Anesthesia Business Consultants: Communique fall10

FALL2010 VOLUME14,ISSUE8
ANESTHESIA
BUSINESSCONSULTANTS
The Anesthesia Quality Institute
(AQI) was founded in 2009 to promote
patient safety and quality management
efforts across the specialty. The primary
mission of the AQI is development of the
National Anesthesia Clinical Outcomes
Registry (NACOR), a repository for
anesthesia case-specific data from across
the country. NACOR is populated by
transmission of electronic information
from participating anesthesia practices
and hospitals, including administrative
(billing) data, Anesthesia Information
Management System (AIMS) data,
elements from the hospital’s electronic
healthcare records, and purpose-
gathered patient outcome information.
The AQI began recruiting practices a year
ago, and began accepting case data from
January 1, 2010. To date, the AQI has
contracts with more than 40 anesthesia
practices (including several ABC clients)
ABC offers The Communiqué in electronic format
Anesthesia Business Consultants, LLC (ABC) is happy to provide The Communiqué
electronically as well as the regular printed version. The Communiqué continues to feature
articles focusing on the latest hot topics for anesthesiologists, nurse anesthetists, pain
management specialists and anesthesia practice administrators. We look forward to
providing you with many more years of compliance, coding and practice management
news through The Communiqué and our weekly e-mail alerts. Please log on to ABC’s web
site at www.anesthesiallc.com and click the link to view the electronic version of The
Communiqué online. To be put on the automated email notification list, please send your
email address to info@anesthesiallc.com.
➤ INSIDE THIS ISSUE:
Turning Data into Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Breaking Down the Business of Anesthesia . . . . . . . . . . . . . . . . . . . . . 3
AQI and Related Presentations at the ASA Annual Meeting . . . . . . . . 7
ABC Partners with ePREOP™ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Should I Change Banks? Understanding Bank Ratings . . . . . . . . . . . . 10
Ten Facts That Anesthesiologists Should Know About Medicare
Accountable Care Organizations (ACOs) . . . . . . . . . . . . . . . . . . . . . 11
Compliance Corner: Focus On Compliance . . . . . . . . . . . . . . . . . . . . . 14
Event Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Continued on page 4
Turning Data into Dollars:
How to Use Quality
Management Information to
Create Value for Your Practice
Richard P. Dutton, MD, MBA
Executive Director, Anesthesia Quality Institute, Park Ridge, IL

The Communiqué Fall 2010 Page 2
More Than Ever, It’s
About Data
By the end of 2010, the Anesthesia
Quality Institute will have records for
more than one million anesthetics in
its database, the National Anesthesia
Clinical Outcomes Registry. This is
an impressive feat, considering that
NACOR only began accepting data on
January 1. We are proud of the fact
that some of our clients were among
the first practices to sign participation
agreements and that our information
system, F1RST Anesthesia, was quickly
adapted so that we could easily transmit
client data to NACOR.
The overall number of practices
contributing data can be expected to
grow exponentially now that the AQI
has truly established its identity. The
AQI booth at the ASA Resource Center
in San Diego will certainly draw a great
deal of interest. So will the various
presentations and lectures on improving
patient outcomes using case registries.
To paraphrase Richard P. Dutton,
MD, MBA, Executive Director of the
AQI and author of the lead article in
this issue of the Communiqué, the
volume of quality management data
is just the beginning. The real value
lies in the use of the data, and Dr.
Dutton makes an excellent argument
for the proposition that “the bottom
line is that QM data equals business
data.” Table 1 on page 4 lists some
of the ways in which the use of AQI
data can add value to an anesthesia
practice, including reducing costly
complications, meeting regulatory
requirements, understanding the basic
metrics of the practice, and “fueling
resource allocation and contract
discussions with facilities.”
The AQI was the future; it is now
the present. Also very much in the
present is the need for anesthesia
practice owners – the anesthesiologists
themselves–tounderstandthebasicsof
running their business and to continue
studying the market. “Breaking Down
the Business of Anesthesia” was written
by two practicing anesthesiologists and
oneprofessionalpracticeadministrator.
Attorneys Abby Pendleton’s and
Jessica Gustafson’s article “Focus on
Compliance” also contains here-and-
now recommendations.
Still in the future are various
vehicles for sharing the savings
from improvements in health
care delivery such as Accountable
Care Organizations. Re-reading
Kathryn Hickner-Cruz’s and Carey
F. Kalmowitz’s article on ACOs, I am
struck by how heavily the Patient
Protection and Affordable Care Act
stacked the ACO decks in favor of
maximizing patients’ choices. Even
so, the ACO provisions offer so much
opportunity to run afoul of the anti-
kickback and Stark laws and federal
antitrust principles that as we go to
press, the FTC and CMS are holding a
major joint public meeting to resolve
apparent conflicts. The nascent ACO
rules could, all by themselves, turn
out to be the “Full Employment for
Lawyers” legislation that we feared the
Affordable Care Act might become.
We expect to learn about
additional developments and trends in
anesthesia practice management at the
ASA Annual Meeting that begins on
October 15. Please come by our booth
and talk with our staff and business
partners. See you in San Diego!
With best wishes,
Tony Mira
President and CEO

During most doctors’ undergraduate
and medical education, understanding
the business side of the industry is the
furthest thing from their mind. They
want to be a doctor, help people, and
somehow miraculously it would come
with a paycheck.
Most go through their residency
years expecting to compile significant
debt. But that is OK because, the thinking
goes, all the debt would go away and their
ignorance to the financial side won’t be a
factor.
However, in today’s world of being
a doctor and anesthesiologist, the
initial payout is larger, the debt is huge,
overhead isn’t shrinking to say the least
with malpractice premiums at the top of
the list, and reimbursement is dwindling
with projections of becoming significantly
worse. In a private anesthesia group, many
times the physicians in the group are too
busy to realize when they have reached a
critical mass and the need has arisen to
hire a professional businessperson to take
over the day-to-day management of the
practice.
The most successful private practice
anesthesiagroupshaveahighlyfunctional
and symbiotic relationship between the
physician CEO and the layperson practice
administrator, executive director or chief
operating officer.
Private anesthesia groups all
have differing needs due to market
demographics, payer markets, clinical
needs of the facilities they cover and
internal group dynamics. However, a
seasoned practice administrator can
work collaboratively with the group’s
physician CEO, board of directors and/
or executive committee to improve three
important underlying business dynamics:
payer contracting process, governance/
strategic planning and managing the
billing process.
The billing process can be managed
either internally with an in-house staff or
externally by working with a competent
and established anesthesia billing
company.
BoththeMedicalGroupManagement
Association (Physician Compensation and
Production Survey and Cost Survey for
Single Specialty Practices) and the ASA
(Fee Survey) have compiled statistics
and metrics that can be successfully
used to negotiate and benchmark payer
contracts. Most payer contracts can be
broken down into three or four different
components: surgical anesthesia,
obstetrical anesthesia, non-anesthesia
procedures (TEE monitoring, insertion of
Swan Ganz catheters, insertion of Arterial
lines, etc.) and chronic pain management.
Many anesthesia groups focus
exclusively on negotiating a fair market
value for the anesthesia unit conversion
Breaking Down the Business
of Anesthesia
Joseph F. Answine, M.D.
Assistant Secretary Treasurer, Pennsylvania Society of Anesthesiologists
Fred Rosetty
Practice Administrator and Chief Operating Officer, Riverside Anesthesia Associates, Ltd.
Kevin Slenker, M.D.
President, Anesthesia Associates of Lancaster, Ltd.
Continued on page 8

