Articles on Compliance Strategies

Featured Health Business Daily Story April 2, 2009

Conflicting CMS Guidance About Physician Signatures on Orders Creates a Quandary for Hospitals

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

By Nina Youngstrom, Managing Editor, (nyoungstrom@aishealth.com)

Despite CMS's recent clarification that physicians don't have to sign orders for outpatient diagnostic testing, there's doubt about the real-world application of this position for many hospital-based providers. Not only has CMS taken a somewhat conflicting position in another forum, but the Joint Commission appears to require physician signatures on all orders, sources say. And hospitals potentially could have problems with program-integrity auditors if their orders lack physician signatures.

"I think there is some discomfort for hospitals with this conflicting guidance," says Gloryanne Bryant, senior director of the corporate coding health information management compliance department at Catholic Healthcare West in San Francisco.

In the now-famous Transmittal 248 (Change Request 5971), which barred physician signature stamps, CMS conveyed the necessity of having physician signatures in written or electronic form. "Medicare requires a legible identifier for services provided/ordered," says the transmittal, issued in March 2008.

But Transmittal 94, implemented on Sept. 30, 2008, said that "while a physician order is not required to be signed, the physician must clearly document, in the medical record, his or her intent that the test be performed." And CMS emphasized this position in February 2009 by revising an MLN Matters article (MM 6100). It noted that language on physician orders was inadvertently omitted from the Internet version of the Medicare Benefit Policy Manual. CMS reiterated: "A physician's signature is not required on orders for clinical diagnostic tests that are paid on the basis of the clinical laboratory fee schedule" but that "the physician must clearly document in the medical record his or her intent that the test be performed."

"The transmittals seem counterintuitive and somewhat conflicting for the hospital performing and billing for these diagnostic tests, like lab testing," Bryant maintains.

For years, the foremost compliance challenge with physician orders for outpatient diagnostic tests performed at hospitals was the absence of any — or specific — diagnosis codes that would justify the medical necessity of the test (in Medicare's eyes). The recent focus has been on the lack of a physician signature on the order itself. On its face, there's good news in the fact the recent transmittals allow the diagnostic test (often outpatient lab work) to proceed without a physician signature as long as there's documentation in the copy of the medical record maintained by the physician, Bryant says. She contends that the reason for this could be so that missing signatures don't delay care when the back-up documentation sits in the physician office medical record.

However, CMS has said something different in its guidance on signature stamps. And stating that the signature isn't needed on orders doesn't appear to coincide with Joint Commission standards, which are a proxy for Medicare certification.

"When patients come to the hospital for outpatient lab services, and they get registered and the urinalysis or CBC laboratory test is performed, the actual order that the hospital receives may not have a physician signature. The hospital would contend that this outpatient encounter for lab work does create a medical record, so one could interpret this to mean that the hospital order needs a signature. But CMS appears to be focusing on the documentation that is at the physician's office," she says.

RAC Challenge Is Feared

Some providers say it also appears that CMS is not taking into consideration the fact that the Joint Commission has to have everything in the hospital record signed, and a lot of compliance people interpret outpatient lab and radiology encounters as creating a medical record.

So providers perceive a conflict with one set of Medicare transmittals saying that you don't need the signed order and another transmittal that says everything needs a signature, Bryant tells RMC.

Also, it's unclear whether recovery audit contractors (RACs), Medicare administrative contractors and other auditors will challenge hospitals about this. During the RAC demonstration, the validation of physician orders and signatures was audited. Hospitals in the past have expressed frustration about relying on medical records in the physician's office for evaluations of their own program integrity.

For example, Bryant says, "if the government audited the hospital and there was no signed order in the hospital's outpatient patient record for the testing that was provided, coded, billed and paid by Medicare, it's then expected that the intent and other supporting documentation will be in the physician's version of the record and could/should be retrievable."

Another concern is potential conflicts between the position staked out by CMS — that no signature is necessary on orders that patients bring to the hospital when showing up for diagnostic tests — and regulations at the state level that may require this. Compliance experts generally advise following the mandate or guidance that is most restrictive (i.e., whichever requires a signature on the order).

Physician signatures have already been a problem with the Comprehensive Error Rate Testing (CERT) contractor. Last year, during an audit of diagnostic tests, the CERT contractor told hospitals, labs and hospital-based physicians that they faced potential recoupment unless they could provide signed requisition orders. Eventually, CMS told the CERT contractor, a major program-integrity player, to back off. But the experience left hospitals with the impression that they can't count on audit terms to be fair.

CMS's policy leaves hospitals somewhat at the mercy of physicians in terms of compliance. If hospitals face audits of their diagnostic tests, overpayment determinations will rest partly on whether documentation in the medical record back at the physician's office supports "his or her intent that the test be performed." That's a little disconcerting considering how many claims have been disallowed by program-integrity contractors for lack of adequate — or any — documentation.

Though a CMS official has said that a physician's office has the paperwork that hospitals need to support outpatient diagnostic services, it's doubtful this will stand up to Joint Commission accreditation standards, hospital officials say. And they are concerned that auditors may still hit hospitals for the lack of signed orders or missing/inadequate physician documentation in their offices.

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