Table Of ContentManagement & Compliance for Large/Academic Pathology Practices 1 Black-Schaffer & Johnson
Introduction. (2, 3, 5, 7, 9, 10, 11, 12, 13, 14, 26, 28, 29, 30, 31, 32, 33, 34)
The leadership of a pathology practice has always been responsible for the equitable, efficient
organization of their group. How has an increasingly competitive practice environment and an
increasingly intrusive regulatory environment affected good management? It has put a premium on
organization that encourages high diagnostic throughput without compromising the ancillary but
very important practice of compliant billing. Since both diagnostic pathology and compliant billing
are complex, sometimes even arcane professional activities, it is significant that management
professionals consider that the only general way to increase efficiency in the provision of
professional services is to decrease their variability. In all but the smallest pathology practices, a
balance must be struck between the organizational simplicity of an absolutely homogeneous
practice, in which each member shares proportionally in each practice activity, and the efficiencies
of a more specialized allocation of responsibilities. For medium to large practices, both operational
efficiency and efforts to assure compliance reasonably involve considerations of practice structure.
To balance these choices requires an understanding of the benefits, both in ease of compliance
and in enhancement of efficiency, of specialization, as well as of its complexities.
The practical essentials of managing an efficient pathology practice while encouraging compliance
consist of recognizing the synergies of diagnostic services and billing operations. The extent of the
activities necessary to accession, process, diagnose, report and bill specimens allows much
opportunity to achieve efficiency as well as ensure compliance.
Whereas a clinical laboratory service has
MANAGEMENT
primarily an industrial model of efficiency,
with the ratio of fixed to variable costs high
and the incremental costs of additional
business generally low, anatomic pathology
operations essentially follow a professional ORGANIZATION COMPLIANCE
services model. Operational efficiency in
anatomic pathology, as in other areas of
medical practice, relies primarily on
decreasing variability to assure quality and EFFICIENCY
increase throughput.
In structuring any part of a clinical operation for decreased variability, there is the need for the
overall operation to accommodate the full range of necessary clinical services. Thus an early
consideration is how specialized components of the operation can become without compromising
service. At one extreme, a solo practitioner must be a jack of all trades, though the demands of
accomplishing this may impair his or her ability to master of any of them. It is so natural to develop
some degree of specialization in any practice with several practitioners that it would be exceptional
to find a group of, say, three or four, in which there was not already at least a primary allocation of
responsibilities among the clinical laboratory directorships, and with six or eight, it would be
unusual not to have several pathologists quite clearly recognized as the “go to” individuals for hard
cases in various subspecialty areas.
What are the factors that naturally limit this tendency, and what are the advantages that may make
it worthwhile to pursue it further, even at the cost of increased complexity in management? The first
impediment to subspecialization is also one of the most significant: the concern for equitable
treatment of all members of the practice. This can clearly be served, to a first approximation at
least, by having a rigorously symmetrical schedule, where each member of the staff has the same
number of days or weeks on each service and off service for each of the reasons recognized by
the practice. Even here there are difficulties, as some weeks are more valued for time off, and it is
hard to be exactly equally accommodating to each member of the staff.
Management & Compliance for Large/Academic Pathology Practices 2 Black-Schaffer & Johnson
There are, even with this simplest model, at least two further complications, each of which is
usually seen in relation to seniority: equity in compensation and balance in effort. The former is
usually addressed in the time honored fashion by assuring the more junior, less well compensated,
that their turn will come; the latter by (plausibly) asserting that the greater difficulty of the less
experienced in accomplishing the same work is balanced by the greater responsibility of the more
senior in supervising and consulting with their juniors.
What, then are the disadvantages of this reasonably simple, primal form of practice, and how do
they relate to efficiency in management and ensuring compliance? Both in terms of the daily
clinical events of the practice, and in the operational aspects of ensuring correct, consistent
documentation of and billing for services provided, each practitioner is maximally called upon to
know all about everything, and to handle it (diagnosis, documentation and billing) just the same
way. We are all first and foremost physicians, and it is natural that our first impulse toward
specialization should be motivated by our desire to maximize the diagnostic capabilities of our
practices for our patients’ benefit, but let us also consider the operational and compliance benefits
of such specialization as well.