Turning Data into Dollars: How to Use Quality Management
Information to Create Value for Your Practice
Continued from page 1
and is working with more than a dozen
anesthesia software vendors to format,
transmit and translate their data into
NACOR. Although few AQI sites have
all of the desired data in electronic form
today, all are working toward a future state
that is 100% digital. In the meantime,
the quantity of data that is available is
truly astounding: NACOR will include a
million anesthetics by the end of 2010,
representing the work of thousands of
anesthesiologists and CRNAs at hundreds
of surgical facilities. But data collection,
by itself, does not produce value. Value
arises when the data is put to work.
This article will discuss the ways in
which the data collected by the AQI—and
reported back to participating practices—
can be turned into tangible benefits for
both patients and providers. I will cite
examples that apply today using the
relatively limited data now in NACOR,
and I will suggest some examples that
will apply in years to come. One of the
first lessons of quality management, after
all, is that the process is like peeling an
onion: there is always another layer of
understanding and improvement beneath
the current one. The AQI and NACOR
are just getting started, but will grow by
incremental improvement in each year to
come. More practices will be included,
and more and ‘denser’ data will be
gathered from the groups that are already
signed up.
Benefits Provided by the Data
The purpose of quality management
(QM)istoimprovepatientoutcomesfrom
their healthcare. ‘Improvement’ can take
many forms, ranging from hard science
(reduction in morbidity and mortality)
to highly subjective (improvement in
satisfaction scores). Improvement can
also take the form of achieving identical
outcomes at lower cost, or in higher-
risk patients. Improved outcomes have
direct value to the patients and practice,
of course, but the data collected along
the way can be applied for many other
purposes. These are summarily listed
in Table 1 and discussed in more detail
below.
Let’s start with a straightforward
example. One QM measure is “central-
line associated blood stream infection,”
or CLABSI. The rate of occurrence of
this complication is provided by the AQI
to the contributing practice, along with
the national rate in similar hospitals.
As a serious complication, the local
rate would be ‘adjusted’ for known risk
factors: age, ASA class, case mix, and
others as available. The rate is reported
only for those groups contributing all of
the necessary data. Groups with a higher
rate than their peers (“high outliers”)
would be empowered to address the
issue, and adopt new local policies to
reduce the incidence of this complication,
perhaps using guidelines or standards
developed by ASA and promulgated by
AQI. In the end, patient care is improved.
And a considerable financial benefit is
realized: each CLABSI prevented will
save the hospital as much as $80,000, and
perhaps more than that if current federal
plans to dock payment for this so-called
“Never Event” reaches fruition. For the
anesthesia practice, reduction of the
CLABSI rate begins as an opportunity to
Table 1: Ways in which the use of AQI data can add value to an anesthesia practice
 Identification of specific patient outcomes to improve
 Financial return by reducing complications
 Understanding basic metrics of the business
 Providing a lever for making changes
 Quantification of patient satisfaction
 Documentation of QM success stories
 Fueling resource allocation and contract discussions with facilities
 Meeting regulatory requirements for the practice and practitioners
 Creation of a culture of continuous improvement
 Improved group morale; enhanced recruitment and retention
 Improved group reputation
 Support of national advocacy in anesthesiology

benefit patients, but ends up generating an
important financial return. While this is
just one example, the generic observation
is equally true. Complications cost
money. Reducing complications saves
money. Everyone wins. And there are
indirect benefits as well.
Improved QM data, with national
benchmarks from AQI, will have value
to the practice even before addressing
specific outcomes. The core activity of
QM is collection of data that documents a
business, and the first result of most QM
programs is simply a better understanding
of how that business works. What
activities consume the most time? What
brings in the highest revenue? What just
isn’t worth doing? These administrative
endpoints, descriptions of process rather
than outcomes, are nonetheless important
for practice management. How many
ORs should be staffed, and for how long
each day? Which procedures take longer
than they should? How much does it cost
to perform an average anesthetic?
More particularly, QM data can
be used to make decisions regarding
hiring and firing, OR staffing, and
contracts with hospitals and surgeons.
Documentation of improved outcomes
can feed directly into ‘gain-sharing’
discussions with the hospital. Trends
over time can be examined to determine
which portions of the business are
growing, and which are not. Increased
quantity and specificity of data is also
useful to meet regulatory requirements,
and facilitating this use is one of the AQI’s
goals. Reporting of practice outcome
data in comparison with national
benchmarks will meet many overall
requirements for anesthesia department
QM activity, while data available on a
per-practitioner basis will be of use for
Joint Commission Ongoing Professional
Practice Evaluation (OPPE) and Focused
Professional Practice Evaluation (FPPE),
and for the Maintenance of Certification
requirements of the American Board
of Anesthesiology – as well as to the
practitioner seeking to understand his or
her own performance.
The bottom line is that QM data
equals business data. The numbers are
the same, but the application is different.
Putting the data to work for the practice
is driven by the questions that need to be
answered, and many times new questions
can be answered by a different look at
existing data. One of the goals of the AQI
is to present data back to participating
practices in such a way that they can make
these new uses themselves. Rather than a
static 2-dimensional stack of paper, the
AQI practice report will be a web-based
tool that allows the participating group
to combine and manipulate the data in
ways that are of most use to them, based
on local circumstances. This includes
specific reports for individual facilities
and providers, specific looks at certain
procedures, and detailed examination of
outcomes data. As an example, consider
the use of data surrounding the rate of
post-operative nausea and vomiting in
a given facility. Perhaps a question has
been asked in the PACU Committee
suggesting that the rate is too high.
Practice data reported by the AQI could
be used to confirm or deny this suggestion
by comparison to national benchmarks.
Even more important, AQI data could
then be used to take a focused look at
the problem, by showing which patients
appear to have the greatest risk, based on
provider, procedure, age, gender, specific
anesthesia medications used, time of day,
and combinations of all of these variables.
Future Measures Will Include
Patient Satisfaction
Because they are hard to make
perfectly objective, measures of patient
satisfaction are under-represented in
anesthesia QM at the present. Looking
at the future state of regulation, however,
it is hard to imagine that patient-focused
outcome measures aren’t going to be
important. These can range from obvious
elements like the rate of postoperative
nausea and vomiting or the quality of
pain relief to more complex and synthetic
measures such as the Net Promoter Score
(e.g. “on a scale from one to ten, how
likely would you be to recommend this
anesthesiologist to a friend or relative?”).
Continued on page 6

Working to improve patient satisfaction,
based on benchmarks from the AQI or
other sources, might involve a variety of
different tactics targeting everything from
standardized orders for postoperative
analgesia to changing the magazines in
the Surgicenter waiting room. As patients
become more empowered to choose their
own healthcare, including physicians,
treatments and hospitals, attention to
providing the patient what they want will
have increasing value. Odds are that your
hospital is already putting substantial
effort into improving the so-called “hotel
services,” and odds are that the OR is an
important portal of entry for patients and
their families. How long will it be before
the anesthesia practice is ‘invited’ to
participate in customer service training?
Wouldn’t there be value in getting to this
first?
The Hawthorne Effect and
Incidental Positive Outcomes
In addition to improved clinical
outcomes and enhanced patient
satisfaction, there are cultural benefits to
the use of QM data. Quality management
is strongly sensitive to the Hawthorne
Effect, which states that close examination
of outcomes tends to affect them. While
this is a source of bias in scientific
research, it is an important benefit in
QM. Knowing that outcomes data is
being collected, and seeing evidence
of this in periodic reports will lead to
improvement in the measured outcomes
over time, even without overt changes in
department practice or procedures.
There is also a ‘pull through’
effect, where focus on one outcome
(e.g. PONV rate) may improve other
seemingly unrelated outcomes (e.g. rate
of satisfactory postoperative analgesia).
Even without considering these subjective
benefits of QM data reporting, the ability
to present and discuss real numbers
can make the process of implementing
changes more digestible for members of
the practice. Knowing the exact rate of
inadequately documented procedures,
for example, provides a powerful lever for
making changes in the billing system.
Tracking QM outcomes over time,
which AQI data will facilitate, allows
practice leadership to develop success
stories that will meet regulatory needs
externally and can help to improve culture
internally. Being able to walk a surveyor
or hospital executive or board member
through a QM project from start to finish
(see Table 2), using real data from real
patient care is the most powerful possible
illustration of the practice’s commitment
to continuous improvement. Internally,
being able to describe victories in tangible
terms will help snap colleagues out of
their normal cynicism towards increasing
bureaucracy.
Working for a practice that takes
QM seriously will improve the morale of
individual practitioners, and will enhance
recruitment and retention efforts. Done
right, QM helps to put the emphasis on
evidence-based improvements in care,
and encourages a team and systems
approach over individual blame. Self-
reporting is enhanced. Anesthesia
providers feel empowered when they can
see tangible improvements in outcomes
developing over time. This facilitates
participation in further effort and further
change.
External to the Department, the use
of QM data to guide decisions and make
improvements will create an important
perception of the group as interested in
patient outcomes, driven by data and
committed to continuous improvement.
Even beyond the use of specific pieces
of data and QM stories to influence
particular decisions, the reputation
for collecting and acting on objective
information will benefit the group in
contracts with surgeons and hospitals,
relations with other departments and
service contractors and even with public
advertising. One reason that the AQI
has a licensing program for our preferred
vendors and participating practices is
that we believe that commitment to data-
driven QM is the mark of an efficient,
future-oriented practice, one that can be
trusted to take good care of its patients.
Benefits to the Specialty of
Anesthesiology
On the national level, the
contribution of practice data to the
AQI will bring benefits to the specialty
Turning Data into Dollars: How to Use Quality Management
Information to Create Value for Your Practice
Table 2: Steps in creating a quality management success story
 Find an area which can be improved
 Gather baseline performance data
 Convene stakeholders, brainstorm improvements
 Institute changes
 Gather follow up data showing the improvement
 Document the process!
 Share this story with administrators, regulators and colleagues

