From: Becker Scott <>
Subject: N.Y. Audit Uncovers $8 Million in Alleged Inflated Billing by Four ASCs; One Facility's Advice for Bariatric Success


December 6, 2007
In This Issue
N.Y. Audit Uncovers $8 Million in Alleged Inflated Billing by Four ASCs
One Facility's Advice for Bariatric Success
News and Notes
Companies to Watch
Jan.-Feb. Issue ad
N.Y. Audit Uncovers $8 Million in Alleged Inflated Billing by Four ASCs

According to an audit released Wednesday by the New York Comptroller, four of the state's largest surgical facilities allegedly submitted inflated claims to the state's Empire Plan after they inappropriately waived out-of-pocket costs for medical services provided to state and local government employees at an overall cost of $8 million. Under New York State law, submitting an insurance claim with false information may constitute insurance fraud.

"These medical facilities engaged in abusive practices and inflated their bills, causing the state to incur significantly higher costs," says Mr. DiNapoli in a statement. "These providers hurt taxpayers and must be held accountable for their actions. After only a handful of completed audits, I am very concerned about the abuse that we have found in this program. My office will continue to partner with the Department of Civil Service to ensure that taxpayers aren't paying a dollar more than they should."

As part of an effort to examine whether medical providers were complying with reimbursement requirements under the New York State Health Insurance Program (NYSHIP), auditors examined medical claims submitted from Jan. 2001 to Dec. 2006 for four of the state's largest ASCs. Auditors found that these providers routinely waived out-of-pocket costs for Empire Plan members, allegedly because they would not otherwise accept a referral to a non-participating provider and incur significant out-of-pocket costs, says an Office of the State Comptroller release. Instead, the release says, the providers inappropriately billed United HealthCare, the state's insurance administrator, and the state therefore incurred substantially higher costs for services, a total of $8 million.

Auditors have recommended that United HealthCare recover the money from the four ASCs and work with the state Department of Civil Service to develop methods to "prevent providers from taking advantage of the system and inappropriately waving patients' out-of-pocket costs," says the release. One of the major concerns about this action, aside from the claims themselves, is the potential for copycat suits by other states' payors.

SMP ad
One Facility's Advice for Bariatric Success

A year-and-a-half ago, the South Sound Surgery Center in Olympia, Wash., transitioned from a hospital-based outpatient surgery department to an independent ASC facility. General surgery made up about 30 percent of the multi-specialty center's procedures, so when a local bariatric surgeon, who has an office-based Center of Excellence, approached administrator Paul Wilkinson about adding laparoscopic banding, it was an easy transition to a successful program.

"The hospital was doing weight-loss procedures, and some of the staff shuttled back and forth between the [hospital and ASC], so some staff had experience with bariatric surgery," he says. "It's not that different from a lap chole on a procedure basis - one hour in the OR and same equipment, for the most part."

Mr. Wilkinson estimates South Sound Surgery Center spent about $10,000 on longer laparoscopic instruments and other surgical supplies especially for obese patients, and about $800 apiece for a couple heavier-weight recliners (the older ones were only suited for up to 250 lbs.). The ASC already had OR tables that supported weights up to 500 pounds and motorized stretchers that supported up to 300 pounds.

"We'd already had a patient-exclusion criteria of up to 300 pounds, so we didn't need to change our criteria. Most of our patients are actually young and healthy with the exception of their weight," says Mr. Wilkinson. "Our surgeon, if he's got an especially sick patient or one who weighs over the limit, he just does them elsewhere. He self-selects which cases to do here, and knows which are going to do well. Selection is a key."

Here are five more keys to patient safety and a successful program, according to Mr. Wilkinson.

1. Anesthesia on board. The anesthesia team that serves South Sound has worked with the bariatric surgeon to develop specialized protocols for the procedures, and has embraced the challenges, such as airway management and , posed by obese patients. "We have a team of 20 anesthesiologists who cover our ASC, and they had been doing these cases at the hospital, so it's not much of an adjustment for them," he says.

