Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

INSPECTOR GENERAL 

APRIL 2002 

OEI-09-01-00130 

Medicare Payment for Nonphysician Clinical Staff 

in Cardiothoracic Surgery 
OFFICE OF INSPECTOR GENERAL

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 OIG’s 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. 
EXECUTIVE SUMMARY 

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 physician’s 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 Society’s 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 

Cardiothoracic Surgery–Survey Results i 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 report’s findings affirmed its decision to exclude the costs of 

physicians’ clinical staff used in the facility setting from Medicare’s practice cost calculations. 

The full text of the Agency’s comments appears in appendix D. 

Cardiothoracic Surgery–Survey Results ii OEI-09-01-00130 
TABLE OF CONTENTS 

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

Cardiothoracic Surgery–Survey Results iii OEI-09-01-00130 
INTRODUCTION 

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 physician’s clinical staff used in the hospital. The Social Security 

1

42CFR412.50. 

2

42CFR409.10. 

3

42CFR412.60. 

Cardiothoracic Surgery--Survey Results 1 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 

physician’s 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 

4

42CFR412.60(e). 

5

Mandated 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. 

6

Health Care Financing Administration, Carriers Manual, Part 3--Coverage and Limitations, 

Section 2020A. 

7

Ibid., Sections 2050.1B and 2390. 

Cardiothoracic Surgery--Survey Results 2 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 Association’s 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.

Cardiothoracic Surgery--Survey Results 3 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 physician’s chance of

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

Universe Stratification 

Hospital 

Stratum 

Total 

Claims 

Hospital 

Universe 

Hospitals 

Selected 

Claims from 

Hospitals 

Selected 

Claims 

Selected 

PhysicianHospital 

Combinations 

Non-teaching 42235 430 66 5330 396 215 

Teaching with 

cardiovascular 

programs 

26221 154 66 8228 396 248 

Teaching without 

cardiovascular 

programs 

52270 362 66 6741 396 248 

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 surgeon’s survey to 623 

physicians who had current addresses. 

Cardiothoracic Surgery--Survey Results 4 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 President’s Council on Integrity and Efficiency. 

8

We 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. 

Cardiothoracic Surgery--Survey Results 5 OEI-09-01-00130 
FINDINGS 

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 

Nonphysician Clinical Staff Perform 

Hospital Services 

Work in 

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 

nurse-first assistant) 12.7% 9.0% 

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). 

Cardiothoracic Surgery--Survey Results 6 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 

patient’s 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 

Surgeon’s 

Staff Responsibilities Percent 

Physician 

Assistant 

assists: first assistant during surgery 95.6% 

completes discharge summaries 68.4% 

provides postoperative care in the intensive care unit and/or patient 

room 

65.4% 

completes history and physical examinations and/or preoperative 

consultations 58.8% 

Pump 

Perfusionist 

operates perfusion pump in operating room 98.2% 

other functions in the operating room 16.3% 

Clinical 

Nurse 

Specialist 

provides preoperative care and/or patient instructions 84.1% 

completes discharge summaries 48.5% 

completes other postoperative functions (e.g., wound checks) 44.5% 

Nurse 

Practitioner 

completes preoperative care and/or patient instructions 75.2% 

provides postoperative care in the intensive care unit and/or patient 

room 

39.6% 

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, 

Cardiothoracic Surgery--Survey Results 7 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. Surgeon’s 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 surgeon’s staff after regular 

office hours and in emergency situations, and (3) the majority of the hospital’s 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 

9

Surgeons may have included more than one reason. 

Cardiothoracic Surgery--Survey Results 8 OEI-09-01-00130 
provide services to patients in the surgeon’s 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 surgeon’s 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 surgeon’s 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. 

Cardiothoracic Surgery--Survey Results 9 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. 

Cardiothoracic Surgery--Survey Results 10 OEI-09-01-00130 
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 report’s findings affirmed its decision to exclude the costs of 

physicians’ clinical staff used in the facility setting from Medicare’s practice cost calculations. 

The full text of the Agency’s comments appears in appendix D. 

Cardiothoracic Surgery--Survey Results 11 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. 

Cardiothoracic Surgery--Survey Results 12 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. 

Statistic N Point 

Estimate 

95 Percent 

Confidence Interval 

Percent of cardiothoracic surgeons who bring 

their own staff to the hospital 353 74.11% 62.21% - 86.01% 

Percent of hospitals that reported surgeons bring 

their own staff to the hospital 177 69.19% 62.85% - 75.52% 

Surgeons’ Clinical Staff Who Assist at Hospitals 

Percent of physician assistants from surgeons’ 

staffs who perform hospital services 248 69.84% 53.07% - 86.61% 

Percent of physician assistants from surgeons’ staffs 

who perform services in the operating room 248 69.23% 52.43% - 86.03% 

Percent of nurse practitioners from surgeons’ staffs 

who provide hospital services 248 26.14% 15.96% - 36.33% 

Percent of nurse practitioners from surgeons’ staff 

who perform services in the operating room 248 14.59% 5.74% - 23.44% 

Percent of clinical nurse specialists from surgeons’ 

staffs who provide hospital services 248 27.50% 17.34% - 37.66% 

Percent of clinical nurse specialists from surgeons’ 

staff who perform services in the operating room 248 8.30% 2.59% - 14.01% 

Percent of pump perfusionists from surgeons’ staffs 

who provide hospital services 248 47.60% 29.24% - 65.96% 

Percent of pump perfusionists from surgeons’ staff 

who perform services in the operating room 

248 47.00% 28.62% - 65.37% 

Percent of registered nurses (including registered 

nurse-first assistants) from surgeons’ staff who 

provide hospital services 

248 12.68% 6.46% - 18.90% 

Percent of registered nurses (including registered 

nurse-first assistants) from surgeons’ staffs who 

perform services in the operating room 

248 9.00% 3.83% - 14.17% 

Cardiothoracic Surgery--Survey Results 13 OEI-09-01-00130 
APPENDIX B 

Statistic N Point 

Estimate 

95 Percent 

Confidence Interval 

Surgeons’ Clinical Staff Who Assist at Hospitals (continued) 