as a whole. Aggregated data will have
scientific purposes, of course, but it will
also empower the advocacy efforts of
ASA and its leaders. In an ever-changing
landscape of healthcare reform the ability
to help shape the regulations that we will
live under is priceless, and there is no
better way to influence discussions with
regulators than to bring data from real
clinical practice to the table.
The practice of medicine is changing
rapidly in the United States, and its final
shape remains uncertain. One thing that
is likely, though, is that every provider—
hospital, practice and individual—is going
tofaceanincreasingneedtodemonstratein
atangiblewaythevaluetheybringtopatient
care. The AQI is committed to meeting
this need on behalf of anesthesiology, and
with the help of practices and practitioners
across the country we will find many future
ways to do so.
References
Cost savings from reduced catheter-related blood-
stream infection after simulation-based education for
residents in a medical intensive care unit.
Cohen ER, Feinglass J, Barsuk JH, Barnard C, O’Donnell
A, McGaghie WC, Wayne DB.
Simul Healthc. 2010 Apr; 5(2):98-102
Richard P. Dutton,
M.D., M.B.A. is
Visiting Professor
of Anesthesiology,
UniversityofMaryland
School of Medicine
and AQI Executive
Director. To contact
Dr. Dutton or the AQI,
visit www.aqihq.org
AQI and Related Presentations at the ASA Annual Meeting
As a strong supporter and early adopter of the AQI, ABC encourages readers who will be attending the ASA Annual
Meeting to visit the Anesthesia Quality Institute (AQI) booth October 15th-20th in the ASA Resource Center at the
San Diego Convention Center - Sails Pavilion (Upper Level). AQI personnel will staff the booth and be available for
questions and information.
A variety of educational opportunities relating to anesthesia data and registries is being offered (see the list below)
during the meeting. More information and registration for these programs can be found on the ASA Anesthesiology
2010 Web page at http://www2.asahq.org/web/index.asp.
Saturday, October 16, 2010
• Implications of Patient Outcomes Registries for
the Practice of Anesthesiology
San Diego Convention Center, Upper 5B
9:30 – 11:30 am
• Anesthesia Information Management Systems:
How to Choose and How to Use
San Diego Convention Center, Upper 6C
2:10 – 3:00 pm
Sunday, October 17, 2010
• AIMS Outside of the OR
San Diego Convention Center, Upper 2
10:00 – 12 noon
• ASA Closed Claims Project and its Registries:
Value to Patients and Pocketbook
San Diego Convention Center, Upper 6F
1:00 – 3:00 pm
Monday, October 18, 2010
• Rovenstine Lecture/Anesthesiology: From
Patient Safety to Population Outcomes
San Diego Convention Center, Upper Ballroom
20A-C
11:15 – 12:20 pm
• Should My Group/Department Share Patient
Data with National Data Repositories?
San Diego Convention Center, Mezzanine 16A
3:00 – 4:30 pm
Tuesday, October 19, 2010
• So You Want to Install an AIMS System
San Diego Convention Center, Upper 33A-B
8:00 – 11:00 am

factor at the expense of factoring in how
the remaining two or three components
can dilute the overall expected value of
the contract. Obstetrical anesthesia (labor
epidurals, caesarian sections) claims can
easily be underpaid or denied by payers
because of the varying methodologies
for billing anesthesia services for labor
epidurals.
Units for epidural insertion, infusion
time, units for anesthesiologist face-
to-face time with the patient and units
for removal of the epidural catheter
may all be partially reduced or denied
entirely depending on each payer’s claim
processing system ability. For simplicity
and improving the effectiveness of post
payment monitoring, some anesthesia
groups have successfully negotiated
global fees for obstetrical anesthesia,
which removes several impediments in
processing obstetrical anesthesia claims.
Careful attention should also be
paid to payer fee schedule rates for
non-anesthesia procedures and chronic
pain management. Historically most of
these procedures have been assigned
units via the ASA Relative Value Guide;
unfortunately, since Medicare and
most commercial insurers’ payment
methodology is via a fee schedule
unrelated to ASA units, most practices
have abandoned the process of assigning
ASA units to these procedures when
managing their billing operations.
Payer fee schedule rates should be
converted into per ASA Relative Value
unit rates to effectively monitor the
effect of these items on the overall payer
contract that is being negotiated. By
maintaining this practice, which assigns
relative value to all of the services that
a typical anesthesia group provides,
multiple payer contracts or terms can
be compared to determine the most
favorable arrangements.
The following example illustrates
how a seemingly innocuous payer
contract with a unit conversion factor of
$60 per unit can “net out” at significantly
less money for the anesthesia group:
In this example, the dilutive
effect of obstetrical anesthesia, non-
anesthesia procedures and chronic
pain management reduced the overall
expected reimbursement of the contract
by $7.50 per unit or 12.5 percent. Further
significant dilution will occur when a
payer’s policy is to split the anesthesia
claim (reducing reimbursement to the
attending anesthesiologist for medical
direction of non-group employed nurse
anesthetists). In the example above, if
the anesthesia group medically directs 50
percent of the total surgical anesthetics,
group reimbursement will be further
reduced by $21 per unit ($60 per unit
times 70 percent times 50 percent).
This is a simplistic example of how
payerscandilutethevalueofananesthesia
contract without the anesthesia group
knowinghowandwhythedilutionoccurs.
Similarly, many anesthesiologists do not
have a good understanding of some of the
internal processes and mechanics of the
health insurers that pay their claims.
An important concept to
understand when interacting with health
insurance payers· is the concept of ‘float.’
Financial ‘float’ occurs when premiums
are collected ‘up-front’ by payers and
invested until those premiums are
paid out later as claims. The longer the
payer holds onto the premium money
collected, the more valuable the float
becomes. In its essence, float is money
and health insurance payers are conduits
for investable cash.
Warren Buffett, whose holding
company, Berkshire Hathaway, is one
of the top 10 insurance companies
in the world, described this concept
wittily in “The Making of An American
Capitalist:” “Initially, the morning mall
brings in lots of cash and few claims.
This state of affairs can produce a
blissful, almost euphoric, feeling akin to
that experienced by an innocent upon
receipt of his first credit card.”
These examples serve to illustrate
that sophisticated market forces are
at work and can adversely affect the
financial fortunes of anesthesiologists.
I would encourage all anesthesiologists
to devote as much time as possible to
understanding some of these forces
and to obtain business education either
by working with experienced practice
administrators, attending the ASA
Practice Management Conference or
registering for the ASA Certificate in
Business Administration Program.
It is not enough just to provide
a great clinical service in today’s
marketplace. To those anesthesiologists
who venture into private practice
Breaking Down the Business of Anesthesia
Item Per Unit Reimbursement % of Practice Expected $
Surgical Anesthesia $60.00 70% $42.00/unit
Obstetrical Anesthesia $40.00 20% 8.00/unit
Non-Anesthesia $25.00 5% 1.25/unit
Chronic Pain $25.00 5% 1.25/unit
Total Contract Expected Per Unit $52.50/unit