Size of Pathology Groups
The opportunity. (6, 13, 28, 31) 30%
Group size among pathology
practices has been gradually 25%
changing, with practices of five
or more pathologists increasing 20%
1994
relative to smaller groups. Such 1996
changes have long been seen 15% 1998
2000
as a reasonable response to
2002
predictable business pressures 10% 2004
on practices, with the benefits
of increased economies of 5%
scale and subspecialization
being key predictors of success 0%
in a competitive environment. 1 2 3 - 4 5 - 6 7 - 10 11 - 20 >20 No
Answer
Compliance. (1, 4, 7, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 35)
There are four main issues to consider in
ensuring compliant business practice. Two of PATIENT
these relate to the provider-patient
(INSURANCE)
interaction, and can be considered under the
rubric of coding the provider’s service (CPT-
4) and the patient’s condition (ICD-9-CM).
The other two relate to the insurance
circumstances of the patient and his or her SERVICE CONDITION
benefit structure, and of the provider and his
PAYMENT
(CPT) (ICD)
or her credential status.
There are several ways to conceptualize how
to organize your practice for compliance, and
two are very useful from a managerial
PROVIDER
perspective. The first can be represented by
a graphical image of the requirements for (CREDENTIALS)
compliant billing:
Management & Compliance for Large/Academic Pathology Practices 3 Black-Schaffer & Johnson
This shows that successful (and legitimate) payment is obtained when, and only when the
circumstances of the patient’s insurance coverage, the provider’s credentials, the patient’s medical
condition, and the provider’s professional services, happily conjoin to document a payable benefit!
Fortunately this is not so rare as a cynical reading of the multitude of rules would suggest, but
neither is it a foregone conclusion in all cases.
The other way to look at compliance
Seven elements of a complete
activities is as a process. The steps of
this process are those of a compliance compliance program:
plan, and, since October 5, 2000, even
the smallest physician practice has • 1. Written Procedures and Policies.
been subject to a “guidance” from the
• 2. Designated Compliance Officer.
Health and Human Services Office of
• 3. Education and Training Programs.
Inspector General (HHS OIG) to
develop and operate under a • 4. Open Communication.
compliance plan. Similar “guidances” • 5. Auditing and Monitoring.
had been issued previously from time
• 6. Internal Investigation and Enforcement.
to time, but, prior to this guidance, had
• 7. Response to Identified Offenses.
addressed the OIG’s concerns with
larger organizations. All these plans
have been structured around seven
elements:
BILLING
As always, pathology practices find that they
must step carefully to keep their balance,
(OIG)
and not just the usual balance between
good hospital citizenship and medical staff
membership, but also now balancing the
requirements of compliance among four
relevant OIG “guidances:” those for
HOSPITAL LABORATORY
physician practices, for hospital services, for
PATHOLOGY
(OIG) (OIG) third party billing entities and for laboratory
service providers. Fortunately, the College
of American Pathologists (CAP) has issued
its own guidelines for pathology professional
PHYSICIAN practices. The CAP guidelines represent a
fair synthesis of the current state of
(OIG)
compliance activities for pathology
practices, and their listing of necessary
Written Procedures and Policies written policies and procedures for a
pathology practice is particularly helpful.
• (1) Screening Policy
The OIG’s “guidance” for physician
• (2) Education Policy
practices acknowledges that, at least for
• (3) Auditing Policy small practices, it is not necessary to
• (4) Enforcement and Prevention Policy implement all seven elements of a
compliance program, but the program can
• (5) Coding Policy
rather be tailored to fit the particular needs
• (6) Medical Necessity Policy
of the practice as determined by a
• (7) Teaching Pathologist Policy structured and documented audit process.
Management & Compliance for Large/Academic Pathology Practices 4 Black-Schaffer & Johnson
What are the compliance needs of a physician practice most likely to be? (23, 35)
Coding and Billing: a major part of any physician practice’s compliance program is the identification
of risk areas associated with coding and billing. The CPT and ICD-9-CM codes reported on the
health insurance claims form should be supported by documentation in the medical record and the
medical chart should contain all necessary information. Additionally, [CMS] and the local carriers
should be able to determine the person who provided the services. These issues can be the root of
investigations of inappropriate or erroneous conduct, and have been identified by [CMS] and the
OIG as a leading cause of improper payments. The following risk areas associated with billing
have been among the most frequent subjects of investigations and audits by the OIG:
· Billing for items or services not rendered or not provided as claimed;
· Submitting claims for equipment, medical supplies and services that are not reasonable
and necessary;
· Billing for non-covered services as if covered;
(Physician practices should remember that ‘‘necessary’’ does not always constitute ‘‘covered’’ and
that this [billing for non-covered services] is a misrepresentation of services to the Federal health
care programs.)