Percent of operating room or scrub technicians 

from surgeons’ staffs who provide hospital services 248 20.05% 7.90% - 32.21% 

Percent of operating room or scrub technicians from 

surgeons’ staff who perform services in the operating 

room 

248 20.05% 7.90% - 32.21% 

Reasons Why Surgeons Bring Own Staff to Hospital 

Percent of cardiothoracic surgeons who bring their 

staff because of personal preference 244 30.36% 25.25% - 40.47% 

Percent of cardiothoracic surgeons who bring their 

own staff because the hospital does not have staff 

to assist during surgery 

244 75.14% 65.14% - 85.14% 

Percent of cardiothoracic surgeons who bring their 

own staff because the hospital staff does not have 

the right skills 

244 56.96% 41.69% - 72.22% 

Percent of cardiothoracic surgeons who bring their 

own staff because the hospital does not have staff 

for preoperative and postoperative care 

244 34.56% 24.17% - 44.94% 

Percent of cardiothoracic surgeons who bring their 

own staff because the surgeon’s staff is efficient 

and trained by surgeon 

244 73.04% 59.90% - 86.18% 

Percent of cardiothoracic surgeons who bring their 

own staff for other reasons 244 8.30% 3.89% - 12.73% 

Hospitals Pay Surgeons for Their Nonphysician Clinical Staff 

Percent of hospitals that pay any cost of 

cardiothoracic surgeons’ staff who assist at the 

hospital 

114 18.52% 11.72% - 25.33% 

Percent of hospitals that pay entire cost of 

cardiothoracic surgeons’ staff who assist at the 

hospital 

21 34.59% 15.13% - 54.05% 

Percent of hospitals that share the cost of 

cardiothoracic surgeons’ staff who assist at the 

hospital 

21 44.68% 24.55% - 64.82% 

Cardiothoracic Surgery--Survey Results 14 OEI-09-01-00130 
APPENDIX B 

Statistic N Point 

Estimate 

95 Percent 

Confidence Interval 

Staff Provided by Hospitals 

During surgery, percent of hospitals that provide 

residents 177 16.70% 12.94% - 20.45% 

During surgery, percent of hospitals that provide 

other physicians 177 25.50% 19.99% - 31.50% 

During surgery, percent of hospitals that provide 

physician assistants 177 28.55% 22.42% - 34.68% 

During surgery, percent of hospitals that provide 

nurse practitioners 177 6.32% 3.14% - 9.51% 

During surgery, percent of hospitals that provide 

clinical nurse specialists 177 6.26% 3.41% - 9.11% 

During surgery, percent of hospitals that provide 

registered nurses 177 89.99% 85.27% - 93.71% 

During surgery, percent of hospitals that provide 

licensed vocational nurses 177 9.46% 5.40% - 13.53% 

During surgery, percent of hospitals that provide 

pump perfusionists 177 64.93% 58.14% - 71.72% 

During surgery, percent of hospitals that provide 

nurse anesthetists 177 32.22% 25.70% - 38.74% 

During surgery, percent of hospitals that provide 

operating room surgical technicians 177 86.83% 82.10% - 91.56% 

During surgery, percent of hospitals that provide 

other staff 177 12.04% 7.41% - 16.77% 

Cardiothoracic Surgery--Survey Results 15 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 

present 

X X X X X X X 

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 

pump 

X X X X 

Header Coding: 

CA = California

NY = New York

FL = Florida

IL = Illinois

PA = Pennsylvania

OH = Ohio

IA = Iowa

Cardiothoracic Surgery--Survey Results 16 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 

attendance X X X X 

Sufficient nursing personnel to provide specialized 

care 

X X X X 

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 

visitors X X X 

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. 

Cardiothoracic Surgery--Survey Results 17 OEI-09-01-00130 
APPENDIX D 

Agency Comments

Cardiothoracic Surgery--Survey Results 18 OEI-09-01-00130 
APPENDIX D 

Cardiothoracic Surgery--Survey Results 19 OEI-09-01-00130 
APPENDIX D 

Cardiothoracic Surgery--Survey Results 20 OEI-09-01-00130 
ACKNOWLEDGMENTS 

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 

Deborah Harvey, Project Leader 

Cheryl Dotts, Program Assistant 

Robert Gibbons, Program Analyst 

Scott Hutchison, Program Analyst 

Thomas Purvis, Program Analyst 

Christopher Tarbell, Program Analyst 

Steven Zerebecki, Program Analyst 

Tricia Davis, Program Specialist 

Stephanie Lattin, Program Specialist 

Linda Moscoe, Technical Support Staff 

Brian Ritchie, Technical Support Staff 

Cardiothoracic Surgery--Survey Results 21 OEI-09-01-00130