without a fundamental understanding of
market forces, I will close with “Caveat
emptor.”
This article first appeared in the
Summer 2010 issue of the Sentinel, the
Newsletter published by the Pennsylvania
Society of Anesthesiologists. Reprinted here
by permission of the authors and editor.
Anesthesia Business Consultants,
LLC (ABC) has entered into a
partnership with ePREOP™ Integrated
Preoperative Services. ePREOP
is a revolutionary software system
designed by anesthesiologists who
want to ensure that the right pre-
anesthesia tests are ordered and the
correct patient instructions are given
for each procedure. The software
also facilitates the transfer of patient
data between parties. This eliminates
duplicate interviews and data entry
requirements. A standardized mobile
anesthesia preoperative evaluation
form is available that allows timely
access and completion of the record. It
also provides an anesthesiologist with
the ability to capture and track quality
measures. ePREOP helps anesthesia
groups secure their standing with their
contracting institution by improving
outcomes and eliminating waste.
Using a web-based platform,
ePREOP is specifically intended to
bridge the gap between the surgeon’s
office and the surgical facility.
ePREOP interfaces with various
electronic health records like Google
Health, Allscripts, and HealthVault.
The software’s algorithms are based
on a large, viewable database of peer-
reviewed articles on preoperative
testing from the anesthesia and surgical
literature. The program analyzes
hundreds of thousands of data points
and delivers preoperative clinical
guidelines tailored to the individual
patient. These recommendations can
significantly improve postoperative
outcomes, decrease case delays and
cancellations, and reduce wasteful
spending.
ePREOP allows for a seamless
transfer of patient data between
parties — surgeon, anesthesiologist
and hospital or surgery center — and
eliminates the need for duplicate
patient interviews. When an existing
electronic health record is not in
use, ePREOP creates a stand-alone
preoperative EHR that is accessible
from an electronic kiosk, iPad, or other
computer, even one in the patient’s
home. The patient data go directly
to the surgical facility along with lab
recommendations and results.
ePREOP, the company, was
founded by a team of independent,
board-certified physicians. As the
delivery of healthcare services becomes
increasingly complex, ePREOP,
provides a service that simplifies the
communication between patients and
the multiple physicians and hospital
staff that will be involved throughout
any surgical experience. Among
the most immediate, measurable
clinical and cost saving benefits is the
invaluable opportunity for customers
to demonstrate their value by
increasing OR efficiency and quality of
care within their institutions.
For further information, visit
www.epreop.com, or contact: epreop@
epreop.com, or visit the ABC exhibit at
the ASA Annual Meeting in San Diego,
where ePREOP will be on display.
ABC Partners
with
Fred Rosetty, MBA
Mr. Rosetty earned
his Bachelor’s and
Master’s of Business
Administration de-
grees from Shippens-
burg University and
has also done gradu-
ate and postgraduate work in Healthcare
Administration at Penn State Universi-
ty-Harrisburg. Mr. Rosetty worked for
Highmark BlueShield from 1989-1992 as
a Senior Financial Analyst. From 1992-
2007 he worked as Administrative Direc-
tor for a 35+ physician anesthesia group
and since June, 2008 he has served as Ex-
ecutive Director of a 45 physician anesthe-
sia group.Mr. Rosetty’s expertise includes
payer contracting, practice benchmark-
ing, financial and revenue-cycle analy-
sis and physician/staff recruitment and
development. Mr. Rosetty has also been
an Adjunct Professor of Business Admin-
istration at Central Pennsylvania College
in Summerdale, PA since 2002. He may be
reached at frosetty@raahq.com.
Joseph P. Answine, M.D. is a past
president of the Pennsylvania Society of
Anesthesiologists and is currently serving
as Assistant Secretary Treasurer. Dr.
Answine is also a delegate to ASA’s House
of Delegates.
Kevin F. Slenker,
M.D., President, An-
esthesia Associates of
Lancaster, Ltd. and
Staff Anesthesiologist,
Lancaster General
Hospital. Dr. Slenker
may be contacted at
kevin_slenker@aal.bz

With headlines of economic
downturn, health care reform, decreased
reimbursements and the government’s
2008 taxpayer banking bailout, many
physicians are asking the questions, “Is My
Money Safe?” “Should I Change Banks?”
The first step to take in answering
these questions would be to determine
your bank’s rating. To help educate the
average depositor, we researched the
methodology behind bank ratings. Bauer
Financial is a nationally recognized
independent bank rating firm. The
information that Bauer uses to rate banks
is obtained from an approximately 30
page report that each bank is required to
file quarterly with government regulators.
No bank with assets greater than $1.5
million can be excluded from this rating
process nor does a bank pay to be rated or
for the rating that it receives.
There are a number of factors
consideredintheratingprocessincluding:
• Capital ratio;
• Number and value of delinquent
loans;
• Number and value of charge offs;
• Repossessed assets;
• Profit/(loss) trends;
• Value of investment portfolio;
• Regulatory supervisory agreements;
• Community reinvestment rating;
• Historical data; and
• Liquidity
This rating process occurs each
quarter and the results are published
about six months after the rating process
occurs, so the data that we review is
somewhat dated.
An overview of the ratings a bank
can receive are as follows:
• 5 Superior
• 4 Excellent
• 3½ Good
• 3 Adequate
• 2 Problematic
• 0/1 Troubled
Bauer Financial prepares a report
each quarter of banks that fall in the
“Troubled” category, and it recommends
banks that are rated either a 4 or a 5.
The FDIC, until December 31, 2013,
will continue to insure each deposit
account up to $250,000, whether it is a
personal or business checking or savings
account per institution. The amount
could change after December 31, 2013 but
is fixed at this point. There is somewhat
of an opportunity to insure more than
$250,000 as there are some banks that
belong to a unique network called
Certificate of Deposit Account Registry
Services(CDARS). Whenyouplacealarge
deposit with a CDARS Network member,
that institution uses the CDARS service to
place your funds into CDs issued by other
bank members of the CDARS Network.
This occurs in increments below the
standard FDIC insurance maximum so
that both principal and interest are eligible
for full FDIC insurance. By working
directly with just one institution, you can
receive insurance coverage from many
and all transactions are recorded on one
consolidated account statement. Because
the funds are locked into a CD, there is a
time commitment associated with access
to the funds, which can vary from 4 weeks
to 13 weeks to 26 weeks to multiple years.
The longer the asset is invested, the greater
the return rate.
In an effort to gain some comfort
around the stability of the bank holding
group funds and in addition to the fact
that interest returns are minimal right
now, some physicians have made the
decision to modify the frequency of
their payroll and/or bonus schedule…
choosing to withdraw their funds more
frequently in smaller amounts rather
than building in the bank account. There
is no perfect way to protect that your
bank will not fail or be bought by a larger
financial institution; however, looking
at what makes fiscal sense for your
specific practice may result in a change
in your banking practices. Of course, it
is necessary to discuss your concerns and
ideas with your accountant and practice
business advisors so that funds are readily
available for your various expenses and
opportunities as they come due.
Should I Change Banks?
Understanding Bank Ratings
Stephanie J. Zvolenski, MBA
ABC Financial Manager

