Quick change of plans for me today. I had a different episode planned for this week, but something interesting came up that I just had to talk about. If you’ve been in neuromonitoring for a while, you’ve probably heard rumors about private neuromonitoring companies participating in business deals with surgeons in order to, well, secure their business. In these deals, surgeons profit off of the neuromonitoring they use, and people question whether these deals are legal, or even ethical. I’m jumping into this radioactive topic head first today.
I’m Rich Vogel, and this is Stimulating Stuff.
Heyy-ooooo. Welcome back to the Stimulating Stuff podcast. I’m Rich Vogel, and the struggle is real, my friends. I was getting ready to release a new episode featuring friends from ABRET who discuss the new neuromonitoring credential coming out, but something popped up, and I have to push that episode to next Monday.
Ugh. The suspense...
Well, I hope you weren’t sleeping this week because, as Nas said, sleep is the cousin of death, and you’re probably missing out on all the buzz. That’s right, I said buzz... the neuromonitoring community has been buzzing this last week because something very interesting happened. On Friday, August 18th, the Office of the Inspector General issued an advisory opinion on certain business practices in neuromonitoring, deeming them unfavorable, and suggesting that these business practices may be violations of federal law.
If none of this makes sense to you, if you don’t see how this impacts you, or if you’ve heard rumors about these business relationships (but never really understood them), don’t you worry. Uncle Rico is here to break it all down.
I know you like that Napoleon Dynamite reference!!
OK, before we jump into the details of this, I want to give you all some background so everyone’s starting on the same page.
I mentioned the Office of the Inspector General, or OIG for short. This simply refers to the oversight division of a federal or state agency, and this division endeavors to identify, audit, and investigate fraud, waste, abuse, embezzlement and mismanagement of any kind related to their parent agency. All major departments within the US government have their own OIG. The one we’re talking about today is the US Department of Health and Human Services, or HHS, which is a government agency that oversees “health” in the US, and this includes federal healthcare programs like Medicare and Medicaid.
So, when I refer to the OIG in this episode, I’m talking about the folks who investigate criminal activity for the Department of Health and Human Services. These folks develop and distribute resources to assist the health care industry in its efforts to comply with the nation's fraud and abuse laws, and to educate the public about fraudulent schemes so that it can protect itself and report suspicious activities. One example of a resource they may develop and distribute is an advisory opinion when someone submits a question about whether or not some particular situation may be considered a violation of federal law. That’s what happened with neuromonitoring, and we’re going to talk about it.
The OIG for the HHS is the largest inspector general's office in the Federal Government with over 1,600 personnel. The majority of the agency’s resources go towards the oversight of Medicare and Medicaid — programs that represent a significant part of the Federal budget and that affect this country's most vulnerable citizens. The special agents who work for OIG are very similar to FBI agents, but they have special skills in investigating white collar crime related to Medicare and Medicaid fraud and abuse.
The OIG has prosecuted individuals, corporations, hospitals and healthcare systems for violations of Stark Law and Anti-Kickback Statutes, which we’ll talk about, pertaining to physician compensation arrangements. In 2022, they recovered nearly $3 billion dollars in funds related to fraud and abuse, they criminally prosecuted over 700 individuals or entities from crimes against HHS programs, and excluded nearly 2,500 individuals and entities from participating in these programs. That’s a really big deal. So, in other words, the OIG is not to be fucked with.
OK, with that in mind, I’ll repeat what I said before. Just over a week ago, the OIG issued an advisory opinion on certain business practices in neuromonitoring, deeming them unfavorable, and suggesting that these business practices may be violations of federal law.
Today, I’m going to talk about this advisory opinion, what it means, what the implications are, and how this may impact the average person working in IONM.
Let’s jump in. A few minutes ago, I mentioned that the OIG develops and distributes advisory opinions when someone submits a question about whether or not a particular situation may be considered a violation of federal law. Well, someone submitted a question about neuromonitoring, they spelled out the “questionable” business relationship in exquisite detail, and the OIG hit reply-all... essentially sharing their opinion with the public.
