Fraud in the MD/DC Arena
Dynamic Chiropractic
Feb 26, 2004
Fraud in the MD/DC Arena
by Jaffe, Richard
In the past five years, there have been numerous criminal prosecutions
of MD/DC clinics. Most of those indicted or investigated have pled
guilty, in part because the possible jail sentences are substantial -
upwards of 10 years. Chiropractic clinic owners have usually received
sentences in the three-to-five-year range, although a few have
received lesser or greater sentences, depending on how much money was
involved in the fraud.
Associate chiropractors who have pled out have received anywhere from
probation to two years. And every once in a while, an investigation
results in no criminal charges being filed. There is every reason to
believe that these investigations will continue, in part, perhaps,
because as recently as 2003, the Office of the Inspector General (OIG)
listed chiropractic among its top 10 areas of investigation.
Does this mean the MD/DC model is fraudulent? Of course not. However,
many MD/DC clinics are abusing the model and defrauding insurance
companies. The scary part is that sometimes the clinic owners don't
even know they are operating illegally. In fact, some may be certain
they are operating legally, because a chiropractic consultant has set
up the clinic, provides ongoing consulting services, and has cleared
the fundamentals of the operation through his or her "legal
department."
As part of a major criminal trial last year, I had an opportunity to
review the materials of many MD/DC clinics and consultants. My basic
conclusion is that there is not much difference between what is being
offered. These systems are not necessarily fraudulent. However, the
systems are extremely complicated, and are based on some questionable
heath care distinctions. The business realities of a busy health care
practice often force these clinics to cut corners to save money and
increase revenues, any and all of which can result in fraud-related
problems. Here are a few areas of concern, and some specific examples.
The MD/DC Structure
In virtually every state, a chiropractor is either completely
prohibited or limited to a minority ownership interest in a
professional corporation/medical clinic. This ownership restriction
has been circumvented by creating two or more corporate entities: a
professional medical corporation owned by the MD, and a management
corporation owned by the DC. The MD is paid a salary, even though he
or she is the sole owner of the professional corporation, and most of
the medical corporation's income is withdrawn by the management
corporation as various types of fees.
To protect the DC from an MD who may want to take the clinic's
business, some consultants and attorneys have recommended that there
be two medical doctors. One MD is the clinic "owner," but does not
actually work in the clinic. In fact, under some plans, the "owner"
never sets foot in the clinic, and may not even meet the chiropractor.
The other doctor is the working MD - the one who works at the clinic
and does whatever the MD is supposed to do at the clinic.
Several years ago, a large insurance company filed civil fraud actions
against several MD/DC clinics in New Jersey. One of the main
allegations was that the MD "owner" lived in another state, had no
contact with the clinic and was the "owner" of approximately 50 other
clinics. The complaint argued that the MD was just renting her name
for a small fee. Is any of this illegal in itself? Probably not.
However, when these cases come to trial, the jury will probably look
none too favorably on this rather obvious attempt to circumvent the
restrictions prohibiting chiropractors from owning medical
professional corporations. So, if this is what you are doing, it might
be time to change.
Diagnostic Testing
What generates the most scrutiny among insurance companies and
government regulators is the testing performed at some MD/DC clinics,
and in particular, the various electrodiagnostic devices used by these
clinics. In most cases, the diagnostic equipment is sold to the
clinics by chiropractic consultants. Is that illegal? Absolutely not!1
Nonetheless, clinics often buy expensive equipment on the advice of
consultants, who claim the clinic can make tons of money from the use
of such equipment. That's because reimbursement for diagnostic testing
far exceeds the fees for chiropractic manipulation, and even for
therapies and modalities a patient would normally receive during a
visit.
However, the high reimbursement rates for diagnostic testing have led
to considerable abuse in the field, in the form of medically
unnecessary testing. Historically, this was only a problem between
practitioners and insurance companies. However, under the federal
HIPAA laws, providing medically unnecessary testing to a patient
insured by any health insurance company is a federal crime. Most
federal prosecution involving MD/DC clinics have involved allegations
about medically unnecessary testing.
In this space, it's impossible to provide an extensive discussion of
what constitutes "unnecessary testing," but here are some basic
points. First, it is probably always medically unnecessary to give a
test after a prior test has come back negative, unless there has been
significant worsening of the condition and the patient is now a
potential candidate for a condition that the test will identify.
second, many clinics have different testing regimes for insurance
patients and cash patients. Cash patients do not get testing other
than X-rays. Is that illegal? Probably not in and of itself, but it is
certainly going to be viewed as suspicious if only insurance patients
get these expensive tests for normal chiropractic injuries and
conditions.