1. Medicare Accountable Care
Organizations (ACOs) Are A
Product Of Federal Healthcare
Reform Legislation.
By now, to a greater or lesser extent,
most healthcare providers have at least
a basic understanding of the recent and
broad sweeping federal healthcare reform
legislation commonly known as the
Patient Protection and Affordable Care
Act (“PPACA”). PPACA was enacted on
March 23, 2010 and then amended by the
HealthCareandEducationReconciliation
Act of 2010, which was signed into law on
March 30, 2010.
One aspect of federal healthcare
reform eliciting significant interest
among healthcare providers is PPACA’s
Medicare Shared Savings Program, under
which ACOs that meet certain quality
performance standards will be eligible
to receive Medicare shared savings
payments. PPACA requires the Secretary
of the United States Department of Health
and Human Services (the “Secretary”) to
establish the Medicare Shared Savings
Program no later than January 1, 2012.
2. ACOs Will Be Eligible For
Financial Incentives (Enhanced
Reimbursement) Based Upon
The Quality And Efficiency
Of Care Provided To Their
Patients.
Under the Medicare Shared
Savings Program, physicians and
other professionals (including without
limitation physician assistants, nurse
practitioners, certified registered nurse
anesthetists, clinical social workers
and clinical psychologists) manage
and coordinate the care of Medicare
fee-for-service beneficiaries in a multi-
disciplinary manner through ACOs.
ACOs that meet certain quality
performance criteria, which will be
established by the Secretary, will be
eligible to participate in the resulting
Medicare savings.
The quality performance standards
will measure clinical processes and
outcomes, patient and caregiver
experience, and utilization. As time goes
on, the quality performance standards
will become increasingly stringent as the
Secretary will continuously impose higher
standards and/or additional benchmarks
that will need to be achieved in order to
participate in the shared savings.
It is important to note that the
payments through the Medicare Shared
Savings Program are enhancements
to the otherwise available Medicare
reimbursement. The ACO physicians
and other professionals will continue to
receive payment under part A and part B
of the Medicare fee-for-service program
in the same manner as they would
otherwise. ACOs will not be penalized
if quality benchmarks are not attained.
That being said, the Secretary will have
the ability to terminate ACOs that do not
satisfy such quality standards.
3. ACOs Will Not Be
Permitted To Directly Choose
The Patients For Which They
Are Accountable.
PPACA provides that each ACO will
be assigned at least five thousand (5,000)
Medicare fee-for-service beneficiaries
based upon those beneficiaries’
utilization of primary care physicians
(i.e., beneficiaries that receive services
from the ACO’s primary care physicians).
Assignments will be made through a
method that will be determined by the
Secretary. ACOs will be prohibited from
taking steps to avoid at-risk patients that
are likely to negatively impact the ACO’s
receipt of shared savings.
4. Primary Care Physicians
Will Play An Integral Role
In Each ACO.
Continued on page 12
Ten Facts That Anesthesiologists Should
Know About Medicare Accountable
Care Organizations (ACOs)
Kathryn Hickner-Cruz, Esq.
Carey F. Kalmowitz, Esq.
The Health Law Partners, P.C., Southfield, MI

PPACA promotes the adoption of
patient-centered “medical homes” to
achieve improved quality of care through
coordination of care. As stated above,
each ACO will be assigned Medicare
fee-for-service beneficiaries based
upon those beneficiaries’ primary care
physicians. Since assignment of patients
to an ACO is based upon the primary
care physicians participating in the ACO,
it is anticipated that, as a practical matter,
primary care physicians will be required
to have a relationship with only one ACO
and will have substantial influence within
the their respective ACOs. In contrast,
anesthesiologists and other specialists
will probably have more flexibility to
belong to additional ACOs.
5. Those ACOs That Retain
Patients And Refer Patients
Within Their Aco Network
Will Have The Greatest
Opportunity For Success.
It is noteworthy that, although
ACOs will be responsible for the care of
their assigned beneficiaries, Medicare
beneficiaries will be able to choose
their healthcare providers even if such
providers do not participate in the ACO
to which the Medicare beneficiaries are
assigned. Thus, ACOs are accountable
for achieving quality of care goals without
having the ability to necessarily control
whether those goals are achieved. There
will certainly be an incentive for ACO
physicians to refer patients to other
physicians within their own ACO. Legal
counsel for the ACOs will be challenged
to think creatively while acting within a
legally defensible framework to structure
permissible patient and physician
incentives that promote the objectives of
the ACOs.
6. ACOs Must Satisfy Numerous
Eligibility Requirements In
Order To Participate In The
Medicare Shared Savings
Program.
PPACA mandates that each ACO
shall:
• Be willing to be accountable for
the quality, cost and overall care
of the Medicare fee-for-service
beneficiaries assigned to it;
• Enter an agreement with the
Secretary to participate in the
Medicare Shared Savings Program
for at least three (3) years;
• Have a legal structure that enables
it to receive and distribute shared
savings;
• Have a sufficient number of
primary care professionals for the
number of beneficiaries assigned;
• Provide (and have the necessary in-
formation technology infrastructure
to provide) the Secretary with the in-
formation that the Secretary requires
in connection with assignment of
beneficiaries, implementation of
quality standards, and determination
of shared savings payments;
• Maintain a management structure
that includes clinical and
administrative systems;
• Adopt processes to promote evidence
based medicine and patient engage-
ment, report on quality and cost
measures, and coordinate care; and
• Demonstrate to the Secretary that
it meets patient-centered criteria.
As mentioned above, the Secretary
will promulgate regulations to refine
each of these broad and amorphous
requirements. The proposed regulations
are expected to be published during Fall
2010.
7. Healthcare Providers Have
Substantial Flexibility When
Structuring Their ACOs.
PPACAspecificallyprovidesthateach
of the following types of organizations
can become an ACO, assuming that they
have shared governance and that they
satisfy the additional criteria that will be
adopted by the Secretary:
• Physicians and other professionals
in group practices;
• Physicians and other professionals
in networks of practices;
• Partnerships or joint venture
arrangements between hospitals
and physicians and/or other
professionals (e.g., physician –
hospital organizations);
• Hospital employing physicians and
other professionals; and
• Other groups of providers of
services and suppliers as the
Secretary determines appropriate.
The various types of models can
be conceptualized as highly integrated
models (e.g., hospital employment and
group practices), models with limited
integration (e.g., joint venture, physician
organization (PO) and physician hospital
organization (PHO) models), and
Ten Facts That Anesthesiologists Should Know About Medicare
Accountable Care Organizations (ACOs)

