Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medicare Payment for Nonphysician Clinical Staff 
in Cardiothoracic Surgery 
JANET REHNQUIST 
INSPECTOR GENERAL 
APRIL 2002 
OEI-09-01-00130  O I G
FFICE OF  NSPECTOR  ENERAL

http://www.oig.hhs.gov/ 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, 
is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as 
the health and welfare of beneficiaries served by those programs.  This statutory mission is carried out 
through a nationwide network of audits, investigations, and inspections conducted by the following 
operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine the 
performance of HHS programs and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of HHS programs and operations in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspections reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E   S U M M A R Y  
PURPOSE 
This inspection assesses (1) the frequency, payment, and reasons cardiothoracic surgeons use 
their own nonphysician clinical staff to perform surgery-related hospital duties and (2) the 
manner and extent to which Medicare pays for these services. 
BACKGROUND 
In 1992, the Centers for Medicare & Medicaid Services (CMS) dramatically changed the way 
it reimburses physician services under Medicare Part B by adopting a fee schedule for 
physicians services and establishing relative value units for physician work, practice expense, 
and malpractice insurance.  In 1999, CMS specifically excluded the cost of physicians clinical 
staff used in the hospital setting from the calculation of practice expense for all services, 
including cardiothoracic surgery.  The Agency decided that the practice of bringing staff to the 
hospital was infrequent, and that it already paid the hospital for the cost of nonphysician clinical 
staff either through Part A, the Ambulatory Payment Classification system, or directly to the 
physician through the physician fee schedule work relative value units. The Society of Thoracic 
Surgeons objected to CMS decision. They believe that hospitals have reduced the number 
and skill levels of their staff and that advances in technology and the need for quality control are 
reasons why surgeons bring their own nonphysician clinical staff to the hospital.  The American 
Hospital Association disputes the Societys assertions about the extent to which surgeons bring 
their staff to the hospital. As a result, CMS asked the Office of Inspector General to assess 
staffing arrangements between hospitals and cardiothoracic surgeons. 
From the universe of cardiothoracic surgeries that were billed to Medicare in the first 
6 months of calendar year 2000, we used a stratified cluster sampling technique to select a 
sample of hospitals and surgeons for mail surveys. We received 322 valid responses to the 
surgeon survey (51.7 percent response rate) and 177 responses to the hospital survey (89.4 
percent response rate). We also reviewed the hospital licensing requirements of seven States 
with large Medicare populations. 
FINDINGS 
Medicare pays surgeons or hospitals for nonphysician clinical staff involved in 
cardiothoracic surgery 
Medicare pays hospitals and surgeons for nonphysician clinical staff either through the inpatient 
hospital prospective payment system (Part A), the Ambulatory Payment 
i 
Cardiothoracic SurgerySurvey Results  OEI-09-01-00130  Classification system for hospital outpatient services, or the physician fee schedule 

(Part B).  Almost three-quarters of cardiothoracic surgeons report that they use one or more of

their own nonphysician clinical staff to perform surgery-related functions at the hospital. This

was confirmed by approximately 70 percent of the hospitals.

Surgeons can bill and Medicare pays for medical services provided by certain mid-level

practitioners (physician assistants, nurse practitioners, and clinical nurse specialists) in the

hospital.  However, surgeons cannot bill separately for other staff, such as pump perfusionists,

registered nurse-first assistants, and operating room technicians.  Reimbursement for these staff

are paid to hospitals under Part A or the Ambulatory Payment Classification for hospital

outpatient services.

Some compensation agreements exist between hospitals and surgeons 
While most hospitals do not pay surgeons for the use of their nonphysician clinical staff, 
approximately 19 percent of the hospitals do provide either partial or full compensation to 
surgeons. 
CONCLUSION 
Medicare pays for nonphysician clinical staff even though surgeons do not receive additional 
payments for some of the staff they bring to the hospital. Instead, services of these staff are 
paid either to physicians through the work relative value units, to the 
mid-level practitioners directly, or to the hospital through Part A or the Ambulatory Payment 
Classification system for outpatient services.  Recognizing this, some hospitals and 
cardiothoracic surgeons have entered into arrangements whereby hospitals provide some 
compensation to surgeons who bring their own nonphysician clinical staff. 
AGENCY RESPONSE 
We received comments on the draft report from CMS. The Agency concurred with our 
conclusion and said that the reports findings affirmed its decision to exclude the costs of 
physicians clinical staff used in the facility setting from Medicares practice cost calculations. 
The full text of the Agencys comments appears in appendix D. 
ii 
Cardiothoracic SurgerySurvey Results  OEI-09-01-00130  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY ...................................................... i

