training courses to teach new techniques and improved ways of performing standard techniques. I have been an assistant instructor at the AANA shoulder courses for years and always learn from the master faculty leading the discussion and training. Two areas of special interest are the use of preoperative MRI to determine the pattern of rotator cuff tears and method of repair; and the use of an MRI to preoperatively design cutting jigs to add to the precision of total knee replacement.

Q: What do you believe is the future for outpatient orthopedic surgery in terms of keeping up with the ever changing medical and economic environment?

A: Practicing-physician involvement in management and ownership is one key. No one has a greater interest in maintaining a top-flight center than the orthopedist taking care of the patients, doing the surgery, and watching the bottom line. As we discussed earlier, my partners and I are betting on “big is better.” We built Gateway without a corporate partner. Last year for a number of reasons we sold a portion of our center to AmSurg. We are hopeful that this association will lead to economies of scale in purchasing and a stronger position in contracting. Cooperation with our colleagues has led to success in business and has improved our practice of orthopedics as well. We consult one another, adopt best practices, and learn from each other’s successes and failures. Healthcare is changing rapidly and we will all need to stay nimble to adjust to these changes.

J.F. James Davidson, MD, graduated with honors from Yale University and received his MD degree from Columbia University. He then completed his orthopedic residency and sports medicine fellowship in Phoenix. He is board certified by the American Board of Orthopaedic Surgery and is a fellow of the American Academy of Orthopaedic Surgeons. He has also served as an officer in the American Orthopedic Society for Sports Medicine and the Arthroscopy Association of North America. Davidson has published scientific papers and spoken nationally on topics ranging from anterior cruciate ligament reconstruction to arthroscopic rotator cuff repair. He is the lead spring training physician for the Chicago White Sox as well as the team orthopedist for several local schools. His special interests include disorders of the shoulder and knee. Davidson has been with Canyon Orthopaedic Surgeons since 1994.

The Building Blocks of Patient Safety

Patient Safety Awareness Week is March 7-13, 2010, and this observance is always a good opportunity to review the patient safety initiatives you currently take at your ambulatory surgery center (ASC), as well as ask yourselves what you could do to take safety to the next level. I like what Doni Haas, RN and Lorri Zipperer, MA, have created in their “ABCs of Patient Safety” to remind healthcare professionals of common-sense ways to protect patients. With kudos to Haas and Zipperer and the National Patient Safety Foundation (NPSF), here are the ABC’s they recommend:

Accountability is not always about a person.

Blame hides the truth about error.

Cultures must change.

Document facts.

Error is our chance to see weakness in our systems and people.

Focus on prevention.

Gather evidence to support facts.

Hear when you listen.

Investigate cause.

Justice should include compassion, disclosure and compensation.

Knowledge must be shared.

Learning from others’ mistakes benefits all.

Make the effort to look beyond the obvious.

Nothing will change until you change it.

Opportunities for solutions are lost by blame.

Partner with patients and practitioners.

Question until you can no longer ask “why?”

Reporting error is suppressed by blame.

Systems are where practitioners practice.

Think about the blunt and sharp end.

Understand the role of accountability.

Value the patient’s perspective.

Why, Why, Why, Why, Why = root cause.

X-ray vision sees the deeper story.

You can make a difference.

Zeroing in on cause brings us one error closer to zero error.

For more resources, visit the NPSF at www.npsf.org.

Source: Haas D, Zipperer L. ABCs of patient safety. Focus Patient Safety. 2000;3(1):3.

Know Your APCs for ASCs

APCs for outpatient procedures performed in ambulatory surgery centers (ASCs) are part of an averaging and bundling system using CPT® procedure, HCPCS Level II and revenue codes submitted to Medicare on CMS=1500 forms, with UB-04 claim forms used by ASCs to file claims to most other payors. The APC system utilizes “packages” of CPT® and HCPCS Level II codes, based on clinical and facility resources and establishes payment rates for each APC grouping. This means the physical and human resources needed to provide the service and the geographic costs are bundled together using annually adjusted formulae, much as in hospital inpatient billing. Certain medications, services, and durable medical equipment are considered “pass through” and can be reported separately from an APC revenue code.

APCs are assigned based on the CPT® and HCPCS Level II codes reported by the provider for each service. Usually, more than one code will fall into an APC category. More than one CPT® and HCPCS Level II codes can be reported if needed.

But not all CPT® and HCPCS Level II codes qualify. They are all assigned a status indicator denoting the code’s relation to APCs — whether they qualify and how. The ASC must be careful to avoid reporting a code denoted as not reimbursable for ASC services unless a modifier and documentation support it. As a result, a limited group of modifiers are recommended as well. The status indicators can be found on CMS files including the CPT and HCPCS Level II codes, and most commercially published codebooks include them as icons.

Examples of the indicators include the following:

• A: Services furnished to a hospital outpatient that are paid under a fee schedule or payment system other than OPPS. This means fiscal intermediaries are reimbursing this code via a fee schedule not under APCs.
• C: Inpatient procedures. This is the kiss of death for an ASC claim’s success. This procedure is expected to be done in a hospital with the appropriate resources and an overnight stays.
• N: Items and services packaged into APC rates. This is paid under the APC OPPS and payment is packaged into payment for other services; there is no separate payment for this.

Restricted CPT® modifiers include:

• 50: Used when the exact same procedure is done on the exact body part of the opposite side. Also known as “bilateral”. Some insurance companies prefer the biller use the CPT® code twice instead. Ex: 10220-RT, 10200-LT. Check with carrier on which to use. Payment should be 150 percent.
• 51: Indicates multiple procedures were performed. The 51 appends to the second CPT® code and all CPT® codes thereafter. Medicare does not recognize modifier 51 for ASC services as this modifier is for use on physician claims only.
• 52: Indicates reduced services. Use when procedure is not completed as described in the official CPT® description.
• 73: Used when a procedure is discontinued before the anesthesia administration. Patient must be in the room where the procedure would have taken place. Payable at 50 percent of the Medicare allowable rate. Typically seen when patient’s blood pressure arises to a dangerous rate.
• 74: Used when a procedure is discontinued after the anesthesia administration. Patient must be in the room where the procedure would have taken place. Payable at 100 percent of rate. Typically seen when patient’s blood pressure arises to a dangerous rate.
• 78: Used when the patient has to return to the operating room during the global period for a procedure related to the first procedure, such as control of bleeding following a colonoscopy or sinus procedure.
• 79: Unrelated procedure or service by the same physician during the postoperative period. (Same day for an ASC setting.)

Rhonda Buckholtz, CPC, CPC-I, CGSC, COBGC, CPEDC, CENTC, is vice president of business and member development for the American Academy of Professional Coders (AAPC).

Innovation & Excellence Intersect at Renaissance Surgical Arts of Newport Harbor

Even before the Centers for Medicare and Medicaid Services (CMS) issued its new conditions for coverage relating to improved infection control practices in ambulatory surgery centers (ASCs), Bruce Wallace and Anthony Pings knew that infection prevention would be the cornerstone of their latest development project — a world-class multi-specialty ASC that would be destined to set the bar enormously high in terms of innovation, patient care, and surgeon and staff satisfaction.