contractual models (e.g., management
services and service line models).
8. The Ability To Efficiently
And Effectively Share
Information Will Be Key To
The Success Of Any ACO.
As a condition of receiving Medicare
shared savings payments, ACOs will need
to submit information to the Secretary
that is necessary to determine the quality
of care furnished by the ACO. Each
ACO will need to have the information
technology and other electronic health
record (“EHR”) infrastructure in place
to maintain, share, retrieve and report
meaningful and usable data. It is expected
that many ACOs will find that this can be
achieved only through the use of health
information exchanges. It is interesting
to note that this ACO requirement
relating to use of EHR dovetails with
the Medicare and Medicaid incentive
payments that will be available to certain
health providers that adopt EHRs and
achieve certain specified objectives.
9. ACOs Will Serve As
A Catalyst For Further
Integration Among Healthcare
Providers.
In order to achieve the clinical and
administrative coordination and sharing
of information that will be necessary to the
success of ACOs, physicians, hospitals and
other professionals will need to integrate
(both clinically and either corporately or
contractually) but within the constraints
of applicable law. Significant bodies of
federal and state law impose numerous
barriers to integration among healthcare
providers, including without limitation
the federal Anti-Kickback Statute, the
federal Stark Law, and the federal Civil
Monetary Penalty Law (all of which are
designed to prevent fraud and abuse with
respect to the federal healthcare programs),
federal tax exempt laws (prohibiting, for
example, impermissible benefits to private
individuals), the federal and state patient
privacy laws, including without limitation
the Health Insurance Portability and
Accountability Act of 1996, as amended
(“HIPAA”) (setting forth standards for the
security and privacy of patient information)
and the state corporate practice of medicine
doctrines (adopted, in part, to preserve the
unique attributes of the physician-patient
relationship). Furthermore,ACOswillneed
to be designed with sensitivity towards the
federal antitrust laws, which are designed
to encourage competition and limit market
concentration. Many experts envision
progressive changes in many of these
substantive areas of the law as governmental
authorities attempt to reconcile the tensions
created between current legal requirements
and the integration required to operate a
successful ACO.
10. The Healthcare Community
Is Currently Preparing For
Future Participation In The
Medicare Shared Savings
Program Through ACOs.
As of today, there are many
uncertainties surrounding the
requirements that ACOs will need to
satisfy in order to receive payments under
the Medicare Shared Savings Program.
While the Centers for Medicare &
Medicaid Services (“CMS”) has published
certain ACO guidance on its website
titled “Preliminary Questions & Answers”
and has held a Special Open Door
Forum regarding the Medicare Shared
Savings Program, health care providers
are anxiously awaiting additional
information. Some of our unanswered
questions will certainly be addressed
during the upcoming ACO workshop
that will be hosted on October 5, 2010
by the Federal Trade Commission, the
U.S. Department of Health and Human
Services’ Office of Inspector General and
CMS. Furthermore, additional guidance
will be provided through CMS’s Notice
of Proposed Rulemaking regarding
this program, which is expected to be
published during fall 2010.
Notwithstanding this current state of
affairs, many providers are wisely looking
beyond the basic contours of the proposed
Medicare Shared Savings Program and
developing strategies to prepare for its future
implications. More specifically, groups of
physicians, hospitals, and other providers
are developing structures and relationships
that will allow them to transform themselves
into ACOs upon the commencement of the
Medicare Shared Savings Program. This
proactive approach is advisable considering
the substantial time and monetary resources
that will be required in order to effectively
organize most ACOs.
Kathryn Hickner-Cruz is a health care
attorney with The Health Law Partners, P.C.
Ms. Hickner-Cruz specializes in health care
transactional matters and compliance with
federalandstatehealthcareregulations. She
regularly assists her clients by structuring
and facilitating corporate reorganizations,
mergers, asset acquisitions and divestitures,
private placements, and joint ventures.
Ms. Hickner-Cruz has expertise in federal
and state self-referral laws, including
without limitation Stark, federal and
state anti-kickback laws, HIPAA and state
privacy laws, and federal tax exempt laws.
She can be reached at (248) 996-8510 or
khicknercruz@thehlp.com.
Carey F. Kalmowitz, Esq. is a founding
member of The Health Law Partners, P.C.
Mr. Kalmowitz practices in all areas of
healthcare law, with specific concentration
on the corporate and financial aspects of
healthcare, including structuring transac-
tions among physician group practices and
other healthcare providers, development
of diagnostic imaging and other ancil-
lary services joint ventures, physician
practice, IDTF and home health provider
acquisitions, certificate of need, compliance
investigations, and corporate fraud and
abuse/Stark analyses. Mr. Kalmowitz can
be reached at ckalmowitz@thehlp.com.
Kathryn Carey F.
Hickner-Cruz Kalmowitz

It is estimated that over 1.2 billion
claims will be submitted to Medicare
during fiscal year 2010 alone.1
This
means that Medicare will process 4.5
million claims per work day, 574,000
claims per hour, and 9,579 claims
per minute. Because of this volume,
Medicare contractors process most
claims without investigation or even
reviewing medical records. As a result,
the Medicare Trust Funds are vulnerable
to the submission of false and fraudulent
claims. Because of this, the Department
of Justice (“DOJ”), the Department of
Health and Human Services (“HHS”)
and the Centers for Medicare and
Medicaid Services (“CMS”) have taken
steps to combat activities perceived
to constitute Medicare fraud. Within
this highly-regulated environment, it
is important that health care providers
focus on compliance, so that submitted
claims can withstand any government
scrutiny that may arise. This article
will outline some of the initiatives
taken by the DOJ, HHS and CMS to
fight Medicare fraud and abuse and will
identify rules all Medicare providers
should remember when submitting
claims to Medicare.
Increased Auditing Activity
As noted by President Obama in
a recent White House Memorandum,
“Reclaiming the funds associated
with improper payments is a critical
component of the proper stewardship
and protection of taxpayer dollars, and it
underscores that waste, fraud, and abuse
by entities receiving Federal payments
will not be tolerated.” Describing
Medicare’s Recovery Audit Contractor
(“RAC”) program, President Obama
stated his support for the use of “Payment
Recapture Audits” to identify improper
Medicare payments. 2
Medicare claims are subject to
increasing audit scrutiny. Not only
do Medicare Affiliated Contractors
(“MACs”) (or Medicare Carriers and
Intermediaries) conduct their own
audits, but also Medicare’s RAC program
is now operational nationwide (and has
recently been expanded to include Part
C and Part D claims), and Zone Program
Integrity Auditors (“ZPICs”) (or Program
Safeguard Contractors (“PSCs”)) are
conducting nationwide benefit integrity
audits. Health care providers must be
cognizant of this increased claims scrutiny
and conduct themselves accordingly.
Civil False Claims Act Liability
Codified at 31 U.S.C. § 3729 (a),
the Civil False Claims Act (the “Act”) is
the government’s primary enforcement
tool against providers. The Act prohibits
any person from “knowingly” making,
using, or causing to be made or used “a
false record or statement to get a false or
fraudulent claim paid or approved by the
Government.” The Act defines the term
“knowingly” to include a person having
actual knowledge; acting in deliberate
Focus On Compliance
Abby Pendleton, Esq.
Jessica L. Gustafson, Esq.
The Health Law Partners, P.C., Southfield, MI
As part of our desire to keep both clients and
readers up to date, the Communiqué has been
printing compliance information since its
inception. In the Compliance Corner, we will
now formally keep you abreast of the various
compliance issues and/or pick out a topic that
would be of interest to most of our readers.
1 http://dhhs.gov/asfr/ob/docbudget/2010budgetinbriefp.html
2 http://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-finding-and-recapturing-
improper-payments