INTRODUCTION .............................................................1

FINDINGS

Medicare pays for nonphysician clinical staff .....................................6

Compensation agreements between hospitals and surgeons  .........................10

CONCLUSION  ............................................................. 11

APPENDICES

A: Description of Selected Cardiothoracic Surgery Procedures  ..................... 12

B: Confidence Intervals for Selected Statistics  ..................................13

C: Regulation of Cardiothoracic Surgery for Selected States........................16

D: Agency Comments  ....................................................18

ACKNOWLEDGMENTS ..................................................... 21

iii 
Cardiothoracic SurgerySurvey Results  OEI-09-01-00130  I N T R O D U C T I O N  
PURPOSE 
This inspection assesses (1) the frequency, payment, and reasons cardiothoracic surgeons use 
their own nonphysician clinical staff to perform surgery-related hospital duties and (2) the 
manner and extent to which Medicare pays for these services. 
BACKGROUND 
Implementation of a Medicare Fee Schedule for Physicians Services 
In 1992, the Centers for Medicare & Medicaid Services (CMS) dramatically changed the way 
it reimburses services under Medicare Part B. Section 1848 of The Social Security Act 
required CMS to adopt a fee schedule for physicians services and establish relative value units 
(RVUs) for physician work, practice expense, and malpractice insurance. The payment 
amount for each service paid under the physician fee schedule is the product of three factors: 
(1) a nationally uniform relative value for the service, (2) a geographic adjustment factor for 
each physician fee schedule area, and (3) a nationally uniform conversion factor for the service. 
The conversion factors translate the relative values into payment amounts. 
Medicare Reimbursement for Cardiothoracic Surgery 
Medicare reimburses both hospitals and surgeons for inpatient, outpatient, and professional 
care for cardiothoracic surgery.  The inpatient component is reimbursed through the 
prospective payment system (Part A) or the Ambulatory Payment Classification (APC) system 
for outpatient services, while the professional component is reimbursed under the physician fee 
schedule (Part B). 
Part A Reimbursement. Medicare reimburses hospitals for all necessary, covered inpatient 
care.1 Services include, but are not limited to:  bed and board; nursing services; certain 
diagnostic or therapeutic services; and drugs, biologicals, supplies, appliances, and equipment.2 
Reimbursement is based on several factors, including the use of hospital resources (e.g., staff), 
treatment patterns, and technology.3 Part A reimbursement traditionally does not include 
physician services and the physicians clinical staff used in the hospital. The Social Security 
142CFR412.50. 
242CFR409.10. 
342CFR412.60. 
1 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  Act requires CMS to adjust the prospective payment system annually based on changes in 
technology, inflation, hospital resources, and other factors.4 
Hospital Outpatient Reimbursement. Section 1833(t) of The Social Security Act 
authorized the implementation of the outpatient prospective payment system for hospitals.5 This 
system replaced the cost-based payment system which operated since Medicare was enacted 
in 1965. The outpatient prospective payment system, implemented August 1, 2000, classifies 
services according to a list of ambulatory payment classifications or APCs. Medicare 
reimbursement under APCs is prohibited for nonphysician services furnished to the hospital 
outpatient by a provider or supplier other than a hospital unless the services are furnished under 
arrangement.  Therefore, the APCs include reimbursement for hospital-employed nonphysician 
clinical staff only. 
Part B Reimbursement. Surgeons receive reimbursement under the Medicare physician fee 
schedule for professional services, such as diagnosis, surgery, and consultation.6 Physician Part 
B services are covered when provided in the office or an institution, such as a hospital.  The 
physicians reimbursement includes overhead costs for the wages of typical nonphysician 
clinical staff, such as nurses. However, Medicare Part B does not pay for physicians clinical 
staff used in the hospital. Exceptions include some 
mid-level practitioners, such as physician assistants, nurse practitioners, and clinical nurse 
specialists.  These mid-level practitioners may be licensed or certified under State law to 
perform special medical procedures, and the office and hospital services are covered and paid 
by Medicare.7 When these nonphysician clinical staff are employees of the surgeon, the 
surgeon can bill on their behalf, and Medicare reimburses the surgeon for their services. 
Determining Practice Expenses 
The Social Security Act Amendments of 1994 required CMS to develop a methodology for a 
resource-based system for determining practice expense RVUs for each physician service. The 
legislation also required that any adjustments to these RVUs be budget neutral. The Balanced 
Budget Act of 1997 required CMS to implement the new payment methodology over a 4-year 
period, effective for services furnished in 1999, with resource-based RVUs as the sole basis for 
reimbursement in calendar year 2002. During the transition period, payment is based on a 
blend of charge-based practice expense 
442CFR412.60(e). 
5Mandated in the Balanced Budget Act of 1997 and modified through the Balanced Budget 
Refinement Act of 1999 and the Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000. 
6Health Care Financing Administration, Carriers Manual, Part 3--Coverage and Limitations, 
Section 2020A. 
7Ibid., Sections 2050.1B and 2390. 
2 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  RVUs and resource-based practice expense RVUs. The Balanced Budget Refinement Act 
of 1999 required CMS to establish a process for accepting and using data that 
non-government organizations either collect or develop.  These data would supplement the data 
CMS normally collects to develop the practice expense component of the physician fee 
schedule for calendar years 2001 and 2002.  Refinement of practice expenses will be an 
ongoing process, because Congress requires CMS to review and adjust the RVUs 5 years 
after the end of the transition period, no later than 2007. 
The CMS has relied primarily on two sources of data on practice expenses.  The first source is 
data from 15 Clinical Practice Expert Panels (comprised of physicians, administrators, and 
nonphysician clinicians), and the second is the American Medical Associations Socioeconomic 
Monitoring System. The Agency also used data from a survey submitted by the Society of 
Thoracic Surgeons, which represents 3,000 cardiothoracic surgeons in the United States, to 
compute the practice expense for cardiothoracic surgery starting with the calendar year 2000 
physician fee schedule. 
The Debate Over Practice Expense for Cardiothoracic Surgery 
In 1999, CMS excluded the cost assigned to all clinical staff in the hospital from the Clinical

