Medicare Signals a Change of Course in Physician Supervision Rules: What's NEDTS?

For the last two years, the battleship USS Medicare has been steaming its hospital passengers into uncharted and dangerous waters. The danger stems from the new rules on physician supervision in hospital outpatient departments. Although both the danger and the location remain, there are—at long last—signs that the ship may be changing course. Hospitals are not out of trouble yet, but the prospect of landfall in a place where hospitals, physicians, and Medicare can coexist peacefully seems at least within the realm of possibility.

On Aug. 3, 2010, as part of the 2011 Hospital Outpatient Prospective Payment System proposed rule, Centers for Medicare & Medicaid Services (CMS) will formalize two important concessions on its controversial rules requiring physician supervision in hospital outpatient departments.

First, not all hospital outpatient therapies require direct supervision at all times the procedure is under way. Second, CMS proposes to define a list of “nonsurgical extended duration therapeutic services” (NEDTS) that can be performed with general supervision by a physician. General supervision does not require the physician to be present in the hospital or offsite provider-based department during the entire procedure. Although CMS received pleas to include chemotherapy on the NEDTS list, it declined.

Hospitals have 60 days after the publication of the Aug. 3 proposed rule to submit comments.

CMS’s most recent tack

CMS’s most recent change in position involves something old and something new. The old concept is “general” supervision by physicians, which does not require the physician’s presence at the site where the procedure is being performed. The new concepts are a limited number of “nonsurgical extended duration therapeutic services,” which require direct physician supervision only at the beginning of the procedure. To put the changes in context, it is necessary to revisit Medicare’s direction (and directives) of the past two years.

Recall that Medicare is a defined benefit plan. Two of the benefits are “services incident to the services of a physician” and “hospital services incident to the services of a physician.” The past two years have seen Medicare importing the rules that applied to the former to the latter. In other words, the rules that govern physician supervision of their staff in physician and group-practice offices have been applied to hospital staff in outpatient departments.

A “clarification” that CMS issued two years ago caused significant friction. At the time, CMS asserted that all hospital outpatient therapies must have “direct” supervision by a physician in order to be compensable by Medicare. Direct supervision requires not only the physician’s presence in the hospital or outpatient department, but also the physician’s ability to step in “immediately” and take over or change the therapy.

One of the best scenarios to illustrate the mischief that rule creates is a chemotherapy program in a rural hospital. Rural hospitals often do not have a patient base that is sufficient to justify the presence of a full-time oncologist. Instead, oncologists from a nearby big city often visit the rural hospital for a day or two. The physicians see patients and define chemotherapy regimens, which the hospital’s oncology nurses implement during the course of the week. In some cases, hospitals have not only received accreditation for the oncology service, but also recognition or citations for superior care.

The problem with CMS’s original “clarification” is that a compliant rural hospital would have to shut down its chemotherapy program. The unrealistic alternatives are to incur expenses to pay for physician supervision or find a physician who would assert an expertise (chemotherapy) that he or she did not have.

Possible new NEDTS procedures

The list is of NEDTS is short—16 codes describing nonchemo infusion, injection, or observation—but CMS is soliciting comments on whether other procedures should be included. CMS identified a four-step process that it used to identify the initial procedures on the list:

1. The procedure takes a long time, perhaps past normal business hours
2. Nurses and other auxiliary personnel normally provide much of the supervision
3. The procedure is low-risk
4. The procedure is not surgery

For procedures that CMS identifies as having these characteristics, direct physician supervision is necessary only at the beginning; after that, general supervision is permitted, which does not require the presence of the physician.

The rural chemotherapy question

The new NEDTS list is helpful, but obviously does not go far enough. CMS has still not solved the rural chemotherapy dilemma, but it may have opened the door to the solution just a crack. The following chart illustrates the current positions of the regulator and regulated on the issue.

CMS’s position is not based on any empirical evidence, while rural hospitals have an extended track record of providing quality chemotherapy care without an oncologist onsite. Given the four criteria identified, chemotherapy ought to qualify. If those hospitals, and their accreditation agencies, do an effective job educating CMS and documenting the real-world experience with chemotherapy nurses implementing chemotherapy regimens that oncologists define, the end of the long journey may be in sight.

Possible solutions regarding physician presence

However, getting chemotherapy added to the NEDTS list will only be the first step. With respect to requiring a physician to be present when an outpatient procedure is initiated, there are at least two potential solutions. The first is to eliminate the concept in cases, such as chemotherapy, where hospitals can demonstrate that starting the procedure is safe without a physician being present. (Note also in CMS’s position above that it does not identify the initiation of the chemotherapy as the point in time when physician expertise is likely to be needed). The second option is for CMS to confirm that the presence of an emergency-room physician is all that is needed to prepare for and begin the chemotherapy session.

These CMS concessions are the third chance to put the ship back on a safe course, so let’s hope a realistic set of rules results.