Electronic Medical Records - Not as Common as You Might Think

A recent Wall Street Journal report indicated that only 10% of the nation's hospitals and 7% of physician practices have full-fledged electronic medical records (EMR).  The article goes on to point out that even among those with some form of EMR, very few actually share that information with other providers.

As we mentioned earlier, the big government stimulus dollars are an incentive to invest in healthcare IT and the ability to share information among providers is a part of the "meaningful use" test needed to secure the bonus payments.

More meaningful, robust healthcare information systems are the clear goal of the stimulus funding.  As the article points out, there is a lot of work left to do.

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More from the Healthcare Reform Bill - New 1099 Requirements: Corporations Not Exempt from Reporting

An interesting bit of the Healthcare Reform Bill received some publicity this week in a Boston.com article. The key news is that corporations will no longer be exempt from 1099 reporting requirements.  This change is effective for transactions beginning January 1, 2012. 

This will no doubt be an administrative burden upon implementation and surely gives the IRS more tools to track the underreporting of income. 

This is another small, but important requirement for healthcare accounting / healthcare tax compliance personnel.  The onion that is the Healthcare Reform Bill continues to unfold.

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Proposed House Bill to Double Medicare Fraud Penalties

The newly introduced bill, the Medicare Fraud Enforcement and Prevention Act, is a bipartisan effort to curb what is estimated to be a $60 billion dollar per year crime.  The Act proposes to double prison sentences from 5 to 10 years and fines from $25,000 to $50,000 for Medicare fraud-related crimes.

The full AP story is here.

Whether or not the bill gets signed into law, it is indicative of a trend towards more political will in Medicare and Medicaid reimbursement enforcement.

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Healthcare IT - Government Stimulus Money Spurring Investment

The American Recovery and Reinvestment Act earmarked billions of dollars in Medicare bonuses available to hospitals and physicians to encourage spending on healthcare information systems.  Payments are available beginning 10/1/10 for hospitals and 1/1/11 for physicians.  However, these incentives will turn into penalties for late adopters starting in 2015.  The key to earning the bonus is demonstrating the somewhat nebulous "meaningful use" standard. 

This carrot and stick framework is encouraging a number of our clients to jump in early and try to maximize the available federal dollars as a subsidy for their healthcare IT investment.  The benefits of an integrated information system have long been touted to include:

  • Reduced billing costs
  • Reduced transcription costs
  • Reduced duplicative testing
  • Lowered risk of medication errors
  • Streamlined prescription refills
  • Improved coding
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Physician Employment Substitute? - Clinical Lease Physician Compensation Models are Gaining Momentum

As the current wave of physician acquisitions grows, we are seeing some of our clients, both hospitals and physicians, wanting to and entering into clinical lease arrangements as an alternative to direct physician employment. 

The Basics

The general arrangement is as follows:

  • The physician remains independent, but assigns the right to bill and collect for services provided to a third party, usually a health system.
  • The health system, in turn, guarantees a clinical rate to the physician.
  • Payment is generally paid on a production basis -- typically in a rate per wRVU fashion.

As always, the compensation paid under a clinical lease model must be consistent with fair market value. 

Physician Perspective

This has been a good option for physician groups that are not interested in an immediate sale, but want stability with respect to income and an opportunity to develop a closer working relationship with a health system. 

Health System Perspective

Health systems also get the opportunity to more closely evaluate the relationship. Sometimes this is an interim step towards a full employment arrangement / practice acquisition.  This can also be a good relationship structure for a health system if it has insufficient resources to acquire and/or manage a practice.


This type of physician compensation model has been successfully implemented in a number of markets for a variety of reasons, including the few mentioned above, but certainly in other situations as well.  We anticipate increased utilization of this type of arrangement in the market for the next two to three years.

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21% Medicare Cuts - Delayed Again

The never-ending story of 2010 Medicare payments cuts has been delayed (again).  The delay this time is administrative.  Because Congress is somewhat likely to delay or amend the scheduled April 1 reductions in payments, CMS has decided to not issue any reduced payments as of yet. 

CMS announced it would hold post March 31 claims an additional 10 days in order to allow Congress time to address the issue after returning from Easter recess.  This is just the latest hiccup in for practices in analyzing Medicare and Medicaid reimbursement for 2010.

This is Bloomberg's take on the delayed cuts.

We are all back to a wait and see approach on this one.

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New Disclosure Requirements on Physician Gifts - More from the Healthcare Reform Bill

Companies who make drugs, devices, and medical supplies will be required to publicly report gifts and payments made to physicians and teaching hospitals. 