Wallace, the CEO of Congero Development, architect Ping, the CEO of Anthony C. Pings and Associates, and Kathy Just, vice president of Congero and interior designer on the project were the driving forces behind Renaissance Surgical Arts of Newport Harbor, LLC, designed to be a preeminent medical facility led by notable surgical specialists working with cutting-edge operating room technologies within an innovation-rich, patient-focused, healing environment.

“This facility was truly designed around exceptional patient outcomes,” Wallace says, “and much of that has to do with integration of some newer equipment and emerging technologies that were not readily available before in the U.S. It also more fully addresses the needs of healthcare providers, as we have identified the challenges that their lifestyles incur and we have provided solutions for them.” In addition, Congero desired to bring a center of excellence to Orange County, California, as well as a project that was scalable to emerging technologies as they became available, with minimum invasiveness to the operations overall.

This 360-degree approach starts with the patient. “I conduct a lot of direct research with patients and physicians to determine what makes them happy,” Pings says. “We don’t ask patients what they want; instead, we ask them to describe their experiences and that’s when they are going to tell you what works and what doesn’t. Nobody wants to have surgery, so when we work on a project like this, we want to provide patients with the physical and emotional support they need.” To that end, Just worked to ensure that Renaissance was designed as a healing environment, with a sophisticated and rich décor that promotes pre-operative calm and facilitates post-operative recovery. To maintain normothermia and ward off post-surgical complications, patients are provided with forced-air heated garments and blankets, as well as IV solution warmers.

Pings adds, “We start a project like this from a patient-focused standpoint and blend that with needs of the clinical staff to create solutions that supports both parties in the best possible way.” For example, the center places a high priority on patient privacy; patient entrances and exits are separated, and private spaces have been created all throughout the pre- and post-surgical experience. “We believe in giving patients separate waiting areas,” Wallace says. “Because we are multi-specialty facility we don’t want patients sitting just anywhere — we don’t want a woman who has had a mastectomy sitting next to a woman having augmentation.” Wallace continues, “We accommodate patients in a tremendous number of ways, including doing what we can to make them feel welcome, lower their anxiety and make them comfortable. I want them to feel as though the staff and center was there for each of them personally.”

From the time the patient is prepped for surgery until recovery, aseptic technique is an omnipresent concern. “Infection control considerations were integrated into every decision we made,” Wallace affirms. That starts with the replacement of traditional gurneys with operating tables that first function as patient transport systems and then transfer – along with the patient – to a fixed base in the OR. Not only does this system – the first of its kind in the U.S. — save as much as 40 minutes in transfer time, but it helps eliminate cross-contamination during patient transfer. What’s more, the German-made tabletops by Trumpf can be completely sterilized.

“The tabletop you are on was never shared by another person between being sterilized,” Wallace emphasizes. “A classic place where bacteria transfers is the OR table itself. At other facilities, someone goes in with a squirt bottle between patients and they have 5 minutes to sterilize the table and the fact of the matter is that the table is definitely not sterilized in 5 minutes.”

Recognizing that proper decontamination and sterilization of medical devices and surgical instruments eliminates infections and produces operational cost-savings, the facility features a system that has taken patient and staff safety to the next level. Driven by selective automation, Renaissance’s sterile processing department, supported by Belimed equipment, is able to achieve efficiencies in the way surgical instruments are transported, washed and decontaminated, sterilized, reassembled and contained. Upholding the dedication to stringent infection control practices, instruments are sealed in trays and then pass from a “dirty” room to a “clean” room where they are sterilized and processed further, all in a department that has been designed with the goal of becoming more environmentally responsible in water and energy usage. All instruments have been marked with RFID technology, bar-coded, catalogued and tracked from purchase, and when an instrument approaches a sterilizer, the cycle is automatically set to the individual manufacturer’s care parameters – thus ensuring a longer instrument life and a repeatable sterilization process that ensures uniform processing and meets infection prevention standards. According to Pings, the backbone of the facility is a chamber sterilization system comprised of two discreet, low-intensity, stand-alone sterilization areas located between the operating rooms, and a central, high-intensity processing area in the operating corridor. The combined effect of the chamber system, sterilization process and smart utility use, allows for the elimination of up to eight full-time employees, with processing cut to a fraction of standard times while delivering vastly improved sterility assurance.

“Our system reduces staffing in central sterile (CS) and eliminates a lot of the cross-paths that exist elsewhere,” Pings says. People think if you are six feet away from dirty, you are OK, but those numbers don’t work anymore. Hospital CS departments are essentially one big room with workstations, and even the best-trained staff will violate those boundaries. That’s why the chamber sterilization concept works.”

Contributing to maintaining the line between sterile and unsterile is Congero’s proprietary LED system built into the floor and walls with a laser that resembles a light fixture placed before each terminal end of the OR corridor; this system replaces the traditional red-line tape used to delineate non-sterile areas from sterile areas. The center also features sterile lounges in the sterile corridor for staff to use on surgery days without having to gown out into non-sterile cover-ups to conduct business outside of the OR corridor. Staff can use phones and computers in the area while saving vast amounts of time in gowning out both ways; it adds up to a cost savings of approximately $8 per trip per staff member.

Contributing further to physician convenience is an adjacent, separate entity, the “hot office” area, instead of a conventional medical office building set-up where surgeons can have a place for pre-op and post-op patient consults, a design that extends the full use of the facility to office-based surgery convenience, according to Pings, who notes, “When you provide ways for physicians and staff not to work harder but to work more efficiently, they prefer it, and they are happier people.”

Pings continues, “What I push for the most is an understanding of the different needs of everyone involved at the center, and that includes surgeons. That physician lounge is one way to provide them with the productivity tools they need without having to leave substerile. We wanted to give them the support tools they need within their domain; for example, while they chart they can observe monitors that assist them in real-time tracking of pre-op and post-op patients. Go into the average surgical corridor and you see surgeons sitting on stools trying to have some sort of defendable territory between cases, and that’s neither appropriate nor conducive to surgeon satisfaction.”

The center is powered by a sophisticated IT platform that enables a number of progressive processes such as ultrasonic tracking of patients, staff and physicians for quick-location purposes; biometrics identification for narcotics dispersion; Bluetooth wireless monitoring of patient vitals; advanced telemedicine capabilities; RFID-driven nurse call system and much more. The IT capabilities extend to center management and operations such as inventory control, setting par levels and supplies ordering, plus patient scheduling, patient flow and H&P, and coding and billing, all handled with HIPAA-approved transmittal processes. The center’s eight ORs are equipped with state-of-the-art LCD displays, booms and an audiophile system, as well as CT and MRI in-room imaging. Renaissance is also home to a showroom and telemedicine center of excellence for Olympus Corp., which has installed a digital integration system utilizing rigid and flexible scopes, with one cart handling multiple surgical specialties.

