Danger lurks in schemes involving outside reads

July 1, 2005

The keys to radiologist profitability are productivity and efficiency. Outside reading arrangements that permit remote reading at a workstation can greatly assist a group's profitability because the radiologist can read more studies, enhancing productivity while remaining efficient. But the news on such opportunities is mixed. While new Centers for Medicare and Medicaid Services policy changes have opened the door to certain out-of-state reading arrangements, other outside arrangements remain questionable under the fraud and abuse laws. Of particular concern are proliferating outside arrangements for sharing CT angiography reads with cardiologists.

The keys to radiologist profitability are productivity and efficiency. Outside reading arrangements that permit remote reading at a workstation can greatly assist a group's profitability because the radiologist can read more studies, enhancing productivity while remaining efficient. But the news on such opportunities is mixed. While new Centers for Medicare and Medicaid Services policy changes have opened the door to certain out-of-state reading arrangements, other outside arrangements remain questionable under the fraud and abuse laws. Of particular concern are proliferating outside arrangements for sharing CT angiography reads with cardiologists.

Many hospital-based radiologists are barred by exclusive professional services agreements from providing professional services outside the hospital. But such agreements are generally limited in geographic scope. While it is frowned upon to consider competition outside one's own backyard, changes to the Medicare rules-combined with the technical capability of radiologists to live and work anywhere in the country while providing services anywhere else-are beginning to open the door to new business opportunities.

Many barriers persist. The reassignment rules have been liberalized, but the Stark rules remain when the outside reading arrangement involves global billing by the group requesting the radiologist's services. At one time, an exception to the reassignment rules was necessary to permit a clinic to bill for the services of independent contractor radiologists who provide interpretation. Section 952 of the Medicare Modernization Act did away with the reassignment issue, but CMS advises a physician who orders a diagnostic test that is interpreted by an independent contractor radiologist to arrange for the interpretation to be provided at the group practice's facility, so the group practice can refer and bill for the professional component services. Consequently, the Stark onsite requirements, particularly for small contracts where it is not economically feasible for a radiologist to read onsite, may make separate billing of Medicare services the best way to proceed.

Another exception to the reassignment rules exists for what CMS calls "purchased interpretations." I have placed the term in quotes because the exception is narrowly defined in the rules. The purchased interpretation exception permits an entity that provides diagnostic tests (thus the entity must be performing the technical component services) to contract with radiologists to provide interpretations of these tests, provided the radiologist does not see the patient and provided the tests are not initiated by the physician or entity performing the technical component of the test. This exception most frequently involves arrangements with an independent diagnostic testing facility (IDTF).

Like all other physician services, interpretation services are paid under the Medicare physician fee schedule and are subject to the same payment rules as all other services paid under the MPFS. Under longstanding fee schedule pricing rules, the carrier that has jurisdiction over the geographic location where the services were performed has been the carrier that must be billed for the claim.

Recently, however, CMS received reports that some Medicare suppliers purchasing interpretations were unable to receive reimbursement for these services when the services were performed outside of their local carrier's jurisdiction, primarily due to carrier enrollment restrictions. To address this problem, CMS has narrowly changed its policy.

Effective for claims with dates of service on or after April 1, 2005, Medicare carriers must now accept and process claims for purchased interpretations when billed by suppliers to their local Medicare carrier regardless of where the interpretation service was furnished. Initially, CMS is limiting this capability to bill for purchased interpretations to IDTFs and has not yet extended the opportunity to physician practices.

Suppliers that submit claims to the carrier for purchased interpretations must therefore provide the ZIP code of the location where the service was rendered to allow the carrier to determine the correct payment locality for any service paid under the MPFS. In this manner, an IDTF can contract and bill for radiologists' services from anywhere within the U.S., provided the interpreting physicians comply with the transmitting state's licensure requirements and have made arrangements for professional liability coverage.

Another example of an outside reading arrangement is a so-called overread, a second opinion and thus a service to the physician requesting the service, not the beneficiary. There is no reassignment of benefits. Overread arrangements should be carefully structured, however, so that the radiologist is not involved in a situation in which the clinic submits a bill to Medicare for an interpretation that is billed as a service of the clinic physician but was actually performed by the radiologist.

At issue in these arrangements is whether the professional component service was provided by the clinic physician. I recommend to my clients that each request for an overread should be accompanied by documentation that a clinic physician actually read the radiograph; for example, the requisition could contain a copy of the report or at least a summary of the initial finding. To bolster this understanding, the radiologist could document that the initial interpretation was performed by a clinic physician and note the initial finding in the radiology report along with the fact that the study is a request for a second opinion.

As for whether the clinic physician conformed to Medicare requirements for performing the professional component, the radiologist cannot audit the clinic's practices but should be expected to take the good faith actions described above. It is interesting to note that Medicare instructs carriers to pay for interpretation of diagnostic radiology procedures only if the services are identifiable, direct, and discrete diagnostic services to an individual patient, such as an interpretation of diagnostic procedures that includes a written report.

If my anecdotal experience is any measure, many cardiology groups are eager to interpret CT angiography, but they recognize their limitations in interpreting the noncardiac portion of these studies and are proposing to radiologists what I describe as services and fee-sharing arrangements. There is no separate CPT code today, however, for the interpretation of the cardiac-only portion of a CTA. These arrangements appear to be rampant, and I believe they are very risky from both a fraud and abuse standpoint and a professional liability basis.

First, the cardiologist is billing the professional component for the full study despite interpreting only the cardiac portion. I haven't heard cardiologists indicate that they are coding with the -52 modifier, alerting the Medicare carrier or other payer that they have not interpreted the complete study. A false claim? Perhaps, and apparently radiologists around the country are being sucked into facilitating what could be viewed as false claims activity.

As for the professional liability risk, the radiologist is asked to read the noncardiac portion of the CTA. What if the cardiologist erred? Will the radiologist not also be sued? I believe the only way for the radiologist to avoid or at least minimize the professional legality exposure is to treat the exam like any other and read the entire study and prepare a complete written report as with all CTA studies. But since the radiologist is then doing the entire study, is it illegal remuneration to the cardiologist for the radiologist to give a full report and be paid a small percentage of the professional component value? Another dilemma.

Finally, many outside reading agreements are paid on a percentage of collections or per-click basis. Either payment method can meet regulatory requirements, but I tend to prefer the latter. If payments are made on a per-unit-of-service basis, they can be discounted below your usual fee schedule and still be priced at fair market value if the fee does not vary on the basis of volume or value of referrals. The discount is supported by the fact that you do not incur billing or bad debt expense and further supported if your contract is written to require payment whether or not the billing group collected the global fee.

These joint outside reading arrangements are currently my pet peeve. Someday there will be codes to describe the services provided by cardiologists and radiologists on these studies, but in the meantime, be careful of what you agree to. Radiologists must make certain they are paid at a level that does not permit the referring physicians to profit from the professional component. Prices for services should be based on your usual fees, discounted only for the efficiencies noted above. Heed the fraud and abuse laws, particularly when cardiologists come knocking on your door to collaborate on CTAs.

Mr. Greeson is a partner in the healthcare group of Reed Smith LLP in Falls Church, VA. He can be reached at 703/641-4242 or tgreeson@reedsmith.com.