ED Coding and Reimbursement Alert

Editors Note: Although ECAs primary focus is on emergency coding and documentation, we also attempt to cover significant issues that effect emergency medicine billing and reimbursement. This article deals with establishing a billing mechanism for independent contractor emergency physicians that complies with the recent, new interpretation of Medicares reassignment of payment rules by the Health Care Financing Administration (HCFA).

Whether you are an independent emergency physician contractor working at three different emergency departments, an emergency medicine billing company providing services to several large emergency practice groups, or a hospital that handles billing for its ED, Medicares recent crackdown on reassignment of payment has hit you hard.

For years, independent physicians had been allowed to accept a flat salary or per-hour payment for services from their practice management company and, in turn, re-assign payment of their Medicare claims to that company.

Now, however, the HCFA has ruled these reassignment arrangements invalid and that the only reassignment of payments they will accept are those between employers and employees, from physicians to their medical groupif the health care facility is owned by that medical group; reassignment to a health care delivery system or HMO; and, reassignment by physicians assistants.

Emergency physicians who are independent contractors (ICs) or the companies that handle their billing now have three options, notes Edward R. Gaines, III, senior vice president of compliance and general counsel for Healthcare Business Resources, Inc. a large emergency medicine practice management company with contracts across the country.

These physicians can either become an employee of the management group or groups they currently contract with, form a limited partnership with other emergency physicians (this would make them a delivery system), or set up a banking account known as an electronic lockbox to receive their Medicare payments and then have them automatically sent to the group or company of their choice.

The last option, notes Gaines, is the only one that allows IC physicians to remain truly independent.

Many local emergency groups use independent contractors, and this is exactly how I would tell them to set up the billing, he says.

Emergency Groups Must Act Quickly

The bottom line, Gaines notes, is that emergency physicians and practice groups must decide which course to follow and decide it quickly.

In October, HCFA announced that it was instructing carriers to begin reviewing physicians with multiple reassignment arrangements. Any physicians found to be re-assigning payment to a ineligible company are now subject to a fraud investigation and loss of Medicare participation.

Physicians must file the form HCFA-855 with their Medicare carrier for each company that is eligible and will be accepting payment on their behalf. Or, they must submit a HCFA-855 to receive a provider number on their own and receive their reimbursement directly.

If physicians dont have a valid provider number and re-assignment arrangement in place, they cannot submit claims to Medicare, says Lynne Kottman, vice president of marketing and client relations for Alamo Physician Services, a Texas-based emergency medicine billing company with clients in Louisiana, Arkansas, Mississippi, Florida and Maryland.

Medicare and Medicaid carriers often put time limits on claims submissions, she adds. In many states, Medicare claims are invalid a year after the date of service and Medicaid claims are not accepted more than three months after service, although this varies from state to state.
And, you cant bill Medicaid without a Medicare provider number, she advises.

Kottman says Alamo had some client groups that were unable to bill Medicare for up to six months because they had not finalized the status of their physicians.

The claims that were outside the time limit for submission simply did not get reimbursed, she says.

What is an Electronic Lockbox?

Most physicians when they hear the word lockbox will think of a banking arrangement in which the bank delivers both a banking function and post office function, says Gaines.

What happens is, the billing company sets up the group, all of the third-party payers payments go to a bank account, he explains. A bank staffer opens up the remittances from Medicare or Cigna or whoever and he or she deposits the various amounts and copies all of the correspondence and documentation and forwards to the billing company.

With an electronic lockbox, a physician can set up a bank account and sign electronic transfer agreements with the bank that allow the money in the account to be transferred electronically to the bank account of the billing company. When that physician enrolls in Medicare, he or she also signs a form permitting all billing and payment to be handled by electronic transfer, says Gaines.

Subscriber benefit: For a faxed copy of a
document detailing the steps to setting up an electronic lockbox, please call ECA at 800/508-2582 and request document number ECA2-99.

Using this method, the physician can still collect a straight salary or salary plus incentive from the group or company he contracts with, and the company will receive the Medicare payments and handle all of his billing.

Although this arrangement may seem like it is getting around the rules, it is perfectly legal. Even HCFA has verified it is compliant with Medicare regulations, says Gaines.

The Medicare statute simply mandates that payment be made to the provider of services. Since the payment has been made to the physician (by electronic transfer to the physicians bank account), the law is satisfied.

Tax Complications

However, notes Kottman, there are some complications to using the electronic lockbox.

At the end of the year, the Medicare payments will be reflected in the physicians taxable income even though that money was automatically sent to the management company.

There are two solutions, Kottman advises.

The physician can file an off-setting 1099 form with the IRS indicating that money was transferred to the management company under terms of an employment contract.
Or, the management company can choose to pay the physician the difference between his salary and what he would have received in reimbursement from Medicare, if there is one, she says.

Then the physician only pays taxes on the difference, she notes. It takes real close coordination with the billing company, but then it avoids having to file the off-setting 1099s.

In addition, Medicare requires billing companies to make the EOBs of the physicians billings available if the physician requests to see them.

The individual physicians are actually receiving payment and are responsible for the billing, Kottman says.

Again, these physicians also will have to re-enroll with Medicare to obtain new provider numbers because their prior arrangements with their management company have been deemed invalid.

Warning to Hospital Billing Departments

Several ED groups have mistakenly thought that because the hospital does their billing for them, then their salaried physicians are covered and they can re-assign payment to the hospital.

There is an exception for reassignment to groups that own the health care facility where services are provided, Kottman notes. However, these physicians are not employees of the hospital, they are employees of a group that has contracted to run the hospitals ED.

Medicare will soon begin cracking down on these arrangements as well, Kottman predicts.