· Double billing resulting in duplicate payment;
(Double billing occurs when a physician bills for the same item or service more than once or
another party billed the Federal health care program for an item or service also billed by the
physician. Although duplicate billing can occur due to simple error, the knowing submission of
duplicate claims, which is sometimes evidenced by systematic or repeated double billing, can
create liability under criminal, civil, and/ or administrative law.)
· Knowing misuse of provider identification numbers, which results in improper billing;
(An example of this is when the practice bills for a service performed by Dr. B, who has not yet
been issued a Medicare provider number, using Dr. A’s Medicare provider number. Physician
practices need to bill using the correct Medicare provider number, even if that means delaying
billing until the physician receives his / her provider number.)
· Unbundling (billing for each component of the service instead of billing by using an
inclusive code);
· Failure to properly use coding modifiers;
· Clustering;
(This is the practice of coding / charging one or two middle levels of service codes exclusively,
under the philosophy that some will be higher, some lower, and the charges will average out over
an extended period (in reality, this overcharges some patients while undercharging others).)
and
· Upcoding the level of service provided.
Reasonable and Necessary Services: a practice’s compliance program may provide guidance that
claims are to be submitted only for services that the physician practice finds to be reasonable and
necessary in the particular case. The OIG recognizes that physicians should be able to order any
tests, including screening tests, they believe are appropriate for the treatment of their patients.
However, a physician practice should be aware that Medicare will only pay for services that meet
the Medicare definition of reasonable and necessary. An area of concern for physicians relating to
determinations of reasonable and necessary services is the variation in local coverage
determinations (LCDs) among carriers. Physicians are supposed to bill the Federal health care
programs only for items and services that are reasonable and necessary. However, in order to
determine whether an item or service is reasonable and necessary under Medicare guidelines, the
physician must apply the appropriate LCD. In order to determine if an item or service is covered for
Medicare, a physician practice must be knowledgeable of the LCDs applicable to its practice’s
jurisdiction. Medicare (and many insurance plans) may deny payment for a service that is not
reasonable and necessary according to the Medicare reimbursement rules. Thus, when a
Management & Compliance for Large/Academic Pathology Practices 5 Black-Schaffer & Johnson
physician provides services to a Medicare beneficiary, he or she should only bill those services that
meet the Medicare standard of being reasonable and necessary for the diagnosis and treatment of
a patient.
There are two circumstances in which correct coding may be particularly complicated. The first is
when it is governed by a local coverage determination (LCD). Most Medicare coverage
determinations are local, and these generally relate an allowable range of ICD-9-CM codes to each
CPT-4 code; together with their associated articles, they may also apply other requirements, such
as frequency limits, age and sex criteria, &c. The significance of these determinations is not only
that payment may be denied, but that billing for services disallowed under such determinations, if
“knowing,” or in “deliberate ignorance,” or with “reckless disregard,” may implicate the federal False
Claims Act (31 U. S. C. 3729-3733). This is one among the several compliance benefits of
restricting the particular services usually affected by LCDs (for example, flow cytometry), to
pathologists whose specialty interest keeps them cognizant of the special circumstances which
surround billing for these services.
