In a case that may hit a raw compliance nerve, Ascension Macomb Oakland Hospital in Michigan has agreed to pay $100,000 in a settlement with the HHS Office of Inspector General (OIG) over free services provided to certain physicians by advanced practice providers (APPs). The settlement stemmed from the hospital’s self-disclosure to OIG.
According to the settlement, Ascension Macomb Oakland Hospital paid remuneration to certain physicians who referred patients to the hospital for surgeries between July 16, 2014, and Dec. 1, 2020. “The remuneration was in the form of clinical staff, specifically, advanced practice providers who performed pre-surgical histories and physicals for the Physicians without cost to the Physicians,” OIG alleged in the settlement, which was obtained through the Freedom of Information Act. The hospital was accepted into OIG’s self-disclosure protocol in October 2022. OIG alleged the remuneration paid to the physicians subjected the hospital to civil monetary penalties arising from the Anti-Kickback Statute (AKS) and led to claims for designated health services prohibited by the Stark Law. The hospital didn’t admit liability in the settlement and two hospital officials didn’t respond to RMC’s requests for comment.
The APP picture is a complicated one. Clinical care requires a collaborative team with both physicians and APPs, said attorney Holley Thames Lutz, with Dentons US LLP in Washington, D.C. Hospitals shouldn’t fear the fraud and abuse laws if they have bona fide, patient-centric reasons to use APPs to support hospital patients (e.g., improving patient outcomes and satisfaction scores), she said. “Hospital-employed APPs should be able to round on patients, correct errors, etc., as part of a clinical care team,” Lutz explained. For example, if a physician orders a patient’s discharge before heading into an eight-hour emergency surgery but without writing an antibiotic prescription, an APP involved in the patient’s care should be able to write the prescription for a timely discharge, she said. The physician establishes the plan of care and it’s carried out by the APP (and others, including registered nurses). Compliance depends partly on whether the APP’s services are provided in addition to, not in place of, the physician’s services.
APPs also are authorized by the Medicare Conditions of Participation to write the history and physical (H&P), Lutz said. “I submit there are hospitals out there that operationalize it with the right safeguards and I’m entirely comfortable with it if that’s what you need,” she noted. “I would argue that Medicare’s GSP [Global Surgical Package] payment to the surgeon doesn’t mean that the surgeon and only the surgeon must provide all the items in the GSP for every patient. Rather, when the surgeon provides the services within the GSP, that surgeon can’t bill separately for those services as they’re included in the bundled payment.”
For example, one of the components of the GSP is miscellaneous services, including splints and dressing changes. “If an orthopedic patient comes to a physician’s office post-discharge for a splint and the visit is within the GSP period, the physician’s office cannot bill separately for that,” Lutz explained. But if the patient is in the hospital and requires a splint or dressing change, would Medicare expect the surgeon to perform these services? Lutz said the answer is no.
Hospitals Are Wary Because of Enforcement Actions
Yet, hospitals may be very sensitive to their exposure when using APPs to support certain hospital service lines because of enforcement activity, Lutz said. “I know of several False Claims Act cases going on about this exact issue.” And there will be situations where hospitals do have something to fear beyond fear itself. If hospitals provide free APP services that independent physicians bill separately and the government has incriminating emails along the lines of “some surgeon said I am not bringing my cases to your hospital until you get an APP like the competitor hospital does down the street, then you have your foot in a hole,” Lutz said. But that may not be the case. For example, while it’s unclear exactly what happened at Ascension Macomb Oakland Hospital, Lutz said it’s telling that after five years of H&P freebies, the hospital paid only $100,000 to settle with OIG. “It’s not a bad deal,” she noted.
In fact, the government has smiled on certain free APP services. OIG in a 2022 advisory opinion gave its blessing to an arrangement in which a hospital provides the services of its employed nurse practitioners (NPs) free to help physicians with inpatient and observation care.[1] Although giving free services to referral sources would generate remuneration under the AKS “if the requisite intent were present,” OIG found little risk of fraud and abuse.
