Aetna Will Stop Recovering “Overpayments” on Office Surgeries

MSSNY has received a written communication from Aetna confirming that Aetna will stop its efforts to recover the alleged overpayments stemming from payments for facility charges for office based surgeries. MSSNY has worked with numerous attorneys who represented the physicians that were the subject of Aetna’s monetary recovery demand, and MSSNY facilitated meetings between the physicians’ attorneys and Aetna representatives to resolve the issue. MSSNY President Richard Peer congratulated Aetna for its decision not to pursue the monetary recovery demands.


The Department of Health General Counsel Opinion
Based upon complaints from a health plan to the New York State Department of Health (the identity of the complaining health plan was not disclosed to MSSNY), on March 21, 2006 the General Counsel of the New York State Department of Health (DOH) issued GC Opinion 06-01 “Billing for Services Performed in Physicians’ Offices”. The legal opinion was forwarded to MSSNY and legal counsel for the New York State Health Plan Association. The legal opinion stated that certain billing practices of physicians in charging facility fees for office based surgeries were legally questionable and possibly raised issues indicating the operation of unlicensed clinics, the illegal corporate practice of medicine, illegal fee-splitting or perhaps fraud. While the GC opinion acknowledged that the wide variety of fact patterns must be analyzed on a case by case basis before any conclusion could be reached about criminal or civil consequences, the opinion focused upon narrow factual circumstances where the physician resorted to deceptive means to induce the health plan to pay facility fees for office based surgery. The GC opinion gave the example where the physician’s office is not a licensed Article 28 facility. The physician bills the health plan for professional services, doing so in the name of the physician or professional corporation.

Subsequently, the physician uses a business corporation that is owned and controlled by the physician (but which has not been disclosed to the health plan), and which is not licensed under Article 28, to bill for the office based costs. Under such a factual pattern the GC Opinion stated that the health plan could be induced into believing that the business corporation was a licensed Article 28 facility, and would pay facility charges under such mistaken belief. The health plan complained to DOH that physicians were increasingly resorting to these false inducements.

MSSNY’s Letters to DOH
MSSNY’s General Counsel wrote to the DOH General Counsel on January 17, 2006 and again on April 25, 2006. MSSNY’s letters stated that there is no statutory requirement that a medical facility be an approved Article 28 facility in order to bill and receive facility fee payment. MSSNY contended that the matter is contractual in nature and determined by the agreement of the health care professional and health plan. MSSNY contended that where there is disclosure by the physician regarding the nature of the office based surgery practice and the health plan thereupon agrees to pay facility fees to the health care professional, there has been a “meeting of the minds” and the arrangement is appropriate. MSSNY disputed the allegations of the health plan and contended that the overwhelmingly vast majority of physicians are honest and do not resort to false inducements to obtain facility fee reimbursement.

Aetna’s Recovery Demands
Not long after DOH GC Opinion 06-01 was issued, MSSNY received reports from physicians that they had received a payment letter from an attorney retained by Aetna. The letter demanded that the physician re-pay to Aetna the facility fee reimbursement that Aetna had paid to the physician in the previous years. The monetary amounts that were demanded were generally substantial. The payment demand letter cited GC Opinion 06-01 as substantiating the contention that the payment of facility fees to an office based practice, which was not an approved Article 28 facility, was inappropriate. Many health care attorneys stated that numerous health plans were aware of Aetna’s payment demands, and expressed serious concerns that if Aetna prevailed in these demands, other health plans would soon make similar demand to recover facility fees previously paid to physicians.

MSSNY Takes Action
MSSNY met with the health care attorneys who were known to represent physicians in this matter, Scott Einiger, Esq., Michael Schoppmann, Esq. and Mark Furman, Esq. MSSNY issued statements that Aetna’s attorney did not correctly interpret GC Opinion 06-01. Far from condemning the charging of facility fees altogether, MSSNY stated that GC Opinion 06-01 only focused on a narrow factual pattern where the health plan is falsely induced into paying facility fees. MSSNY forged an advocacy group consisting of MSSNY physician leaders, health care attorneys and representatives of Validare Inc. and the American Association for Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF). Validare, Inc. provides a series of services for physician office based surgery facilities. AAAASF is a nationally recognized accrediting agency that accredits ambulatory surgery facilities.

At a meeting with the Department of Health on June 5, MSSNY and the representatives of the other groups asserted that there is no statutory requirement that a medical facility must be an approved Article 28 facility in order to bill and be eligible to receive facility fee payment. Representatives of the Department of Health did not disagree. Furthermore, the Department of Health did not disagree with the statement that a health plan may adopt a policy of making facility fee payments to a physician office based surgery practice that is not an approved Article 28 facility. Comments were made that there may be confusion or uncertainty on occasions because there is lack of uniformity among health plans, and that the policies and procedures among health plans over facility fee payment may vary widely.

Representatives of MSSNY and the other groups met with representatives of Aetna on June 15, 2006 at Aetna’s headquarters in Hartford Connecticut. MSSNY and the other representatives cited documentation that demonstrated that the physicians in question did not misrepresent their practices to be Article 28 facilities, and that they had disclosed the relevant facts concerning their office based surgery practices.

Aetna’s July 1, 2006 Policy Statement
Following the June 15, meeting with Aetna, on July 1, 2006, Aetna issued a Policy Statement on Office Based-Surgery that reads as follows:

“For any surgical procedure, in order to be reimbursed for facility fees or any related surgical care charges, e.g., pharmaceuticals, surgical supplies, operating room charges, the entity must be properly licensed by the state where the facility operates. Specifically, the facility must be licensed as an ambulatory surgical center or whatever comparable title is used by a state’s licensing law to describe a freestanding facility, other than a physician’s office, where surgical and diagnostic services are provided on an ambulatory basis.

In the absence of state licensure requirements, evidence of Medicare eligibility or certification as an ambulatory surgical center under 42 CFR 416 must be provided. Accreditation alone by accrediting agencies such as JCAHO (Joint Commission on Accreditation of Healthcare Organizations), AAAASF (American Association for Accreditation of Ambulatory Surgical Facilities) or AAAHC (Accreditation Association for Ambulatory Health Care) is not sufficient for separate payment of facility fees or surgical care charges.

In particular, accreditation as an office-based surgical facility is not sufficient for separate payment of facility fees or related surgical charges.

According to Aetna, the purpose of the policy statement was to clarify its policy on a going forward basis. MSSNY expressed concerns that Aetna’s newly articulated policy does not appreciate the benefits of office based surgery, including improving patients’ access to care. Aetna agreed to hold meetings with MSSNY representatives so that MSSNY can recommend programs that will promote and encourage office based surgical procedures as appropriate by the physician. These meetings are ongoing.

MSSNY President Richard Peer expressed his appreciation to Aetna for its agreement to stop its efforts to recover the facility fees that it paid to physicians in the past. Dr. Peer stated that this is in the best interest of all the parties involved including the physicians, Aetna and patients. With the dispute regarding the “retrospective” facility fee payments ended, Dr. Peer said that he looked forward to discussing prospective policy issues with Aetna, which may lead to enhancements to patient access to quality care. Appreciation was also expressed to Robert Goldberg, M.D., Andrew Kleinman, M.D., Alan Gold, M.D., Scott Tenner, M.D., Scott Einiger, Esq., Michael Schoppmann, Esq., Ralph Erbaio, Esq., Mark Furman, Esq., Peter Millock, Esq., Jack Anderson (Validare), Rock Rockett (Validare) and Jeff Pearcy (AAAASF) who assisted MSSNY in its advocacy efforts.