The other circumstance in which correct coding may be particularly complicated is when it involves
National Correct Coding Initiative (NCCI) edits. These are pairs of CPT codes for which there are
rules that govern when they may appropriately be billed together. Some of these edits never allow
a particular pair of codes to be billed together, while others permit the edit to be overridden by use
of a CPT code modifier. This latter circumstance requires special attention to the guidelines for
these edits, as the intent of each edit is specific to the code pair, and the mere fact that both
services were performed in not sufficient justification to override the edit. Determining what the
intent of the edit is, and whether therefore the circumstances justify an override of the edit, requires
knowledge of the NCCI Policy Manual, which, together with the code edit pairs themselves, is
updated quarterly and available online at: http://www.cms.hhs.gov/NationalCorrectCodInitEd/
Subspecialization. (2, 3, 8, 9, 10, 11, 12, 13, 14, 26, 28, 29, 30, 31, 32, 33, 34)
Finally to address the efficiency aspects of subspecialization, the Massachusetts General Hospital
(MGH) diagnostic pathology services have been fully subspecialized for more than ten years. What
does this mean? It does not mean a particular combination or number of services. It does mean
that there is no default (or “wastebasket”) service for any sort of specimen, and that each specimen
is therefore first examined and diagnosed by a pathologist for whom that specimen represents
either their major or one of usually at most two minor areas of particular interest. This obviously
dramatically minimizes the routine need for intradepartmental consultations, without diminishing
(indeed, while enhancing) the level of
expert attention brought to bear in each RVUs and Staffing after Subspecialization
case. It encourages consistency, both in
60
diagnosis and in diagnostic phraseology, it
facilitates (especially pertinent in a large
50
and academic institution) communication
and collaboration between pathologists 40
and their correspondingly subspecialized
clinical colleagues, and it makes the 30
routine clinical work of the staff and
trainees more conducive to academic 20
development. Last but not least, it has
proven able to enhance service throughput 10
by more than 50%, which efficiency is quite
necessary in times of diminishing unit 0
95#2 96#1 96#2 97#1 97#2 98#1 98#2 99#1 99#2 00#1 00#2 01#1 01#2 02#1 02#2 03#1 03#2 04#1 04#2 05#1
reimbursement, if one does not wish to
RVUs (10,000s) Staff FTEs Work Weeks Work FTEs
work for a perpetually diminishing income! RVUs/Work FTE (1,000s) Alternative Work FTEs Alternative Staff FTEs
Management & Compliance for Large/Academic Pathology Practices 6 Black-Schaffer & Johnson
M G H P A T H O L O G Y S E R V I C E
Compliance with Legal and Ethical Standards
A. POLICY
The MGH Pathology Service is committed to ensuring that all professional staff members and employees (1) are aware
of and comply with the letter and spirit of all applicable laws and regulations, (2) avoid conflicts of interest and (3)
conduct hospital business with the highest degree of integrity and honesty.
This plan describes the MGH Pathology Service program to ensure compliance with all laws, regulations and policies
and outlines the mechanism used to monitor compliance. The MGH Pathology Service will undertake the following
with the assistance and guidance of the Hospital Compliance Director and the Office of the General Counsel.
B. APPLICABILITY
This policy applies to all employees of the MGH Pathology Service and consultants retained in its service. This policy
encompasses all relevant areas of law, regulation and business practice, including but not limited to: antitrust, conflict of
interest, clinical practice discrimination, environmental protection, financial practices, gifts, mandated reporting,
Medicare and Medicaid referral and billing practices, Occupational Health and Safety, Health Information Protection
and Privacy, pharmaceutical practices, taxation, grant administration and scientific integrity.
C. PLAN
1. Organization
The MGH Pathology Service will:
a. Establish compliance oversight as an integral function of the Pathology Executive Committee (PEC).
This committee meets monthly, chaired by the Chief of the Pathology Service. It includes the
Associate Chiefs of Anatomic Pathology, Laboratory Medicine, Molecular Pathology and Research,
Training and Education, and Clinical Operations. It also includes the Director for Finance and
Administration who is designated as the Department’s Compliance Officer. The PEC will:
• Communicate its commitment to compliance to all employees
• Monitor department compliance and report to the Compliance Oversight Committee
• Establish and review enforcement of appropriate compliance standards, policies and procedures
b. Designate the Departmental Compliance Officer to work with individual laboratories to ensure compliance
by all employees. The Director of each laboratory or service area in the MGH Pathology Service is
responsible for the implementation of all compliance procedures within their operation. The Compliance
Officer, or his or her designee, will:
• Establish a departmental Billing Compliance committee to monitor professional and technical
billing activity for appropriateness, timeliness and accuracy
• Compile and maintain all statutory and regulatory requirements, industry standards and internal
policies applicable to the MGH Pathology Service
• Work with Laboratory Director to develop compliance procedures for their respective areas
• Develop a system to communicate statutory and regulatory requirements to the Laboratory
Director
• Encourage and enable all employees to report any possible noncompliant activities to the
Department or Hospital compliance Director without fear of retaliation.
Management & Compliance for Large/Academic Pathology Practices 7 Black-Schaffer & Johnson
• Evaluate and investigate all reports of noncompliance using appropriate institutional resources.
When required, refer matters to the PEC, Office of General Counsel or Hospital Oversight
Committee
• Take remedial steps to correct and prevent recurrence of instances of noncompliance, recommend
appropriate disciplinary action to the PEC, Laboratory Director or other appropriate body.
• Monitor the effectiveness of the Department’s compliance program, implement changes when
necessary and report on compliance activities to the PEC on an annual basis.
• Develop and implement additional policies and procedures to ensure continued compliance with
applicable laws, regulations, standards and policies.
