Practice Management Q&As

August 19, 2005

Limiting HMO patients; fee splitting; payroll rules

Closing your practice to new HMO patients

Q One of my HMO contracts states that if I close my practice to new managed care patients, I can't accept the insurer's fee-for-service patients either. Is this legal?

A Yes. Even if your contract didn't contain this provision, many state laws prohibit healthcare providers from discriminating against a plan's HMO members.

Q An equipment vendor approached me with the following proposal: If I use the vendor's equipment and technical services in any procedure, we'll split the billing. I'll bill for the service's professional component, and the vendor will bill for the technical component. If the patient's insurance carrier refuses to pay for the vendor's services, he says he'll just write off the charges. Is there anything wrong with this arrangement?

A Yes. Some states would view such an arrangement as illegal fee splitting. Moreover, if the vendor writes off a fee billed to the carrier without attempting to collect it from the patient, it could be considered insurance fraud, and, depending on the patient, could be deemed Medicare fraud, as well. If you have the volume, you should simply lease the equipment.

Must part-timers be given vacation?

Q I'm just starting my practice and can't afford to offer benefits. So I plan to hire only part-time help. Am I obliged to give them vacation time?

A No. There are no laws that require private employers to offer benefits like health insurance or retirement plans, or to pay them for vacation, holidays, and sick days. So the cost of benefits shouldn't be the reason to restrict yourself to part-timers.

Payroll rules you must follow

Q What information should we include in our payroll records? How long must we keep the information on file?

A For all employees, you should have a record of the following: full name, Social Security number, home address, sex (to ensure compliance with the Equal Pay Act), occupation, when the employee's workweek begins (day of the week and time of day), total wages for each pay period, date a paycheck is issued, and the pay period it covers.

For employees you pay by the hour, you'll need records of their regular hourly pay rate, the number of hours worked each day, daily or weekly straight-time earnings, overtime pay, and any salary additions or deductions for each pay period. List each deduction, its amount, and the date it was taken.

Also have on hand a copy of any agreement-such as an employment contract or collective bargaining agreement-that substantiates variations in pay.

Federal law requires that you keep these records for four years. Your state labor department can tell you if your state mandates a longer retention period. Many experts recommend that you keep payroll records for seven years.

When a Medicare audit finds a mistake

Q If a Medicare audit finds errors in my billing, can I avoid fines by demonstrating that my billing service was responsible for the mistakes?

A Yes, but you'd probably have to secure a written admission from your billing service that the mistake was its fault before you'd be home free.

Do you have a practice management question that may be stumping other doctors, too? Write PMQA Editor, Medical Economics, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to mepractice@advanstar.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.