Here's a link to the Pew Prescription Project's Fact Sheet.

Cash or in-kind consideration (of many varieties) are required to be reported.  Disclosures will include a physician's name, address, provider number, and value of payment.

This is another important healthcare consulting item for physicians and hospitals to consider as the interact with sales reps and like going forward.
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New Medicare Commission - A New Frontier in Annual Reimbursement Determinations

As many details are continuing to emerge from the new landmark healthcare reform bill, one interesting item for Medicare and Medicaid reimbursement is the creation of a new Medicare Commission.  Among other things, the Medicare Commission will set reimbursement levels that, if not taken up by Congress for discussion, will be implemented.  Even if Congress votes for a different allocation or amount of funding, it would still be subject to a possible Presidential veto.

Here's a link to the Financial Times video interview of Peter Orszag, White House Budget Director. 

Especially interesting to me was Mr. Orszag's comment that the Medicare Commission could be as significant to health policy as the Federal Reserve is to fiscal policy.

Could this mark the end of Congress' last minute elimination of statutory cuts to Medicare reimbursement?  Many of our clients thought this was the year the seemingly annual 20%+ cuts to reimbursement would take place.   It will be interesting to see how this new Commission impacts the reimbursement landscape.
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Stark Self-Referral Act - Updated by Landmark Healthcare Reform Bill

Our friends at the American Health Lawyer Association have alerted us to three provisions of the Patient Protection and Affordable Healthcare Act that modify the Stark regulations.

Since Stark Compliance is frequently a hot topic, here is a brief summary of the three changes:
  1. Stark Self Referral Disclosure  CMS must develop and implement a self disclosure protocol for actual and potential stark violations.  CMS is also granted the authority to compromise or reduce otherwise statutory penalties.  The OIG or Department of Justice are not required to be involved in settling any cases under this protocol.
  2. In Office Ancillary Disclosure  The in-office ancillary services exception under Stark now requires a referring physician to inform patients (in writing and at the time of the referral) that the patient may receive various ancillary services, such as imaging or other DHS services, from a source other than the referring physician / practice.  In fact, physicians must provide patients with a written list of suppliers who furnish equivalent services locally.  This is retroactively effective as of 1/1/2010.
  3. Limits on Physician Owned Hospitals  Physicians are essentially barred from future investment in hospitals, except as meets the whole hospital exception.  Current investments are grandfathered as of a qualifying date (currently 8/1/10, but subject proposed at 12/31/10 in reconciliation bill).  There are also increased disclosure requirements and heavy restrictions on expansion of facilities, including operating rooms, procedure rooms, and beds.
Compliance with the new in office ancillary disclosure requirement is an obvious physician practice consulting item with respect to ongoing Stark compliance.  Let us know if you have any questions about the above or expected implementation.

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MGMA Benchmarking - Physician Extender wRVU's

Are "incident-to" wRVU's generated by a non-physician provider included in the MGMA data reported for physician wRVU's?

This was a key question in a recent healthcare compensation study we performed. 

It turns out that they are included in the physician data.  The "TC/NPP Excluded" that appears in many of the tables in MGMA's Physician and Production Compensation Survey is not intended to include the incident-to wRVU's generated by non-physician providers.

Here is what we are referring to:

Partial MGMA Sample Table

The NPP Excluded from the chart above indicates that independently performed non-physician provider services are not included.  Those services relate to non-physician provider work billed directly under the non-physician provider's provider number (typically at a discount from physician rates). 

Therefore, the inclusion of non-physician provider wRVU's may or may not be appropriate to include in a healthcare compensation study, depending on the facts and circumstances.  The key, as always, is to make sure the underlying data is appropriately matched.


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Medicare Fraud Recovery Audits Are On the Way - Are Your Files In Order?

President Obama just announced a nationwide initiative to find and eliminate fraud and abuse with respect to Medicare and Medicaid payments.  Numerous outlets have picked this item up. 

Here's a link to Politico's coverage.

This may open the floodgates for private recovery auditors to start investigating the various hospital-physician arrangements that exist in the marketplace. 

As relates to our clients, we would encourage everyone to take stock of their arrangements and make sure all compensation, especially physician compensation, is being paid at fair market value. 

Be advised that fair market value opinions are commonly issued with an "expiration date" and, generally, should not be relied upon for more than two years.  Therefore, just having a fair market value opinion on file may not be sufficient protection if it's based on old data and/or old methodologies.

Glad to see enforcement on the national radar?  Worried?  Think the enforcement will steer clear of the smaller markets?  We'd love to hear your thoughts in the comments section.


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