Practice Expert Panel data that are used in the calculation of practice expense. The Agency

decided that the practice of bringing clinical staff to the hospital was infrequent, and that it

already paid the hospital for the cost of nonphysician practitioners through Part A and the

APCs, the physicians for the work of their physician extenders through the work RVUs, or to

their mid-level practitioners directly. The Society of Thoracic Surgeons objected strongly to

CMS decision. The Society claims that, during the last 10 years, hospitals have reduced the

number and skill levels of their staff. Also, advances in technology and the need for quality

control explain why cardiothoracic surgeons bring their own nonphysician clinical staff to the

hospital.

The American Hospital Association disputes the Society of Thoracic Surgeons assertions

about the extent to which surgeons bring their staff to the hospital.  The organization surveyed

its members in 1997 and found that some hospitals that responded reported that at least one

physician had brought their own clinical staff to the hospital during a 

six-month period that year. (The survey did not ask hospitals which specialists typically

brought nonphysician clinical staff to the hospital.) Some respondents said it was not a regular

practice among surgeons. The American Hospital Association sent a follow-up survey to

hospitals that had reported that physicians brought their own clinical staff and found that the use

of physicians staff in the hospital did not reduce hospitals staffing costs.

The CMS asked the Office of Inspector General to assess staffing arrangements between

hospitals and cardiothoracic surgeons.

3 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  METHODOLOGY 
We mailed separate surveys to physicians and hospitals.  We used a stratified cluster sampling 
technique to create both samples. 
Selection of Hospital and Cardiothoracic Surgeon Samples 
We first defined a universe of hospitals consisting of those facilities with at least 

10 inpatient admissions from the CMS national claims history file in diagnostic-related groups

(DRG) 104, 105, 106, 107, and 109 in the first 6 months of calendar year 2000. (See

appendix A for brief descriptions of cardiothoracic surgeries.)  We stratified this universe into

three strata: non-teaching hospitals, teaching hospitals with training programs in cardiovascular

surgery, and teaching hospitals without training programs in cardiovascular surgery.  We

randomly selected and mailed surveys to 66 hospitals from each of these strata for a total of

198 hospitals.

We chose 6 inpatient claims from each of the sample hospitals, for a total of 1188 claims. We

identified 635 unique physicians listed as the operating physician on these claims and 711

unique physician-hospital combinations. The unit of analysis is the physician-hospital

combination; responses from physicians with claims at multiple hospitals were entered

separately for each hospital. The responses are weighted by each physicians chance of

selection, which is not based on the number of hospitals at which the physician practices.

