Requirements versus Suggestions in Policy, and Government Overuse of “Overpayment”

This article covers two totally unrelated compliance issues: the risk that your attempt to improve your compliance with respect to medical director agreements will actually make things worse, and the U.S. Department of Health and Human Services (HHS) Office of Inspector General’s (OIG’s) misuse of the term “overpayment.” 

When it comes to medical director relationships, most people assume that a physician is legally required to keep time records. That isn’t true. Time records are helpful, and I would never discourage a physician from keeping them, but they aren’t legally required.

Here is how an attempt at compliance can backfire. Including an explicit requirement for physicians to keep time records may seem like a solid risk management strategy. After all, I just noted that time records lower your risk. But now you have created a requirement that didn’t exist in the law. Failure to comply with a written agreement provides a basis to argue that the Stark Law has been violated. 

So I’ve told you that it’s a good idea to have time records, but I’ve discouraged you from including a time record requirement in your contract. How do I harmonize this seemingly conflicting advice? You can ask for time records without requiring them. Medicare has Conditions of Participation, the rules you’re expected to follow, but don’t affect your payment, and Conditions of Payment, terms you must meet in order to get a check. You can do the same sort of thing in a contract. Instead of contractually requiring time records, have a policy suggesting them. Alternatively, you can take the direct approach in a contract and say something like “while time records are not required as a condition of payment, the physician is highly encouraged to maintain time records.” Your approach will ensure that time records are a “bonus feature” that lowers your risk, not a requirement that heightens it.

The second risk is that the OIG defines the term “overpayment” far too broadly. When the OIG finds some technical violation of a Medicare regulation, like a missing signature or missing documentation, the OIG will often deny the claim and label the payment an “overpayment.” But is that reasonable? There is something very misleading about characterizing a hospital stay that everyone agrees was both needed and received by the beneficiary as an “overpayment.” 

While I readily agree that the OIG should review organizations to verify their compliance with regulatory requirements, the findings should be presented in a way that helps policymakers understand the issue. When the issue is highly technical and entirely unrelated to the value of the care received by the patient, claiming that the government “overpaid” for services seems wrong.

Any reasonable observer would conclude that an “overpayment” means that the services were not provided, should not have been provided, or were provided in such a deficient manner that they were effectively useless. Labelling administrative mistakes as “overpayments” implies that legitimate healthcare expenditures are unnecessary. That can be used to cut spending in a way that will harm society.

When the Medicare program (and Medicare beneficiaries) receive exactly what they paid for, any regulatory misstep should not be called an “overpayment.”