Debate continues over Medicare 'reassignment of benefits' controversy

Emergency physicians who work as independent contractors will have to be vigilant in monitoring their reimbursements to stay in compliance

The flap over Medicare's invigorated enforcement of rules that bar certain emergency physicians from assigning payments to a medical group isn't likely to impede the growth of practice management firms.

Emergency physicians can still work for group practices as independent contractors. They just can't permit the groups to maintain absolute control over their Medicare reimbursements.

These are just two views emerging from the ongoing debate over a decade-old Medicare payment rule that, government officials admit, would have gone largely unnoticed if they hadn't stumbled on them two years ago.

Last year, the Health Care Financing Administration (HCFA) in Baltimore alerted medical groups that the agency would begin strict enforcement of the rules. Physicians immediately raised an uproar.

Physicians face salary decisions

Today, six months into enforcement, the ground is still shaking from the so-called "reassignment of benefits" controversy. Hundreds of physicians are still in a quandary over what to do about their payment status. And at least one physician is advocating in favor of legislation to rescind the rule.

"It's a very complex situation," says Richard L. Stennes, MD, an emergency physician and president of The Stennes Group in San Diego, CA, a 40-physician staffing management concern.The regulation forces practitioners to re-evaluate whether it's simpler to abandon their independence in exchange for a salary or undertake the headaches of monitoring every penny of their reimbursements to be in compliance with Medicare, Stennes says.

Many physicians are uncertain what to do, Stennes says. However, most aren't likely to succumb to a salary despite the growing complexity of staying in private practice, he adds. Limiting their income potential isn't part of the equation, he says.

They'll just have to learn to be more accountable for their income or face putting their Medicare certification at risk, Stennes says.

For most physicians, that's a tall order. Here's why:

    · For years, they've been urged without much success by the American Medical Association and other professional groups to play a bigger role in clinical coding and documentation issues. So far, physicians have resisted, Stennes says.

      Now, under the new restrictive environment, they'll have to learn these difficult tasks, he adds.

    · And with physicians already juggling a full portfolio of payment accounts, including a complex mix of commercial managed care plans, the Medicare rules could not come at a worse time.

HCFA orders carriers to review contracts

HCFA doesn't really care. Last spring, the agency instructed carriers to carefully review the contractual relationships existing between physicians and companies such as hospital staffing firms on a case-by-case basis.

According to the agency, the burden of proof is on the medical group. The rules and their related exemptions under the Social Security Act are quite specific:

    · Under sections 42 CFR 424.73 and 424.80 of the Medicare regulations, medical groups that pay physicians who work under independent-contractor status are barred from accepting these payments on their behalf.

      In effect, physician contractors are prohibited from reassigning their payments to a staffing or practice management firm in blanket fashion. Last spring, carriers began soliciting letters from medical groups demanding proof of compliance.

    · The prohibition doesn't extend to physicians who are salaried employees or own a partnership stake in a medical group practice. Physicians can also continue to bill through a hospital or clinic, if their professional services were furnished at those locations. They can also be paid through an outside billing agency provided each provider has an individual Medicare identification number.

Providers fear protracted scrutiny

The restriction affects all private-practice physicians but has enormous implications for emergency medicine. About 50% of all emergency physicians currently work as independent contractors, according to the Irving, TX-based American College of Emergency Physicians (ACEP).

"Does this mean yet more scrutiny of our claims? Are we going to have to look behind us every time we submit a bill from now on?," mused one Chicago-area provider, who asked to remain anonymous.

In effect, HCFA has said yes. The purpose of the regulation is to zero in on potential fraudulent claims submissions. "Physicians should try to interpret the government's efforts as a positive. It's designed to protect them from others intent on defrauding the Medicare program," according to one HCFA official.

Indeed, physicians may be over-reacting. "This isn't likely to have any damaging, long-term effects on either individual providers or group practices, according to Stephen Dresnick, MD, president of Sterling Healthcare Group in Miami, FL.

Check with the IRS

Here are seven tips for weathering the future:

    · Physicians should decide what personally works best for them-to continue as contractors or become salaried. This is solely a financial decision, Dresnick says.

    · They need to apply and obtain their own individual Medicare identification numbers to be in compliance. The same goes whether you bill through a third-party entity, cautions Stennes.

    · You should also be individually enrolled with a carrier and have separate billing numbers for each hospital or clinic. But you do not have to enroll more than once to work at more than one facility within the same carrier jurisdiction.

    · According to HCFA, a contracting physician may be required to complete a separate HCFA 855 form if there is a change in the information previously provided or the services are provided at a facility in another carrier jurisdiction. Check with your carrier.

    · Contractors should also check with a corporate attorney and the U.S. Internal Revenue Service (IRS) in Washington, DC regarding how to interpret a general or limited partnership stake in a medical group.

      Some physicians erroneously interpret their position in some one or two-physician corporations as an employer-employee relationship, Stennes says. Sometimes it's okay, but not all corporations are legally structured the same way.

    · Providers should also get the fine-print from the IRS on laws that cover independent contractors, especially the rules governing special financial arrangements.

      HCFA hasn't specified whether some financial contributions between contracting physicians and groups such as stock options, retirement plans, or profit-sharing are subject to question under the regulations.

    · The medical group should establish a bank account for Medicare reimbursements in the contracting physician's name. This is a priority. According to HCFA, carriers are insisting that the physician, not the group practice, have total control over payments.

Once the payments have been electronically deposited by the carrier into your account, "physicians can then transfer any portion of each payment back to the group practice," Stennes adds.