• Establish an education program to inform all current staff members and train new employees at
orientation concerning Departmental compliance policies, procedures, their obligation to report
any questions concerning compliance, and all departmental and organizational reporting
mechanisms.
• Develop a communication system to periodically advise staff of new statutory, regulatory or
institutional requirements
2. Communication
The MGH Pathology Service will:
a. Communicate its commitment of compliance to all its employees as part of annual competency training.
b. Work in conjunction with the MGH Compliance Office to develop a communication system to
periodically advise the Hospital community and its external customers of current compliance
requirements. This will include:
• Definition of the Medicare medical necessity policy as it relates to laboratory studies
• Components of test profiles
• CPT or HCPCS codes used to bill each profile
• Medicare payment for each profile and component
• Hospital billing practices for profiles
• Health Information Privacy Protection
c. Develop a communication system to provide compliance and ethics training for all MGH Pathology
Service staff, particularly those involved in billing, marketing, specimen collection test processing and
reporting. This training will be scheduled annually and as determined by changes in relevant laws or
regulations. The training will: review the hospital and laboratory compliance policies, reinforce the
expectation of compliance with all regulatory standards as a condition of employment, describe the
hospital communication system for the internal reporting of compliance questions and acceptable
standards of conduct.
3. Monitoring and Auditing
The MGH Pathology Service will:
a. Audit existing laboratory operations to ensure compliance with the laboratory policies and procedures
related to billing, sales, marketing, notices to physicians, requisitions and the ordering of laboratory tests.
b. Review the laboratory plan and all applicable Federal and State laws to ensure compliance with standards
for contracts, marketing, billing, sales and record keeping.
c. Analyze test utilization data annually to monitor test-ordering patterns and investigate any significant
volume increases to ensure compliance with all established policies.
Management & Compliance for Large/Academic Pathology Practices 8 Black-Schaffer & Johnson
d. Report findings to the hospital Compliance Oversight Committee
4. Procedures and Policies
The MGH Pathology Service will
a. Develop specific written procedures and policies including:
• Standards of conduct which address laboratory policies regarding fraud and abuse, as well as
disciplinary actions that may be undertaken for employees failing to comply with these policies.
• Methods for investigating, documenting, correcting and reporting all systems, operations and
personnel compliance failures.
• Billing policies that ensure the accurate and correct coding of all services
• Policies for ordering laboratory tests that address the use of only medically necessary tests and
the use of standing orders in the course of extended treatments.
b. The MGH Pathology Service will review all fraud alerts and communications from the HHS OIG and its
Fiscal Intermediary and consult with the Hospital Compliance Director and the Office of General Counsel.
The MGH Pathology Service will evaluate any practices outlined in a fraud alert. This may include
monitoring any portion of the operation identified in the alert.
c. The MGH Pathology Service will develop clear and accurate descriptions of its services, which include
information on the impact of ordering practices for all payers including Medicare.
d. The MGH Pathology Service will maintain fair and consistent billing practices for all payers, in
accordance with pricing policies and models established by the Hospital Finance Department.
Specifically, charges for all panels will reflect the total cost of all tests included in that panel.
e. The MGH Pathology Service will establish or maintain records as required by all Federal or State laws,
and hospital policy.
f. The job descriptions and annual evaluations for all managers will include performance criteria related to
the promotion of and adherence to all elements of the Hospital and Department compliance plans.
5. Investigation
All reports of violations of the hospital or laboratory legal and ethical standards will be promptly investigated.
This investigation may include interviews with appropriate personnel, review of relevant documents, and
laboratory reports. If it is determined that violations have occurred, the hospital administration will take the
necessary actions to rectify the event(s), secure the relevant evidence, report the events to all necessary internal
and external agencies, and institute appropriate corrective for all individuals involved in the misconduct.
6. Corrective Action
The MGH Pathology Service will initiate appropriate corrective and/or disciplinary action against any
employee who fails to comply with the Hospital or Laboratory compliance policies, federal or State laws, or
acts to compromise the integrity of the organization. This will be conducted with the Hospital Department of
Human Resources and will be consistent with hospital policies and procedures.
Management & Compliance for Large/Academic Pathology Practices 9 Black-Schaffer & Johnson
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Article: Proper Usage Regarding Distinct Procedural Service
[http://www.cms.hhs.gov/NationalCorrectCodInitEd/Downloads/modifier59.pdf]
Description:The practical essentials of managing an efficient pathology practice while . circumstances of the patient's insurance coverage, the provider's