ignorance of the truth or falsity of the
information; and acting in reckless
disregard of the truth or falsity of the
information. No proof of specific intent
to defraud is required.3
On May 20,
2009, the Act was amended by the Fraud
Enforcement and Recovery Act of 2009
(“FERA”). FERA amended the Act to
extend liability under theAct to a provider
who knowingly retains an overpayment,
even if no false or fraudulent claim is
actually submitted to the government.
The Patient Protection and Affordable
Care Act of 2010 (“PPACA”) requires
that a known overpayment be reported
and returned within 60 days from the
date the overpayment is identified. Any
overpayment retained after this date gives
rise to liability under the Act. Any person
found in violation of the Act is liable for
treble damages, plus a penalty of not less
than $5,000 and not more than $10,000
for each claim submitted. 4
In 2009 alone,
more than $1 billion was recovered under
the Act. 5
There are many activities that
give rise to liability under the Act.
Among other activities, examples
include not only billing for services
that were not performed, but also
performing inappropriate or unnecessary
procedures in order to increase Medicare
reimbursement; upcoding; bundling and/
or unbundling services; and retaining
known overpayments.
Criminal Liability
Note, there are also laws that give rise
to criminal responsibility (as opposed
to just civil liability). For example, the
Criminal False Claims Act, codified at 18
U.S.C. 287, states that:
Whoever makes or presents to any
person or officer in the civil, military,
or naval service of the United States,
or to any department or agency
thereof, any claim upon or against the
United States, or any department or
agency thereof, knowing such claim
to be false, fictitious, or fraudulent,
shall be imprisoned not more than
five years and shall be subject to a
fine… 6
On June 9, 2010, a Texas pain
management physician was indicted
on charges of health care fraud. The
government is seeking the forfeiture of
the physician’s assets and a monetary
judgment of $41.8 million. The 99-count
indictment alleges that the physician
caused to be submitted to Medicare,
Medicaid TRICARE and the Texas
Workers’ Compensation Commission
claims for reimbursement for peripheral
nerve injections, facet injection
procedures, and Level four office visits,
which were never performed. 7
Health Care Fraud Prevention
and Enforcement Action Team
(“HEAT”)
While acknowledging the success the
government has experienced combating
Medicare fraud and abuse through
the Civil False Claims Act and other
statutory enforcement mechanisms, the
government still desires to do more. In
May 2009, the DOJ and HHS announced
the creation of the Health Care Fraud
Prevention and Enforcement Action
Team (“HEAT”). The mission of HEAT
is to prevent fraud, waste and abuse in
the Medicare and Medicaid programs.
HEAT will build upon and strengthen
existing programs to combat Medicare
and Medicaid fraud, waste and abuse.
One activity taken by HEAT is to
develop Strike Teams in metropolitan
areas with high rates of health care fraud
and abuse. To date, Strike Teams are
operational in Baton Rouge, Louisiana;
Brooklyn, New York; Detroit, Michigan;
Los Angeles, California; and the
Miami-Dade and Tampa Bay areas of
Florida. These Strike Teams have been
instrumental in obtaining numerous
health care fraud indictments and
convictions in these areas.
Focus on Compliance
1. Physician practices must adopt
and implement effective compliance
programs.
While previously the adoption and
implementation of a compliance plan
was “voluntary” for physician practices,
the Patient Protection and Affordable
Care Act of 2010 (“PPACA”), mandates
that providers and suppliers adopt a
compliance program containing certain
“coreelements”asaconditionof Medicare
enrollment. Pursuant to a recently-
issued proposed rule, published in the
Continued on page 16
3 31 U.S.C. § 3729 (b).
4 31 U.S.C. § 3729 (a).
5 http://www.stopmedicarefraud.gov/heatsuccess/index.html
6 In addition to the Criminal False Claims Act, other statutes giving rise to criminal responsibility include
(among others) Obstruction (18 U.S.C. § 1516); Mail Fraud and Wire Fraud (18 U.S.C. § 1341 and 1343);
Conspiracy to Defraud the Government (18 U.S.C. § 286); RICO (18 U.S.C. § 1961 et seq.); and Making and
Causing to be Made False Statements or Representations (42 U.S.C. § 1320a-7b (a)).
7 Department of Justice Press Release, available at http://elpaso.fbi.gov/dojpressrel/pressrel10/ep061410.htm.

September 23, 2010 Federal Register,8
CMS has proposed that physicians’
compliance plans contain the following
elements (comprised of the elements
described in the U.S. Federal Sentencing
Guidelines Manual):
• A physician practice must develop
and distribute written policies,
procedures and standards of
conduct to prevent and detect
inappropriate behavior;
• Aphysicianpracticemustdesignate
a chief compliance offer (and other
appropriate bodies) to operate and
monitor the compliance program.
The compliance officer and/or
other governing body must report
to high level personnel;
• The physician practice must use
reasonable efforts not to include
any individual in a position of
authority that the organization
knew or should have known
has engaged in illegal activities
or conduct inappropriate for an
individual in such a position;
• The physician practice must
develop and implement regular
and effective education and
training programs for the
governing body, all employees and
agents, as appropriate;
maintain a complaint process,
which protects the anonymity
of complainants and protects
whistleblowers from retaliation;
develop a system to respond
to allegations of improper
conduct and enforce appropriate
disciplinary action against
employees who have violated
internal compliance policies,
statutes, regulations and Federal
health care program requirements;
and
• The physician practice must use
audits and/or other evaluation
techniques to monitor compliance
and reduce identified problem
areas; and
investigate and remedy
identified systemic problems,
including making any necessary
modifications to the organization’s
compliance and ethics program.
2. A physician is legally responsible
for claims submitted under his or
her billing number.
Physicians are legally responsible for
all claims submitted under their billing
numbers. This is true even if a physician
uses an in-house or outside coder and
biller for the submission of claims.
Accordingly, physicians must ensure
that they stay educated and apprised of
billing activities taken on their behalf.
3. A physician is responsible for
knowing Medicare policy.
Physicians are legally responsible for
knowing Medicare policies regarding the
services and procedures they perform,
including policies on documentation.
Pursuant to federal regulations, a
physician will be deemed to have
knowledge of a Medicare coverage policy
if the Medicare Affiliated Contractor
(“MAC”) (i.e., Medicare Carrier or
Intermediary) provides actual notice
to the physician regarding coverage; if
CMS has provided notices related to the
subject service (e.g., Manual issuances,
bulletins or other written guides); and/or
Focus On Compliance
8 http://www.ofr.gov/OFRUpload/OFRData/2010-23579_PI.pdf
9 42 C.F.R. § 411.06 and Medicare Claims Processing Manual (CMS Pub. 100-04), Chapter 30, § 40.1.

if a National Coverage Decision has been
adopted with respect to the service. 9
Many physicians believe that
Medicare policies address billing and
coding issues only; this simply is not
true. Physicians must keep in mind
that Medicare policies address not only
billing and coding practices but also
documentation. As a best practice,
physicians should set up a system to
obtain, distribute, provide education
regarding and maintain information
relevant to the services and procedures
provided.
4. If billing “incident to,” a physician
must understand the “incident to”
rules.
Medicare policy recognizes that
physicians often receive assistance from
non-physician practitioners (i.e., nurse
practitioners, physician assistants, etc.)
in the course of providing services to
their patients. Where such services are
an integral, although incidental part
of the physician’s professional service;
commonly rendered without charge or
included in the physician’s bill; of a type
that are commonly furnished in the phy-
sician’s offices or clinics (i.e., not in the
hospital setting); and furnished by a phy-
sician or by auxiliary personnel under
the physician’s direct supervision, such
services may be billed “incident to” the
physician’s service and are reimbursed at
100 percent of the physician fee sched-
ule. Although anesthesia providers do
not bill services “incident to,” some pain
practices choose to take advantage of this
concept.
In order to bill for “incident to”
services, the physician must employ or
contract with the non-physician practi-
tioner. In addition, the physician must
have an existing physician-patient rela-
tionship; that is, the physician must first
conduct an initial visit with the patient
to establish the physician-patient re-
lationship prior to billing any services
pursuant to the “incident to” guidelines.
Further, the physician must directly su-
pervise the services rendered. In order to
provide “direct supervision” as required
by Medicare, the supervising physician
need not be in the same room with the
non-physician practitioner; however, the
physician must be present in the office
suite and immediately available to pro-
vide assistance and direction throughout
the time the practitioner is performing
services. 10
In the course of appealing numer-
ous recent post-payment audit determi-
nations, this office has seen an increase
in denials related to “incident to” ser-
vices. For example, in one recent audit
with which this office was involved, the
Medicare contractor denied numerous
services billed “incident to” the physi-
cian’s services, where the physician had
not visited the patient to conduct an ini-
tial patient visit, and accordingly there
was no existing physician-patient rela-
tionship. All visits were performed by a
nurse practitioner and billed “incident
to” the physician’s service. Although “in-
cident to” remains an acceptable way to
bill Medicare for services incidental to
the physician’s services rendered by non-
physician practitioners, physicians must
be cognizant of the rules surrounding
such services, and ensure that such ser-
vices (and, importantly, the supervision
provided) are fully documented.
5. All services a physician provides
must be medically necessary
in order to obtain Medicare
reimbursement.
The Social Security Act confers
to patients entitlements to a range
of medical services defined by broad
categories. Pursuant to Sections 1831
and 1832 of the Social Security Act,
Medicare Part B provides coverage for
a variety of services not covered under
Medicare Part A. The Social Security Act
also describes exclusions from coverage,
most notably including payment for
expenses incurred for items or services
that are not reasonable and necessary for
the diagnosis or treatment of illness or
injury or to improve the functioning of
a malformed body member. Generally
speaking, a service may be covered if it is
reasonable and necessary under Section
1862 (a) (1) (A) of the Social Security
Act.
Auditors and medical reviewers
routinely deny claims on a post-payment
basis because an item or service is found
not to be medically necessary. This office
has seen an increase in post-payment
audits of pain practices over the past year,
several of which are being conducted by
Zone Program Integrity Contractors
(“ZPICs”) (or Program Safeguard
Contractors (“PSCs”). It is essential that
Continued on page 1810 42 C.F.R. § 410.26 and Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 15, § 60 et seq.