How Renaissance fit into the existing Pacific Medical Plaza building is an achievement in itself, Pings says, since the entire project was a retrofit and where the anchor of the building was the nearly 19,000-square-foot ASC. “We were able to be extremely aggressive in our design in the allotted square footage,” he says. “The original ASC design had elements that were extremely challenging when you realized our space limitations. The design had to be created around the main stairwell in the very center of the structure and we relocated a second stairwell from one side of the building to the other.”

The innovations abound at Renaissance, which required a coordinated process of value engineering driven by the collective experience of the development team to deliver a cutting-edge ASC for very close to the cost of a standard facility. “We knew the challenges related to cost control for an ASC as ambitious as this,” noted Wallace. “However, what we could not have anticipated was trying to accomplish this amid one of the worst economic environments in U.S. history.” The upfront effort will continue to be realized through much lower operating costs thanks to better outcomes, automation and other inherent cost controls. “Cost is an overriding concern at any center but you must remember that upfront costs are ameliorated by cost savings in patient safety and efficiency,” Pings notes.

Key to Renaissance’s success is the partnership between stakeholders, according to Wallace. “This center is a culmination of many years of collaboration with Tony and Kathy as well as the relationship with a cooperative landlord who was of tremendous help in the development process and extremely supportive through the financial crisis. It was also critical to have physicians buy into your vision. We couldn’t have done it without the overwhelming support of the physicians; most of them put their money in, signed on the dotted line and sat back, leaving us to do what we were supposed to do.”

According to Wallace, the center is 70 percent physician owned, with Congero operating as a minority management company. Being a physician-driven facility, the opportunity to do things differently presented itself repeatedly, including how the center was staffed. “We created our own registry and share our staff with other facilities in the area,” Wallace explains. “By doing so we can reduce the labor-related load on the facility; for instance, on slower days with a lower case volume, we can share our staff with other facilities in the area. We believe having people standing around is bad for morale and bad for efficiency’s sake, and this arrangement is better for staff, if they need to take a day to meet personal or family obligations. The registry concept is a better way to accommodate staff who can work the hours they would like to work. And it allows physicians to have a schedule that fits their lives, too. It creates a real team spirit. We also incentivize staff to help increase the efficiency and profitability of the center, linking together their individual success and the success of the center for even better outcomes and operations.”

Advocacy Committee Creating Unified Voice for the ASC Industry

In an effort to continue to represent the ASC industry on Capitol Hill and to create a bridge between two existing organizations, the ASC Advocacy Committee was launched last August and has been busy educating Washington policymakers about the value of ambulatory surgery centers. The committee is sponsored by the ASC Association and by the ASC Coalition, an affiliation of ASC associations and ASC management companies.

The Advocacy Committee includes ASCA, some of the largest state ASC associations, and more than a dozen major ASC companies. The funding is provided by the members; separately, ASCA, many state ASC associations, and many companies have their own PACs for direct political giving, according to Andrew Hayek, president and CEO of Surgical Care Affiliates and chair of this new committee.

Despite a health reform-related injection of chaos on Capitol Hill, Hayek says that the committee’s objectives have remained steadfast: “First, to create a clear, compelling message of how ASCs benefit the healthcare system; second, to hire the resources to help communicate this message (e.g,. PR firm, lobbyists, external studies); third, to create an active grassroots network among ASCs to communicate with legislators and policymakers; and, fourth, to create an open, collaborative organization, in which any parties interested in supporting ASCs are welcome to join us and participate.”

One of the most important roles of the committee is to educate lawmakers and to tell the ASC story. Hayek says the committee is in the design process of a PR campaign that will launch early next year. “We have added greater lobbying resources to help us communicate with legislators, policy makers and regulators in Washington, D.C.,” Hayek adds. “We have activated a much greater degree of coordinated grassroots efforts, and we are in the design phase of a grassroots database that will help us take this coordination to a much higher level. Lastly, we are coordinating our messaging across ASCA, state ASC associations, and companies to a greater degree. All of these components work together to help us tell our story in Washington, D.C.”

Another critical item on the committee’s agenda is to help define and promulgate the role that ASCs can play within the context of healthcare reform, and to continue to address key issues of reimbursement and physician ownership. “We have been active in communicating the very positive role that ASCs play in the healthcare system — providing outstanding clinical care at a lower cost to beneficiaries and Medicare,” Hayek says. “We have been active both on the Hill and with the Administration in advocating for higher ASC reimbursement rates, to help facilitate a greater migration of surgical cases from the HOPD setting to ASCs, which will help improve care and save beneficiaries and Medicare money.”

Hayek continues, “We have also engaged in conversations sharing the value of physician ownership in ASCs — ensuring the highest levels of patient care and greater efficiency in the delivery of services. One of the reasons that ASCs provide such outstanding care and simultaneously operate so efficiently is that physicians are ultimately responsible for the operations of the ASCs — clinically, operationally and financially. This leads to aligned interests in ensuring outstanding care, delivered in the most efficient manner.”

Counted among the ranks of the most ardent supporters of the committee is William Kennedy, senior vice president of business development. “We were original members of the ASC Coalition and are now active and enthusiastic supporters of the new group headed by Andy Hayek,” Kennedy confirms. “What we hope to accomplish is to make our industry known in Washington, and that includes CMS as well, so that they understand the good work that surgery centers are doing in terms of delivering low-cost, high-quality patient care to the community. And that we are also a very attractive surgical service at a very attractive price for very attractive outcomes. We want to ensure that our voice is heard above all of the noise made by the hospital associations.”

Kennedy emphasizes the importance of advocacy efforts at the grassroots level as well, something that physicians, administrators and nurses can accomplish to help protect their livelihoods. Because so many issues are springing up at the state level, Kennedy encourages ASC owner/operators to kick complacency to the curb and get involved.

“Many people think that issues impacting our industry are going to start at the state level and will proliferate, rather than coming down from Washington,” Kennedy says, “so there’s a critical need to be involved in your state ASC association.” Kennedy points to the restrictions on ASCs in New Jersey as a recent example. “Legislators are looking to restrict physician ownership and limit the surgery center industry. Grassroots advocacy will ensure that your voice is being heard by your Congress members. There are numerous ways to do this, and our industry has become much better at writing letters to legislators and providing some Congressional pressure. Holding open houses is a great way to get our story to the community; and when it does get out, it is very appealing to healthcare consumers. ASCs make good sense because we deliver the same results for about 40 percent less.”

While not every physician feels that he or she is cut out to be an industry advocate, Kennedy says the industry cannot afford to be bereft of its physician champions. “There’s a core group that galvanizes around advocacy efforts and then there are other people who say someone else can do the work — it’s kind of like public radio,” Kennedy says. “It’s critical to show physicians how not becoming involved can hurt them in dollars and cents. But at the same time it’s also about giving them a sense that they can make a difference. One of the things we are spending a lot of time on now is going back to people who have sent e-mails and letters to legislators to ensure they know their work has paid dividends.”

