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7 Signs Your Organization

Could Have Risky Contracts

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Outline:

• Introducing MD Ranger• 7 signs you might have a problem• Best practices for mitigating risk

But first, a disclaimer

• MD Ranger doesn’t give legal advice• Physician agreements should always be reviewed by

an attorney (or two)• All matters regarding potential legal/compliance

issues should go to counsel• A formal review and approval process is foundational

to compliance

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About Us

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ABOUT US

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Our subscribers

250+ Physician Benchmarks• Call coverage rates• Medical direction payments• Administrative and leadership

services rates• Hospital-based service stipends• Diagnostic testing, etc.

Online Platform• Benchmark lookups• Contract proposal tools• Expenditure reports by facility and

service• Total facility costs + benchmarks

Compliance Documentation• Contract-specific FMV documentation

reports• Reports to assist with real-time

monitoring and annual reviews

Research and Support• Dozens of resources for education and

training• On-call expertise to help subscribers

use benchmarks and tools

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250+ benchmarks:• Call Coverage• Medical direction• Administrative• Medical Staff Leadership• Hospital-based services• Diagnostic/other services e.g.

ROP, autopsy, dialysis• Hospital-based stipends• Clinics, professional services• Telemedicine• Residency/teaching/GME

• Uncompensated care• Meeting attendance, peer

review, IT/EHR and quality initiatives

• Hours, hourly rates, annual pay• Hospital-characteristics drill

down for ADC, bed size, trauma status, urban/rural, stroke centers, and more

Our methodology: key differences

• Providers vs. facilities• Hospital-verified data• Thorough data audits• Physician contract experts on-

call to review/advise on challenging contracts

• Comprehensive scope of benchmarks based on full hospital contracting practices

• Ad hoc and non-director/call services

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The foundation of your compliance process

Standardize processes and rates across

the organization

Look up and document

physician rates for FMV

Access 250+ payment

benchmarks

Review contracts

annually and monitor with

easeHave smarter, data-driven

physician negotiations

Mitigate compliance

risks

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Extensive education and analysis for subscribersContracting• What You MUST Know About Compensating Call Coverage (video)• Benchmarking Total Physician Costs (video)• Key Strategies for Compensating Physician Administrative Positions

(video)• Making Physician Contracting More Efficient (white paper)

Compliance:• Defining, Determining, and Documenting FMV (video)• Stark Law and Physician Contracting (video)• Audit Smart (video)• Four Signs Your Organization Could Have Risky Contracts (checklist)

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Your speaker

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• Ten years experience in healthcare consulting and technology; specializing in physician marketing, recruitment, engagement, compensation, negotiations

• Helps MD Ranger subscribers leverage data, analyze internal costs and structure physician contract compliance programs

Physician Contract Attributes and Components

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7 SIGNS OF RISKY CONTRACTS

7 Signs

1. Lack of a physician contracting process2. Unfamiliarity with the risks3. No executive support of physician contracting

compliance4. Assuming physicians should be paid whenever they

ask, for all services5. Consistently paying high rates6. Spending higher in aggregate over peer

organizations7. Thinking your hospital is “exceptional”

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1) Lack of a formalized physician contracting process

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• Without a comprehensive approach to physician contract compliance, contracts can slip through the cracks and documentation may lapse.

• If you have no process for FMV determination and documentation, you cannot be confident your arrangements are compliant.

Key elements of physician contracting programs:

• Executive oversight• Contract management• Financial analysis• Compliance checks and processes• A consistent process for determining and

documenting FMV

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No process? We can help.

ü Improving Physician Contract Compliance

üQuick Changes for Big Impact: Compliance Tips You Can Use Today

üKey Elements of Physician Contracting Compliance Programs

üMaking Physician Contracting More Efficient16

2) Unfamiliarity with the risks

• If executives are cavalier about physician contract compliance, it is likely they are unaware of the huge risks

• The impact of non-compliant physician arrangements can be devastating

• The largest hospital Stark settlement in history (so far) cost Adventist Health a cool $118.7 million in fines

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Federal regulations in play

• Two federal regulations impact physician arrangements: Stark Law and the Anti-Kickback Statute. Under these regulations, a third regulation called the False Claims Act can be invoked for services billed under non-compliant arrangements.

• If you are not paying a physician fair market value for services and/or paying for referrals, you may be in violation of one or potentially multiple regulations

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Physician Self-Referral Law (AKA Stark Law)

• Limits certain physician referrals of DHS if a physician or the physician’s family members have a financial relationship with that entity, unless an exception applies

• Limited to Medicare and Medicaid programs• Liability statue, so proof of specific intent to violate

the law is not needed

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Anti-Kickback Statute

• Prohibits the exchange or offer to exchange anything of value in an effort to induce the referral of health care services (any items) from any person or provider

• Much more broad than Stark• Applies to all federal health care programs• Intent must be proven

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And lastly…. The False Claims Act

• Enacted during the Civil War, the law imposes liability on people/organizations who defraud government programs

• Payments to a hospital for services that violate both Stark and AKS could be subject to penalties because they defraud the government

• Allows whistle-blowers to bring qui tam lawsuits and sue on behalf of federal government for both Stark and AKS violations

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Penalties steep for non-compliance

• Stark Law: single civil violation could result in a fine of up to $15,000 for each service, plus overpayment obligation and potential for high civil monetary penalties assessment

• AKS: single criminal violation could result in a fine of up to $25,000 for each service and imprisonment of up to five years, and even absent of conviction, violators may face exclusion from federal health care programs.

