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How Hospitals Can Recoup Revenue on Resident-rendered Services

By HealthLeaders Media Staff  
   January 18, 2011

Trainees perform a significant number of unsupervised procedures on patients with private insurance but are prohibited from billing for those services. And that represents a significant amount of lost income for teaching institutions. This is the conclusion reached by the authors of a study published in The Journal of Trauma -- Injury, Infection, and Critical Care.

Billing private insurers for these services might help offset the costs of graduate medical education, the authors suggest.

Medicare does not let residents and fellows bill for services, and for good reason: Medicare already supplements hospitals via medical education funds. Reimbursement for trainee services would amount to double billing, explains the lead author, Ara J. Feinstein, MD, MPH, a trauma surgeon who is clinical assistant professor and surgical clerkship director at University of Arizona College of Medicine in Phoenix.

The problem, according to the authors is this: Private insurance companies benefit financially from Medicare billing regulations without contributing to the expense of education.

To determine how much revenue is lost, Feinstein and his colleagues retrospectively evaluated a prospective database of procedures performed by residents and fellows from March 1998 through 2007. During that period, 14,497 minor procedures were performed without attending supervision, of which 13,343 had valid current procedural terminology codes. (The most commonly performed procedures were central venous line change, arterial line placement, and central venous catheter placement.)

Total charges for these procedures would have been $10,096,931. "Using the mean percentage of patients that carry private insurance at our institution (68%), $6,876,000 could have been billed. Using our historic collection ratios (33%), $2,269,083 in revenue was lost or $232,726 annually during the study period," the authors wrote.

It is unclear why institutions have not billed private insurers for trainees' work in the past, the authors note. It's not unprecedented. Feinstein points that trainees who moonlight at hospitals outside of their home institution can bill for their services. In other words, a procedure performed by a moonlighting resident is billable but that same procedure, done at her home institution, isn't.

An editorial comment accompanying the article touches on this very issue. "Unsupervised procedures performed by residents on non-CMS funded patients should

be as billable 'at home' as they are when the resident is moonlighting elsewhere," writes R. Lawrence Reed, II, MD, of thedepartment of surgery at Indiana University and the department of trauma services at Clarian Methodist Hospital in Indianapolis.

He calls the paper's concept "ingenious" and asks why the industry follows CMS rules in situations when CMS is not involved. He notes that "for the 45 years since Medicare was introduced, hospitals have given away a massive fortune in free care provided by residents to privately insured patients."

One question is whether the private insurers would just deny the claims. They could, Feinstein says, "but on what ground would they deny the claim?"

When he first presented the paper, it was controversial. But he thinks the concept has potential. "It will take a courageous hospital or training program to give it a shot. I'm curious to see what insurers will say and do."

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