Hayek welcomes any ASCs or organizations with an interest in the ASC community to join the ASC Advocacy Committee’s efforts. “The Advocacy Committee is designed to be open and transparent — and we welcome both financial support and grassroots support,” he says.

Hayek can be reached at (205) 545-2755 or andrew.hayek@scasurgery.com. Or contact the committee’s executive director, Marian Lowe, at (202) 266-2606 ormarian.lowe@shcare.net.

Battleground New Jersey: Is an “Anti-ASC Pandemic” Possible?

On March 23, 2009, revisions were made to the New Jersey anti-self-referral statute (the “Codey Law”), which prohibits New Jersey physicians from referring patients to healthcare services in which the physicians have a significant beneficial interest unless an exception exists. Although heralded as a victory in the wake of Garcia v. Health Net, in which a New Jersey Superior Court held that referrals to ASCs were prohibited by the then-current version of the Codey Law, the so-called “Codey Amendment” contains, among other provisions, a moratorium on the development of new physician-owned ASCs.

A question arises in the amendment’s adoption — will other states in the country follow? The answer to that question may lie in the degree of vigilance exercised by state ASC associations in proactively examining the anti-referral language of their states’ statutes and the ability of those in the ASC industry to capitalize on positive recent events which have occurred with regard to relationships with third-party payors.

As originally enacted, the Codey Law contained a broad prohibition on physician referrals to healthcare services in which such physicians held a significant beneficial interest. Exceptions were permitted for referrals for specific services which did not include referrals for services performed within an ambulatory surgical center. Despite the lack of an express exception applicable to ASCs, physician ownership in New Jersey ASCs proliferated as investors relied upon unpublished and informal guidance given by the Board of Medical Examiners (BME) to a couple of separate projects. This informal guidance indicated that physician owned ASCs would be viewed by the BME as extensions of the physicians’ medical practices. Relying upon such informal guidance certainly involved taking the path of least resistance, as opposed to attempting to effect an amendment to the Codey Law or secure more formal guidance from the BME. Unfortunately, such reliance seems to have been misplaced.

New Jersey has traditionally been an out-of-network (OON) state with ASC providers receiving on average three times the reimbursement for being out-of-network than in-network. Not surprisingly, payors have used various tactics to fight against having to pay the higher OON reimbursement, including (i) filing suit against OON providers asserting claims of insurance fraud under the New Jersey Insurance Fraud Protection Act and tortious interference with contract; (ii) threatening in-network physicians who refer to OON facilities with termination of network provider agreements, (iii) ignoring assignments of benefits and making payment directly to health plan beneficiaries, and (iv) attempting to require OON facilities to provide additional disclosure statements to patients who schedule services there.

In Garcia v. Health Net of New Jersey, Inc., 2007 WL 5253484 (Ch. Div. 2007), a New Jersey ASC and its individual surgeon-owners filed suit against Health Net of New Jersey, charging that Health Net had improperly declined to renew individual surgeon-owner’s provider contracts. Although the surgeons had been in-network with Health Net, the center itself was OON. Health Net counterclaimed that the center and its owners had committed insurance fraud in submitting claims for reimbursement for services which were provided in violation of the Codey Law.

Although the court held that the requisite intent to commit insurance fraud was not present, the judge called into question the physicians’ reliance on the informal guidance issued by the BME finding that a plain reading of the Codey Law did not support the BME’s position that ownership in an ASC was excepted from the referral prohibition.¹

As a result of the court’s non-binding statements in the Garcia decision, the approximately 40 physician-owned ASCs operating within New Jersey suddenly found themselves “skating on thin ice.” Frantic efforts to address the situation began immediately.

After several iterations, a final version of the Codey Amendment was adopted which unequivocally legitimized physician ownership in ASCs in New Jersey, provided certain conditions are met. Specifically, P.L. 2009, c.24 requires ASCs to be or become accredited by the Centers for Medicare and Medicaid Services (CMS) as an ASC in order to qualify for exception under the anti-self-referral provisions.

In addition, under the Codey Amendment physicians may continue to refer to ASCs in which they have a beneficial interest if (1) the referring physician personally performs the services, (2) income received from the ASC is directly proportional to the physicians’ ownership interest, (3) all clinical decisions at a facility owned in part by non-physicians are made by physicians and (4) the referring physician discloses his or her interest in the ASC to the patient, in writing, including whether the services provided at the ASC will be reimbursed at an OON rate, and posts a sign prominently in his or her office indicating the ownership interest.

The Codey Amendment also imposes a moratorium on the issuance of new licenses to ASCs by the New Jersey Department of Health and Senior Services (DHSS), except in the case of a change of ownership of an existing center; relocation of an ASC to within 20 miles or to a “Health Enterprise Zone” with the DHSS commissioner’s approval and with no expansion in the scope of services provided; ASCs for which architectural plans were filed with the municipality in which the center will be located or with the Health Care Plan Review Unit of the New Jersey Department of Community Affairs by Sept. 23, 2009 (six months within the effective date of the Codey Amendment); entities owned in whole or in part by a New Jersey hospital; and entities owned in whole or in part by a New Jersey medical school.

Payor attacks on ASCs in New Jersey have not been limited to questioning the legitimacy of such entities under state law. Blue Cross Blue Shield of New Jersey (BCBSNJ) introduced a new small business health plan that caps payment for out-of-network ASCs services at $2,000 per person per year. The New Jersey Association of Ambulatory Surgery Centers and the Alliance for Quality Care, a coalition of ASCs and other healthcare providers, contested the state Department of Banking and Insurance (DOBI)’s approval of the plan, arguing that the cap violated state law regulating small employer health benefit plans. DOBI denied the request to prohibit its sale and both the Appellate Division and the state Supreme Court denied stays of the sale pending litigation. The new small plans, although the subject of litigation, have been sold to employers and are affecting ASCs’ ability to receive fair reimbursement for OON services. Other payors may be jumping into the fray. For example, Aetna has instituted a freeze on reimbursement for in-network ASC services and may be in the process of implementing a cap on out of network reimbursement similar to BCBSNJ’s.

The situation started by the Garcia case can generally be summed up in a few simple sentences. The physician-owned ASC industry in New Jersey was content to grow in a murky regulatory environment while generally using aggressive OON tactics against powerful and hostile payors. When the “tremors” caused by the Garcia case struck, New Jersey ASCs were forced to seek hurried redress from the legislature in a national climate that is generally hostile to physician ownership of providers. This hostility is evidenced by provisions curtailing ownership by physicians in hospitals which are contained in all versions of the national healthcare reform bills circulating around Washington. In the end, existing physician-owned ASCs received what they needed but not without paying a significant price. A quasi certificate of need regime has been set in place in New Jersey largely to the benefit of hospital and payor lobbies in that state. The situation is worsened when the payors’ attempts to unilaterally impose caps on OON reimbursement is considered.