2. Developing patient expectations. The vast majority of patients are up and out of the center about three hours post-op. How can you improve your chances of that happening? Have the surgeon tell patients to expect such a length of stay, and have pre-op and post-op staff reinforce it. "When they're in the office, they're told they're not going to feel 100 percent, but they're going to feel well enough to go home a few hours post-op," says Mr. Wilkinson. "They spend about an hour in surgery, 45 minutes in PACU and another two hours in stage two recovery. You'll always have some who stay longer or shorter, but when you gear them toward that short stay, they're motivated to get out of there."

It helps that patients aren't slowed by heavy pain meds post-op: They are given liquid Lortab while in the facility and a prescription for the same to go home with.

"Patients just do better when they're able to relax at home in their own beds or on their own couches," says Mr. Wilkinson, noting that the system has led to excellent patient satisfaction scores - consistently 4.9 on a 5-point scale. "The ASC atmosphere appeals especially to our younger patient group."

3. Attention to staff and patient safety. Moving and transferring patients can pose an injury risk to both nurses and patients. Patients aren't pre-sedated ("unless there's a good reason," says Mr. Wilkinson), so they walk to the OR and get onto the operating table themselves. When patients are sedated post-op, a hover-pad is used to transfer them to a stretcher.

"That does help, when you consider that even a 250-lb. patient doubles the weight of some of our nurses," he says. "We also have two stretchers that are electronic, they move on their own, which prevents injuries from pushing the stretchers."

4. Guarantee the surgeon OR time. When you have a surgeon who's committed to his bariatric program and organized and motivated, reward him with proper block time. South Sound has two surgeons who perform weight-loss procedures, but one does the majority of them; in fact, it's all his practice consists of.

"We have five ORs, so we gave him a block once a week, and he typically does four cases in that block," says Mr. Wilkinson. "We've done five before, but that means the last patient might not be out of here till 5 or 6, so we try to keep it to four maximum. And doing that has added about 125 cases this year to a relatively new center."

5. Figure out finances in advance. Mr. Wilkinson says that, because he knew the costs of doing a lap chole in terms of staff, supplies and OR time, it was easy to determine the cost for laparoscopic banding and to charge accordingly.

"I added in the $10,000 in equipment costs and the per-case cost of disposables he requested and the laparoscopic band, and came up with a figure. The surgeon and I negotiated and came up with a fair market value payment," says Mr. Wilkinson. All patients are self-pay, so the surgeon collects the fee up front from patients, then pays South Sound Surgery Center and anesthesia out of that fee. "He pays cash up front, so we're happy. And he's happy because it's less than at the hospital."

June conf ad w Emily
News and Notes

McShane Construction completes new facility. McShane Construction Corporation announced it has completed a new, build-to-suit, specialized facility for Suburban Gastroenterology in Naperville, Ill. The 13,000 square foot medical office facility features an integrated ASC with two ORs, as well as pre- and post-operative care stations and consultation rooms. Eight examination rooms, laboratory facilities, doctors' offices, multiple reception areas, a patient education room, a business office and full administrative support areas are also included, among other rooms and features. Denver-based Marasco & Associates provided the concept design of the facility while Shive-Hattery served as the Architect of Record. RMK Design Associates of Colorado Springs, Colo., provided the interior design for the facility. Suburban Gastroenterology offers a comprehensive range of consultative and endoscopic services in the field of gastroenterology.

Update on June Orthopedic- Pain Management- and Spine-Driven ASC Conference: Tucker Carlson to speak. The agenda and program for this event is nearly complete. We will have a robust agenda with approximately 70 different presentations. Further, given the proximity to the '08 presidential race, we have secured political commentator Tucker Carlson as a lead or keynote speaker. Overall, it will be a terrific event.

We will again be offering CME credit for physicians and we expect to exceed last year's attendance of 480 at this event. Aside from sizable attendance, we receive great feedback on the quality of the audience.

