The Importance of Physician Orders in Health Care

In my last article on physician orders, I more or less ranted about the lack of a clear regulatory definition of physician orders. Yet, physician orders serve a variety of important purposes including communicating the physician’s direction for ancillary services and required diagnostic tests and securing the ability to receive reimbursement for services that flow from the physician’s encounter with the patient. The systematic use of physician orders also serves as proof that the physician is directing services to the patient and that conditions of participation of the facility, which require a physician driven process, are being complied with on a systematic basis.

Physician Orders as Conditions of Participation

Medicare law draws a distinction between conditions of participation and conditions of payment. Conditions of participation are compliance items, failure of which can result in corrective action and citations on survey. Failure of physician orders can result in survey deficiencies. The good news here is that a facility will normally be able to take action to correct a cited deficiency. If the failure of physician orders is systematic, other sanctions can attach; even including exclusion from governmental health program. But the garden variety, relatively isolated failure of a physician to timely sign an order can normally be corrected without devastating consequences.

Physician Orders As Condition of Payment

Physician orders can also be conditions of payment for specific services flowing from the physician’s encounter with the patient. This is where the real, serious regulatory exposure for failure to document physician orders occurs. Where an order is a condition of payment, claiming and accepting reimbursement results in an overpayment that should be repaid to Medicare. Failing to repay within 60 days of identification of the overpayment results in significant False Claims Act penalties that can far outweigh the original overpayment amount. Identification occurs when a provider “should know” that an overpayment exists which is why health care providers need to proactively look for missing physician orders as an identified risk as part of their compliance programs.

Physician Order Documentation Requirements

Health care providers will be familiar with the adage that “if it is not documented, it didn’t happen.” The same is true with respect to physician orders. A physician order that is not properly documented will be treated by payors as if the order does not exist. Even failure of seemingly technical failures to sign orders on a timely basis can result in payment denial or overpayment claims. In these cases, the provider is not entitled to reimbursement. If reimbursement is received, an overpayment will exist and I describe above the consequences of not repaying overpayments.

So it is important for physicians and other providers to understand the requirements for physician orders as they pertain to the services that they provide. Not getting it right can have very serious consequences. False Claims Act penalties are triple the original overpayment, plus up to $22,000 per claim. A systematic failure to properly use physician’s orders can result in draconian levels of damages under the False Claims Act.

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Source: Health Law Blog