Whether the situation in New Jersey will prove to be “contagious” may depend on how nimble ASC advocates in any given state can be when facing similar challenges. For example, recent events in California have created a “foggy climate” similar to that which existed for ASCs in New Jersey before the Codey Amendment was executed. Following the decision in Capen v. Shewry, 155 Cal. App. 4th 378 (2007), the California Department of Public Health (DPH) issued a policy statement instructing district offices not to license, or renew licenses for, physician-owned ASCs. DPH’s position is that, in accordance with Capen, it does not have the authority to license physician-owned ASCs as they fall under a statutory exception to the definition of “surgical clinic.” As a result of the Capen case, ASCs in California are faced with a surreal situation in which Medicare-certified ASCs can continue to open and operate while the state cannot license such facilities.

The California Ambulatory Surgery Association (CASA) has not been content with operating in the gray area created by the Capen case.

“What we learned in California was being complacent was not good,” notes Scott Leggett, the immediate past-president of CASA. Leggett states that his previous involvement with CASA taught him that the association should have been more proactive in confronting changes in the state’s worker’s compensation laws when it had the opportunity to do so several years ago. Leggett says that such experience has taught him that failing to be proactive means that “… you are on the menu rather than having a seat at the table.” According to Leggett, CASA is using the Capen case as an opportunity to educate lawmakers as it aggressively seeks to correct the uncertainty left in the Capen decision’s wake.

ASCs around the country would also be well advised to actively monitor positive developments on the OON reimbursement front if they encounter tactics such as those being implemented in New Jersey by BCBSNJ as previously described. For example, New York Attorney General Cuomo announced on Oct. 27, 2009, that a new not-for-profit company, FAIR Health, Inc. and an upstate research network headquartered at Syracuse University have been established which, collectively, will develop a new independent database of “usual and customary” rates for consumer reimbursement for OON charges to replace the widely used Ingenix, Inc. system which was earlier debunked in Cuomo’s report, “The Consumer Reimbursement System is Code Blue.” This new reimbursement system will be funded by the almost $100 million in settlement money received by the state from insurers like United HealthGroup and CIGNA after assertions by the Attorney General that such companies had under-reimbursed consumers and providers by hundreds of millions of dollars for OON services. Further, ASCs should require that their counsel track the class action lawsuits underway on OON issues in Georgia and California.

Although the battles occurring in New Jersey and California are the result of a confluence of factors unique to each state, ASCs are well-advised to be ever vigilant in removing ambiguity from their state’s anti-referral statutes at the earliest possible opportunity and in assessing the status of state-specific reimbursement plans and legislation. The lessons of New Jersey and California teach us that efforts to exert change are best made proactively, rather than reactively once laws have been passed, regulations have been promulgated and physician-owned ASCs’ rights have been eroded.

Lorin E. Patterson is a partner in the Falls Church, Va. office of Reed Smith LLP and a member of the firm’s Life Sciences Health Industry Group, practicing in the area of healthcare regulatory law.

Lisa S. Albright is a senior healthcare associate in the Princeton, N.J. office of Reed Smith LLP who specializes in regulatory and transactional matters for ambulatory surgery centers, hospitals, physician groups, skilled nursing facilities and other healthcare clients.

Reference:

1. Health Net appealed the decision and, on Nov. 17, 2009, the Appellate Division affirmed. Garcia v. Health-Net of New Jersey, Inc., No. A-2430-07T3 (N.J. Super. Ct. App. Div. Nov. 17, 2009). While the affirmation of the lower court’s holding is very positive news for ASCs operating on an OON basis it does nothing to mitigate the ramifications of the Codey Amendment.

 

Online Defamation and Libel: The Modern Faceless Crime

The hallmark of the Internet is its ability to increase the free exchange of ideas. The ease with which information is proliferated increases the damage caused by false or harmful information, stretching the bounds of defamation.

The Internet gives the average person an opportunity to express their opinion, anonymously, well beyond any other venue. An individual now has the ability to publish statements and articles across the world in an instant, without the guidelines or checks and balances of traditional publishing. Thereafter, online erroneous statements may linger for months, or even years, almost impossible to recover, amend and remove. Internet defamation lawsuits are on the rise and the number of people sued over online speech is increasing sharply, according to statistics from the Citizen Media Law Project at Harvard’s Berkman Center for Internet and Society.

As a physician, you know that your reputation is one of your most valuable assets. It takes years to cultivate impeccable credentials and positive public perception. Unfortunately, one disgruntled patient can destroy that hard work in minutes with a few clicks of the computer mouse. In these difficult and challenging times, protecting your most valuable assets becomes top-of-mind priority.

Disgruntled patients, or those posing as patients, can easily publish content to the Web — regardless of the veracity of that content. Increasingly, physicians are experiencing the damage caused to their hard-earned reputations from these posts, blogs and doctor rating sites.

Below you will find the tips and tools to make it easier to track, control and manage your online reputation.

Purchase Domain Names

Buy iterations of your name and practice name as domain names. Imagine a potential patient going to “your name”.com and reading horrible statements about you posted by a disgruntled patient or competitor. Unfortunately, this happens more than you think. Buying iterations of your name is a simple and inexpensive way to prevent such attacks. If your name is common and the exact match is unavailable, look for a combination of your name and either a location or a professional title (example: johndoemd.com,doctorjohndoe.com or johndoedallas.com). Also, check to see if your name is available with hyphens (example: john-doe-md.com). You can buy a .com domain for as little as $7.95 a year from site providers such as GoDaddy or DreamHost; even cheaper if the “.com” extension is not a priority.

Keep a Watchful Eye

Proactively monitor the Internet. If you wait until someone notifies you of a questionable online post or rating before you begin a proactive monitoring campaign, then you are too late. The damage is already done. Perform monthly (minimum) checks to see if there is any information about you that could be potentially harmful. Search for your name, practice name as well as key staff members. Medical Justice’s Web Anti-Defamation service includes proprietary technology that proactively monitors the top physician rating Web sites. The software immediately notifies its members of any new postings or ratings containing member physicians’ name or practice names.

Act Fast

If you do find something posted about you online that could be potentially damaging, take action immediately. Whether it is a friend posting photos you do not like or an anonymous person slandering your business, taking care of it sooner rather than later is best. The longer it stays on the Web, the more people see it and the more damage it can do. Certain attorneys specialize in cyber issues and can assist with legal redress if necessary.

Your Google Reputation

Consciously create a clear and positive image of yourself and monitor the Internet for any type of commentary – good, bad or indifferent. Be contentious while creating and updating content on your practice, professional or social Web sites. Ambiguous comments or statements can be used misinterpreted. Make sure that your content is clear and unmistakable. In today’s world, Google is more than a search engine — it is a reputation engine. When a prospective patient, professional partner or investor wants more information about you, they ultimately turn to Google for information. Some individuals, with flawed online reputations, try to manage the situation by creating copious content to “push down” negative information on Google. This tactic can take many weeks — sometimes months — before your new positive image rises up through the ranks of Google. Do not wait until you are knee-deep in a crisis to decide you need to take charge of your online reputation. A proactive strategy is more effective than reactive tactics.