Three senior level sponsorships available for June Orthopedic- Pain Management- and Spine-Driven ASC Conference. We are offering a new senior level sponsorship for this event that will be limited to three companies. The senior level sponsorship will ensure complete broadcast of your company and what it does throughout the event and leading up to. For example, aside from introductions at the start of meeting and at lunch, we will have huge signage related to the senior level sponsors, pay for a suite for three nights for the sponsor to use for some entertaining, provide 10 free passes to the event (for use by sponsor personnel and colleagues), include a double exhibit booth, reserve a table at lunch for the sponsor and take several other steps to help ensure senior level sponsors maximize the marketing benefits of the meeting.

If you reserve a senior level sponsorship in the next week-and-a-half, we can also highlight this fully in the conference brochure, which will be mailed to 125,000 to 145,000 people. The exhibitor-sponsor prospectus will be out in a week or so for reservations. We will provide it to ASC Review advertisers first and then prior exhibitors and sponsors.

Should you have questions regarding sponsoring or advertising, please e-mail Scott Becker, and he will refer you to the right person; or e-mail Jessica Cole, e-mail Emily Noyes or e-mail Ryan Kiernan. For editorial ideas or news and notes, please e-mail Stephanie Wasek.

RN experienced in bariatrics and business. We have a close colleague who is an RN who has been heavily involved in business and clinical leadership in bariatrics. She has an outstanding background and is seeking a regional vice president role or similar role with a company. If you have an interest, e-mail Scott Becker; he will have her e-mail you, as her seeking a role is confidential.

Jan./Feb. ASC Review's. We expect a record Jan./Feb. issue. It focuses on 40 companies to watch, an orthopedics and spine medical device market letter and bariatrics in ASCs. The issue will be distributed to 25,000 people, including approximately 19,000 surgeons and proceduralists. While we have spots available for advertising, advertising closes on Monday, and we have no further spots available for ASC development and management companies as advertisers for the first six months of 2008. We make exceptions for prior advertisers and firms with business relationships with McGuireWoods. Should you have questions about advertising in the Becker's ASC Review please e-mail Jessica Cole or call her at (312) 505-9387; e-mail Emily Noyes or call her at (773) 454-7445; or e-mail Ryan Kiernan or call him at (202) 337-1893.

Thank you, new and returning advertisers. We have added a a few recent advertisers that are terrific. We are also delighted that two of the leading companies in the ASC industry, Meridian Surgical Partners (contact Kenny Hancock) and Surgery Consultants and Surgery Center Billing (contact Caryl Serbin) have renewed their advertising for a full year again. We also welcome Larry Taylor and Practice Partners, and David Thoene and Titan Health Corp. Each are really good people. We have decided to not permit any further new development and management companies as advertisers except for these two through at least the first half of '08 unless the company is otherwise involved with our firm or the ASC Review.

ASC valuation services. Should you need ASC valuation help, please consider Todd Mello or Curtis Bernstein at Health Care Appraisers or Greg Koonsman or Elliot Jeter at VMG Health. Each does a ton of work in the ASC space.

Compounding for ASCs. For your ASC pharma needs, consider Brian Williamson and JCB Labs.

Outstanding equipment and product options. For your ASC equipment and product needs, please consider BBraun Medical and Alpine Surgical Equipment. Contact Matt Sweitzer or, at BBraun, contact Jim Ricchini.

Financing help.For financing, please talk to Anthony Mai at CIT Healthcare (thank you for your full-year ad renewal for 2008), Ken Seip or Ross Guilford at Citicapital, or Brad Stern or Jeff Fox at Marcap.

Free teleconference on healthcare issues in states. McGuireWoods is hosting a free teleconference on Dec. 12 targeted to state-specific healthcare issues. The program, "A Current View of North Carolina's Certificate of Need Program: Thoughts for Hospitals, ASCs & Other Providers," will be held Weds., Dec. 12, from 12:45 to 1:45 p.m. (ET). For more information about this event, or to register, please e-mail Andrea Green or call (312) 750-8896. You may also register online.