Before we get into the findings and my commentary, I want to walk you all through the type of business relationship that is at the center of this opinion... and, by the way, it’s been the center of controversy in neuromonitoring for over a decade.
In the typical world of outsource neuromonitoring, a technical services company who employs neuromonitorists contracts with various hospitals under a neuromonitoring services agreement to:
1. perform the technical component of neuromonitoring for surgeries at those hospitals through its employed neuromonitorists; and
2. arrange for the performance of the professional component of neuromonitoring for the same surgeries through neurologists who are often either independent contractors or employees of a separate physician practice that has a management services agreement with the neuromonitoring company.
In this episode, I’m going to refer to this as a neurology practice, but just keep in mind that it could just be one person who is an independent contractor neurologist.
So, when surgeons wishing to schedule IONM services for one of their procedures at the hospital, they reach out to the IONM company to schedule the case. The neuromonitoring company then schedules one of its neuromonitorists to perform the technical component for the surgery, and then contacts the neurology practice to arrange for them to assign a neurologist to perform the professional component for the surgery. Neurologist assignment is simply based on who is licensed in the state and privileged in the facility where surgery is taking place... and also taking into account who is available (e.g., not on PTO).
Generally speaking, when the surgery is complete, the neuromonitoring company bills the hospital for the technical component, and the neurology practice bills the insurance company or the patient for the professional component.
That is how neuromonitoring generally works in the outsourced setting, and the OIG made it clear that they were not asked to give an opinion on, and they express no opinion regarding, these particular details, including the individuals and organizations involved.
What they did give an opinion on is a specific business arrangement for how this could all work behind the scenes.
Under that arrangement, the neuromonitoring company offers to assist surgeons who use neuromonitoring with the formation and operation of a new, separate company – what they call a “turnkey entity” – that would perform IONM services and that would be owned by the surgeon or surgeons. I’m going to call this new organization “Company X.”
In this scenario, neither the neuromonitoring company nor the neurology practice would have an equity or ownership interest in Company X. The Surgeon Owners would be responsible for forming Company X and for preparing Company X’s internal governance documents. In reality, I’m sure all of this is done, or at least guided, by the neuromonitoring company’s lawyers.
The Surgeon Owners ultimately would set the terms of their respective investment interests in Company X and the methodology for the distribution of the company’s profits amongst themselves. Therefore, the Surgeon Owners would likely receive distributions of Company X’s profits in return for their investment interests in Company X.
After Company X is formed at the suggestion of, and with the assistance of the neuromonitoring technical services company, the Surgeon Owners would have limited participation in its day-to-day business operations and would instead contract with the neuromonitoring company and the neurology practice for the performance the necessary services. Several difference contracts are established to make it work.
First, there is a “billing services agreement” established between the neuromonitoring company and Company X. In this agreement, the neuromonitoring company would provide to Company X certain administrative services such as billing and collections in exchange for a fee from Company X.
Second, there is a “management services agreement” between the neuromonitoring company and the neurology practice. In this agreement, the neurology practice would lease neuromonitorists from the neuromonitoring company to provide neuromonitoring to the surgeons.
Third, there is a “personal services agreement” between the neurology practice and Company X. In this agreement, the neurology practice would provide to Company X the services of its neurologists and the leased neuromonitorists in exchange for a fee from Company X.
The services provided by the neuromonitoring company and the neurology practice under these contracts would constitute virtually all of the day-to-day requirements of an IONM business. So, Company X – the surgeon owned entity – wouldn’t need to hire any dedicated employees because the neuromonitoring company and the neurology practice would provide all necessary services for Company X, which is essentially a shell.
So, Company X – the shell company – contracts with the hospital under a services agreement that would govern the provision of the technical and professional components of neuromonitoring for surgeries at that hospital. Generally, Company X would bill the hospital for the technical component and would bill the insurance company and/or patient for the professional component. Although Company X’s billing would be handled by the neuromonitoring company under the Billing Services Agreement, the neuromonitoring company would take direction from the Surgeon Owners regarding the amounts to be billed for services. In theory, the more surgeries they monitor, and the more money they bill for each procedure, the more money the surgeons make.
