By: Larry J. Laurent, Attorney at Law
As the insurance industry tightens its belt with regard to payment for chiropractic services more and more doctors are looking at the attractiveness of certain billing proposals offered by various diagnostic testing companies. In many instances the attractiveness of these proposals derives from the opportunity for the referring doctors to “bill” third party insurers for the diagnostic testing services at the full published fee guideline prices while paying the diagnostic testing company a deeply “discounted” price for the actual performance of the testing procedures. The split between the actual cost to the doctor for the diagnostic test and the amount billed and recovered is often quite substantial. While this type of monetary return is often difficult to pass up the potential adverse consequences of such opportunities may prove far more costly than the short term monetary benefit.
Take for example the following hypothetical situation:
A diagnostic testing company offers to contract with a
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referring doctor to provide a specific diagnostic test on the doctor’s patient. The testing procedure is to be performed on-site at the location of the referring doctor’s clinic via a mobile testing facility operated by the testing company. The testing company agrees to accept a reduced fee for its testing service (one-thirdÅ of the TWCC fee guideline price). Under the testing company’s proposal the referring doctor will be deemed to be the “testing” doctor, while the testing company simply serves as the doctor’s “agent”. The referring doctor thereupon bills the third party insurer at 100% of the allowable TWCC fee guideline price for the diagnostic test, pays the testing company its discounted fee for its services, and puts the balance in the bank.
Does the above factual situation potentially violate any provision of Texas law?
Both the Texas Medical Practice Act (“TMPA”), Tex. Rev. Stat. Ann, Art. 4495b (Vernon 1998) and the Texas Chiropractic Act (“TCA”), Tex. Rev. Stat. Ann., Art. 4512b (Vernon 1998) expressly prohibit overcharging by a licensed health care provider. Both acts also contain express prohibitions against illegal remuneration, or “kick-backs”, for the referral of health care patients. Neither statute, however, precludes a reduction in the amount of fee to be charged, so long as such reduction is universally applied. Thus, based upon the hypothetical situation presented above, if the reduced fee charged by the testing company for handling and processing the diagnostic test for the referring doctor represents the “market value” charge for the nature and extent of the service provided there exists no potential violation of the law with regard to the testing company’s conduct.
However, the hypothetical situation does suggest several potential legal traps for the referring doctor.
As in the above hypothetical, many programs offered by diagnostic testing companies are intended to encourage the referral of patients from treating doctors. As in the above hypothetical this “carrot”, more often than not, includes the opportunity to bill and collect full price for a diagnostic test while incurring only a percentage of the billed price as the actual cost for the testing procedure. By offering the opportunity for the referring doctor to assume the cloak of “testing doctor” when he/she bills for the full fee guideline price of the testing procedure the testing companies effectively encourage referrals of patients for testing procedures which may not otherwise be necessary. Many of the referring chiropractors who contract for the performance of these specialized diagnostic tests have little, if any, experience or training in the specialized testing process. The referring doctors simply remain on-site during the testing procedure and contribute little, if anything, to the actual testing process. Generally payments for “unnecessary” tests are simply withheld of discounted by third party payers. However under todays microscope, when referring doctors become active participants in such diagnostic testing programs their activities are likely to be more closely scrutinized.
Under the Texas Chiropractic Act a doctor may not engage in any act of deception or fraud in the practice of chiropractic. The technical and licensing committee of the Texas Board of Chiropractic Examiners has adopted guidelines that provide that any chiropractor representing or holding himself/herself out as having special competence in a field of practice, such as acupuncture or diagnostic testing, will be held accountable for such representations of special competence. Thus, a doctor who represents that he/she has conducted a diagnostic test, by submitting a bill for a diagnostic testing procedure, may be required to account to the Board of Examiners for that particular training which qualifies him/her to perform such tests. In the event a doctor is found not sufficiently trained to perform a diagnostic test for which he/she has submitted a bill the doctor my face Board sanctions ranging from an administrative fine to suspension or revocation of his/her license.
