Written by Melony Anderson on September 24, 2014

Physician Supervision Requirements under CMS Regulations – False Claims Act Cases on the Rise

In 2013, the Department of Justice collected over $3.8 billion in qui tam and non-qui tam settlements and judgments under the False Claims Act (“FCA”). Of the total amount collected, $2.7 billion, or 70% were in cases in which the Department of Health and Human Services (“HHS”) was the primary client agency. In comparison, cases from the Department of Defense represented just 1% of the total collections. Surprisingly, the total numbers for 2013 were actually slightly lower than 2012 numbers. In 2012, total collections were $4.9 billion, with HHS cases representing $3.1 billion, or 63%.

Notwithstanding the slight decrease in total judgments and settlements, it is clear that one type of case under the FCA is beginning to account for an increasing portion of the total:  cases where the government has alleged that the services were not properly supervised by a physician or a qualified non-physician provider (“NPP”), such as a licensed physical therapist.

CMS regulations define three types of physician supervision:

• General supervision: the physician or NPP must be available by telephone.
• Direct supervision: the physician or NPP must be “immediately available” and “interruptible” throughout the performance of the procedure. The physician or NPP does not need to be present in the room. CMS will not explicitly define “immediate” but has said that the requirement is not met where the physician or NPP is “so physically far away…from the location where…outpatient services are being furnished that he or she could not intervene right away.”
• Personal supervision: the physician or NPP must be in the room during the procedure.

In order to bill Medicare or Medicaid for certain services, the service must have been appropriately supervised under these definitions. The government takes the position that services billed but not properly supervised are not “reasonable and necessary” and are, therefore, false claims. For example, MRIs with contrast require direct supervision.  Although the supervising physician need not be in the room during the treatment, the physician must be “immediately available” somewhere on the premises.  What is more, it is not enough that any physician or NPP is immediately available – the supervising physician or NPP must have within his or her State scope of practice and hospital privileges the ability to perform the service or procedure.

The following recent settlements provide some insight into the types of services where the government is paying close attention:

• A Florida hospital and doctor group settled with the government for $3.5 million.  The allegations in that case were that the group billed Medicare, Medicaid and TRICARE for radiation oncology services (which require direct supervision) that were performed without the necessary supervision. In particular, the government alleged that the services were often performed while the defendant doctors were on vacation or were working at another radiation oncology clinic.
• In April 2013, a North Carolina neurologist and his practice paid $2 million to resolve allegations under the False Claims Act that the neurologist had improperly billed for intravenous immunoglobulin therapy services, which require direct supervision.  The government alleged that the services had been performed by registered nurses when the neurologist was not present in the office suite. There were no allegations that any patients had been harmed; what is more, in many instances there were other physicians on site and the neurologist himself was, in his words, “no more than 8 seconds away” from the office suite.
• A Georgia-based collection of companies settled a False Claims Act case for $1.2 million in April 2013.  The allegations in that case were that the companies had billed for contrast MRI procedures where only clerical staff and technicians were onsite.

It is worth noting that most, if not all, of the major settlements involved physician supervision over services that require direct supervision, rather than general or personal. This is perhaps not surprising:  general and personal supervision are clearly and understandably defined, whereas CMS has declined to provide specific time or distance limits that would meet the definition of “immediate” and “interruptible” for direct supervision.

Direct supervision is required for most outpatient services.  The following is a non-exclusive list of services that require direct supervision:

• Diagnostic services furnished to outpatients, including drugs and biologicals required in the performance of those services (for example, MRIs with contrast);
• IV therapy services, such as chemotherapy
• Physical and occupational therapy (a licensed therapist must provide direct supervision)
• Pulmonary, cardiac and intensive cardiac rehabilitation;
• Glaucoma screening examinations; and
• Services and supplies provided “incident to” a physician’s services in a non-institutional setting (such as a physician’s office)

Understanding the level of supervision that a particular service or treatment requires is extremely important, particularly for health care providers who bill for services that they do not perform themselves. The consequences for billing for services where the requisite level of supervision was not present could be dire and could include not only significant financial liability, but exclusion from federally funded healthcare programs.