Assume Everything Can Get on the Web

Both in your personal and professional life, what you say online and offline can come back to haunt you. Be safe and assume any e-mails, conversations, articles or photos may eventually end up on the Web. If you are blogging, writing editorials, running a Web site or just have a social media profile, be careful what you post. you say may cause you problems in the future. If you do want to keep a non-practice affiliated blog or engage on social internet message boards, create a pseudonym for yourself so you cannot be tracked.

Keep Social Networks Private and Actively Monitor

Thirty percent of online physicians in developed markets report that they use Facebook, according to the Medimix International Report. Keep your social networking profiles private to all except those you approve. This will keep casual or even malicious viewers from seeing your personal information. Keep in mind that the influence of connections made on the Internet can be much more impactful for high-visibility individuals, such as physicians, than had been previously perceived. Create custom RSS feeds based on keyword searches: Feedster.com, Technorati.com, IceRocket.com,Google.com/blogsearch, Blogpulse.com, MSN Spaces, Yahoo! News, Google News, MSN News and PubSub. RSS stands for “Really Simple Syndication” — it’s a format for distributing and gathering content from sources across the Web, including newspapers, magazines, and blogs. RSS feeds are an efficient way to monitor and track content that affects your practice.

Put Your Best and Most Accurate Foot Forward

Make sure that your online presence will not be mistaken for someone else’s or used against you.  Sign up for social network sites, starting with the most popular like LinkedIn and Facebook.  Complete your social network identities with valid information and data that you want to be “known” about you (e.g., specialty, practice information, credentials, location). Do not forget to link to your own Web site(s). While signing up and setting up your identity on these social networks, make sure you pay special attention to the privacy settings.  Set certain features, like personal pictures and posts, to private.

 

Link, Link, Link…

Google sets a high ranking priority to Web pages that contain active links.  This is an easy way to address the search engine optimization (SEO) for yourself as an individual or your medical practice. Make it a priority to link your Web site to your social networking identity links as well as other web pages that you are associated with (e.g., medical societies, alumni organizations, non-profit affiliations). Anonymity is part of the Internet. Unfortunately, anonymity creates a willingness and boldness to criticize. When online criticism (anonymous or not) strays over the line into libel, questions surrounding freedom of speech arise.  Traditional remedies and approaches do not apply to cases involving physicians. First, physicians are bound by state confidentiality laws and HIPAA. They are forbidden from defending against reputational assaults by posting the medical record as a correction. Second, under traditional legal principles, one who is defamed can sue not only the originator of the libelous comments, but also the distributor- such as a newspaper or a television station. Using that analogy, a natural target would be the digital distributor, the Internet Service Provider (ISP). However, in 1996, Congress foreclosed that option by granting broad immunity to ISPs for the tort of defamation. In general, physicians have few practical after-the-fact remedies against Internet assaults on their reputation.

 

Ambulatory Surgery Center Outlook for 2010

With 2009 closed, the preparation for a successful 2010 is here. Most centers have considered the trends and utilization by surgeons and begun the budgeting process to establish goals and objectives for 2010. When setting those goals, the greatest factor for existing centers is capturing the appropriate cases from prior utilizers and recruiting new cases from surgeons seeking the efficiency of an ambulatory surgery center (ASC). Management team members need to assess their individual challenges at their center and work to contain cost, improve production and eliminate waste. Similarly, physician partners need to assess their role in the center in assisting the cost control, reviewing data on cost, preference items and consider case adoption when appropriate.

For centers under development or under consideration, team members should be recasting projections, timelines and fully understanding the progression from planning to operations making assurances that the plan reflects today’s environment. As the economy continues to remain slower than anticipated, the economic downturn results in the need for all members of the partnership to personally guarantee loans, there is additional scrutiny of the deal points, terms are aggressive and the process is slower than in past history.

In general, 2010 has many positive aspects to consider. From an operational aspect the decrease in professional fees result in surgeons seeking an ambulatory setting for partnership as well as the need for efficiencies to impact their total practice. The investment in an ASC is often a great stabilizer to a physician base attempting to control their surgical environment and production. An ASC could be formed easily around a smaller core group of physicians to assist in attaining their goals. As with any partnership, the greater affinity for the groups’ cohesiveness the greater focus on core principles and alignment.

As hospitals continue to have pressures and cuts in personnel, the ASC environment can recruit registered nurses and surgical techs more easily by bringing quality offerings with less pressure on elevated salaries. This will allow ASCs the ability to recruit and retain talented employees and bring value to those employees seeking part-time and PRN work schedule. The ASC setting can be of great value to registered nurses, as the flexibility of part-time and PRN work can fill current needs of local resources. Surgeons will continue to seek potential avenues for an ASC and hospitals may consider expanding the potential for joint-venture opportunities. A counter measure by hospitals may be to employ specialists and reducing the potential for surgical intervention outside the hospital catchment entities. This could reduce the availability of specialists needed to expand or develop existing or future ASCs.

Currently, building and labor costs are lower due to the economic pressures and the need for contractors to keep crews active, resulting in lower costs and rental rates. This is a critical point for existing center remodeling and expansion allowing for tired assets to be updated and keep pace in the local standard of care. Additionally, the start-up facility has the opportunity to increase margin by lower cost space and lower lease rates as the entire construction cost is decreased. This drives great value, as the fixed cost is often over a longer time frame and the savings great over the life of the lease. Additionally, the availability of new, used and refurbished equipment remains of value with the current pressures on companies to move existing equipment and reduce inventory in all categories. Equipment and surgical instrumentation companies are increasing the ability to provide valuable terms and payment methods to meet centers needs.

Reimbursement is always a challenge in any healthcare entity. In the ASC industry the negotiation of contracts and details that must be included in each negotiation is critical to the success of a center. Each year, a careful evaluation of the centers managed care contracts, covered codes, multiple procedures, carve-outs and implant reimbursement must be reviewed and negotiated. Beyond the contracting, the appropriate billing and collections- to-contract standards must be complied to receive each dollar on every case. As the consolidation of payors continues and contract language becomes more complex, it is essential that your team has the appropriate resources to grow net revenues. The collection of co-pay and deductibles must also be conducted in a proactive manner. Each patient must be notified of the expectations at time- of-service and associated costs of the surgical encounter. The evaluation of in and out-of-network must be weighed, justified and aligned with each state’s regulatory guidelines. As the co-pay and deductible becomes more burdensome on the population, the potential for the delay in elective cases being scheduled timely may occur.

As the healthcare debate continues, ASCs continue to be the lower-cost environment to assist in keeping healthcare costs from climbing into the future. Assuring the right case for the right environment is often an indicator that is overlooked in an ASC. Having partners understand the appropriate case type, acuity, co-morbidities and implant reimbursement is key to assisting in the profitability of cases. ASC management teams must communicate trends and encourage participation in the process allowing all employees become knowledgeable in the aggregate center costs. All team members must have the necessary attention to detail, high customer service and clinical excellence required of today’s successful ASC. The center’s management team must proactively manage the center to optimal levels to assure the clinical and financial performance of the center.