Neuromonitoring companies get into these arrangements for competitive reasons because their surgeon clients are continually approached by other IONM companies that are encouraging the surgeons to enter into similar arrangements, and the neuromonitoring company just wants to retain business from its surgeon clients that otherwise would be lost to these competing IONM companies.
So, while Company X would pay a fee to the neuromonitoring company under the “Billing Services Agreement,” and would pay a fee to the neurology practice under the “Personal Services Agreement,” Company X would likely see substantial profits from the Proposed Arrangement. The profits come from the difference in fees paid to neuromonitoring company and neurology practice, and reimbursement received from third parties, like insurance companies.
And, while Company X – owned by surgeons – is raking in the money, the thought here is that the neuromonitoring company and the neurology practice would earn substantially less profits than they otherwise would under a standard business model. This is primarily because, 1) reimbursement for the professional component of neuromonitoring can far exceed the cost of providing the service; and 2) the neurology practice would charge Company X less than it would otherwise make by billing insurance for the same service... and, they have to charge less because other, competing neuromonitoring companies marketing similar arrangements to surgeons have aggressively discounted their charges for such services.
OK. I know this is a lot of information, so let me break this down even more simply. For all intents and purposes, Company X is a surgeon-owned shell company. It receives money from hospitals and insurance companies, and it pays out a portion of the money to the neuromonitoring company and neurology practice for doing what they already do... cover cases and bill for them. Whatever money is left over, the surgeons get to keep. So, while the neuromonitoring company and the neurology practice would make far more money doing what they already do by billing the hospital and insurance company directly, they make less money because the shell company owned by the surgeons is taking a piece of the pie. And they do this just so they can keep the surgeon as a client. It may seem odd to give away money to keep clients, but if you do this at scale – working with far more surgeons than you would if you weren’t giving them a piece of the profit – then you can make up your losses in volume and actually make good money.
OK. Here’s where it gets interesting. Under the arrangement I just described, when neuromonitoring is needed, the surgeon would essentially refer any Medicare or Medicaid patients to the neuromonitoring company – in which they have no ownership – and all their patients who have commercial insurance would be referred to Company X. So, if the patient has Medicare, the insurance payment flows through the neuromonitoring company and/or neurology practice. But, but if the patient has private insurance, Blue Cross, for example, then the money flows through Company X, which is owned by the surgeon.
Isn’t that interesting?? I wonder why Company X – the company that surgeons profit from – deals exclusively with private insurance, and why federal insurance (tax payer money) is “carved out” and sent to a different company that the surgeon doesn’t profit from!!
I’ll tell you why after a quick word from our sponsor. This episode is sponsored by the Neuro Pod. The Neuro Pod is a podcast for the neurodiagnostic community, hosted by Jason Mayer. I’m a big fan of the Neuro Pod. Jason, take it away...
So, before the break, we were talking about why Company X – the one that surgeons profit from – deals exclusively with private insurance, and why federal insurance (tax payer money) is “carved out” and sent to a different company that the surgeon doesn’t profit from!!
Well, I don’t want to deal in speculation as to why people are doing this. Instead, let’s see what the OIG said about this particular business arrangement...
The first point they make is that the arrangement would implicate the Federal anti-kickback statute. If you haven’t taken your compliance courses in a while, the anti-kickback statute is a federal law that imposes criminal and civil penalties on those that knowingly and willfully offer, solicit, receive, or pay any form of payment in exchange for the referral of services or products covered by any federal healthcare program (e.g., the referral of a Medicare patient for neuromonitoring). The statute covers both those that provide (or offer) kickbacks and those that receive (or solicit) kickbacks.
The OIG says that this arrangement looks and smells like a kickback because surgeons receive something of value when they use neuromonitoring. Examples include:
1. discounts under the Personal Services Agreement provided by the practice to Company X.
2. the opportunity for Company X to generate a profit through the difference between the money it receives from insurance reimbursement, and the fees paid by Company X to both the IONM company and the neurology practice under the services agreement.
3. returns on investment interests in Company X to the Surgeon Owners.
