BY MICHAEL J. MCLAFFERTY CPA, MBA, FACMPE
SENIOR MANAGER, HEALTHCARE SERVICES

The Office of Civil Rights (OCR) has issued guidance that provides valuable information relative to the Standards for Privacy of Individually Identifiable Health Information (the Privacy Rule), established by the Department of Health and Human Services (HHS).

This Rule set national standards for the protection of health information, as applied to the three types of covered entities: health plans, healthcare clearinghouses, and healthcare providers who conduct certain healthcare transactions electronically. By the compliance date of April 14, 2003 (April 14, 2004, for small health plans), covered entities must implement standards to protect and guard against the misuse of individually identifiable health information. Failure to timely implement these standards may, under certain circumstances, trigger the imposition of civil or criminal penalties.

The Privacy Rule establishes a foundation of Federal protections for the privacy of protected health information. The Rule does not replace Federal, State, or other laws that grant individuals even greater privacy protections, and covered entities are free to retain or adopt more protective policies or practices.

Most health plans and healthcare providers that are covered by the new Rule must comply with the new requirements by April 14, 2003. The HIPAA Privacy Rule for the first time creates national standards to protect individuals' medical records and other personal health information. The following benefits are received by patients:

• It gives patients more control over their health information.
• It sets boundaries on the use and release of health records.
• It establishes appropriate safeguards that healthcare providers and others must achieve to protect the privacy of health information.
• It holds violators accountable, with civil and criminal penalties that can be imposed if they violate patients' privacy rights.
• And it strikes a balance when public responsibility supports disclosure of some forms of data — for example, to protect public health.
• It enables patients to find out how their information may be used, and about certain disclosures of their information that have been made.
• It generally limits release of information to the minimum reasonably needed for the purpose of the disclosure.
• It generally gives patients the right to examine and obtain a copy of their own health records and request corrections.
• It empowers individuals to control certain uses and disclosures of their health information.

Congress mandated the establishment of Federal standards for the privacy of individually identifiable health information. The Privacy Rule establishes a Federal floor of safeguards to protect the confidentiality of medical information. State laws that provide stronger privacy protections will continue to apply over and above the new Federal privacy standards.

The Privacy Rule requires the average healthcare provider or health plan to perform the following activities:

• Notifying patients about their privacy rights and how their data can be used.
• Adopting and implementing privacy procedures for its practice, hospital or plan.
• Training employees so that they understand the privacy procedures.
• Designating an individual to be responsible for seeing that the privacy procedures are adopted and followed.
• Securing patient records containing individually identifiable health information so that they are not readily available to those who do not need them.

The following "covered entities" must adhere to the Privacy Rule:

• Health plans
• Healthcare clearinghouses — Includes Billing Companies
• Healthcare providers who conduct certain financial and administrative transactions electronically. These electronic transactions are those for which standards have been adopted by the Secretary under HIPAA, such as electronic billing and fund transfers.

These "covered entities" are bound by the new privacy standards even if they contract with others (called "business associates") to perform some of their essential functions. The law does not give the Department of Health and Human Services (HHS) the authority to regulate other types of private businesses or public agencies through this regulation. For example, HHS does not have the authority to regulate employers, life insurance companies, or public agencies that deliver social security or welfare benefits.

Most covered entities have until April 14, 2003 to come into compliance with these standards, as modified by the August, 2002 final Rule. Small health plans will have an additional year, until April 14, 2004 to come into compliance.

Amper, Politziner & Mattia, LLP has a HIPAA Privacy Program Service (HPPS) available to assist our clients comply with the Privacy Standards. If you have any questions about this article or would like information about our HPPS, please call Michael McLafferty.

Michael McLafferty CPA, MBA, FACMPE, is a Senior Manager with the Healthcare Services Group at Amper. Mike has 20 years of healthcare experience and provides numerous business services to physician practices, hospitals and ambulatory organizations. You can contact Mike at 732-287-1000, ext. 284.

BY MAUREEN A. DOHERTY, CPC, CPC-H
CONSULTANT, HEALTHCARE SERVICES

The Office of Inspector General (OIG) has recently released their 2003 work plan listing areas for investigation of physicians. Listed below are some of the target areas with guidelines to follow:

Consultations: When billing a consultation, you must have a Request (written or verbal) from another physician; the service is Rendered to the patient; and a Report must be sent back to the referring physician.

Coding of Medicare Physician Services: Review Medicare's National Correct Coding Initiative (CCI) when billing procedures to be certain that unbundled claims are not being sent and processed.

Coding of Evaluation and Management Services: Documentation must always support the Evaluation and Management code that is being billed. It is also important to review the utilization of codes billed for your practice against other practices of your specialty.

Bone Density Screenings: Documentation of medical necessity must be indicated for bone density screenings.

Billing for Chiropractic Care: The OIG will be reviewing improper payments made for chiropractic maintenance treatments which are a non-covered service by Medicare.

Services and Supplies Incident to Physicians' Services: Direct supervision must be followed (a physician must be present in the office suite) in order to bill "Incident-to" and be reimbursed 100% of the Medicare physician fee schedule.

The additional target areas of the OIG Work Plan can be reviewed on their web site, www.oig/hhs.gov

Maureen A. Doherty, CPC, CPC-H, is a Consultant with Amper's Healthcare Services Group. Maureen has more than 20 years of experience providing coding, documentation and revenue cycle services. Contact Maureen at 732-287-1000, ext. 301

TIME TO RENEGOTIATE YOUR CONTRACTS?

