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Announcement

Medicare Physician Profiling is Coming

Summer 2007 | Volume 2, Issue 2

Physicians and those entities that work with them be warned: The Centers for Medicare and Medicaid Services (CMS) is ready to start profiling individual physicians for inefficient practices.

On May 10, the Subcommittee on Health of the House Committee on Ways and Means held a hearing during which the acting deputy administrator for CMS revealed that as early as 2008, CMS may start using Medicare claims data to measure individual physician resource use that links quality in the provision of care to Medicare beneficiaries and encourages physicians to focus on efficiency. Through this measurement, CMS believes it will be able to compare and contrast individual physician resource use, including the number of services a physician orders, such as laboratory and diagnostic tests, as well as hospital and other services. Although couched as a quality initiative, such information could also reveal potential fraud, such as Stark and Antikickback violations. For example, a physician who shows an unusually high number of claims for certain laboratory or diagnostic tests may spark additional questioning of his or her financial arrangement with the entities that furnish those tests. A direct correlation between diagnostic test referrals and the entity that provides such tests may constitute a Stark or Antikickback violation, resulting in potential civil and criminal penalties.

This profiling initiative comes on the heels of other federal initiatives to reduce Medicare costs and improve overall health care quality. We noted another such initiative in our March 13, 2007 client alert regarding the Medicare Pay-For-Performance: 2007 Physician Voluntary Reporting Program. A third initiative, the Recovery Audit Contractor (RAC) Program, was instituted in Section 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and is a program under which CMS pays RACs contingency fees for identifying Medicare overpayments using Medicare claims data. The RAC Program is currently operating in New York, California and Florida, but pursuant to Section 302 of the Tax Relief and Health Care Act of 2006, the program will be permanent and operate nationwide by 2010. To learn more about the RAC Program, see: http://www.cms.hhs.gov/RAC.

Physician profiling, along with the RAC Program, will help CMS identify Medicare overpayments because of lack of medical necessity, incorrect coding, duplicate payments or payments for which another insurer was responsible. Identifying these overpayments will place physicians and hospitals at risk of owing the Medicare program money and being accused of fraud. In fact, in 2006, of the $3.1 billion in settlements and judgments in cases involving allegations of fraud against the government, 72% of those recoveries were attributable to health care fraud. See United States Department of Justice, “Justice Department Recovers Record $3.1 Billion in Fraud and False Claims in Fiscal Year 2006” (Nov. 21, 2006).

In anticipation of this forthcoming profiling and RAC Program, physicians should review their practice procedures and make sure those joint ventures and payment mechanisms are in compliance with federal and state laws.

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