Significant Disclosure of Medicare Physician Payment Data; Separating Fact from Fiction

By April 11, 2014No Comments

A remarkable amount of data on Medicare physician billing was released for the first time to the public on Wednesday, April 9. The information, contained in over nine million records, reveals what the government insurance program paid physicians in 2012. Released to foster transparency in the system, the Centers for Medicare & Medicaid Services also provided the data as a response to a legal quest by the Wall Street Journal and others over several years to make the data public.

The data gives the public special insight into the system of payments to physicians. For example, the highest-paid 2 percent of doctors received almost one-fourth of Medicare payments, or $15.1 billion out of a total of $63.9 billion. Much of the Medicare payments to physicians – 59 percent overall – are intended to compensate them for practice overhead and expenses such as equipment, drugs, supplies, clinical staff, and malpractice insurance costs. The remaining 41 percent compensates physicians for their actual professional services. Across the entire country, the Washington Post reported that only 23 billers personally earned $1 million or more in the year.

2. Reasons Why the Data is Often Misleading
The payment information is complex, and understanding the implications of the data is not necessarily a straightforward project. Many in the provider community have expressed concern about the value of this data and, in particular, how some of the information could be misinterpreted. Of particular concern is that the data may overstate the number of services performed and the Medicare revenue received by an individual physician. In fact, there are many ways in which this could occur.

One such example is “incident to” billing in which a physician may bill under his or her NPI for services provided by other clinical professionals such as nurse practitioners, physician assistants, physical therapists, and clinical social workers who work under the physician’s supervision. Although these professionals can obtain their own NPI and bill independently, Medicare also permits their services to be billed by the supervising physician as “incident to” his or her service.

Thus, a physician who employs several physician assistants and bills their services under the “incident to” rules might have Medicare volume much higher than his or her peers who do not use physician assistants. There is no way to tell from theCMS data whether a higher than average utilization is because the physician is appropriately billing for services of other non-physician professionals or because the physician is over-billing the Medicare program.

Another example is teaching physicians who supervise residents in a teaching setting. Medicare rules allow teaching physicians to bill for services performed by residents provided certain criteria are met. For example, a surgeon can bill for a surgical procedure in which a resident assists provided the surgeon was present for the key portions of the surgery. Similarly, a teaching physician can bill for office visits (E & M services) provided by residents and supervised by the teaching physician. Medicare rules allow teaching physicians to supervise up to four residents at a time. Thus, teaching physicians may appear to perform more services and have higher Medicare revenues than their non-teaching peers. Again, the Medicare claims and payment data would not provide this level of detail.

A third area where data is likely to be misleading relates to diagnostic services that have both a professional and technical component. Medicare rules allow these services to be billed globally or separately using the sameCPT Code. If a single physician serves as the supervising physician for a large number of technical component services, all of which are billed under that physician’sNPI, this could incorrectly appear to be excessive billing. In addition, practices may vary in how they bill when a diagnostic test is interpreted by one physician but supervised by another making an “apples to apples” comparison difficult or impossible.

3. Impact on FCA Risk for Physicians
Much of the press surrounding the payment data release has focused on the risk it poses for physicians under the False Claims Act (FCA). One headline read: “FCA Risks Soar as Medicare Unseals Doc Billing Records.” Physicians should not become too rattled by this hyperbole. Bringing aqui tam or “whistleblower” suit under theFCA is far more difficult than just selecting apparently abusive practice patterns from the data base.

In particular, theFCA contains something known as the “public disclosure bar,” which generally prohibits suits based on transactions publicly disclosed in a federal agency report or by the news media. The bar was lowered somewhat in 2010 with the passage of theACA, which gave the Government the discretion to keep awhistleblower in a case as a party simply by objecting to a defendant’s motion to dismiss. Nevertheless, in most cases, a plaintiff relying on the data base to support a claim will need to be able to show that he or she is an “original source” to avoid being dismissed from court under the public disclosure bar. To be recognized as an original source, the plaintiff must be able to show that he or she has knowledge independent of the data base that materially adds to the publicly disclosed allegations. Thus, the plaintiff will need to be an insider with specific information about the details of an apparently improper billing pattern identified through the data base.

Also, it is worth remembering that the data base has been available to Government enforcement authorities all along. Nothing about the release of the data base will generate a new wave ofresources for DOJ or OIG. Instead, the major impact of the release is likely to be from the results of crowdsourcing the analysis of the payment data base. All types of interested parties may now crunch the data to identify billing aberrations. No doubt some of those efforts will be aimed at furthering individual interests more than benefiting the public. Nevertheless, Government enforcement agencies may receive valuable leads from the collective data mining effort and, most certainly, sophisticated plaintiffs’ attorneys will use the data base to identify potential targets for qui tam suits, and then seek to recruit employees or former employees to build a case.

Physicians can best protect themselves from potential claims or bad press by examining where they stand compared to their colleagues. Those who appear to be receiving disproportionately high Medicare payments can then determine the reasons for these amounts and be prepared to explain them if asked. In short, the best defense is often not to be caught by surprise. Of course, the data base also presents a new tool physicians can use to identify potential billing problems and make corrections.

Within about six months, the billing records data base will be followed by CMS’ disclosure of financial compensation received by physicians from pharmaceutical and medical device industries. The availability of both data bases will present an opportunity for data mining to match physicians receiving industry support with those receiving unusually high Medicare payments.

4. Challenging Future Payment Data Releases
Physician associations should consider challenging CMS’ release of physician claims data as an unwarranted invasion of personal privacy before CMS releases data for 2013. In 1979, a Florida district court permanently enjoined the Department of Health and Human Services (HHS) from releasing Medicare payment information related to individually identifiable physicians. Fla. Med. Ass’n v. Dep’t of Health Educ. & Welfare, 479 F. Supp. 1291 (M.D. Fla. 1979) (FMA). The court held that physician claims data was protected by the Freedom of Information Act (FOIA) and the Privacy Act. More recently, the D.C. Circuit held that HHS permissibly refused to release Medicare claims data because it was protected from release by a FOIA exemption. Consumers’ Checkbook Ctr. for the Study of Servs. v. United States Dep’t of Health & Human Servs., 554 F.3d 1046 (D.C. Cir. 2010). In 2013, however, a Florida court lifted the FMA injunction, leading to CMS’ recent release of claims data.

Although the Florida injunction no longer prevents CMS from releasing Medicare claims data that identifies individual physicians, the D.C. Circuit’s decision in Consumers Checkbook is still good law. The D.C. Circuit held that release of Medicare claims data would result “‘in a clearly unwarranted invasion of personal privacy.’” Consumers’ Checkbook, 554 F.3d at 1056 (quoting 5 U.S.C. § 552(b)(6)). The Privacy Act forbids a federal agency from releasing personally identifiable information that is subject to a FOIA exemption. 5 U.S.C. § 552a. A physician (or group of physicians) who submits Medicare claims could challenge CMS’ release of claims data by filing suit in D.C. federal district court. Such a suit would argue, consistent with the Consumers’ Checkbook decision, that the Privacy Act forbids CMS from releasing claims data that identifies individual physicians. It is difficult to determine how the court would rule on such a claim with the Government now on the other side.

5. Other Political Fallout
Beyond legal action, the political connections of the highest-paid physicians have also come under scrutiny. Political action committee donations made by those physicians are being connected to the reelection campaigns of prominent federal politicians, and some physicians have used lobbying and influence in Washington to try and control the scrutiny they receive for large Medicare payments.


We hope this summary provides you with some additional insight on the significance of the release of the physician payment data. We would be pleased to answer any remaining questions you might have on the subject.

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