To refine the point, are all insurance patients getting the test? Many
of these electrodiagnostic testing and imaging devices have their
place - in certain cases. However, a reasonable question can be asked
as to whether all patients who present with some kind of back pain
require diagnostic testing, especially when the etiologies of their
conditions are known and well-understood; for example, a pulled muscle
resulting from an identifiable cause or event. I know there are
chiropractors, and especially chiropractic consultants who sell
equipment, who say using this expensive testing will rule out certain
neurological problems. However, if there are no initial indications of
neuropathy, radiating pain, or some other indication that a patient
has anything more then a pulled muscle, I think clinic owners should
think hard about having a protocol that includes a variety and series
of expensive testing for a patient who presents with these relatively
straightforward symptoms.
Billing Under the Physician's Provider Number
It seems obvious, but it's not often publicly acknowledged that the
primary reason for a chiropractor to own or be involved in an MD/DC
clinic is that insurance reimbursement is better for medical doctors
than chiropractors. Insurance companies often limit chiropractic care
and usually prohibit reimbursement for diagnostic testing other than
X-rays, if such tests are ordered by a chiropractor. There are few
such limitations on spinal care or testing when ordered by medical
doctors. It is not surprising, therefore, that most chiropractic
consultants teach that all services provided by ancillary health
personnel in an MD/DC clinic be billed under the medical doctor's name
and provider number, in order to obtain maximum reimbursement.2 Is
this illegal? The answer to this question is quite complicated. The
short version is that it's not necessarily illegal, but in the real
world, most of the clinics are on the wrong side of the legality line.
Here are the basics: In general, medical services rendered by others
can be billed under a physician's name under what Medicare calls the
"incident to rule." Under this rule, services by others which are
integral though an incidental part of the physician's service in the
course of the diagnosis or treatment of a patient, can be billed by
the physician so long as they are commonly furnished or included in
the physician bill; are of the type that are usually furnished in the
physician's office or clinic; and are medically appropriate.
However, the most important requirement is that the physician have
direct supervision of the patient, which means the physician must be
in the office or clinic when the services are provided. There are no
exceptions to this requirement. If the physician is not in the
office/clinic when the services are provided, the service cannot be
billed under the physician's name. To do so constitutes federal health
care fraud, period.
Here's where it gets complicated. As stated, this is the Medicare
rule. It absolutely applies to Medicare and other federal pay
programs. But does it apply to private third-party pay plans? Maybe,
sometimes, with some carriers, in some cases. Some carriers use the
Medicare rule, others use variations of the rule, and still other
payers have no written policy on the subject, but some of these jokers
still try to enforce so called "unwritten policies and practices." The
practical problem is that it is virtually impossible to know the
"incident to" rules for all of a clinic's patients.
However, since the Medicare rule is by far the most restrictive, if
the clinic is properly billing under the Medicare rule, and
specifically, is in compliance with the direct supervision definition,
then it should be proper under any third-party payer "incident to"
rule. Does that mean it is absolutely fraudulent to bill a third-party
payer without compliance with the direct supervision rule? No, but I
would suggest this is a de facto safe harbor.
Unfortunately, it is virtually impossible for most MD/DC clinics to be
in compliance with the Medicare rule, for the simple reason that for
cost-savings reasons, most MD/DC clinics have part-time physicians.
Thus, whenever the part-time doctor is not present in the clinic, a
payer could take the position that bills for services submitted under
the physician's name is fraudulent under federal law. The ugly reality
is that billing services of ancillary health care personnel under a
part-time physician's provider number is, at best, a crapshoot in
today's environment.
Does this all these problems are resolved by hiring a full-time
doctor? Well, it certainly solves the problem of direct supervision.
However, other problems are likely just starting to surface. But more
on that another time.
References
1. At least one state (California) has taken the position that it is
unethical for a chiropractic consultant to sell equipment to clients.
However, such statements have no real legal force, since chiropractic
consulting is not regulated by any state or federal agency.
2. In the past year or two, as a result of some high-profile cases,
some consultants have backed off and started advising their clients to
bill chiropractic care under the chiropractor's provider number.
Richard Jaffe, Esq.
Richard Jaffe, Esq.
Houston, Texas
www.richardjaffe.com
Copyright Dynamic Chiropractic Feb 26, 2004
Provided by ProQuest Information and Learning Company. All rights
Reserved
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