Medicare’s Anti-Markup Rule – CMS Finalizes Two Alternatives
On October 30, 2008, CMS released the 2009 MFPFS. In the 2009 MFPFS, with respect to the application of the anti-markup rule to the provision of certain diagnostic testing services, effective January 1, 2009, CMS adopted two alternative tests for determining the applicability of the anti-markup rule.
The Final Anti-Markup Rule
Specifically, the following principles determine the applicability of the anti-markup rule:
(1) Alternative 1 – “Substantially All Test.” Arrangements should first be analyzed under this Alternative. If the performing physician (i.e., the physician who supervises the TC or performs the PC, or both) performs substantially all (at least 75 percent) of his or her professional services for the billing physician or other supplier, the services will not be subject the anti-markup rule payment limitations. If the “substantially all” services requirement is not satisfied, an analysis under Alternative 2 may be applied.
(2) Alternative 2 – “Site of Service Test.” TCs conducted and supervised in, and PCs performed in, the “office of the billing physician”, which includes the “same building”, by an employee or independent contractor physician avoid the anti-markup payment limitation.
These alternative tests measure whether or not a performing or supervising physician “shares a practice” with the billing physician or other supplier. A physician is no longer required to exclusively work for one physician practice; rather, a physician need only “share a practice” with a physician or physician organization. This change aligns certain provisions of the Stark group practice definition with the anti-markup provisions.
Additionally, the 2009 MFPFS provides that a billing physician or other supplier satisfies Alternative 1 if he or she has a reasonable belief, at the time he or she submits a claim, that either: (1) the performing physician furnished substantially all of his or her professional services through the billing physician or other supplier for the period of 12 months prior to and including the month in which the service was performed; or (2) the performing physician is expected to furnish substantially all of his or her professional services through the billing physician or other supplier during the following 12 months (including the month the service is performed).
With respect to Alternative 2, CMS aligns the location test with the Stark Law “same building” test by clarifying that a physician or other supplier may have more than one “office of the billing physician or other supplier”. Such space is one in which the ordering physician or ordering supplier regularly furnishes patient care (and with respect to physician organizations or group practices, the space in which the ordering physician performs substantially the full range of patient care services that the ordering physician provides generally). Additionally, CMS requires the physician supervising the TC to be an owner, employee, or independent contractor of the billing physician or other supplier. With respect to the PC, the performing physician must be an employee or independent contractor of the billing physician or supplier.
As a practical matter, the final anti-markup provisions permit the use of shared space imaging arrangements between physicians that occur in the “same building”. Nevertheless, CMS notes that centralized building locations raise concerns for over-utilization and are not permitted for the provision of diagnostic tests. CMS further cautions that despite its flexibility, it has concerns with the present use of the IOAS exception under Stark and may issue future changes.
Of particular significance for those physicians providing imaging services in reliance on Alternative 2, the TC must be both conducted and supervised in the “office of the billing physician or other supplier” (“the Same Office Requirement”). While Stark Law generally applies the Medicare coverage and payment regulations governing supervision of tests (“Medicare Coverage Requirements”), providers seeking to rely on Alternative 2 must meet the Same Office Requirement. This is due to CMS’s belief that the Same Office Requirement is necessary to minimize the potential for overutilization and program abuse.
Arrangements that fall within the ambit of the anti-markup provisions are subject to restrictive payment limitations, such that payment to the billing entity will be limited to the lowest of the following: (1) the performing physician’s or other supplier’s net charge to the billing entity; (2) the billing entity’s actual charge; or (3) the fee schedule amount for the test that would be allowed if the performing physician or supplier billed directly.
Significantly, the net charge amount must be determined without reference to any charge that is intended to reflect the cost of equipment or space leased to the performing supplier by or through the billing physician or other supplier. Therefore, the billing physician, or other supplier may only recover costs for the salary and benefits it paid to the performing supplier of the TC or PC. As a result, billing physicians or other suppliers who implicate the anti-markup rule will likely receive reimbursement that fails to even cover the costs of providing the services.
Below are two examples of the final anti-markup provisions and their application to common imaging services arrangements:
(1) Group Practice Independent Radiologist Arrangement. A physician in a multi-specialty group practice orders an x-ray and the part-time technician employee performs the x-ray in the group’s office. The ordering physician works exclusively for the multi-specialty group and supervises the test in the group’s office. A radiologist, who is an independent contractor with the multi-specialty group practice, performs the PC of the test in the group’s office and reassigns his right to payment to the group. The radiologist provides professional services to several groups and hospitals in the area. He performs approximately 20 percent of his professional services for the multi-specialty group practice. The anti-markup rule does not apply to the group’s billing of the TC because the supervising physician (i.e., the performing physician) “shares a practice” with the billing group insofar as he performs at least 75 percent of his professional services for the group. With respect to the PC of the test, the independent contractor (i.e., the performing physician) does not perform substantially all of his professional services to the group (he performs approximately 20 percent). Thus, an analysis under Alternative 2 applies. Under the “site of service” test, the anti-markup rule does not apply because the performing radiologist provided the interpretation on-site in the group’s office.
(2) IDTF Arrangement. A physician orders a diagnostic test from an IDTF. The IDTF bills globally for the test (TC and PC). The anti-markup rule does not apply because the IDTF did not order the test; rather, it was ordered by an outside physician.
