Opinion ID: 3012795
Heading Depth: 2
Heading Rank: 1

Heading: Medicare Billing.

Text: The underlying dispute in this case involves Medicare billing at teaching hospitals. The parties differ on when physicians could bill for work performed by interns and residents under Health and Human Services regulations in effect before July 1996. Plaintiffs contend defendant’s planned audit of their billing records would use an improper standard and should be enjoined.1 The Medicare program is the responsibility of the United States Department of Health and Human Services. Within the department, the program is administered by the Centers for Medicare and Medicaid Services, the successor to the Health Care Financing Administration. The processing of bills submitted by the healthcare providers for particular services rendered has been contracted out to several insurance companies known as “carriers.” Because 1. Plaintiffs are the University of Medicine and Dentistry of New Jersey and two corporations associated with it: the Cooper Health System, a non-profit corporation that owns and operates a teaching hospital affiliated with the university; and University Physician Associates of New Jersey, Inc., a non-profit corporation that processes bills and Medicare payments for university faculty members. The claims of all parties are based on the proposed audit of the university’s teaching hospitals. 4 the carriers handle the billing and payment, they have initial responsibility for ensuring compliance with the statutes and regulations governing Medicare billing of individually billable services.2 Medicare payments to healthcare providers fall under two categories. Medicare Part A covers general hospital expenses, including residents’ and interns’ salaries. Part B covers payments made on a fee-for-service basis, reimbursing direct care by physicians, among other services. Consequently, at teaching hospitals, most services performed by residents are covered under Part A, which reimburses the hospitals for residents’ salaries, but does not reimburse them on the basis of particular services they provide. 42 U.S.C. § 1395x(b)(6). Physicians providing care to patients, by contrast, are reimbursed under Part B based on the service performed and in line with reimbursement paid to physicians for services outside of teaching hospitals. But this distinction is not so easily drawn. Physicians can also bill Medicare for services in which residents and interns participate, so long as the physician is sufficiently involved in the provision of services. The appropriate standard for determining when physicians may bill under Part B for work performed by residents and interns is the subject of the underlying dispute in this case. In 1968, HHS promulgated regulations for Part B reimbursement of services performed at teaching hospitals. The regulations authorized payment to an “attending physician” for services “of the same character, in terms of the responsibilities to the patient that are assumed and fulfilled, as the services he renders to his other paying patients” if the physician “provides personal and identifiable direction to interns or residents who are participating in the care of his patient.” 20 C.F.R. § 405.521 (1968). Notwithstanding, “[i]n the case of major surgical procedures and other complex and dangerous procedures 2. Payments for other kinds of costs, i.e., not on a fee-for-service basis, are made by “intermediaries”—private entities contracted by HHS for processing payments under Medicare Part A. Like the carriers, their Part B analogues, intermediaries have a certain amount of responsibility for ensuring compliance with Medicare requirements. 42 U.S.C. § 1395h. 5 or situations, such personal and identifiable direction must include supervision in person by the attending physician.” Id. In 1980, Congress amended the statute, largely adopting the standard HHS stated in its regulations, but omitting the specific references to surgery and other hazardous procedures. The statute now provides that if a physician “renders sufficient personal and identifiable physicians’ services to the patient to exercise full, personal control over the management of the portion of the case for which the payment is sought, [and] the services are of the same character as the services the physician furnishes to patients not entitled to benefits under this subchapter,” the physician may bill for the services under Part B. 42 U.S.C. § 1395u(b)(7)(A)(i)(I). HHS’s regulations were changed in 1992, but continued to authorize payment to a teaching physician only when the attending physician “furnishes personal and identifiable direction to interns or residents who are participating in the care of the patient.” 42 C.F.R. § 405.521(b)(1) (1992). And the regulations continued to require that the physician “personally supervise” the residents and interns in the case of major surgery or other dangerous procedures. Between 1992 and 1996, the Health Care Financing Administration began to interpret the phrase “furnishes personal and identifiable direction” as requiring the physician to be physically present when and where the resident or intern provides the billed service in order to be eligible for Part B payment. This interpretation led to widespread complaints from healthcare providers, many of whom claimed that it amounted to a change in the regulation. A physician could provide “personal and identifiable direction,” it was claimed, without being physically present when the resident performed the billed care. The university contends that in response to these comments, the Health Care Financing Administration agreed to refrain from imposing such a requirement until there was a new rule clarifying the agency’s position. In December 1995, HHS adopted a new rule governing physicians at teaching hospitals that took effect July 1, 6 1996. The rule now provides, “If a resident participates in a service furnished in a teaching setting, physician fee schedule payment is made only if a teaching physician is present during the key portion of any service or procedure for which payment is sought.” 42 C.F.R. § 415.170. Because the carriers are initially responsible for enforcing the billing standards, the carriers themselves often issue clarifying instructions to the healthcare providers, furnishing a source of information about Medicare billing requirements in addition to the statute and regulations.