7 Healthcare Reform Changes Affecting Orthopedic Surgeons

Written by Laura Dyrda | October 04, 2010 | Print  |
Healthcare reform, with its many current and future changes to Medicare payment methodologies and to the “Stark” self-referral and fraud and abuse laws, is creating stricter regulations and new obligations for all physicians, including orthopedists. Wayne J. Miller, Esq., a healthcare transaction and regulatory attorney and a founding partner of Compliance Law Group in Thousand Oaks, Calif., discusses seven ways orthopedists are directly affected by healthcare reform law and how they can prepare for future changes.

1. Physician owners of specialty hospitals.
Healthcare reform eliminated the “whole hospital” ownership exception under the Stark self-referral restrictions, prohibiting doctors from owning future constructed hospitals to which they refer. However, orthopedists who currently own specialty surgical hospitals will be grandfathered in despite the new law. Unfortunately, the law stops existing doctor-owned facilities from adding investors and limits future growth. "Orthopedist facilities can't increase the number of surgery suites or expand the facility except in very restrictive ways," says Mr. Miller. "If you own an interest in a facility already, you can continue owning it. But you may find that over time a physician-owned facility won't be as competitive, especially if it is unable to keep up with the expansion of competitor non-physician owned facilities."

2. Affiliations with hospitals to form ACOs.
The new legislation regarding accountable care organizations states that physicians can form ACOs among themselves or affiliate with hospitals to create those groups. Within this partnership, payment is based on the outcomes for the group as a whole. Mr. Miller says many physicians and practices are seeking to affiliate with hospitals to prepare for the future. "People are trying to be ready  by organizing these ACOs now and potentially be ready for the change in reimbursement methodology that comes down the pipe," says Mr. Miller. "Practices have been doing this already because the downward economy has had a large impact on their revenue.

He notes that part of the difficulty for orthopedists and others is that the ACO concept has not been well defined. As a result, providers are scrambling to affiliate with hospitals or staff model HMOs in expectation that these arrangements will qualify as ACOs. In some states, Mr. Miller says, hospitals are able to put physicians on salary and HMOs with affiliated medical staffs are able to employ physicians, meaning the physicians are moving from independent practices to an 8am-5pm job. "That's looking more and more attractive to orthopedists," says Mr. Miller. "Those who want to continue in private practice will probably need to have a close affiliation with a hospital and have a pay-for-performance or other compensation plan in place to fulfill ACO requirements. That will require a contract relationship with the hospital."

3. Prosecution for fraud or abuse. The new laws make it easier to allege improper conduct, such as fraud and abuse, which could be implicated for orthopedic surgeons who have financial relationships with device suppliers or hospitals to which they refer. "Physicians need to take a close look at those relationships, such as medical director or consulting contracts, to make sure they are bonafide and that there isn't a potential liability risk under the changed laws," says Mr. Miller. In the past, Stryker Corp., Zimmer Holdings, Smith & Nephew and Biomet were required to disclose financial relationships with physicians as a result of federal investigations and litigation. However, under the new legislation, all device companies will be required to publicly disclose their financial relationships with physicians, which Mr. Miller says could lead to more audits and investigations.

4. Compliance plan requirements.
Every practice is required to have a compliance plan in place starting next year, according to healthcare reform’s amendments to the fraud and abuse laws. If a practice already has a compliance plan, it will need to make amendments so it fits the specific Medicare requirements. Compliance plans will, among other terms, need to include standards upon which an orthopedist's financial relationships and agreements with third parties, including device manufacturers and hospitals, will comply with the law. "It's another incentive for the practice to focus on these relationships and show they are meeting the Stark law and fraud and abuse law standards," says Mr. Miller. Non-compliance means the physician or practice could be suspended or terminated from Medicare participation.

5. Provide notice for imaging equipment usage.
The healthcare reform legislation also modifies the “in office ancillary service” exception under the Stark law that allows orthopedic practices to own, use and refer to MRI and CT scans in-house. However, now, before conducting such diagnostic tests, the practice must provide patients with a written disclosure containing information about other local facilities providing the same services. This creates more paperwork for the physicians and could cause patients to seek imaging services elsewhere if the practice prices are not competitive.

6. Rehabilitation services must be available.
The new law establishes a basic coverage package that must be included in Medicaid plans that will cover currently uninsured patients. Rehabilitation services must be included in basic coverage plans. If an orthopedist accepts Medicaid patients, this requirement assures payment for rehab services. However the amount of reimbursement is not set at this time. "No matter what the coverage, rehabilitation is one of the benefits patients will get," says Mr. Miller.

While it may not be financially feasible for all practices to expand into providing Medicaid-covered rehabilitative services, those that can should expect a volume expansion in their rehab center. Mr. Miller suggests practices analyze their patient base and see whether more Medicaid patients could seek rehabilitation services in their area. "If rehabilitation is a part of the orthopedic practice, to the extent the practice can take on Medicaid patients it’s a positive development that it's going to be a covered service," says Mr. Miller.

7. Rehabilitation medicine caps extended. In the past, reimbursement caps were in place for physical therapy and rehabilitative medicine. These caps have been extended by the PPACA, which means there is still an annual limit for visits per year per patient. This could present a problem for practices if it experiences an influx of new patients with conditions that do not resolve within the visit limit.

Read more about healthcare reform's impact on orthopedics:

- 8 Implications of Healthcare Reform on Orthopedic and Spine Practices

- Healthcare Reform Act's Impact on Orthopedic and Spine Device Companies: Q&A With Kristian Werling of McGuireWoods

- 6 Points on New Reform Provisions Going Into Effect Sept. 23

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