AANS Neurosurgeon | Volume 29, Number 1, 2020


Share the Wealth: Extending Valuable Neurosurgical Care and the Legal Considerations Thereof

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It has been well publicized that the American health-care system faces a unique challenge in the coming years — increasing demands for health care and a decreasing supply of health- care providers. Multiple reports published by the Association of American Medical Colleges (AAMC) from the last decade have tracked both physician supply and physician demand. In its most recent report, the AAMC projects that surgical specialties will experience the highest increase in demand (3.2 percent) (1) as a result of increased access to care from extended coverage, to be implemented pursuant to the Patient Protection and Affordable Care Act, as amended by the Health-Related Portions of the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA). Conversely, the AAMC estimates a physician shortfall of 46,100 to 90,400 by 2025, with the greatest percentage shortfall occurring among surgical specialties including neurosurgery (2). Accordingly, unless proactive measures are implemented, the scarcity of neurosurgeons will increasingly be a driving factor in establishing the “intrinsic” value of such an important surgical specialty. 

Furthermore, changes in the American health-care system driven by the ACA also demonstrate the “quantifiable” value of the neurosurgery specialty. The ACA called for several changes to hospital and physician reimbursement models that increasingly shift the risk of care to providers. As a result, providers are forced to maximize those service lines where revenues exceed costs, while simultaneously trying to find capital for infrastructure improvements to create efficient ways to provide care. 

Surgical specialties, such as neurosurgery, can be one such avenue for revenue maximization, offering one of the highest profit margins per procedure and bringing in approximately $1.6 million in business each year (averaging $40,000 per procedure) by some estimates (3). As hospitals continue to see a decline in cash on hand and look to translate value into dollars, such a profitable, yet essential, surgical specialty will continue to be a valued commodity in the American health-care marketplace. 

As highlighted in further detail below, the factors driving the intrinsic and quantifiable value of the neurosurgeon can similarly achieve advances in patient care. While access to a neurosurgeon may become ever more costly, as salaries average $670,000 (4), the consolidation and affiliation strategies occurring among hospitals and physician groups as a result of the ACA are creating networks of care settings through which neurosurgeons can provide their services to communities that may not regularly require, or cannot afford, a neurosurgeon. 

Legal Overview
In any arrangement involving physicians or physician groups and hospitals, there are many legal considerations to keep in mind. In addition to licensing and patient responsibility matters, there are two notable federal laws governing the business relationship between the parties.
Broadly, the Ethics in Patient Referrals Act of 1989, as amended the “Stark Law” (5), governs the financial relationship between a physician and any entity to which the physician may make a referral for certain reimbursable services identified as “designated health services,” which include inpatient and outpatient hospital services. Accordingly, any financial relationship (e.g. compensation or ownership) must meet the requirements of a Stark Law exception, or referrals by the physician to the hospital will be prohibited. Similarly, remuneration, such as compensation between physicians and hospitals is subject to the federal Anti-Kickback Statute (6) and should also satisfy the requirements of an applicable safe harbor, otherwise the services referred by either party may not be reimbursed by federal health-care programs. Many states have implemented similar or more restrictive versions of the Stark Law and Anti-Kickback Statute, further complicating the legal framework for such arrangements. 

While the specific requirements of each Stark Law exception and Anti-Kickback Statute safe harbor differ, the overriding spirit of these laws requires a fair market value compensation arrangement, blind to the parties’ business relationship through referrals or otherwise.  Accordingly, this legal framework shifts the focus on value from the “quantifiable” to the “intrinsic” when setting forth all compensation arrangements. Although health-care regulations can oftentimes frustrate legitimate business objectives, there are several models that have shown that there are legal and fiscally responsible ways to bring specialist services to communities that need them most. This article will briefly summarize two of the models currently being used in rural areas of the U.S. and the legal considerations for each. 

Regional Arrangements
As the physician shortage continues to amplify, some health systems have begun to address the issue through arrangements where a specialist provides services at various locations throughout a geographic region (e.g. the “traveling physician”). While access to specialists is necessary for all communities, there may not be a high enough demand to support the cost of a full-time physician in a single location. Accordingly, by providing services at various locations, the cost can be shared among the various participants, and the communities’ needs are still met. 