Companies to Watch

We are delighted to highlight the following companies in this week's E-Weekly.

Medical Facilities Corporation. Medical Facilities Corporation is a publicly traded company and a leading acquirer of majority interests in high quality specialty hospitals and ASCs. Founded and managed by physicians and with a market capitalization over $300 Million, MFC is the ideal partner for physician owners. MFC permits physician owners to retain local operational control while benefiting from being part of a larger prestigious healthcare organization. MFC currently owns an interest in four specialty hospitals with a total of 28 operating rooms, 51 recovery beds and more than 500 physicians and surgeons. Visit MFC's Web site or contact Steven Hartley at (866) 766-3590 x105.

SourceMedical Solutions. SourceMedical is the leading provider of outpatient information solutions and services, collectively serving ASCs, rehabilitation clinics and diagnostic imaging centers. Its unique end-to-end systems improve operational efficiency and cash flow while empowering healthcare facilities to deliver a higher standard of patient care. SourceMedical's solutions strengthen and enhance overall clinical, financial and administrative processes. More than 2000 ASCs and surgical hospitals nationwide use the company's Vision, AdvantX and SurgiSource solutions. SourceMedical continues to invest in research and development to maintain its leadership position with innovative products and services that satisfy the specific requirements of this unique market.

B. Braun. For 150 years, B. Braun has developed a rich heritage of knowledge and expertise for delivering innovative healthcare products, medical devices and programs designed to improve both patient and health-professional safety.

From a small-town apothecary founded in Germany in 1839, B. Braun has grown into a global organization with over 30,000 professionals worldwide -- and remains committed to translating customer needs into products with unmatched quality, cost-effectiveness, environmental responsibility and superior technology and safety. Using its Sharing Expertise initiative as a driving philosophy, B. Braun collaborates with customers, partners and employees to develop innovative products, services and education programs.

Pinnacle III. Pinnacle III specializes in the operational development, management, select management, and billing for ASCs. Whether you are a physician group, hospital or hospital joint-venture, Pinnacle III delivers proven success in both single and multi- specialty ASCs throughout the country. Pinnacle III is one of the most flexible development and management companies in the industry offering both equity and non-equity models. For more information, visit Pinnacle III online.

In addition, Pinnacle CBO -- central business office -- can provide a cost effective alternative while positively impacting your bottom line. Pinnacle CBO is staffed exclusively with certified coders and billing specialists dedicated to ASC billing and reimbursement. Our billing experts assist your facility by lowering A/R days, reducing overhead and improving cash flow while allocating every square foot of your premium medical space to revenue producing ventures.Expertise awaits. Please call Kim, vice president of business office operations at (303) 280-9101

*           *           *

If you have any questions on any of the items listed in this letter, please contact me at (312) 750-6016 or by email at

Very truly yours,
Scott Becker

Scott Becker, JD, CPA
(312) 750-6016

Becker's ASC Review
is a publication of
ASC Communications, Inc.
Quick Links
  • Becker's ASC home
  • Order the ASC Review
  • ASC Review
    online archive

  • Contact us toll-free: (800) 417-2035
    Upcoming ASC Conferences
    Key Thoughts on the Orthopedic Industry
    A Webinar from ASC Communications
    Dec. 5, 2007

    Improving Profitability and Business and Legal Issues for ASCs
    Presented by
    FASA and ASC Communications

    Oct. 23 to 25, 2008

    For advertising or exhibiting conference information, please contact (800) 417-2035. Or contact our media consultants:

    Jessica Cole
    (312) 505-9387
    e-mail Jessica

    Emily Noyes
    (773) 454-7445
    e-mail Emily

    Ryan Kiernan
    (202) 337-1893
    e-mail Ryan

    For more information about print and online stories, please contact editorial.

    Stephanie Wasek (484) 866-1292
    e-mail Stephanie
    Join Our Mailing List
    This email was sent to, by
    Beckers ASC | 77 W. Wacker Dr. Suite 4100 | Chicago | IL | 60601