IDTF Performance Standards for Mobile Imaging Providers
Conclusion
Through a series of regulatory actions, CMS has been targeting diagnostic imaging arrangements. Diagnostic imaging providers and suppliers should be attentive to developments with future rulemakings, which may significantly affect the structure of many current imaging arrangements. As a result, we advise providers to incorporate mechanisms into their current contractual arrangements that will permit these arrangements to adopt a more stringent regulatory framework. Finally, the regulatory changes discussed in this article likely will not be CMS’s final word on diagnostic imaging. Providers should be mindful of this before entering into structures that cannot be unwound or modified.
Posts Tagged ‘Mobile’
The 2009 Medicare Physician Fee Schedule ? Medicare?s Anti-Markup Rule and IDTF Enrollment Requirements for Mobile Imaging
Thursday, June 17th, 2010How to Properly Charge Late Fees in a Mobile Home Park
Friday, June 11th, 2010Mobile home park tenants are not rich. Most of them live from paycheck to paycheck. As a result, they frequently don’t pay their bills on time – sometimes at all. To motivate these tenants to pay their lot rent on time, you must enact a late fee for rent that is not received by the due date. However, enacting such a plan is a lot more complicated than most park owners recognize. And messing up the plan can cause extreme legal and financial penalties. Here are a few initial points to consider:
How much to charge the tenant.
There is a law in most states as to the maximum late fee you can charge. It is not left up to your discretion. You are not allowed to charge a punitive amount. For example, if the lot rent is $150 per month, your late fee cannot be $100. The law is very specific on what you can and can’t charge. Don’t know the maximum amount allowed by law? You’ve got to get this data before you can go forward.
How much to charge the tenant as long as it is within the law.
You do not want anyone to ever be late. As a result, you should charge the maximum amount allowed by law to definitely get their attention. If the maximum is $50, then charge $50. I’ve toyed with this as much as anyone, but I’ve found that you have to make it absolutely not an option to be late, or the tenant may rearrange his payment plan and pay for that needed car repair/case of beer/cell phone bill before your lot rent. I cannot think of any reason not to go for the full amount allowed by law.
When do your charge it?
You should charge the late fee after a certain grace period. For example, if the rent is due on the first of the month, then you might have a grace period of the 5th. Any rent paid between the due date and the grace period (and obviously before the due date) would not be assessed any type of late fee. However, any rent received after the grace period would receive a late fee. In our example, any rent received on the 6th or later would be charged a late fee.
How do you prove when you got it?
The best way to do this is by postmark, assuming that you have the rent sent in to a P.O. Box as we do. If the postmark is after the fifth, then you will charge a late fee. What if the postsmark is on the fifth? Well, in some areas, if you sent it on the 5th, it can still reach its destination theoretically by that afternoon. So you are much safer just using the day after the end of your grace period for the postmark definition of late rent. And obviously, you want to save every late postmarked envelope as Exhibit A if you have to go to court over it. No judge is going to rule against you if the postmark is later than the grace period end date.
What about a late fee system that increases with every day?
These systems, and we’ve tried them, are just too complicated. Although you may feel like it is going to motivate the customer, we’ve found that it really doesn’t – they don’t think that strategically. Basically, if they have the money in hand they’ll pay you, and if not they can’t. It’s not like you are reminding them. Normally, if they miss the first of the month, they don’t get paid again until the 15th, and as a result can’t pay you again until the fifteenth, no matter what the penalty. Just keeping track of a daily escalating late fee will cost you way more in time than it is worth.
How do they know they owe a late fee for next month?
The best system is to send a monthly invoice, showing the rent plus a late fee, if they have one. Obviously, you have to have some kind of notification system if you want to be paid. If you let the tenant pay the rent in person at the park office, then the manager will need to keep a list of who owes it and collect at that time. If you send the rent to a P.O. Box, then there will have to be some type of system in place or you will never get your late fees. They can’t pay it if they don’t know they owe it. And don’t imagine that they should know themselves – it doesn’t happen in the real world. They always dream that somehow they got around the system, or you screwed up and forget to assess it.
Am I being mean charging a late fee?
No. On the contrary, you are being a bad landlord if you don’t. If the general tenant base starts delaying or stops paying altogether their rent, then the property will either go bankrupt or into disrepair. Neither scenario is for the good of the community. You must maintain order and keep the bills paid for these folks to have a home. And a late fee is the magic ingredient to help keep them paying, and at least create a small buffer if they don’t. Would you rather charge a late fee or kick them all out on the street, because that’s basically the choice you are making over the long run.
Can I forgive the late fee once assessed?
Legally you can. However, if you do that for one individual, then word will spread, and you will be besieged by folks wanting the same perk. You are far better off to stay uniform in your treatment of tenants. If you want, you could spread the late fee over several months to make it less painful, The only exception would be for extremely mitigating circumstances concerning a tenant who has never been late. For example, an elderly gentlemen who was put in the hospital on the 29th and released on the 7th. Even then, I would come up with a spin on it like you kept the late fee, but gave him an early payment discount for the next month of the same amount.
Other considerations?
It has been our experience that the total late fees in a stabilized, seasoned tenant base equals the amount of bad debt. This is very important, as it theoretically eliminates your line item of bad debt, when offset by late fees. Without late fees, you will never have perfect collections. With late fees, you scientifically can. And that’s essential for hitting your budget.
Conclusion
Late fees are an essential part of being a good landlord. And it is very important that you do them the right way for them to be fair and accurate. In addition, you have to build a system to assess the fees that it simple, consistent and not time consuming.
If you follow the system shown in this article, you will see an immediate improvement in your income and general happiness of your customers in your mobile home park.
