Medicare ER payment policies remain murky

November 4, 2004

Medicare payments in the fast-growing field of offsite emergency radiology reads could come under challenge from regulatory developments in Washington, DC, and legislative developments nationwide. The Office of Inspector General has signaled that it is once again looking at the issue of whether emergency department radiology reads performed after the patient receives initial treatment provide true clinical value and should thus be reimbursed. At the same time, legislative initiatives in Washington and a number of states to limit outsourcing could interfere with the ability of U.S. emergency departments to contract with international teleradiology companies.

The question of who should bill Medicare for diagnostic radiology interpretations provided in hospital ERs has been an issue for more than a decade. Renewed interest in this question became apparent earlier this year when the Department of Health and Human Services' OIG included in its work plan for 2004 a notice of its intent to study ER radiology interpretations.

"This study will assess the appropriateness of Medicare billings for diagnostic tests performed in hospital emergency rooms. Medicare pays approximately $85 million a year for standard imaging (x-rays) and an additional $70 million for advanced imaging (such as MRIs and CAT scans)," the OIG's summary said "We will determine whether the services were medically necessary and whether the tests were interpreted contemporaneously with the beneficiary's treatment. . . ."

CURRENT CMS POLICY

This issue was on the OIG's agenda as far back as 1993, when it released a report criticizing Medicare payment policy for x-rays in hospital ERs ("Medicare's reimbursement for interpretations of hospital emergency room x-rays"). Medicare policy at that time stated that when a hospital radiologist interpreted an x-ray that had already been interpreted by another physician, the service of the radiologist almost always constituted a physician service and was payable by the Medicare carrier. When the radiologist's interpretation was for quality-control purposes, the service was to be considered a hospital service instead of a physician service and was to be reimbursed to the hospital by a fiscal intermediary under Medicare Part A.

Medicare's policy was based on three assumptions:

- Reinterpretations almost always constituted patient care.

- Radiologists are recognized experts; therefore, x-rays should be read by them.

- The qualifications of the interpreting physician are more important than the exact timing of the interpretation in determining whether a substantive physician service had been provided.

The OIG's 1993 report questioned all three assumptions. The OIG found that when patients were discharged before or on the same day as the radiologist's interpretation, this reading did not constitute patient care because it had no effect on the treatment provided. The OIG recommended that Medicare pay for reinterpretations of x-rays only when the attending physician requested a second interpretation before the patient was discharged. The OIG also recommended that any other reinterpretation of the attending physician's original interpretation should be treated and reimbursed under Part A as part of the hospital's quality assurance program.

The Centers for Medicare and Medicaid Services (then HCFA) reviewed the OIG recommendations, met with various parties, including the American College of Radiology, and developed a new policy that took effect in 1996. Under that policy, carriers pay for only one interpretation and report of an x-ray procedure furnished to an emergency department patient. (Note that a carrier will pay for interpretations of radiology examinations only if there is a written report prepared for inclusion in the patient's medical record. This requirement raises an issue as to the adequacy of emergency physician claims for reimbursement, as well as illegal remuneration issues.)

If multiple claims are submitted for the same interpretation and report, the policy is to pay only for the one that directly contributed to the diagnosis and treatment of the patient. In practice, carriers have tended to pay the first claim received.

The net result of this policy is that if both the radiologist and emergency physician submit claims for interpretation of the image, but the radiologist's interpretation was subsequent to the diagnosis and treatment, and the emergency physician's interpretation is determined to have directly contributed to the diagnosis and treatment, the carrier should seek recovery of the radiologist's payment.

This policy creates an incentive for a billing race between the emergency physician, whose interpretation may not be medically accurate and who may not generate the required written report; and the radiologist, whose interpretation, while of greater quality because of expertise, may not be furnished contemporaneously with the diagnosis and treatment of the patient. The burden is on the carrier to determine which claim is valid.

Because of the unpredictable results under this Medicare policy and the potential for additional scrutiny, the most prudent course for hospital-based radiologists is to reach an agreement with the hospital and the emergency physicians on who should furnish and bill for emergency department imaging interpretations.

In its instruction to carriers, CMS "encourage[es] hospitals to work with their medical staffs to make sure that only one claim per interpretation is submitted" and says that carriers should also "encourage the two parties [emergency room physicians and radiologists] to reach an accommodation as to who should bill for these interpretations."

OIG THREAT

The Social Security Act provides for civil monetary penalties against those who present claims for services they know or should know are not medically necessary. The OIG's interest in this topic has raised the possibility that a radiologist's interpretation of an emergency department diagnostic test might not be considered a physician service payable by Medicare. While the OIG has not stated this explicitly, the implication is that the OIG might consider such a service not medically necessary. This would introduce a significant risk of fraud and abuse charges for radiologists who submit claims for emergency department diagnostic test interpretations.

TELERADIOLOGY IMPLICATIONS

It is my view that the teleradiology model has provided a valuable service to Medicare patients and others who receive emergency department services. It has also been of great benefit to radiologists who use these services by enhancing their overall coverage. CMS could accommodate this style of practice by permitting payment under either of the following scenarios:

- The official interpretation made by the radiologists may be paid by Medicare if it was read and delivered to the treating physician contemporaneously with the patient's treatment.

- Medicare would make payment to the local radiologist if a preliminary report (e.g., via teleradiology) had been prepared and delivered to the treating physician contemporaneously with the patient's treatment, such preliminary report having been prepared by a radiologist with appropriate licensure and other qualifications necessary for hospital credentials. The official report prepared by the local radiologist follows the teaching physician model, with the local credentialed radiologist having the responsibility for reviewing the preliminary interpretation and approving that interpretation or approving the report after any necessary modifications.

Thus, in the hospital emergency department context, the teleradiology provider should be available to provide a preliminary read of a diagnostic test ordered by the emergency physician when the hospital's contracted radiologists are not on the hospital premises. The emergency physician may make a treatment decision based on the preliminary interpretation. The local radiologist will later read the study and produce a final interpretation, which should be compensated by Medicare.

ANTI-OUTSOURCING LEGISLATION

Measures to address outsourcing, at both state and federal levels, could limit the ability of radiologists and hospitals to contract with teleradiology companies. Recent proposals to require hospitals and other healthcare providers to obtain patient consent prior to sending personally identifiable healthcare information to offices located outside of the U.S. could, unfortunately, dissuade hospitals from using new and innovative technologies and services offered from abroad. It is likely that mandatory patient consent and related "hassle factors" would make hospitals reluctant to use international teleradiology to back up their emergency needs.

The consequence of such restrictions would be renewed pressure for radiologists to be onsite or on-call seven days a week, 24 hours a day, or for hospitals to credential emergency physicians to read and submit claims for radiology interpretation. These alternatives are harmful to the quality of patient care and detrimental to the practice of radiology.

Protecting U.S. radiologists from unfair, low-quality competition from abroad is a cause to champion. Measures that prohibit the use of teleradiology services from abroad, however, will also restrict the use of U.S.-trained, American Board of Radiology-certified, and multistate licensed radiologists who are providing an invaluable service to U.S. radiologists and their patients. The unintended negative consequences of anti-outsourcing legislative proposals should concern all U.S. radiologists.

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.

Mr. Greeson's clients include Nighthawk Radiology Services, but the views here are his own.