Universe Stratification 
Claims from  Physician-
Hospital  Total  Hospital  Hospitals  Claims 
Hospitals  Hospital 
Stratum  Claims  Universe  Selected  Selected 
Selected  Combinations 
Non-teaching  42235  430  66  5330  396  215 
Teaching with 
cardiovascular  26221  154  66  8228  396  248 
programs 
Teaching without 
cardiovascular  52270  362  66  6741  396  248 
programs 
Total  120726  946  198  20299  1188  711 
We initially obtained the physicians names and addresses through CMS Unique Physician 
Identification Number (UPIN) file.  Whenever the address in the UPIN file was incorrect, we 
searched the Society of Thoracic Surgery website and then the Internet to identify the correct 
address for the physician. We then mailed the cardiothoracic surgeons survey to 623 
physicians who had current addresses. 
4 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  We received 322 valid responses to the surgeons survey and 177 valid responses to the 
hospital survey for response rates of 51.7 percent and 89.4 percent, respectively. 
Nonrespondent Analysis 
We analyzed the characteristics of nonrespondent surgeons to determine whether they differed 
from respondents.  We found that surgeons who were listed as the operating physician on more 
claims were more likely to respond to the survey.  We compared the characteristics by the type 
of hospital (non-teaching/teaching and by type of teaching program), geographic location 
(urban/rural), hospital bed size, and type of ownership (profit/nonprofit/government).  None of 
these comparisons, however, was significant at the 95 percent confidence level. 
To determine the effect of the relationship between responses and the number of claims, we 
conducted additional analysis of the statistics in the report. We assumed that 
non-respondents would have answered identically to respondents within the same claims 
volume categories. We then recalculated the statistics. All recalculations were within the 95 
percent confidence intervals of the original estimates.  Therefore, we did not find any evidence 
of bias related to claims volume due to non-response. 
Review of State Hospital Licensing Requirements for Cardiothoracic Surgery 
We reviewed State hospital licensing and other regulations for seven States with large 
Medicare populations--California, New York, Florida, Illinois, Pennsylvania, Ohio, and Iowa. 
The purpose was to identify State hospital regulations that specifically cover cardiothoracic 
surgery.8 
Our review was conducted in accordance with the Quality Standards for Inspections issued 
by the Presidents Council on Integrity and Efficiency. 
8We excluded both Texas and Michigan, even though they have large Medicare populations. 
Neither State has any hospital code or licensing provisions related specifically to cardiothoracic surgery. 
The Texas general hospital code covers surgery, anesthesia, and post-operative recovery.  The Michigan 
hospital code is very brief and does not contain any provisions specifically for cardiothoracic surgery. 
5 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  F I N D I N G S  
Medicare pays surgeons or hospitals for nonphysician clinical 
staff involved in cardiothoracic surgery 
Almost Three-Quarters of Cardiothoracic Surgeons Bring Their Own Staff to the 
Hospital 
Most cardiothoracic surgeons bring their own nonphysician clinical staff to the hospital to

perform preoperative, intraoperative, and postoperative patient care. Approximately 

74 percent of surgeons reported that they bring one or more of their own staff to perform

hospital services.  As one surgeon wrote, We do 800+ heart surgeries a year and could not do

this without our surgical assistant staff.  We found a positive correlation between the total

number of surgeries that a surgeon performed and the probability that he brings his own staff to

the hospital. The following table shows the frequency with which the 

74 percent of surgeons bring particular types of nonphysician clinical staff to work in the

hospital and the operating room.