While the anti-kickback statute technically applies only to patients with federal insurance, and while the surgeons are only using this arrangement for private insurance, the OIG believes these benefits could induce the surgeons to make referrals of neuromonitoring services for which payment could be made by a Federal health care program. In other words, some medicare/Medicaid patients could have their insurance billed by Company X, which, whether accidental or purposeful, would still be considered illegal. They go on to say that the arrangement sets the stage for “significant risk of fraud and abuse.”
Based on the relevant facts submitted to the OIG, they conclude that the arrangement, if undertaken, would generate prohibited benefit to the surgeons under the Federal anti-kickback statute, which would constitute grounds for the imposition of sanctions.
What’s interesting to me, is how often the OIG uses the words “could” and “potential” in talking about fraud and abuse. In particular, they make it sound like it’s illegal to do something that “could” result in fraud and abuse, even if you’re not committing fraud and abuse. I’m obviously not a lawyer, and I don’t know for sure what they’re trying to communicate using such equivocal language, but I’d love to hear the perspectives of any lawyers who happen to be listening.
What’s also interesting to me is this part about the “carve out.” The OIG says they have longstanding and continuing concerns about arrangements under which parties “carve out” Federal health care program beneficiaries or Federal health care program business from otherwise questionable financial arrangements. It sounds to me like they have concerns but can’t do much about it except, perhaps, to send it to a different investigative agency, like the FBI.
Anyway, the OIG advisory opinion ends with a bunch of caveats. Of particular interest to me is the fact that the person who submitted this inquiry to the OIG only asked about violation of the anti-kickback statute, so the OIG only comment on this statute. They did not analyze this agreement against any other federal, state, or local law... including the Stark Law which prohibits physician self-referral.
So, let’s talk about that for a second.
The Stark Law says that a physician can’t request an item or service for a Medicare or Medicaid patient if the physician (or an immediate family member) has a financial relationship with that entity. They also can’t refer a patient to an entity for health services if the physician (or an immediate family member) has a financial relationship with that entity.
The main goal is to reduce the temptation of “over-treating” patients simply because it serves a practitioner’s financial interest. Think of a surgeon who orders IONM on every patient/surgery regardless of risk to the nervous system.
This is considered illegal because overutilization of services drives up health care costs, and it limits competition. Critics of the Stark Law argue that physicians who own, invest in, or operate medical companies, products, services, and facilities are responding to a need for medical services which would otherwise not be met, particularly in medically under-served areas.
Again, I’m not a lawyer, but when I read the arrangement described in the OIG’s advisory opinion, and I read the Stark Law, I don’t see a difference. I’m sure there are nuances, and I can think of a few, but high-level, the surgeon owns Company X and uses it exclusively for IONM by his/her own choice. Seems like self-referral to me.
Here’s something really interesting... the Federal Stark Law was actually derived from a New Jersey state law... and neuromonitoring is intertwined!
In 1991, New Jersey Senator Richard Codey introduced legislation prohibiting physicians from making referrals to health care services in which they held ownership interests. The New Jersey Codey Law would eventually be modified by US Congressman Pete Stark who pushed for prohibitions against physician self-referrals of Medicare and Medicaid patients (now the Stark Law). So, now we have a federal law against physician self-referral.
Back to the State of New Jersey, like most states, the practice of medicine is governed by both federal and state law. Federal law comes into play when you take or accept Medicare or Medicaid related insurance plans. When that happens, it doesn’t matter what state you are practicing in – the laws of the federal government are going to control. However, If you are taking private or even some state funded plans, than the New Jersey laws and regulations will govern you.
That’s important, and I bring up New Jersey in particular because, in 2015, in NJ, the very birthplace of the Stark Law, the Codey Law was actually altered to allow surgeons to self-refer to a neuromonitoring company in which they have ownership interests, or otherwise profit from. In other words, it’s legal there!
At the time the bill was introduced, it was argued that neurosurgeons needed their own neuromonitorists for the most dangerous of neurologic surgeries because there was a shortage of qualified personnel. Not only is that genuine horse shit, frankly, because some of the best neuromonitorists in the country live and work in the tristate region, but I’m willing to bet if you look under the hood today, you’ll find that surgeon-owned neuromonitorists are being used for routine surgeries of comparatively low risk than what the amended Codey Law was designed to accommodate. Case in point, several years ago, I met an attorney who drafted the Codey law amendment at a Risk Management conference, and, having kept his ear to the ground, he expressed regret for what had come of, what he originally believe to be, a noble effort.