• False Claims Act: amplifies above penalties

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AKS vs. StarkAKS

• Prohibits soliciting or offering anything of value for referrals or to generate Federal healthcare program business

• Referrals from anyone• Any service or item• Criminal• Intent must be proven

Stark

• Prohibits a physician from referring Medicare/Medicaid patients for DHS to an entity with a financial relationship with that physician

• Referrals from a physician• DHS• Civil• Intent doesn’t have to be proven

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3) No executive-level support for physician contracting

• Healthcare organizations’ leadership should be concerned about physician contract compliance

• If your organization’s leaders don’t prioritize compliant physician arrangements, no one else will

• Organizations that lack a culture of compliance are more vulnerable to risk

4) Assuming you should always pay physicians for any service

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• Just because compensation is requested, doesn’t mean it should be paid

• Organizations must justify that all payments are commercially reasonable

• Use MD Ranger’s percent paying benchmarks

MD Ranger’s Percent Paying benchmark

• “Percent Paying” benchmarks can help determine if compensation for any given physician service is appropriate

• Explore alternative ways to compensate instead of always relying on a “per diem” payment. Consider an activation fee, a per episode payment, or an unsponsored payment rate to make up for poor payer mix

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5) Consistently paying high rates

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• As your organization reviews contracts, note trends. • There are good reasons to pay above the 75th percentile in

some cases, but not all. No organization should pay above 75th as a standard practice.

• Make sure that your definition of FMV is documented and those involved in physician contracting know your organization’s rules and policies

Monitor higher payments and riskier contracts

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6) Spending higher in aggregate over peer organizations

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• Non-employed physician contracts are a sizeable chunk of operating budgets

• Typically fall between 4-6% operating expenses

• Benchmark yourself to peers with MD Ranger’s Facility Totals Reports; benchmark your facilities against one another with MD Ranger’s online portal

7) Thinking your hospital is exceptional

• Yes, all healthcare organizations are different

• However—not so different

• Beware of defensive reactions to benchmarks!

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Hot Topics in Physician Contracting

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BEST PRACTICES FOR MITIGATING RISK

Document proof of FMV

• All physician services agreements, in order to be compliant, must have documentation that payments are fair market value

• Likewise, all payments must be commercially reasonable

• FMV documentation could be:• High quality market data• Cost valuation• Evidence of extraordinary efforts or circumstances

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Don’t negotiate payments above the 75th

percentile without justification

• Payments under the 75th percentile are generally considered within FMV; however, your organization could have a different policy regarding market ranges

• Many organizations use the median since it gives room for growth or changes in benchmarks at contract renewal

• Typically it’s okay to have a few agreements above the 75th or even the 90th percentile, if there is reasonable justification

• High payments with no or poor justification should be analyzed further

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Don’t let contracts expire

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• Expired contracts mean that you do NOT have a contract in place with the physician, which is not best practice

• Remember: contract terms must be set in advance• Calendar contract expirations and begin

renegotiations early (at least 90 days)

Never pay without a contract

• Cross check all payments to physicians from your AP department as part of routine audits

• Payments to physicians with no contract in place is risky

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Keep documentation of non-monetary payments

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• Are you providing non-monetary payments to independent physicians that exceed the cap? • Parking spaces?• Meals?• Electronic health records?• Overhead from charity events involving doctors?• Joint marketing?• Office artwork?• Technology?• Infrastructure?• ….?

Describe the service in detail on the contract

• Don’t forget important details, like number of hours in administrative agreements

• Record keeping for time and performance of duties• When in doubt, spell it out

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Keep time cards, call sheets

• Likewise, if no time cards or call sheets exist, your red flag should fly

• Time cards are key for administrative contracts given that physicians are typically paid hourly or monthly based on a minimum and/or maximum number of hours

• Use technology!

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Check if you might have too many positions under one service

• Some medical directorships might need several physicians serving in administrative roles (cardiology is a good example)

• Many do not• If you have more than one medical director per

service, investigate commercial reasonableness• MD Ranger’s number of administrative positions

report can help!

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Always double check multiple contracts/payments to a single provider or group

• Though payments might be warranted, check out physicians or groups that receive multiple payments

• Compliance concerns mount when payments mount

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Do something about non-compliant arrangements.

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Do you feel confident in your organization’s physician contracting and FMV documentation process? Do you feel like your organization has risky agreements?

We can help! Reach out: apullins@mdranger.com or 650-692-8873