The Tex. Health & Safety Code Ann., Art. 161.091(a) (Vernon 1999) (the Texas “Illegal Remuneration” statute), expressly prohibits payments made to, or the receipt of payments by, a health care provider in the nature of remuneration for the referral, securing or soliciting of patients. This statute has been construed by both the Texas Board of Chiropractic Examiners and the Texas Board of Medical Examiners to prohibit any form of referral or “kick-back” arrangement by or between doctors relating to patient referral activities. The Texas Attorney General has also construed this statute to prohibit conduct whereby a health care provider may obtain financial benefit, in the form of monetary payments or otherwise, as consideration for the referral of a patient – where such referring doctor fails to provide a commensurate service as consideration for such financial benefit. Violations of both the Texas Illegal Remuneration statute carry criminal sanctions and civil penalties of up to $10,000.00 per day for each act of violation.
The Texas Penal Code §35.02
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defines the act of “Insurance Fraud” as (a) when “with intent to defraud or deceive an insurer, [a] person causes to be prepared or presents to an insurer in support of a claim for payment under a health or property and casualty insurance policy a statement that the person knows contains false or misleading information concerning a matter that is material to the claim, and the matter affects a person’s right to a payment or the amount of payment to which a person is entitled”, or (b) when “the person solicits, offers, pays or receives a benefit in connection with the furnishing of health care goods or services for which a claim for payment is submitted under a health or property and casualty policy.” Under the above cited statutory provisions any referring doctor who represents himself or herself as actually having conducted a specialized diagnostic testing procedure in order to bill and thereby collect a portion of the component overall fee, but who, in reality, lacks sufficient qualifications or training to administer the technical component of such a test, may be deemed to have committed an act of deception or fraud in the practice of chiropractic, an act of illegal remuneration and/or an act of insurance fraud.
Under the hypothetical situation presented above, if a referring doctor bills a third party insurer for an amount in excess of the fee paid to the testing company which actually administered the testing procedure, the billing doctor must be able to substantiate that he/she provided services which were actually necessary and useful in the testing process. A doctor who recovers and retains any portion of a published fee guideline price for a diagnostic test — over and above the amount actually paid for the actual performance of such test, without performing a useful and necessary service in conjunction with the testing process, may find himself or herself under investigation for insurance fraud or violations of the Texas Chiropractic Act.
This article should not be construed to suggest that there can never be a circumstance under which a referring doctor can participate in proceeds derived from a bill submitted for a diagnostic testing procedure performed by an independent testing entity. The type of usual and necessary health care services which a doctor must provide for or on behalf of his/her patient those service(s) must constitute more than the simple act of patient “referrals” or oversight of the testing process. The doctor’s conduct should encompass actual assistance with the overall testing process and may include consultations with the patient during the course of their review of the test results for the purpose of devising individualized programs of patient treatment. Inasmuch as the referring doctor’s review and analysis of the diagnostic report is considered to be part of the “bundled” testing bill such action alone may entitle the reviewing doctor to charge and recover some portion of the global testing fee. Other useful and necessary service(s) provided by the referring doctor, such as assuming financial responsibility for the actual cost of the testing process independent of his/her ability to collect the testing fee or serving as an independent billing “agent” for the testing company, may also entitle the doctor to a portion of the recovered fee. However, since the value of any ancillary service provided by the referring doctor must be “market value”, the “value” of such ancillary services provided to the diagnostic testing procedure would likely be weighed against the discounted price actually paid for the test. Thus, an equal or other disproportionate split of the fee billed for the testing process may be construed to be excessive.
Any doctor considering working with a diagnostic testing company must always be aware that a health care provider may not bill for a service which he/she does not provide. The referring doctor must provide useful and necessary services as consideration for the compensation received and the amount of compensation received must represent the actual market value of those services rendered by the doctor. Any referring doctor who represents himself/herself as having conducted a diagnostic test, but who lacks the requisite skill and training and does little more than simply observe the test performed by an independent diagnostic testing service, may soon find a big bad wolf knocking at the door.