June 15, 2002
7 min read

Billing: an area of vulnerability for ASCs

Ambulatory surgery centers face increased scrutiny. A review of systems for billing issues is critical to compliance efforts.

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In its recent report on quality oversight of ambulatory surgery centers, the Health and Human Services Office of the Inspector General recognized the “explosive growth” of Medicare ASCs, with their number having doubled from 1990 to 2000. With this new attention, ASCs should ensure that all claims submitted to Medicare, other federally funded health care programs or private payors are accurate and that they correctly identify the services provided in order to reduce the risk of being the target of a federal investigation and enforcement action. With potential for increased scrutiny of ASCs by the OIG, this article discusses some of the most recurrent and persistent issues.

Waiver of deductibility, coinsurance

Except in cases of genuine patient financial hardship, business practices that waive patients’ obligations to pay for all or a portion of a service they receive may subject an ASC to criminal, civil and administrative penalties for violations of the Federal False Claims Act, the Federal Anti-Kickback Statute and the anti-beneficiary inducement provision of the Health Insurance Portability and Accountability Act (HIPAA), as well as a host of state insurance fraud and anti-kickback laws.

These problematic waivers may include the routine failure to collect some copayments or deductibles; out-of-network charges; and uses of professional courtesy, particularly “insurance only” forms of professional courtesy.

In 1991, the OIG made clear in a Special Fraud Alert that the routine waiver of Medicare copayments and deductibles may be a criminal offense under the Federal Anti-Kickback Statute. The OIG reiterated this position in a 2001 Advisory Opinion, explaining that waived patient responsibility amounts may also be viewed as improper patient inducements under HIPAA, to the extent that the provider offering those waivers knew or should have known that the waivers were likely to influence a beneficiary’s decision as to where to receive services. One exception to the prohibition against waiving coinsurance is waiver in circumstances of documented patient financial hardship.

Waiver of out-of-network charges

Although the OIG has not opined specifically regarding the waiver of out-of-network coinsurance charges or penalties, its guidance related to copayments and deductibles is instructive as to how the federal government (and some state governments) might analyze a situation involving waiver of out-of-network charges in some situations.

A number of states have clearly prohibited waiver of any type of enrollee financial obligation. Although other states appear to have no prohibition against such waivers, the waiver of out-of-network coinsurance or penalties should, even in those states that permit it, be undertaken only after notifying the affected payer, in order to minimize any risk that the payer later alleges fraud in connection with the practice.

In Colorado, for example, it is a crime for a health care provider to “insurance-only” bill or to submit a claim to a third-party payor which is higher than the fee the provider has agreed to accept from the enrollee with the understanding of waiving the required coinsurance. It also is a crime to commit a fraudulent insurance act, such as knowingly presenting or preparing any written statement that is known to contain false information concerning any material fact to an insurer or to knowingly mislead or conceal information material to a claim. Failure by an ASC to notify an insurer regarding waiver of coinsurance charges could be considered false because a facility submitting claims for discounted services is misstating its actual charge for the services listed on the claim.

Professional courtesy

Professional courtesy may raise similar fraud and abuse concerns. If recipients of professional courtesy are selected in a manner that directly or indirectly takes into account their ability to affect referrals or otherwise generate business for the provider, the Anti-Kickback statute, as well as the anti-beneficiary inducement provision of HIPAA, may be implicated. This risk is reduced significantly where an ASC has a regular and consistent policy of extending professional courtesy to both referral and non referral sources and in a manner that does not take ability to refer into account.

Extending professional courtesy to active physicians in the area who have provided significant referrals over the past year and failing to extend professional courtesy to those who have not or who have retired is likely to be seen as an indication that the professional courtesy program reflects at least some prohibited intent to reward or induce referrals.

Advance beneficiary notices

An additional area of concern relates to advance beneficiary notices (ABNs), which are sometimes referred to (though incorrectly) as waiver-of-liability forms. ABNs are forms de signed to allow a physician to charge a patient for services that the physician believes will be denied by Medicare as not medically necessary, but which the patient nonetheless wishes to have performed and is willing to pay for.

The ABN informs the patient before the procedure that Medicare likely will deny the service as not medically necessary and that, to the extent this in fact occurs, the patient will be liable for the entire cost of the service. If the ABN is not provided in a situation where one could have been issued, the physician may not bill the patient for payment of the services in the event of a denial.