While an advisory opinion on the use of free NPs and other APPs was welcomed, lawyers explained it may have limited utility partly because the opinion applies only to services that are medical. In fact, OIG said, “We might reach a different conclusion if, for instance, the Arrangement was offered on surgical or specialty units where specialist physicians typically make more lucrative referrals to Requestor.”
What if the Patient Thinks the Surgeon is a Jerk?
That position sticks in Lutz’s craw because she feels strongly that there’s room for hospital-employed APPs to provide appropriate care to hospital patients as part of a collaborative clinical care team, even with surgical patients. “The global surgical package paid to the surgeon should not be interpreted as obligating the surgeon to do anything and everything listed in the global surgical package” as defined in the Medicare Claims Processing Manual.[2] “Would Medicare really be advocating for only the surgeon to adjust a pain medication to alleviate an adverse reaction when the surgeon may be in surgery for the next five hours and an APP is available on the floor and is part of the clinical care team? No. Rather, I argue that whatever services the surgeon provides within the GSP, that surgeon only gets the one GSP payment. I am not saying CMS agrees with me. But I feel pretty strongly that the above is a reasonable, good faith argument.”
The GSP includes preoperative visits, intraoperative visits, services to treat complications, postoperative services, postsurgical pain management, supplies and miscellaneous services, according to Chapter 12, Sec. 40.1. The manual also cites exclusions like distinct surgical procedures and treatment for post-op complications that require a trip to the OR.
Lutz noted that CMS states if a physician outside of the surgeon’s group practice provides surgery-related services to patients during the GSP period, Medicare will pay the fee schedule amount without requiring the surgeon to cover the charges. For example, if the patient thinks the surgeon is a jerk and decides to get their stitches out at an urgent care center, CMS will pay for it separately.
Nonphysicians Got Green Light to Write H&Ps
Also, APPs/nonphysician practitioners (NPPs) are explicitly permitted to perform and document H&Ps, Lutz said. In a 2006 regulation updating the Medicare Conditions of Participation, CMS added “qualified licensed individuals” to the people eligible to do H&Ps.[3] Before that, only physicians were allowed to document H&Ps. The regulation states that “A medical history and physical examination be completed and documented for each patient no more than 30 days before or 24 hours after admission or registration, but prior to surgery or a procedure requiring anesthesia services, and except as provided under paragraph (c)(5)(iii) of this section. The medical history and physical examination must be completed and documented by a physician (as defined in section 1861(r) of the Act), an oral and maxillofacial surgeon, or other qualified licensed individual in accordance with State law and hospital policy.”
That stands in contrast to the preoperative H&P on the day of or day before surgery that’s part of the GSP. A physician must provide this “updated” H&P, although Lutz noted that CMS has expressly stated that when authenticating and updating H&Ps before surgery, it’s good enough for surgeons to review them when they’re performed by APPs, for example.
These regulatory and manual provisions lend support to the idea that the enforcement community shouldn’t view the GSP in black and white, Lutz said. It follows, therefore, that hospital-employed APPs are permitted to be part of a care team and provide services within the scope of their licenses and privileges in collaboration with physicians without running afoul of the fraud and abuse laws, she said. “When hospitals provide these services, it’s not for the benefit of physicians, it’s for the benefit of patients,” Lutz contended. If the hospital is providing services to benefit physicians, then physicians should pay for the APP’s services. “But if the hospital has its own bona fide, non-referral centered reason for having APPs, then hospitals should be able to do that without fear of penalty,” she contended.
“Some people, like whistleblowers or the Department of Justice, say every time you help a surgeon of course it’s for the benefit of the surgeon, but it’s not a certainty,” Lutz said. “It should not be the place where we start the conversation.”
Contact Lutz at holley.lutz@dentons.com.