when a physician documents a service
performed, such documentation must
establish for the reviewer of the medical
necessity for the service rendered.
6. Documentation is key.
In order to establish the medical
necessity for the service performed,
documentation must be thorough.
According to the Office of Inspector
General (“OIG”) Compliance Program
for Individual and Small Group Physician
practices, “[O]ne of the most important
physician practice compliance issues is
appropriate documentation of diagnosis
and treatment. Physician documentation
is necessary to determine the appropriate
medical treatment for the patient
and is the basis for coding and billing
determinations.” 11
Keeping in mind that auditors and
claim reviewers oftentimes are nurse
reviewers without specific expertise in a
physician’s practice area,it is essential that
documentation paint a picture for the
reviewer of medical necessity. Each note
should establish the medical necessity for
the service provided. Specifically:
• The record should be complete
and legible;
• Each encounter should include
the reason, relevant history,
exam findings, prior test results,
assessment, clinical impression or
diagnosis, plan of care, date and
identity of the observer. Records
should take into account any
applicable National Coverage
Decision or Local Coverage
decision;
• If not documented, the rationale
for ordering a test or service
should be easily inferred, and past
and present diagnoses should be
accessible.
By way of example, with respect
to pain management physicians,
documentation of visits should include
the patient’s diagnosis; the patient’s pain
history; a description of prior treatments
and the patient’s response to each
treatment;the rationale for the encounter;
documentation of the location and
intensity of pain; any other information
required by a Medicare Local Coverage
Decision; and any other information that
will help establish the medical necessity
for the service or procedure performed.
One key issue for anesthesia providers
is to ensure appropriate documentation
of compliance with the medical direction
requirements. Pursuant to 42 C.F.R. §
415.110 (b):
The physician alone inclusively
documents in the patient’s medical
record that the conditions set
forth… have been satisfied,
specifically documenting that he or
she performed the pre-anesthetic
exam and evaluation, provided
the indicated post-anesthesia care,
and was present during the most
demanding procedures, including
induction and emergence where
applicable.
CMS has not provided specific
instruction regarding the way that this
documentation must be accomplished.
There are numerous ways that medical
direction can be documented (e.g.,
individual attestation statements with
a comment section; a combination of
attestation statements and time line
initialing; handwritten notations with
no formal attestations; etc.). Whichever
way is chosen, documentation should
establish that the anesthesiologist fulfilled
Focus On Compliance
11 65 Fed. Reg. 59434 at 59440 (October 5, 2000).

its regulatory obligations with respect to
all of the following responsibilities:
• The anesthesiologist performed
the pre-anesthetic exam and
evaluation;
• The anesthesiologist prescribes an
anesthesia plan;
• The anesthesiologist participates
in the most demanding procedures
of the anesthesia plan including,
if applicable, induction and
emergence;
• The anesthesiologist ensures
that any procedures in the plan
that he or she does not perform
are performed by a qualifying
individual;
• The anesthesiologist monitors the
course of the anesthesia at frequent
intervals;
• The anesthesiologist remains
physically present and available
for the immediate diagnosis and
treatment of emergencies; and
• The anesthesiologist provides
post-anesthesia care,as indicated.12
7. Understand your electronic medical
record.
There are special issues that arise
with respect to electronic medical
records. Many electronic medical records
have built in “time savers,” such as self
populating fields that insert a patient’s
medical history or procedural history
into each record. These time saving
devices ultimately may hurt a provider if
not used correctly, should the provider be
subject to an audit. Auditors and claim
reviewers may deny claims if it appears
that the documentation is not tailored
to the service performed, but is merely a
template. Each record should be distinct
from the next. Additionally, auditors and
claim reviewers may deny claims if they
find that the medical records associated
with the service or procedure are
internally inconsistent. For example, this
office has seen audits where claims are
denied because the medical record states
in one area,“patient has no complaints of
pain,” but in another area states, “patient
presentswithseverepain.” Providersusing
electronic medical records must ensure
that they understand the capabilities of
the software, have knowledge regarding
which fields self-populate, and tailor each
record to the patient’s condition at the
time of assessment.
8. Physicians may not routinely waive
co-payments.
Physicians must not routinely
waive copayments. Routinely waiving
copayments could result in potential
Civil False Claims Act violations (e.g.,
liability arises under when a claim
misstates an “actual charge”). Routinely
waiving copayments also could create
exposure under the Anti-Kickback Laws
(e.g., advertising to waive co-payments
in order to solicit new patients). The
waiver of copayments is allowed in
special circumstances in consideration
of a patient’s financial hardship. If a
physician chooses to waive a co-payment
for this reason, the physician should
document the hardship and document
the physician’s collection efforts.
9. Credit balances must be returned.
A physician may not keep monies
that are not owed to him or her. Credit
balances must be returned. As noted
above, the Fraud Enforcement and
Recovery Act of 2009 (“FERA”) amended
the Civil False Claims Act to extend
liability to a provider who knowingly
retains an overpayment,even if no false or
fraudulent claim is actually submitted to
the government. The PPACA expanded
on the amendments made by FERA to
the Act and requires that an overpayment
be reported and returned within 60
days from the date the overpayment is
identified. Any overpayment retained
after this date gives rise to liability under
the Act. For these reasons, it is imperative
that credit balances are returned.
Conclusion
All physicians must be cognizant
of the increased scrutiny under which
Medicare claims are reviewed. In the
highly-regulatedhealthcareenvironment,
physicians are well advised to keep
compliance activities in the forefront
and keep the billing tips outlined herein
in mind when submitting claims to
Medicare and other payors.
Abby Pendleton and Jessica L. Gustafson
are partners with the health care law
firm of The Health Law Partners, P.C. in
Southfield, Michigan. The firm represents
hospitals, physicians, and other health
care providers and suppliers with
respect to their health care legal needs.
Pendleton and Gustafson specialize in
a number of areas, including but not
limited to: Recovery Audit Contractor
(RAC), Medicare, Medicaid and
other payor audit appeals, healthcare
regulatory matters, compliance matters,
reimbursement and contracting matters,
transactional and corporate matters,
and licensing, staff privilege and payor
de-participation matters. They can be
reached at apendleton@thehlp.com and
jgustafson@thehlp.com.
Abby Pendleton Jessica L. Gustafson
12 42 C.F.R. § 415.110.
13 See OIG Special Fraud Alert, available at http://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html.

Professional Events
ANESTHESIA
BUSINESS CONSULTANTS
255 W. Michigan Ave.
P.O. Box 1123
Jackson, MI 49204
Phone: (800) 242-1131
Fax: (517) 787-0529
Web site: www.anesthesiallc.com
Date Event Location Contact Info
Oct. 16-20, 2010 American Society of Anesthesiologists
Annual Meeting
San Diego Convention Center
San Diego, CA
www.asahq.org
Oct. 21, 2010 Jackson Business Showcase Allskate Fun Center
Jackson, MI
www.gjcc.org
Oct. 24-27, 2010 American Osteopathic College of
Anesthesiologists Annual Convention
San Mateo Marriott
San Mateo, CA
www.aocaonline.org
Nov. 13, 2010 Midwest Anesthesiology Conference –
Illinois Society of Anesthesiologists
Intercontinental Hotel
Chicago, IL
www.isahq.org
Dec. 10-14, 2010 Postgraduate Assembly in Anesthesiology New York Marriott Marquis
New York, NY
www.nyssa-pga.org
Jan. 28-29, 2011 ASA Practice Management Conference Houston, TX www.asahq.org

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