Staff Who Assist at Hospitals 
Perform  Work in 
Nonphysician Clinical Staff 
Hospital Services  Operating Room 
Physician Assistant  69.8%  69.2% 
Pump Perfusionist  47.6%  47.0% 
Clinical Nurse Specialist  27.5%  8.3% 
Nurse Practitioner  26.1%  14.6% 
Operating Room or Scrub Technician  20.1%  20.1% 
Registered Nurse (including registered 
12.7%  9.0% 
nurse-first assistant) 
Hospitals also reported that many surgeons bring their own nonphysician clinical staff. Overall, 
approximately 69 percent of hospitals reported that surgeons bring their own staff to perform 
hospital services. Hospitals with training programs in cardiovascular surgery were least likely to 
report that surgeons bring their own staff (42.6 percent) versus non-teaching hospitals (71.0 
percent) or even teaching hospitals without training programs in cardiovascular surgery (77.1 
percent). 
6 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  Staff Responsibilities Vary Greatly 
Nonphysician clinical staff perform many functions while at the hospital and in the operating 
room.  Responsibilities range from performing history and physical examinations upon the 
patients admission to harvesting veins that the surgeon uses for the bypass surgery. The chart 
below includes the hospital responsibilities mentioned most often by surgeons. 
Top Hospital Responsibilities of Nonphysician Clinical Staff 
Surgeons 
Responsibilities  Percent 
Staff 
assists: first assistant during surgery  95.6% 
completes discharge summaries  68.4% 
Physician 
provides postoperative care in the intensive care unit and/or patient 
Assistant  65.4% 
room 
completes history and physical examinations and/or preoperative 
58.8% 
consultations 
operates perfusion pump in operating room  98.2% 
Pump 
Perfusionist 
other functions in the operating room  16.3% 
provides preoperative care and/or patient instructions  84.1% 
Clinical 
Nurse  completes discharge summaries  48.5% 
Specialist 
completes other postoperative functions (e.g., wound checks)  44.5% 
completes preoperative care and/or patient instructions  75.2% 
provides postoperative care in the intensive care unit and/or patient 
39.6% 
Nurse 
room 
Practitioner 
completes discharge summaries  39.1% 
assists: second assistant during surgery  35.8% 
Surgeons mentioned responsibilities of other nonphysician clinical staff who work at the 
hospital.  Registered nurses most often provide preoperative care (63.1 percent) and, for some 
surgeons, also act as surgical first assistant (called registered nurse-first assistant or RNFA) in 
the operating room (48.1 percent).  Technicians work primarily in the operating room. 
We compared responses of surgeons who bring their own staff to the number of procedures 
they performed at the hospital, the type of hospital (non-teaching/teaching, 
7 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  and by type of teaching program), geographic location (urban/rural), hospital bed size, and 
profit/nonprofit/government ownership. None of these comparisons was significant at the 95 
percent confidence level. 
Surgeons Cite Lack of Appropriate Hospital Staff and Specialized Training as 
Major Reasons to Bring their Own Staff 
Cardiothoracic surgeons gave many reasons as to why they use their own nonphysician clinical 
staff rather than hospital staff to provide preoperative, intraoperative, and postoperative care to 
their patients. The major reasons are, but are not limited to: 
Reason  Percent9 
1.  The hospital does not have staff to assist during surgery 75.1% 
2.	 Surgeons staff is efficient and has appropriate training 
in surgical techniques  73.0% 
3.  Hospital staff does not have the right skills  57.0% 
4.	 Hospital does not have staff for preoperative 
and postoperative care  34.6% 
5.  Personal preference  30.4% 
Other reasons (8.3 percent) include (1) the lack of enough physician assistants to assist at all 
surgeries performed by the surgeons daily, (2) the availability of the surgeons staff after regular 
office hours and in emergency situations, and (3) the majority of the hospitals nursing staff is 
transient. 
Many surgeons expanded their reasons for bringing their own nonphysician clinical staff to the 
hospital. One surgeon noted, The technical skills and degree of knowledge for cardiovascular 
surgery personnel is not available unless my group provides it.  The hospital simply will not or 
cannot.  A second surgeon commented,  ...the number of staff required to support 
cardiovascular care of good to excellent quality is enormous.  And yet a third surgeon said, 
My partners and I rely heavily on the assistance of our nurses with so many aspects of patient 
care.  We would not be able to provide the same standard of care without their professional 
expertise. . . . the elderly (Medicare) patient especially requires an experienced and astute 
individual to assess his or her past medical history, present condition, and postoperative 
recovery. 
Surgeons Can Bill for Physician Assistants, Nurse Practitioners, and Clinical 
Nurse Specialists 
Surgeons can bill and Medicare Part B does pay separately for mid-level practitioners (such as 
physician assistants, nurse practitioners, and clinical nurse specialists) who 
9Surgeons may have included more than one reason. 
8 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  provide services to patients in the surgeons office or the hospital.10 In our sample, 
approximately 53 percent of surgeons brought at least one physician assistant, nurse 
practitioner, or certified nurse specialist to the hospital to work in the operating room. 
Approximately half of these surgeons billed Medicare and received payment for those staff. 
Nearly 70 percent of surgeons who bring their own staff said that physician assistants perform 
hospital services, particularly in the operating room. Medicare will pay for the services of 
physician assistants  . . . who are legally authorized to furnish services in the State and who 
render the services under the supervision of a physician in a hospital, . . . or when the physician 
assistant performs the services of an assistant at surgery.11 Surgeons use a modifier on 
Medicare claims to identify services provided by physician assistants during surgery. 
Reimbursement for physician assistants as assistant surgeons generally is limited to 
approximately 10 percent of the surgeons fee schedule amount. 
Hospitals, Not Surgeons, Receive Reimbursement for Nurses and Pump 
Perfusionists 
Nurses who perform hospital duties are typically employed by hospitals, not surgeons. We

asked hospitals to specify the hospital employees who are available to assist cardiothoracic

surgeons during surgery and found that registered nurses (89.5 percent) and operating room

technicians (86.8 percent) are the most commonly employed nonphysician hospital staff. Since

the hospital payment includes reimbursement for wages, surgeons cannot bill and receive

reimbursement for some of their own staff, such as registered nurse-first assistants, pump

perfusionists, and operating room technicians.

