CoFi and Co-Management:

Q&A with Alan Reider of LSR Consulting

An exchange with Alan Reider, one of the foremost experts on co-management. Mr. Reider is the principal of LSR Consulting and a former Partner and Arnold & Porter LLP.

This information is provided for information only. It does not constitute legal advice. If you have any questions, you should contact an attorney, preferably one with expertise in healthcare regulatory and compliance issues. Also, please be advised that Mr. Reider and LSR Consulting do not provide legal advice.

CoFi is designed to eliminate some of the key payment-related compliance risks relating to co-management provided in connection with the implantation of a premium IOL. It also addresses compliance issues relating to co-management of non-covered (cash pay) refractive surgeries like LASIK performed by surgeons who also receive referrals from co-managers for services covered by Medicare. For many years, critics have alleged that co-management may be a violation of the federal Anti-Kickback Statute, which prohibits the payment of anything of value in return for a referral of a patient receiving services paid for by Medicare or other federal programs. These concerns were offset, however, by the Medicare program’s restrictions relating to billing, which requires each provider of care to bill for the services they perform. Further, Medicare determines the amount to be paid for each service provided. This reduces significantly the risk for abuse. However, the Medicare requirements do not apply to the non-covered services rendered in conjunction with the implantation of a premium IOL. And because most premium IOL services are promoted to patients as a package with a single global payment, it often results in the surgeon collecting the global payment and paying the OD co-manager - - who is generally the referral source - - for the additional services provided by the co-manager. And while a particular arrangement may be compliant in every other sense, making a payment to the referral source creates the appearance of impropriety, which could lead to unwanted scrutiny. Over the years, ophthalmologists have sought ways to address this concern. Some practices have decided to follow the Medicare protocol, where the surgeon and the co-manager each bills the patient for their respective services. Others have collected 2 payments from the patient - - one for the ophthalmologist’s services and another for the OD co-manager’s services; the ophthalmologist then will deliver the OD’s payment to the OD. Finally, others choose to collect a single payment and pay the OD themselves, but provide the patient with a detailed line-item invoice which specifies the amount that is attributed to the services performed by the ophthalmologist and to the services performed by the OD co-manager. As noted above, each of these options is designed to address the appearance of impropriety when payment is made to a referral source. Where each provider follows the Medicare protocol and bills and collects from the patient directly for the services performed, that appearance of impropriety is eliminated. With CoFi, the patient makes separate payments for non-covered services to both the surgeon and the OD co-manager. Essentially, CoFi follows the Medicare payment protocol, thus avoiding the potential appearance of abuse where payment is made by the ophthalmologist to the referring OD.

The portion of the global fee for non-covered services paid to the ophthalmologist should reflect the value of the services performed by the ophthalmologist; the portion paid to the co-managing OD should reflect the value of the services performed by the co-managing OD. The global fee reflects the charge to the patient for the package of services provided when a premium IOL is implanted, above and beyond those services performed when a conventional IOL is implanted. If a patient receives all of these services from the ophthalmologist (i.e., there is no co-management), then the ophthalmologist would properly receive the entire global fee. If, however, the patient elects to be co-managed, and the OD provides some of the services reflected in the global fee package, then the OD is entitled to be paid for the services performed by the OD. In this case, the ophthalmologist’s fee should be reduced to reflect the fact that the ophthalmologist is not providing all of the services in the global fee package. It is important to note that the fee charged by the co-managing OD need not match the reduction in fee from the ophthalmologist. The OD is free to set a fee independent of the ophthalmologist. However, it is critical that both the reduction in fee by the ophthalmologist and the fee charged by the co-managing OD reflect the fair market value of these services. If the fee reduction by the ophthalmologist or amount charged by the co-managing OD exceeds the fair market value of those services, then it may appear that the co-managing OD is receiving something of value from the ophthalmologist, which raises a concern under the Anti-Kickback Statute.

As long as the patient has been given clear guidance that the fee paid to the co-managing OD is for additional post-operative visits, the patient’s failure to return to the OD should not present a compliance concern to either the ophthalmologist or the optometrist. This is identical to the situation that would arise if a patient did not elect to be co-managed but failed to return to the ophthalmologist for the same additional post-operative visits when a premium IOL is implanted. (Of course, there may be risk management issues if there is no attempt to reach out to the patient, reminding the patient that it is in the patient’s clinical interest to return for these additional visits that are part of the global package.)

Yes, optometrists are at risk for compliance violations relating to co-management to the same extent that ophthalmologists are at risk. The Anti-Kickback Statute reaches both the party who provides something of value in exchange for a referral, as well as the party who makes a referral in exchange for something of value. The penalties for violating the Anti-Kickback Statute are severe: violators are subject to significant civil penalties as well as administrative sanctions, including exclusion from Medicare and all federal health care programs. In extreme cases, criminal penalties may be imposed. And do not be misled to believe that because the co-management relates to non-covered services there is no risk of violation of the Anti-Kickback Statute. Premium IOL implants reflect both a covered and non-covered component; as long as Medicare pays for the covered component, any improper conduct may trigger the federal statute. The same is true for completely non-covered procedures like LASIK or Refractive Lens Exchange if the co-manager also refers patients to the surgeon for Medicare covered services; an unreasonably high co-management fee for LASIK could be viewed as an inducement to refer patients for services covered by Medicare.

Yes. The relationship between the surgeon and the Surgery Center can be compared to the relationship between the co-managing OD and the surgeon: just as the co-managing OD refers to the surgeon, the surgeon refers to the Surgery Center. As a result, to the extent that the global fee also includes any amount that reflects the additional items or services provided by the Surgery Center, that amount should reflect the fair market value of these additional items and services. At a minimum, this includes any additional fee for the higher cost of the premium IOL. The IOL is the responsibility of the ASC; if the ASC allows the surgeon to profit from the sale of the premium IOL, it could raise a concern under the Anti-Kickback Statute. Further, just as in the case of the surgeon and the co-managing OD, the patient must be provided information which describes that portion of the global fee that is allocated to the Surgery Center. As noted above, CoFi provides this protection as the patient makes a separate payment to each provider, including the Surgery Center.