BY LEWIS D. BIVONA CPA
MANAGER, HEALTHCARE SERVICES

AA recent article in USA TODAY reported several interesting trends that are disturbing for healthcare providers and consumers of healthcare services. Two key facts cited were:

• Healthcare insurers are increasing premiums in the double-digit range for the third year in a row, well above the rate of medical inflation.
• Average healthcare insurer operating margins for the third quarter of 2002 were 5.3%.

While these facts bode well for investors, they don't help physicians and hospitals. If health insurers are doing so well in the marketplace, it would seem to make sense that providers should seek to balance the reimbursement scales! Many providers have gone years without a reimbursement increase or have received only inflationary adjustments (i.e. 3 to 5% increase). It makes sense to negotiate a better financial package for your practice or facility while the industry is doing well as it increases your leverage.

Why aren't providers pursuing this opportunity? Frequent reasons for not renegotiating contracts include fear of being dropped from participation lists, lack of knowledge of managed care negotiating tactics or just being too busy practicing medicine to have time to negotiate.

Amper's Healthcare Services Group has personnel with experience in negotiating initial contracts or renegotiating existing agreements for all types of providers. We can assist you in differentiating your practice from your competitors, thus providing you with a discreet market advantage. In addition, we have developed tools and procedures that many of our physician and hospital clients have found useful in guiding them through evaluating and negotiating agreements. Amper's staff has helped many providers to prepare for contracting opportunities and to succeed.

Lew Bivona CPA is a Manager with Amper's Healthcare Services Group. He has more than 22 years of experience in healthcare financing and operations and has particular expertise in reimbursement and contractual negotiations. Contact Lew at 732-287-1000, ext. 285 for a free consultation.

PHYSICIANS REVIVING HOUSE CALLS

BY BLAIR BELTZER, MD
CONSULTANT, HEALTHCARE SERVICES

Many physicians are embracing the old-fashioned house call of late, some for the great individual satisfaction of the very personal care they can render and others noting the increase in reimbursement that Medicare has provided since May of 2000. Due to a very strong campaign by the members of the American Academy of Home Care Physicians, Medicare has made it much more desirable from a financial standpoint for doctors to visit patients at home. As long as guidelines of medical decision-making are followed and proper documentation is provided, MD's can expect up to $229 based on the 2002 Medicare fee schedule in New Jersey for an initial home visit for a 99345 call to a patient (initial visit, new patient, medical decision making high, history and exam extended and face-to-face time 90 minutes). Follow-up visits for established patients are also well reimbursed.

There are several issues to consider before undertaking home visits, a few of which are discussed here.

The physician making house calls must be well organized, because travel time is included in the reimbursement rate. Adding home care to your practice can be a full-time or part-time endeavor. Important to note is that Medicare is explicit in its language that patients need not be homebound.

In 2001, Medicare clarified the difference between a home visit and visits to domiciliary facilities (a facility that provides room and board for an extended time, e.g. adult-living facilities). Visits to the latter are reimbursed at a slightly lower rate.

It is important to document that the home visit is necessary. Document that "leaving the home would require a considerable and taxing effort."

On another note, some physicians have reported that their malpractice insurer was willing to cut their rates after the actuary calculated that your in-office volume was reduced to house calls and that your malpractice exposure is lower with the geriatric population.

Lastly, some physicians work as employees for house call corporations and in this setting need to go through credentialing processes, have proof of malpractice insurance (not an issue in New Jersey because it is required by law) and even undergo urine drug screening before getting on board.

Blair Beltzer, MD, is a Consultant with the Healthcare Services Group at Amper. He is a partner of a family medicine practice and has particular expertise in providing clinical, coding and documentation, revenue cycle and regulatory services. Contact Blair at 732-287-1000, ext. 301.

MEDICAL & DENTAL GROUPS TARGETED FOR STATE SALES / USE TAX

BY JOHN C. GENZ CPA
SENIOR MANAGER, TAX DEPARTMENT

Though mild by historical standards, the impact of the economy's downturn is far-reaching. States, impacted by the decrease in tax revenue, are making up lost revenue by increasing the number of income and sales/use tax audits. It has come to our attention that states are targeting medical and dental practices for sales/use tax audits. Many physicians are not aware that out-of-state purchases of medical equipment and supplies may be subject to sales/use tax when used or consumed in the state. This potential tax liability, plus penalties and interest, could be substantial upon audit. Physicians and dentists are well-advised to take steps to minimize their risk.

State and local tax laws vary from state to state and can be very complex. Our State and Local Tax (SALT) Group can help minimize your exposure, starting with implementing controls to comply with the tax laws currently in effect. We believe this could reduce examination adjustments typically assessed for multiple year periods. To minimize or avoid penalties and to minimize interest charges on additions to tax resulting from such adjustments, it can be critical to voluntarily comply with the law before the state taxing authorities come calling.

The burden of state and local tax on business has increased much more rapidly than that of federal taxes. State and local taxes are a key consideration in business planning. Our SALT Group can help you develop the strategies necessary to minimize these taxes and provide you with ongoing assistance in your day-to-day operations.

The services of the SALT Group include:

• Advanced tax planning to maximize tax exemptions.
• Audit representation to ensure you do not pay more than legally required.
• Updates on changing interpretations, new tax laws, and policies.
• Compliance checkups to make sure your systems and records are adequate and to minimize audit exposure.
• Research and answers to your sales and use tax questions.
• Training for your staff.

John C. Genz CPA is a Senior Manager in Amper’s Tax Department. He has more than 16 years of experience and has specialized expertise in state & local tax issues. Contact John at (732) 919-1400, ext. 48.