Almost half of the surgeons (47.6 percent) who bring their own nonphysician clinical staff

reported that they employ pump perfusionists, the staff who operate the heart pump during

surgery.  When the American Hospital Association surveyed its members in 1997, it asked

about the types and functions of staff who were employed by surgeons. Although the

association did not ask specifically whether or not surgeons employed pump perfusionists (they

were considered other personnel types), hospitals reported that 

10 percent of the surgeons nonphysician clinical staff operate the perfusion pump.  In our

survey, approximately 65 percent of the hospitals reported that they provide perfusionists,

usually under contractual arrangements rather than as hospital employees.

Hospitals Rarely Reduce Staffing When Surgeons Bring Their Own Staff 
All States regulate hospitals through licensing, and those requirements usually set minimum 
staffing levels and staff qualifications.  Our limited review of State licensing regulations showed 
that hospitals may be required to provide certain staff to be licensed 
10Health Care Financing Administration, Carriers Manual, Part 3, Chapter XVI (NonPhysician 
Practitioner Services), Sections 16000-16003. 
11Ibid, Section 16001. 
9 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  in their State for cardiothoracic surgery.  Therefore, hospitals cannot reduce their staffing when 
surgeons bring their own staff to the hospital.12 Of the 70 percent of hospitals that responded 
that surgeons bring their own staff, only six hospitals reduce their staffing levels in response to 
surgeons use of their own staff. 
Some compensation agreements exist between hospitals and 
surgeons 
Surgeons typically are responsible for the costs of their nonphysician clinical staff. While most 
hospitals do not compensate surgeons for the staff that they bring to the hospital, approximately 
19 percent of hospitals said that they provide either partial or full compensation.  Likewise, 
approximately 19 percent of the surgeons responded that they receive compensation from the 
hospital. Since the reimbursement for pump perfusionists is typically included in the Medicare 
hospital payment, some hospitals reimburse the surgeons for this staff. 
12Appendix D summarizes regulations for cardiothoracic surgery and post-operative staffing 
requirements for the seven States we reviewed, each of which has a large proportion of Medicare 
beneficiaries. 
10 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  C O N C L U S I O N  
Medicare pays for nonphysician clinical staff even though surgeons do not receive additional 
payments for some of the staff they bring to the hospital. Instead, services of these staff are 
paid either to physicians through the work relative value units, to the mid-level practitioners 
directly, or to the hospital through Part A or the Ambulatory Payment Classification system for 
outpatient services.  Recognizing this, some hospitals and cardiothoracic surgeons have entered 
into arrangements whereby hospitals provide some compensation to surgeons who bring their 
own nonphysician clinical staff. 
AGENCY RESPONSE 
We received comments on the draft report from CMS. The Agency concurred with our 
conclusion and said that the reports findings affirmed its decision to exclude the costs of 
physicians clinical staff used in the facility setting from Medicares practice cost calculations. 
The full text of the Agencys comments appears in appendix D. 
11 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX A 
Description of Selected Cardiothoracic Surgery Procedures 
Coronary Bypass Graft Surgery 
Coronary bypass procedures use either a vein harvested from the leg, or the vein and an artery 
(usually the internal mammary artery from the chest) to bypass an atherosclerotic narrowing of 
the coronary artery.  Although the procedures involve substantial risks (e.g., death, stroke, and 
other neurologic complications), the outcomes are proven and longer lasting than other 
procedures.13 Bypass surgeries are included in the diagnostic-related groups (DRG) 106, 107, 
and 109. 
Valve Procedures With or Without Coronary Bypass Graft Surgery 
Valve disorders are the second most common form of heart disease in adults, and they most 
frequently involve the aortic valve. The most common forms of aortic valve disease are stenosis 
(a pressure overload which occurs as blood flows across a narrowed valve) and insufficience 
(an improperly-closing valve which causes a blood volume overload on the heart and the blood 
then flows back into the heart). Although patients with valve disease can be asymptomatic, 
untreated valve disorders eventually cause symptoms such as chest pain, shortness of breath, 
fainting, as well as serious damage to the heart.14 In patients with clear-cut symptoms of 
coronary artery disease, a combined surgery of valve replacement and bypass might be 
necessary.15 The valve procedures, with and without simultaneous bypass surgery, are in 
DRGs 104 and 105. 
13The Center for the Evaluative Clinical Sciences/Dartmouth Medical School and The Center for 
Outcomes Research and Evaluation /Maine Medical Center, The Dartmouth Atlas of Cardiovascular 
Health Care, 1999, p. 72. 
14Ibid, p. 192. 
15Ibid, p. 198. 
12 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX B 
Confidence Intervals for Selected Statistics

