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Surgical monitoring firms receiving scrutiny for doctor deals
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A technician demonstrates how to use intraoperative monitoring equipment. New companies have been springing up in Texas in the past year that specialize in neuromonitoring patients during surgery.
By Mary Ann Roser
Posted Sep 4, 2016 at 12:01 AM Updated Sep 25, 2018 at 8:36 AM

Some companies that insert needles to monitor a patient’s nervous system during a delicate operation are setting up complex business deals with surgeons, raising concerns about sky-high bills and potential overuse of the monitoring.
The lead lawyer for Aetna, the third-largest health insurance company in Texas, said he is concerned about the moneymaking arrangements, along with their potential to drive up health coverage costs for those with commercial insurance.
“When people wonder why insurance is so high, this can contribute to it,” said Paul Weller, executive director and senior counsel for Aetna’s litigation team. “There are a lot of providers that follow the rules ... and there are always going to be bad actors who are going to take advantage of it.”
From what he has learned, Weller said, “some of the medical necessity of the monitoring is in question,” but Aetna hasn’t determined whether any of the arrangements are fraudulent. “You’ve got to look at the facts of the specific case,” he said.
Brain and spine surgery are among the operations that generally require nervous system monitoring. Surgeons, hospitals and surgery centers contract with companies that provide equipment and trained staff who place needle electrodes in the patient’s scalp, skin and muscles. The monitoring is done to help avoid neurological damage. The risk of injury from a needle insertion is small, but infection, bleeding or worse complications are possible.
Weller and others said they are aware that some neuromonitoring companies are setting up business arrangements with surgeons that enable billing at far higher rates because they aren’t in the patient’s health insurance network. The surgeon gets a share of the proceeds from the out-of-networking billing, which Weller called “the linchpin to the scheme.”
In the past couple of years, Aetna has sued hospitals and other facilities for alleged fraud involving out-of-network billing and kickbacks. Around the country, some compounding pharmacies, surgery centers, home health agencies and labs, including those that do regular blood tests and those that perform drug toxicology screens, offer physicians a chance to “invest” with the understanding the doctor will be financially rewarded for referring patients. Those facilities or their affiliated health care providers then typically bill at far higher out-of-network rates.
The federal government, which has been stepping up prosecutions, has created health care fraud strike forces. During the first three weeks of this month, the U.S. Justice Department prosecuted 32 such fraud cases — a fourth of which involved kickbacks.
The Coalition Against Insurance Fraud began to focus on out-of-network billing and the impact on patients last year, coalition Executive Director Dennis Jay said. In a common scenario, a patient goes to a hospital in their health plan but is treated by an emergency physician or consulting doctor who is outside the patient’s network. Often the consumer doesn’t even know that has happened until the bill arrives, Jay said.
Such “surprise bills” have been getting media attention as health care costs continue to rise.
“We’re planning a consumer education program about asking the right questions so as not to get hit with surprise, out-of-network charges,” Jay said. “A lot of insurance plans have been eating some of these costs.”
The charges can be up to 50 times higher than the in-network charge, he added. Some companies don’t bill Medicare, Medicaid and other government-sponsored coverage to avoid violating the federal Stark Law, which prohibits kickbacks.
Texas has an anti-kickback law that covers commercial insurers, but not all states do.
Neuromonitoring in Texas
Weller and others said they don’t know whether the neuromonitoring-surgeon deals are legal because payment arrangements are often carefully crafted and must be fully dissected to understand how they work. Whether the billing is ethical “is a different matter altogether,” said Dr. George Lee, president of the American Society of Neurophysiological Monitoring. “We don’t condone anything that is illegal or unethical.”
Lee, who has a neuromonitoring company in Nashville, Tenn., said he has been aware of the business arrangements for several years and is concerned about what he’s been told. Some of the practices “may constitute a kickback, but we are not in a position to investigate that,” he said of the organization.
That would be up to such regulators as the Texas Medical Board. The board’s executive director, Mari Robinson, said she couldn’t recall disciplining a doctor for having a financial interest in a neuromonitoring company. The board, however, is looking into such a complaint, a spokesman said.
Under state law, “you can’t agree to accept money for soliciting patients,” Robinson said. Further, doctors who refer patients to facilities in which they have a financial stake must disclose that interest to the patient.
“It shouldn’t be up to the patient to ask if the surgeon owns part of the company,” she said.
Some who are familiar with the neuromonitoring industry questioned the growth of companies and affiliates that might have connections to surgeons.
The American-Statesman searched online business filings maintained by the Texas secretary of state’s office and found a large increase in the number of neuromonitoring companies that were created in the past two years.
More than 40 companies — most of them neuromonitoring firms and several that name doctors among the executives — share the same address in San Antonio, with several sharing an address in Dallas. Many of the companies have ties to the same individuals. An official who returned a call said she didn’t know how many are affiliated nor was she aware of any partnerships with surgeons.
Another company established in Houston in 2011 has created 10 more monitoring companies this year with the same name in Texas and several other states. An official with it didn’t return calls seeking information on the company’s growth and business practices.
Cost to consumers
Several experts cited the 2010 federal health care law as a possible reason some doctors might seek moneymaking opportunities. As the law seeks to move payments from how many procedures are done to the quality of care provided, some doctors are feeling the squeeze on earnings.
“Physicians feel the pressure, and they feel entitled to make more money after all of the years of school and sacrifice,” said Peter Chatfield, a partner at Phillips & Cohen LLP, a Washington, D.C., firm that represents whistleblowers. “There are a lot of kickback schemes.
“The people playing by the rules get shut out ... and it’s costing the taxpayers a huge amount.”
Financial incentives can impair a physician’s judgment, said Chatfield, who wasn’t familiar with neuromonitoring company-surgeon partnerships. Doctors might be induced to overtreat patients, who end up paying for care they don’t really need. In some cases, doctors are paid handsomely for doing nothing more than providing a lab or some other facility with a steady stream of patients.
Charles Oppenheim, a partner in a Los Angeles firm that represents physicians accused of health care fraud, cautioned about passing judgment on the payment arrangements.
“If these doctors are carefully following the advice of lawyers, then presumably they should be OK,” Oppenheim said. “There’s no requirement that says a doctor has to be in network, and there’s nothing to me that says it’s unethical for a doctor to earn a lot of money.”
To protect their wallets, consumers should ask whether procedures or services are billed in or out of network, said Lou Saccoccio, CEO of the National Health Care Anti-Fraud Association, which provides education and training. If it’s out of network, they need to ask why, he said.
Even in cases in which the provider waives the patient’s share of costs, consumers still should ask because higher costs to insurers result in higher premiums for all, Saccoccio said.
The cost of health care fraud amounts to tens of billions of dollars a year, he added.
“This activity does nothing to enhance health care outcomes,” said Jay, with the anti-fraud coalition. “But it’s adding on to the national health care tab. Every time that goes up, there are a few thousand people who are not going to get insurance or have access to health care. Individually, it’s putting some people into financial ruin.”