OIG Says No Fines for Hospital’s Transcription Service

By Eric Topor from Health Care Daily Report for BNA

Dec. 29 — The Health and Human Services Office of Inspector General posted an advisory opinion Dec. 29 (No. 15–15) that said it wouldn’t impose sanctions on a hospital’s proposal to provide market rate transcription services for radiology tests performed at the hospital for patients of an unaffiliated clinic and a contracted radiology practice, both of which are referral sources for the hospital and include Medicare and Medicaid patients.

Under the arrangement, the clinic, which also was a requesting party to the AO, would provide technologists who perform the radiology services, and the radiology practice would provide the physician component of interpreting exam results and would send the final transcribed reports to the clinic. Under the proposed arrangement, the hospital would charge the radiology practice a fee for transcribing reports, but the clinic wouldn’t pay any transcribing fee to the radiology practice or the hospital.

The OIG said there was no prohibited remuneration passing from either the radiology practice to the hospital or from the radiology practice to the clinic. The OIG said the preparation of a written report from the radiology practice to the clinic was a requirement for reimbursement, and a fee paid by the radiology practice to produce the required report wasn’t considered remuneration to the clinic.

CMS Payment Policy

The OIG referenced the Medicare Claims Processing Manual (Pub. No. 100–04, Ch. 3, sec. 20) and said the Centers for Medicare & Medicaid Services advised the OIG that transcription costs are an indirect administrative expense that is “not separately identifiable but [is] included in both the professional component and technical component” of the service. The CMS said that when the technical and professional component of a service are provided by separate entities, each provider can negotiate between themselves as to which will pay transcription fees.

The OIG said in cases where the radiology practice is paying a transcription fee to the hospital for services rendered to non-hospital patients, the “hospital is entitled to be paid for” the transcription service.

However, the OIG said there was a potential risk that the radiology practice’s payment of transcription fees for clinic patients could constitute remuneration for referrals by the clinic to the radiology practice. The OIG said such remuneration would be viewed as substantial if the transcription costs “were attributed solely to the technical component of the radiology exam” under Medicare payment rules.

However, the OIG said such a risk wasn’t present in the proposed arrangement, because a written report, including transcription, was a requirement for reimbursement of the professional component under Medicare payment rules. Because the radiology practice was required to produce a written report as a condition of payment from Medicare for its own services, the OIG said payment of a transcription fee wasn’t considered remuneration to the clinic.