The following table shows the point estimates and 95 percent confidence intervals for selected 
statistics, in the order that they appear in the report.  These calculations account for all levels of 
clustering and stratification as described in the methodology. 
Point  95 Percent 
Statistic  N 
Estimate  Confidence Interval 
Percent of cardiothoracic surgeons who bring 
353  74.11%  62.21% - 86.01% 
their own staff to the hospital 
Percent of hospitals that reported surgeons bring 
177  69.19%  62.85% - 75.52% 
their own staff to the hospital 
Surgeons Clinical Staff Who Assist at Hospitals 
Percent of physician assistants from surgeons 
248  69.84%  53.07% - 86.61% 
staffs who perform hospital services 
Percent of physician assistants from surgeons staffs 
248  69.23%  52.43% - 86.03% 
who perform services in the operating room 
Percent of nurse practitioners from surgeons staffs 
248  26.14%  15.96% - 36.33% 
who provide hospital services 
Percent of nurse practitioners from surgeons staff 
248  14.59%  5.74% - 23.44% 
who perform services in the operating room 
Percent of clinical nurse specialists from surgeons 
248  27.50%  17.34% - 37.66% 
staffs who provide hospital services 
Percent of clinical nurse specialists from surgeons 
248  8.30%  2.59% - 14.01% 
staff who perform services in the operating room 
Percent of pump perfusionists from surgeons staffs 
248  47.60%  29.24% - 65.96% 
who provide hospital services 
Percent of pump perfusionists from surgeons staff 
248  47.00%  28.62% - 65.37% 
who perform services in the operating room 
Percent of registered nurses (including registered 
nurse-first assistants) from surgeons staff who  248  12.68%  6.46% - 18.90% 
provide hospital services 
Percent of registered nurses (including registered 
nurse-first assistants) from surgeons staffs who  248  9.00%  3.83% - 14.17% 
perform services in the operating room 
13 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX B 
Point  95 Percent 
Statistic  N 
Estimate  Confidence Interval 
Surgeons Clinical Staff Who Assist at Hospitals (continued) 
Percent of operating room or scrub technicians 
248  20.05%  7.90% - 32.21% 
from surgeons staffs who provide hospital services 
Percent of operating room or scrub technicians from 
surgeons staff who perform services in the operating  248  20.05%  7.90% - 32.21% 
room 
Reasons Why Surgeons Bring Own Staff to Hospital 
Percent of cardiothoracic surgeons who bring their 
244  30.36%  25.25% - 40.47% 
staff because of personal preference 
Percent of cardiothoracic surgeons who bring their 
own staff because the hospital does not have staff  244  75.14%  65.14% - 85.14% 
to assist during surgery 
Percent of cardiothoracic surgeons who bring their 
own staff because the hospital staff does not have  244  56.96%  41.69% - 72.22% 
the right skills 
Percent of cardiothoracic surgeons who bring their 
own staff because the hospital does not have staff  244  34.56%  24.17% - 44.94% 
for preoperative and postoperative care 
Percent of cardiothoracic surgeons who bring their 
own staff because the surgeons staff is efficient  244  73.04%  59.90% - 86.18% 
and trained by surgeon 
Percent of cardiothoracic surgeons who bring their 
244  8.30%  3.89% - 12.73% 
own staff for other reasons 
Hospitals Pay Surgeons for Their Nonphysician Clinical Staff 
Percent of hospitals that pay any cost of 
cardiothoracic surgeons staff who assist at the  114  18.52%  11.72% - 25.33% 
hospital 
Percent of hospitals that pay entire cost of 
cardiothoracic surgeons staff who assist at the  21  34.59%  15.13% - 54.05% 
hospital 
Percent of hospitals that share the cost of 
cardiothoracic surgeons staff who assist at the  21  44.68%  24.55% - 64.82% 
hospital 
14 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX B 
Point  95 Percent 
Statistic  N 
Estimate  Confidence Interval 
Staff Provided by Hospitals 
During surgery, percent of hospitals that provide 
177  16.70%  12.94% - 20.45% 
residents 
During surgery, percent of hospitals that provide 
177  25.50%  19.99% - 31.50% 
other physicians 
During surgery, percent of hospitals that provide 
177  28.55%  22.42% - 34.68% 
physician assistants 
During surgery, percent of hospitals that provide 
177  6.32%  3.14% - 9.51% 
nurse practitioners 
During surgery, percent of hospitals that provide 
177  6.26%  3.41% - 9.11% 
clinical nurse specialists 
During surgery, percent of hospitals that provide 
177  89.99%  85.27% - 93.71% 
registered nurses 
During surgery, percent of hospitals that provide 
177  9.46%  5.40% - 13.53% 
licensed vocational nurses 
During surgery, percent of hospitals that provide 
177  64.93%  58.14% - 71.72% 
pump perfusionists 
During surgery, percent of hospitals that provide 
177  32.22%  25.70% - 38.74% 
nurse anesthetists 
During surgery, percent of hospitals that provide 
177  86.83%  82.10% - 91.56% 
operating room surgical technicians 
During surgery, percent of hospitals that provide 
177  12.04%  7.41% - 16.77% 
other staff 
15 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX C 
Regulation of Cardiothoracic Surgery for Selected States