When it comes to Stark Law and the anti-kickback statute, the ASNM understood there to be significant risk years ago. In 2018, they published a position statement on business practices in neuromonitoring. It says,
It is the position of the ASNM that business practices related to the provision of IONM should be performed in accordance with the AMA Code of Medical Ethics. By extension, it is the position of the ASNM that the existence of certain financial arrangements (i.e., kickbacks or self-referrals) between an IONM provider and a referring physician/surgeon, whether direct or indirect, have the potential to endanger patient safety. Specifically, kickbacks and self-referrals create the potential for overutilization and substandard patient care when a physician/surgeon refers a case to an IONM provider based on financial considerations. The ASNM does not condone kickback arrangements, irrespective of whether or not 1) patients give informed consent for their healthcare provider(s) to engage in these practices and 2) the kickback arrangement is technically considered legal in any state or jurisdiction. Self-referral arrangements should be structured properly with the advice of counsel and with patient care always foremost.
So, look, none of this shit is new, but the attention of the OIG is. Neuromonitoring really wasn’t on their radar before. Now, it’s on the front page of their website, and this could get really interesting.
OK, so how does all of this impact you? Well, I guess that depends on who you are, but my highly generalized answer is "probably not much." This is an advisory opinion, and it doesn’t carry any legal weight. BUT, it does open the door for organizations who are suspected of engaging in these practices to be reported to the OIG for investigation.
I’ve asked around to a few people in our profession to pick their brains about this OIG thing, and several people are using the same phrase... “an attempt to level the playing field.”
Clearly, someone with intimate knowledge of these business relationships submitted this query to the OIG. And, I assume they already knew the answer they were going to get, and were then prepared to submit a follow-up complaint about a specific organization or group of organizations. This could turn into a game of tattle tale whereby different companies, in the spirt of competition, are turning each other in. Or, as Napoleon Dynamite said about Uncle Rico... “ruining everyone’s lives and eating all their steak”
If this happen, the OIG will probably probe or investigate organizations. There’s a really interesting article online about how they do this... starting with employees, affiliates, and potential whistle blowers... all the way through analytics, forensics, subpoenas, and prosecution. Google will light your way...
Anyway, for most people, there’s not much to see here, so I wouldn’t get too worried. Certainly, it’s possible companies and/or surgeons could be investigated. Consequences could range from nothing, to fines, to exclusion from federal programs, to jail time. It’s possible companies could lose their surgeon clients, and surgeons who feel duped could sue neuromonitoring companies. Anyone who’s been doing this is likely to urgently change their contracts and/or corporate structure.
I suppose it’s possible under extreme circumstances that some companies could shut down, but I doubt it. Even if that happens, the cases aren’t going anywhere, although we’re likely see less monitoring of pain injections, carpel tunnel releases, and maybe even simple lumbar decompressions... none of which, in my humble opinion, ever need neuromonitoring. But, the majority of monitored cases aren’t going anywhere. If anything, companies will have to engage in fair competition, earning their business, instead of buying it.
I suppose that’s what everyone means when they say this OIG advisory will “level the playing field.”
OK... I want to close today with a couple of announcements. First, this podcast now has a website… www.stimulatingstuff.com... where you can find links to listen and follow the podcast, and bonus content in the blog. Second, I’m on YouTube!! Third, the podcast now has a LinkedIn page, and a Facebook group. Please join and follow these pages for updates. AND, finally, I noticed last week that this podcast is being listened to in over 25 countries. Thanks so much to all my listeners from around the world. I appreciate each and every one of you!!
Please continue sending me your comments, critiques, and thought provoking questions. If you don’t agree with me, please share your perspectives. I’m not the final word on anything – particularly not the federal justice system. You can send your thoughts to [email protected]
. I’d love to hear from you!
I’m Rich Vogel, AKA Uncle Rico, and that was Stimulating Stuff!