American Academy of Emergency Medicine

HCFA Makes No Distinction Between Employee and Independent Contractor Physicians

Many of you are aware of AAEM's recent efforts in convincing HCFA that corporate entities should not be able to shield the billings and payments made in the name of the independent contractor emergency physician from that physician. In letters to AAEM, and in response to questions offered by the emergency department staffing industry, HCFA has categorically stated that since the individual emergency physician is the one accountable for any service provided to a Medicare beneficiary, they have the right to know what is being billed and paid on their behalf.

Since these pronouncements, many of AAEM's detractors have called our involvement in these events a "hollow victory" because contract groups would still be able to work their way around the wording of HCFA's ruling by making their independent contractor physicians employees of the management group. Indeed, it seems that several groups have begun just such a transition.

The good news for the rank and file is that AAEM has followed up on this important issue with HCFA and have received confirmation that, independent contractor or employee, there is no real distinction in the rights a physician has to see what their management company is billing on their behalf. The following letter sent to AAEM from HCFA addresses this idea specifically.

January 7, 1998

Robert M. McNamara, MD FAAEM
American Academy of Emergency Medicine
611 East Wells Street
Milwaukee, WI 53202

Dear Dr. McNamara:

I am responding to your December 8, 1997 letter to Mr. Mike Meister of our Office of the General Counsel concerning the rights of employed physicians versus the rights of independent contractor physicians. Specifically, you are asking if an employed physician has the same right as an independent contractor physician in reviewing bills that are being submitted on behalf of the services provided by the physician.

The Health Care Financing Administration believes that an employed physician has the same right as an independent contractor physician in reviewing bills that are being submitted on the physician's behalf. Thus, if an employer refuses to disclose billing information to one of its employed physicians, then the physician has the right to contact the appropriate Medicare carrier and get this information under the Privacy Act. Therefore, we agree with your position, that an employed physician has the right to review what is being billed and paid on the physician's behalf.

If the issue is brought up by the emergency department staffing industry, we will inform them that employed physicians are entitled to review what is billed and paid on their behalf, and that they should disclose this information to a physician that provides services for which the organization bills, regardless of whether the physician is an employee or an independent contractor. If you should have any further questions regarding this matter, you may contact David Walczak at (410) 786-4475. Thank you for your concern.

Sincerely yours,

Bernadette Schumaker
Deputy Director, Division of Integrated Delivery Systems
Center for Health Plans and Providers

Hollow victory? Hardly. AAEM has worked diligently since its inception to bring this recognition to our specialty, that the individual practicing emergency physician is entitled to see what is billed on his or her behalf. In doing so, individual emergency physicians have been economically empowered with important leverage at the negotiating table. Armed with the knowledge of the true value of the services they provide, and the amount that has previously been drained away as a "management fee," AAEM has given emergency physicians the opportunity they have been waiting for to take control of their own livelihoods.

What's next? Well, in addition to working with the AMA to adopt resolutions that mimic the language of these HCFA decisions, AAEM is working to prove its contention that the forced splitting of fees with contract groups and other "senior" emergency physicians is a violation of the anti-kickback statutes that exist in Medicare and other regulations. In a letter to the Inspector General of the United States, we have argued that if the amount of a physician's fees that are taken exceed the fair market value of what is given in return, the arrangement constitutes a fraudulent and unfair business practice. Stay tuned for further developments in this area.