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PPMs vs. MSOs

By Robert B. Burleigh, President, Brandywine Healthcare Services, Malvern, Pa.

Mr. Maruca's analysis is both thorough and well reasoned, and offers a complete explanation of the OIG's recent Advisory Opinion. However, it should be noted that since the release of 98-4, there have been many industry observers who have confused the differences and distinctions between PPMs (Physician Practice Management) organizations, MSOs (Management Service Organizations), and billing service bureaus/billing companies. My firm, as well as the International Billing Association (IBA) have been flooded by calls from practices, hospitals, and billers concerned that the OIG is now making or changing law and regulations which have long accepted percentage-of-collection arrangements, and which are adequately addressed and approved in 42 CFR and Section 3060 of the Carrier's Manual.

It is important to make the distinction that 98-4 applies to PPM organizations, but NOT to so-called third party billers, even though some billing companies and MSOs contribute to the confusion by referring to their services as "practice management." I agree with Mr. Maruca that the opinion addresses the potential for "mischief," but only when the provider of billing has a more direct connection to the overall prosperity of the practice. I would add that the OIG's recent enforcement efforts have tempered client's and biller's, alike, willingness to stretch the limits of the system, assuming that some have done so in the past.

As the government, and the rest of the healthcare system, make billing more complex, technically challenging and dependent, and risky for providers, more and more practices and some hospitals are seeking to outsource these tasks. A results-based economic arrangement has always been expected by the buyers, and willingly accommodated by the vendors. We do not believe that 98-4 was written to extend, even by inference, beyond the specific facts and circumstances of the individual case addressed by that opinion, and generalization of its meaning and importance would be an error.

IBA has taken the additional step of confirming with HCFA and OIG officials that 98-4 does NOT infer any federal plans to propose changes to 42 CFR and/or Section 3060, as they apply to commercial, third party billing arrangements. While the OIG has the tendency to find cause for concern in almost every business relationship, they do not appear to be headed toward upending a nationally used, deeply rooted basis for doing business.

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