In order for the ABN to be valid, it must:

  • be provided to the patient in writing and prior to the service being performed;
  • describe the particular service(s) at issue; and
  • contain the reasons for believing Medicare will deny payment.

Because of the requirement that an ABN describe the particular service and the particular reason for the expected denial, an ABN is inadequate if the provider routinely gives the notice to all beneficiaries for whom the ASC provides services or classes of services (such as blepharitis). Similarly, it is inadequate to simply state there is a possibility that Medicare may not pay for the service.

You can find the government-approved ABN for Part B services, Form CMS-R-131-G, on the Internet at www.hcfa.gov/medlearn/refabn.htm. “ABN abuse” is a clear focus of the government’s seemingly ever-widening focus on health care fraud and abuse.

Miscellaneous billing issues

In conducting compliance audits of ASCs, we have observed that improper or inaccurate billing may often occur inadvertently for reasons that should be easily enough addressed by ASCs. For instance, if an ASC has a system that bills for surgeries according to the surgery schedule for a given day, cancelled cases that were not removed from the schedule could result in the production of a bill for a service that was not performed. Similar issues often result with this kind of “surgery schedule” billing when a case is modified in the course of the procedure.

Like many other types of providers, ASCs routinely stamp “signature on file” on HCFA 1500s indicating that the patient has authorized an assignment of Medicare benefits. Although a stamped “signature on file” can be used in place of the beneficiary’s actual signature on a claim form, providers should verify that the patient’s signature is, in fact, on file, because if it is not, the government may view such a bill as a false claim. Although this seems a rather technical issue, we are aware of a few cases in which the government has pursued this very aggressive tactic.

Non-ASC approved list services

A consistent area of concern for surgeons and ASC owners is whether and how to bill for a procedure performed at a Medicare-certified ASC if the procedure is not on Medicare’s approved ASC procedure list. An ASC may not bill the Medicare program for a facility fee for procedures not on the Medicare approved list, although such procedures may be permissibly performed at a Medicare certified ASC. In these cases, the performing surgeon is reimbursed by Medicare for the service based on the physician fee schedule, receiving the higher “out-of-facility” rate, where one is available. CMS has only recently clarified how the surgeon should bill for his or her service.

CMS considers non-ASC covered procedures performed by a physician in an ASC to be performed at a “nonfacility” site of service, and the physician’s professional fee would be the higher nonfacility rate. The physician receives additional reimbursement because he or she presumably is responsible for the staffing, supply, equipment and overhead costs associated with the use of the facility, and thus should be paid the higher nonfacility rate to cover those costs.

Some ASCs and surgeons have expressed concern, however, that if the physician designates his or her office as the site of service on the claim form to trigger the correct payment, the physician could be accused of submitting a false claim to Medicare. Fortunately, CMS recently directed that physicians should indicate ASC as the place of service on the Medicare claim, and that they would receive the out-of-facility rate, even with this rate of service listed. This will clarify previously inconsistent guidance to physicians issued by Medicare carriers as to the correct site of service to indicate on the claim. The consequences for physicians who billed the Medicare program for these services prior to CMS’s clarifications remain to be seen.

There are other potential pitfalls in developing billing arrangements for non-ASC list services. For example, we have been approached with questions regarding whether an ASC, in lieu of receiving a Medicare facility fee, may bill a facility fee to the beneficiary. The Medicare program has recently advised that the nonfacility payment to the physician is full Medicare payment for the whole service, and that the beneficiary cannot be charged separately for an ASC facility fee.

In essence, CMS would view this as a double billing for the facility-related expenses and the ASC or surgeon could face significant legal exposure.

There is an additional issue about which surgeons and ASC owners should be wary when dealing with non-ASC list services. Some ASC owners, in a further effort to “recoup” the “lost” facility payment, attempt to offer surgeons the use of the ASC for non-ASC list services in exchange for a percentage of the physician’s higher Medicare payment. Although reimbursement by the surgeon to the ASC for the fair market value of the use of the facility should not present a problem, variations of such arrangements could easily run afoul of state fee-splitting laws as well as state and federal anti- kickback prohibitions. Percentage arrangements tend to be problematic from this perspective.

With ASCs facing increased scrutiny, a thoughtful review of systems for these common billing issues is critical to compliance efforts.

For Your Information:
  • William A. Sarraille, JD, et al, can be reached at Arent Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut Ave. NW, Washington, DC 20036; (202) 857-6462; fax: (202) 857-6395; email: sarrailw@arentfox.com.