For example, the Michigan Rural Healthcare Preservation (MRHP) is a physician-driven initiative aimed at bringing quality medical care to Michigan’s rural communities (7). When MRHP was formed, many of Michigan’s rural independent community hospitals were in dire financial straits, and there was a concern that patients’ only option would be to seek care at distant urban facilities, which may disincentive care and exacerbate otherwise treatable conditions due to the stress of traveling. In response, the MRHP initiated a program to send surgeons to the various rural independent community hospitals to practice neurosurgery, among other specialties (8). In order to support the program, the hospitals had to invest in infrastructure, such as technology and equipment upgrades, and additional staff on the days the surgeons were to be in town, but benefits have purportedly outweighed the expenses as these hospitals are able to offer services they otherwise could not to the community, resulting in increased revenues and patient volume (9).

There are several ways such an arrangement may be documented among the parties, but a few regulatory considerations are common to any approach. Each of the “traveling surgeons” would need to be credentialed and granted medical staff privileges at each of the hospitals. There would also need to be an allocation of responsibility for the post-operative care of patients once the traveling surgeon leaves the area. As to reimbursement, the parties must ascertain the manner in which the particular service is to be paid. A bundled payment for the procedure would require the hospital and physician to determine, in advance, the appropriate portion of the fee to be allocated to the surgeon for his or her services. In accordance with the Stark Law and the Anti-Kickback Statute, such allocated portions must be at fair market value and neutral to the volume of business the surgeon generates for the hospital. Where the facility fee and surgical fees are billed separately, the regulatory risk in that respect is mitigated as the parties do not exchange money. 

In addition to payment for services, the parties must be cognizant of the non-monetary benefits exchanged. Generally, the low-value items and services provided to medical staff at the hospital, such as meals and parking, are except from Stark Law scrutiny under the “medical staff incidental benefits” (10) exception, for calendar year 2015, up to $33 in each instance (11). However, care must be taken to ensure that any such benefits do not exceed the maximum value in a given year and that the types of benefits provided are appropriately covered by the exception. 

Another strategy continuing to garner attention as technologies continue to develop is telemedicine. This term encompasses a wide spectrum of activities, including teleconferencing for educational purposes (e.g. webinar lectures), interfacing for diagnostic purposes (e.g. consultation or patient evaluation), and, most recently, remote device connectivity for treatment purposes (i.e., remote surgical intervention) (12). Rural communities in particular have begun to utilize telemedicine as a means of giving patients access to the specialty provider expertise typically concentrated in urban areas. As the physician shortage continues to become more pronounced, similar strategies may become necessary among urban care centers as well. Internationally, countries such as India, have begun to rely upon telemedicine as a means of addressing the needs of its large yet geographically disbursed population (13). One study, particularly focused on neurological emergencies, found that the availability of specialists via teleconference (ranging from a simple telephone conversation to video-conference equipment permitting real-time consultations and patient evaluation) demonstrably improved the local medical staff’s ability to promptly and correctly diagnose the patient’s condition, quickly and accurately read scans and administer appropriate treatment, all of which serve to improve patient outcomes in such emergencies (14).

In the U.S., telemedicine’s role in surgery has taken many forms. In some cases, post-operative care is managed via means of remote observation. For example, in the traveling physician model discussed above, telemedicine could be incorporated to include remote observation of the patient post-operatively by the physician, such as through remote conferencing with the hospital staff, with the patient directly or via a device application that can regularly send the patient’s vitals and other relevant stats to a physician’s mobile device. In other instances, patient evaluations are being conducted via “robotic” technologies. Lincoln Hospital, in Davenport, Wash., utilizes a robot remotely controlled by a physician to conduct real-time consultations, saving patients the hassle of needing to travel for evaluation by a specialist that is not accessible in his or her community (15). The robotic technology allows the physician to control the device to conduct an examination and render the diagnosis and treatment plan for the patient, in collaboration with on-site hospital staff.

