A Thorny Question: Who is Responsible for Transcription Costs?

Radiology practices and hospitals historically have operated under the assumption that the cost of transcription is part of the technical component, and therefore the responsibility of the hospital, or the entity that owns the technology. While there have been periodic attempts by hospitals to charge radiologists for transcription services in the past, radiologists, attorneys, and the ACR have successfully overcome them by raising the specter of anti-kickback–statute violations. In response to a inquiry on the subject by a rural hospital, however, the HHS OIG recently issued an advisory opinion, OIG Advisory Opinion No. 07-19, that specifically states that transcription costs are included in the professional fee, according to W. Kenneth Davis, Jr, JD, partner in the law firm of Katten Muchin Rosenman LLP, Chicago. “This one scares me, folks,” Davis told a gathering at the RBMA-sponsored Managing a Radiology Business from the Top: Physicians & Administrators on February 22, 2008, in San Francisco. According to Davis, the OIG opinion was issued as a response to a rural Critical Access Hospital (CAH) that specifically asked whether it would violate the anti-kickback statute if it charged the radiology group for transcription services.

“The OIG said, ‘No, it’s not going to constitute an anti-kickback violation.' Essentially, they said, ‘Go forth and charge for transcription.'” —W. Kenneth Davis Jr, JD

“That is what the OIG has said to people,” Davis continues. “They’ve said, 'This is not a reimbursement issue, this is only an anti-kickback issue, and it was critical to our evaluation that this was a rural CAH that was doing this.'” There are two problems with the opinion, Davis believes. While the OIG acknowledges that it does not have jurisdiction over reimbursement issues (it explicitly relied on advice from CMS), its opinion has, in effect, reversed its previous position that transcription is reimbursed under the technical component. A February 18, 1993, letter from the Associate General Counsel of the OIG to the Counsel for the ACR specifically states that if a hospital demands payment for transcription, the anti-kickback statute could be implicated. “[The OIG says] it [does not render decisions on] reimbursement, and yet it very clearly says the transcription is reimbursed under the professional component,” Davis notes. He quoted the OIG opinion, which reads: “Thus, the preparation of the written report for radiology services furnished to hospital patients is part of the covered professional services that is reimbursed to the radiologist under Medicare Part B, and the radiologist is obligated to prepare a written report for such patients in order to receive Medicare reimbursement.” The second problem with the opinion, Davis believes, is that while informal, oral comments from the OIG on the opinion have suggested that it based the decision on the hospital's being a CAH, there is only one mention of this focus in the seven-page decision (and, even then, it’s mentioned only in a footnote). Since the opinion was published, Davis has already experienced an instance in which a decidedly nonrural hospital located in a prosperous suburb of a major Midwestern metropolitan area expressed concern that not charging the radiology group for transcription could constitute a violation of the anti-kickback statute. To date, the hospital has not demanded payment, but Davis queried whether that might be the next step. “I would keep an eye out for this,” Davis says. “I am concerned that hospitals are going to use this. I’m not suggesting that they will do this just to find another buck, but there are plenty of hospitals that truly want to do things pristinely from a regulatory standpoint ,and they’ll say, 'This kind of boxes us into a corner. This kind of ties our hands. We don’t see how we have any other choice but to have to charge you.'” In 1996, attorney Hilary Huebsch Cohen, JD, Torrance, Calif, wrote an article in the November RBMA Bulletin explaining why hospitals could not pass through the cost of transcription to radiologists. She cites an October 1991 Management Advisory Report from the OIG and also quotes the February 18, 1993, OIG letter to the ACR to support the position that the cost of transcription rightly is reimbursed within the technical component. The letter stated: “…[i]f a hospital demands payment from a hospital-based physician ostensibly for services that the hospital has already been reimbursed for through the prospective payment system, the anti-kickback statute may be implicated.” The ACR position statement on transcription clearly states on its Web site that:

• “Transcription costs for radiology and radiation oncology services are reimbursed under the technical component and are never included in the professional component. The professional component for radiology services paid under the Medicare Physician Fee Schedule (MPFS) is not intended to cover transcription costs.”
• “For radiology services provided within hospitals, the transcription costs are part of the hospital cost and not included within the fees set by the MPFS.”
• “Medicare pays for a hospital’s transcription costs under its inpatient prospective payment system (Diagnosis-related Groups, DRGs) or under its outpatient prospective payment system (Ambulatory Payment Classifications, APCs) as part of the hospital cost reporting system.”
Davis recommends that all practices encountering this issue contact and inform the legal staff at the ACR.