At Practice Partners in Healthcare we specialize in de novo and turn-around opportunities, providing a unique development process and management arrangements. Practice Partners is a minority equity holder, leaving the majority to physicians and hospital partners. We bring success-proven management expertise to the clinical, financial and regulatory performance of new and existing surgery centers. Experienced in both CON and non-CON states our team provides seasoned talent for developing and managing physician-owned and hospital-physician joint ventured surgery centers.

Larry Taylor is president and CEO of Practice Partners in Healthcare, Inc.

 

Coding and Billing Best Practices

Wikipedia defines “best practices” as the most efficient and effective way of accomplishing a task. As the term has become more popular, some organizations have begun using the term “best practices” to refer to what are in fact merely rules. Despite the need to improve on processes as times change and things evolve, best practice is often considered to describe the process of developing and following a standard way of doing things. However, the need for flexibility is ongoing and best practices also can evolve to become better as improvements are discovered.

This article will highlight what we feel are best practices for each area of the reimbursement cycle. Each of these areas has many categories and subcategories of the best way to do things to achieve the best results. Limited by space, we will cover the main categories and leave it to you to plug in your own sub-categories of best practices.

General

The following is a general overview of areas which will enable your employees to accomplish their jobs in an efficient and accurate manner.

1. Policies and procedures:

Develop written policies and procedures.

» Train billing staff to follow policies/procedures.

» Mandatory annual review and testing.

2. Caseloads/goals:

Establish reasonable caseloads for each position.

» Determine performance goals.

» Readjust goals when necessary.

3. Documentation:

Stress importance of documenting all reimbursement actions.

» Documentation must be clear, complete, standard language and accessible.

4. Miscellaneous:

This is a composite of other important “best practices” for all areas of billing process.

» Electronic submission, follow-up, etc. when possible for quicker reimbursement.

» Benchmark month to month.

» Utilize lockbox and EFT technology.

» Establish guidelines for small balance and uncollectible accounts.

» Perform random performance audits in all departments.

Coding

1. Ethics:

Coders are the first line of defense in preventing the center from engaging in questionable billing practices. Coders must:

» Be aware of OIG regulations.

» Recognize fraudulent billing practices.

» Request additional documentation when needed.

2. Communication:

There must be an open line of communication between the coder/biller and the payment poster.

» Coders should have access to all denials to verify coding; discovering errors and/or trends is best accomplished by review.

3. Documentation:

Operative notes are the primary resource for coders.

» Open communication between coders and physicians is key.

» Provide information to physicians on what is needed for optimal coding.

4. Education:

The OIG compliance program requires that the billing staff have ongoing education. With the ever-changing rules and regulations, it is important that the ASC provide continuing education for the billing office personnel.

» If your coders are certified, they require continuing education credits to maintain their certification.

» All billing personnel need to participate in educational and compliance programs.

5. Resources:

Up-to-date and appropriate coding resources are a definite necessity for all coders. These should include:

» Annual updates on coding, HCPCS and ICD books.

» Specialty coding resources.

» Updated compliance requirements.

» Current Medicare lists of approved CPTs, device intensive procedures, outliers approved in ASCs, etc.

» Specific managed-care contracts with rules regarding secondary codes, implants, etc.

Billing

1. Receiving claims:

Timely receipt of a correctly coded claim is paramount.

» Claims should be coded, given to biller and submitted within 24 to 48 hours of receipt of transcription, invoices, insurance information, etc.

2. Carrier requirements:

Each carrier may have different rules regarding disseminating information on to the claim template.

» Provide billers with specific carrier guidelines.

» Accurate input and follow guidelines for listing secondary procedures or bilateral procedures.

3. Clearinghouse requirements:

Depending on the clearinghouse, there are specific requirements that must be met in order for the claim to be accepted.

» Utilize clearinghouse scrubber component to detect errors and prevent delays.

» Access clearinghouses reports to determine if claims were rejected, accepted and/or sent on to the payor; correct any errors and resubmit.

» Check with clearinghouse 24 hours after submission to determine if all claims cleared.

Payment Posting

1. Payment errors/denials:

This phase is where errors and denials are detected and steps taken toward correction.

» Send all payment errors and denials to the coding department for review.

» Attempt to correct small problems by direct phone contact with carrier.

» After coding review, institute an appeal with carrier.

» After initiating appeal, give claim information to collector for follow-up.

Collections

The collection process begins as soon as the patient is scheduled for a procedure and continues until their account has a zero balance.

1. Verification/pre-authorization:

Where required, get pre-authorizations prior to date of surgery.

» Check on eligibility and benefits, and document these.

2. Patient financial counseling:

All patients should be called and advised of their financial responsibility and discussion of payment choices.

» Depending on findings from insurance verification, patient should be told of co-pay and deductible amounts owing.

» Describe any payment options available.

3. Upfront collections:

The receptionist should have necessary information regarding patients’ upfront dollar amount.

» Collect pre-agreed-upon amount from patients.

» If applicable, obtain signature on promissory note.

4. Insurance collections

» Check with payor one to two weeks after submission to determine if claim is on file; this can usually be accomplished electronically.

» If claim not on file (CNOF), resubmit immediately and check to determine if payor received

» Clean Medicare claims using EFT can be expected to pay within 14 to 21 days.

» Clean commercial claims using EFT can be expected to pay within 21 days.

» Call payor and speak to representative if payment not received in that time frame; determine status and send any additional information needed — and document this process.

» Follow up on all outstanding claims using an Aging A/R by Carrier report.

5. Patient collections:

Patient collections can be somewhat daunting, especially during this economic downturn.

» Send three notifications and make one phone call.

» Send account to collection agency.

Although basic rules (best practices) of billing and collections don’t change a great deal, the ways to perform them have improved with electronic communication. Reiteration of the basics certainly is encouraged and auditing to determine whether your employees are following these rules is a must.

Caryl A. Serbin, RN, BSN, LHRM, is president and founder of Serbin Surgery Center Billing, LLC.

 

Legal Issues for 2010

The ambulatory surgery center industry (ASC) confronted both challenges and change in 2009. However, with numerous ASC developments underway and an economic recovery on the horizon, the ASC industry is poised to perform well in 2010. This article addresses the key business and critical healthcare regulatory developments of this past year and their potential impact on the ASC industry for 2010.

Sale to ASC Management Companies and Health Systems

A significant business issue confronted in 2009 by the ASC industry was the decline in transactions involving a sale of a significant equity interest in an ASC to an ASC management company or health system. This decline was likely precipitated at least in part by a few historical ASC management companies that slowed down their acquisition strategies due to the tightened credit market.

In addition, the terms and pricing associated with a sale of a significant equity stake in an ASC clearly changed. For the past few years, many ASC management companies and health systems were willing to acquire a controlling equity interest in an ASC for a 7-plus purchase price multiple. Most purchase price multiples have dropped into the 5-6 range.