The legal complexities of telemedicine are vast and, in many respects, uncharted. States generally regulate the practice of medicine, but in many cases, the applicable statutes do not contemplate the provision of medical care outside of the face-to-face setting. The notable areas where the law continues to strive to catch up to real-world practice are licensing, disciplinary authority and liability and prescribing authority (16). Tangential to licensing, where physician supervision is required for ancillary staff, the telemedicine arrangement is unable to fulfill the requirements for direct or personal supervision due to the confines on the physician’s presence and availability. Accordingly, these limitations may restrict the practice areas in which telemedicine approaches may be implemented.

In addition to the considerations specific to the physician providing telemedicine care, this type of practice arrangement raises important legal considerations between the hospital and the physician. As a preliminary matter, credentialing a physician who does not practice at the hospital has proven to be a unique challenge. Further, identifying the responsible party for the patient and liability issues, such as malpractice coverage, can become complicated and implicate immense financial risk. Lastly, reimbursement for telemedicine services is constantly evolving (17). As noted above, prior to rendering services, the parties must set forth their responsibilities and determine the method of payment for services within the confines of the legal framework and available means of reimbursement.

The value of a neurosurgeon to a community is demonstrable, and the declining availability of such services continues to push providers to find unique ways to address patient needs. While the medical community continues to advocate for increased resources to train residents and increase the physician ranks (18), community hospitals in need of specialty physician services must resolve to find collaborative, but legal, means to bring these much needed services to their patients. The ultimate solution will be collaboration among physicians, hospitals and government, but the constant will continue to be the need for medical specialists in every community. The foregoing is not intended to be legal advice, and any physician, physician group or hospital contemplating an arrangement should consult local legal counsel familiar with the applicable state and federal laws.

1. The Complexities of Physician Supply and Demand: Projections from 2013 to 2025, HIS inc. (Mar. 2015)
2. Id.
3. Adam Smeltz, Hospitals Bank on Neurosurgery Procedures to Boost Bottom Line, TRIBLIVE (Feb. 7, 2015), https://triblive.com/news/editorspicks/7643039-74/neurosurgery-upmc-hospitals#axzz3sHL3XhZj.
4. Id.
5. 42 U.S.C. § 1395nn.
6. 42 U.S.C. § 1320a-7b
8. Candi Helseth, Technology Widens Care Options for Rural Hospitals, THE RURAL MONITOR (Feb. 12, 2014)
9. Id.
10. 42 C.F.R. § 411.357(m)(5).
11. William O. Jackson, CMS Updates Non-Monetary Compensation and Medical Staff Incidental Benefit Limits under Stark Law, NAT’L L. REV. (Dec. 18, 2014)
12. See, e.g., Bethany Wesley, The “Heart” of the Hospital: Sanford Unveils Plans for 24-hour Cardiology Center; Also Is Adding Robotic Surgery, THE BEMIDJI PIONEER (June 15, 2012)
13. Virendra Deo Sinha et al., Telemedicine in Neurosurgical Emergency: Indian Perspective, 7(2) ASIAN J. NEUROSURG 75 (Apr.–June 2012)
14. Id.
15. Sandra Hosking, Using “Hawkeye” to Augment Patient Care at Rural Hospitals, J. BUS. (Feb. 4, 2011)
16. Latoya Thomas and Gary Capistrant, STATE TELEMEDICINE GAPS ANALYSIS, AM. TELEMEDICINE ASS’N (May 2015)
17. 2015 State Telemedicine Legislation Tracking, Am. Telemedicine Association (July 7, 2015)
18. See Alex B. Valadka, Neurosurgeons Descend on Capitol Hill to Fight for Patient Access to Specialty Care, MORNING CONSULT (July 15, 2015); H.R. 2124/S.11480


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Dave Anderson | January 24, 2019 at 6:57 pm

It would be good for a community to have a neurosurgeon. If they can’t afford it, maybe they can ask for the funding for it. That way they don’t have to go too far to see a neurosurgeon.