Our limited review of State regulations showed that hospitals may be required to provide 
certain staff to receive State licensure for cardiothoracic surgery and cannot reduce their staffing 
when physicians bring their nonphysician staff to the hospital.  The chart summarizes regulations 
for cardiothoracic surgery and post-operative staffing requirements for the seven States. A 
State may have other, general regulations covering surgery, anesthesia, acute care services, and 
post-operative recovery.  Nursing personnel, in particular, are required to be present during 
and after surgery. 
State Code or Regulations  CA  NY  FL  IL  PA  OH  IA 
Staffing for Cardiothoracic Surgery 
Chief surgeon qualified in cardiothoracic surgery 
X  X  X  X  X  X  X 
present 
Other qualified cardiovascular surgeons present  X  X  X  X  X  X 
Qualified cardiovascular radiologist present  X  X  X  X 
Qualified radiologic technologists present  X  X 
Anesthesiologist qualified for cardiovascular surgery  X  X  X  X  X 
Pathologist qualified for cardiac abnormalities  X  X  X  X 
Cardiologist present  X  X  X  X 
Nurse personnel qualified in cardiovascular surgery  X  X  X 
Perfusionists qualified to operate extracorporeal 
X  X  X  X 
pump 
Header Coding: 
CA = California

NY = New York

FL = Florida

IL = Illinois

PA = Pennsylvania

OH = Ohio

IA = Iowa

16 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX C 
State Code or Regulations  CA  NY  FL  IL  PA  OH  IA 
Staffing for Post-Operative Recovery 
Physician responsible for conduct of recovery room  X  X 
Qualified supervisory nurse always in recovery room  X  X  X  X  X 
Registered recovery room nurse always in 
X  X  X  X 
attendance 
Sufficient nursing personnel to provide specialized 
X  X  X  X 
care 
Nurse to patient ratio for intensive care unit  X 
Staff to constantly attend anesthetized patients  X  X  X  X 
Supervisor of non-medical anesthesia personnel  X  X  X 
Staff to supervise and assist family/recovery room 
X  X  X 
visitors 
Mandatory Services/Facilities16 
Surgical and cardiology team  X  X  X  X 
Cardiopulmonary resuscitation team or capability  X  X  X 
Cardiac surgical intensive care unit  X  X 
Emergency room staffed for cardiac emergencies  X  X  X  X 
Catheterization-angiography laboratory services  X  X  X  X 
Nuclear medicine laboratory  X 
Cardiographics laboratory and electrocardiography  X  X  X  X  X 
Echocardiography service  X  X  X 
Blood bank/Hematology/Coagulation laboratory  X  X  X  X  X 
Pulmonary function unit  X  X  X  X 
Renal dialysis  X  X 
Infectious disease control  X  X  X 
16These services must be available 24 hours a day if the hospital offers cardiothoracic surgery. 
17 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX D 
Agency Comments

18 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX D 
19 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  APPENDIX D 
20 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130  A C K N O W L E D G M E N T S  
This report was prepared under the direction of Paul A. Gottlober, Regional Inspector General 
for Evaluation and Inspections in San Francisco.  Other principal Office of Evaluation and Inspections 
staff who contributed include: 
Cindy Lemesh, Project Leader  Tricia Davis, Program Specialist 
Deborah Harvey, Project Leader  Stephanie Lattin, Program Specialist 
Cheryl Dotts, Program Assistant  Linda Moscoe, Technical Support Staff 
Robert Gibbons, Program Analyst  Brian Ritchie, Technical Support Staff 
Scott Hutchison, Program Analyst 
Thomas Purvis, Program Analyst 
Christopher Tarbell, Program Analyst 
Steven Zerebecki, Program Analyst 
21 
Cardiothoracic Surgery--Survey Results  OEI-09-01-00130