The purchase price formula is typically calculated as follows: (i) the ASC’s earnings before interest, taxes, depreciation and amortization (EBITDA) for the prior twelve months; multiplied by (ii) the purchase price multiple (e.g., 5-6 range); less (iii) the ASC’s long-term liabilities; multiplied by (iv) the ownership percentage being purchased. For example,. assume an ASC with $800,000 in EBITDA and no long-term debt desires to sell a 51 percent interest to an ASC management company, then the purchase price could range from $2 million to $2.5 million (e.g., [($800,000 x 5 to 6) – $0] x 51 percent).

Some new well-funded corporate buyers have also emerged in 2009. Additionally, hospitals continue to have an appetite for ASC acquisitions. As a result, a slight uptick in these transactions can be anticipated for 2010. While purchase price multiples will likely hover in the 5-6 range, ASC companies have also introduced more creative strategies to make deals more attractive to selling physicians, including the use of earn-outs and staged transactions. These strategies warrant careful attention as they can introduce new healthcare regulatory and other legal issues into the mix.

Hospital/Physician Alignment Options and Changes to the Stark Law

Hospitals and health systems will likely continue to leverage their higher reimbursement rates and community branding as a means to attract ASCs to them over other corporate investors. Historically, some hospitals pursued an “under arrangement” transaction strategy with physicians in an ASC setting.

While the terms of an “under-arrangement” transaction can vary considerably, it typically involves a physician-owned company leasing the space, equipment and/or staff to the hospital — perhaps on a turn-key basis. The hospital bills Medicare and other payors for the services and pays the physician-owned entity a fixed fee, variable fee or hybrid fixed/variable fee.

However, Stark law changes that became effective as of Oct. 1, 2009 forced hospitals and physicians to restructure or unwind such arrangements. In particular, the scope of the Stark law was expanded to apply not only to the entity billing for a “designated health service” (i.e., the hospital) but also the entity that is performing the designated health service (i.e., the physician-owned entity). In addition, the Stark law no longer permits a physician owned entity to lease space or equipment on a per-click, percentage of revenue or other similar fee structure.

In what appears to be an emerging trend across the country, a number of health systems are also considering (or for many — reconsidering) a broad spectrum of hospital/physician alignment and integration options including physician practice acquisitions, use of the foundation model, and entering into professional service and employment arrangements with surgeons and other proceduralists. These strategies may be driven at least in part by the changes to the Stark law as well as the mutual desire of hospitals and physicians to collaborate in the provision of healthcare services in a more meaningful and long-term manner.

Migration of Procedures From Hospitals Into the ASC

At the individual ASC level, in spite of a slight decrease in demand, many ASCs have grown their profits. The revenue growth may be due in part to the movement into the ASC of procedures historically required to be performed in the hospital setting, such as vascular access and certain orthopedic procedures.

The emergence of these procedures new to the ASC setting has been primarily driven by advances in medical technology as well as the expanded list of Medicare ASC covered procedures under the revised ASC payment system. Adopted by the Centers for Medicare and Medicaid Services in 2007, the revised ASC payment system allows an ASC facility fee to be paid for any surgical procedure performed at an ASC, except those surgical procedures that CMS determines are either not safe when furnished in an ASC or in which the expected duration of services would exceed 24 hours following admission.

The addition of these procedures to an ASC can have an immediate positive impact on an ASC’s bottom-line. As a result, many ASCs are examining the viability of adding these procedures to their ASC by attracting the appropriate physician specialists and sub-specialists and properly equipping the facility for such procedures.

Physician Re-Syndications

Physician re-syndications (i.e., sale of equity interests to physicians) remain very active for a number of reasons. First, ASC companies and physician owners of ASCs often desire to solidify physician utilizers’ relationships to their ASC by having them purchase equity interests. Second, a number of ASCs are reselling equity that was repurchased from prior physician investors who are no longer utilizing the facility.

Many ASCs, however, are struggling with how to make the buy-in price to physicians more attractive. The purchase price must be consistent with fair market value to minimize anti-kickback law issues. The purchase price formula for a physician’s purchase of a minority interest is the same as the formula used by an ASC management company, except that a 2-4 purchase price multiple is typically used in lieu of the 5-7 multiple. The buy-in, however, can still be quite significant. For example, assume the same ASC, as previously mentioned, desires to sell to a 5 percent equity interest to a physician, then the purchase price could range from $80,000 to $160,000 (i.e., [($800,000 x 2 to 4) - $0] x 5 percent) Allowing the ASC or its owners to loan monies to the physician to buy-in, including through an advance of future ASC distributions, could raise regulatory concerns. Accordingly, an ASC may consider alternative strategies to make the purchase price more affordable. These strategies may include the use of a dividend recapitalization or preferred distribution (which are treated as a liability in the formula described above thereby reducing the purchase price).

Alternatively, an ASC could undergo a tax-free restructuring so that the ASC is owned through a physician group practice. Group practice ownership of an ASC may allow an ASC to depart from a fair market value buy-in price.

Physician Buy-Backs

Many ASCs continue to be confronted with physician partnership and “deadweight” issues. A recently filed lawsuit, DeBartolo v. HealthSouth Corp. brings to the forefront the issue of non-productive physician owners in ASCs. The lawsuit was filed by a surgeon investor in an ASC whose shares were repurchased because of his failure to perform at least one-third of his procedures at the ASC.

The case is significant because it addresses the critical issue of whether the repurchase of a physician’s equity interest for failing to utilize the ASC would violate the anti-kickback law. On the one hand, the federal anti-kickback law ASC safe harbor mandates that a physician must perform at least one-third of his procedures at the multi-specialty facility in which he has an ownership interest. However, regulatory concerns could also arise if an ASC’s redemption of a non-productive physician is intended to penalize the physician for not selecting this particular facility for the procedure.

Nevertheless, many ASCs have incorporated compliance with the one-third test requirement into their governing documents. If a physician owner fails to perform at least one-third of his or her ASC procedures at the ASC in which he or she is an owner, then the ASC’s governing document may provide that such physician’s ownership interest in the ASC can be repurchased by the ASC or its other owners.

In an early ruling in DeBartolo, the federal court dismissed the lawsuit indicating it should be addressed under state law. While too early to determine, this initial ruling suggests that physician buy-back issues may simply raise state contract law claims. It is therefore critical that an ASC’s governing document incorporates the latest terms and mechanisms for dealing with physician equity buy-backs in a manner that takes into account the latest regulatory and other legal guidance.

Conclusion

There is no denying that this past year was a bit sluggish for the ASC industry, particularly in the transactional front, as it faced its own set of challenges including dealing with aggressive payor “out-of-network” billing strategies and the potential impact of health system reform. However, most ASCs escaped generally unscathed from the economic woes of this past year.

As 2010 gets underway, there are a number of favorable indicators for the ASC industry. Newly emerging buyers with capital are in search of ASC acquisition opportunities. Hospitals remain interested in pursuing collaborative strategies with physicians, particularly in the ASC and other outpatient sectors. And, ASCs are adopting a number of revenue enhancement strategies including through performing procedures not historically performed in the ASC setting, physician re-syndications and by adding ancillary revenue streams (e.g., anesthesia). As a result, the ASC industry is poised to have a strong year in 2010.

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