essential elements of physician contracting compliance programs

1

Essential Elements of

Physician Contracting

Compliance Programs

March 20, 2014

Allison Pullins

Director

2

Outline:

• Key elements of physician contracting programs

• Ideas for structuring and implementing your contracting program

• Strategies for determining and documenting FMV

• Market data and compliance

• Uncovering whether or not your organization could be “high risk”

for compliance issues

3

A Breakthrough in Physician Contracting

and Fair Market Value Analysis MD Ranger is a leading provider of data-driven physician contract and

compensation solutions that help hospitals and health systems analyze market and

internal data, negotiate competitive contracts, and document compliance.

MD Ranger provides:

• A secure, web-based Data Tool to collect and organize

contract data (uploads via Excel available, too)

• Benchmarks, available as reports and online queries, with

market data for call, medical direction, administrative services,

hospital-based services, uncompensated care programs, and

diagnostic testing services

• Web-based Analytic Tools to benchmark internal data,

identify compliance issues, and analyze where dollars are

spent

4

MD Ranger Subscribers

Our benchmarks:

• 42 call coverage positions

• 65 medical directorships: hours,

hourly, and annual rates

• Hard to find leadership rates (Chief

of Staff, meeting attendance, EHR,

Quality Initiatives, Peer Review)

• Hospital-based stipends and

incentive payments

• Diagnostic and testing services

5

Introducing Allison

6

• Director at MD Ranger, Inc

• Background in physician marketing,

recruitment, engagement, compensation,

negotiations

• Helps MD Ranger subscribers leverage

the data, analyze internal costs

• Follow us on Twitter! @MDRanger

• Blog much? Visit us: blog.mdranger.com

Key Elements of Physician

Contracting Programs

7

The Essentials:

• Executive oversight

• Contract management

• Financial oversight

• Compliance management

• Rigorous, consistent process for determining FMV

8

Executive Oversight

• Designate an executive to take responsibility for

physician contracting at your organization • The buck stops with her

• All exceptions for contracts go through her

• Rates are set with her guidance

• The daily physician contracting director/manager reports directly to

this person (ideally)

• Involve your compliance committee on a quarterly or

half-yearly basis

9

Contract Management

• Having a contract for all financial arrangements (even

non-monetary ones)

• Organizing your contracts

• Alerting your team to expiring contracts

• Renewal process • Updated or new contract

• Checking the rate

• Negotiation

• Sign-off

• Strategic contract management

10

Financial Oversight

• Are all your contracts commercially reasonable?

• What benchmark do you aim for in individual (or

group) arrangements?

• How much are you spending, in aggregate, on

physician administrative services, call arrangements,

and hospital-based service contracts? Is this

comparable to your peers?

11

Compliance Management

• Mandatory Stark training for all staff involved in the

process

• Understanding “fair market value”

• Creating a consistent, rigorous system for

determining FMV

• Deciding how you are documenting the compliance of

every arrangement

12

Process to Determine FMV

• Discuss what’s best for your organization

• Research various approaches (pros and cons)

• Document your organization’s philosophy and

approach to FMV

• Record step by step the process you’ll use to

document FMV

13

10 Ideas for Structuring and

Implementing your Program

14

Contracting

15

1) Have a contract for every service

• Many hospitals have a service or two that is not

outlined contractually

• Determine if your organization has any such services,

and create a contract immediately

• Don’t forget payments for services like: • Chief of Staff

• Medical staff positions

• Meeting attendance

• Other non-monetary compensation

16

2) Get all your contracts in ONE place

• Use your contract management system and organize

all physician contracts in a unified fashion

• Don’t have a contract management system, or too

small to have one? • Create one in Excel

• MD Ranger has a contract management tool included in each

subscription

17

3) Truly know your contracts

• How many do you have?

• How much are you spending, in aggregate?

• When are your “tricky” contracts expiring?

18

4) Have a system for handling contract

renewals

• Automate the process as much as possible

• Designate roles within your organization for contract

renewal. You’ll need: • A new contract (or update current agreement with new dates)

• Checking the rate and potentially designating a new rate

19

5) Create a process to handle

“exceptions”

• Define what makes an exception

• Determine the specifics of how to handle the

exception. Consider: • The upper limits for setting an exception rate

• Who approves the exception

• How to document the exception

• BONUS: how to prevent exceptions from happening in the first

place

20

Compliance

21

6) Create a foundational document

• Describe, in detail, your physician contracting

program—most importantly the steps you will take to

ensure compliance for all physician financial

arrangements

• Within the document, outline: • Accountable executive

• Day to day staff and their responsibilities

• Strategic goals

• FMV process

• Handling exceptions

22

7) Communicate your compliance plan

• Accountable executive should receive blessing from

her peer colleagues

• Communicate your compliance plan throughout the

organization

• Ensure access to foundational document

• Emphasize transparency, consistency

23

8) Determine how you’ll set rates

• Consider cost, efficiency, and the realities of your

organization

• How many contracts will you set rates for, and how

complex are they?

• What is most realistic for your organization?

Consider scale.

24

9) Determine your rate benchmark

• Though you’ll have contracts over the 75th percentile

and above, generally this is not a good mark to aim at

consistently (should be an exception rather than the

rule)

• What’s your market like? Where are your current

rates? What’s your organization’s needs? What is

realistic AND compliant?

25

10) Flag high-risk contracts in advance

• Don’t get caught just weeks before a complex

contract expires

• Determine which contracts are the most risky from

both a negotiation and compliance standpoint in

advance so that you have time to set your strategy

and your ideal rate

26

Strategies for Determining and

Documenting FMV

27

Three approaches to determine rates

• Market Data

• Internal or external proprietary formulas

• Internal or external Ad hoc FMV Opinions

(valuations)

Most hospitals use a combination of two or all three

methods above.

28

All approaches have advantages and

disadvantages

• Market data: • Pros: Cost effective, flexibility, easy to scale

• Cons: Doesn’t work if you don’t have apples to apples comparisons

• Proprietary formulas: • Pros: Hands-off, easy to scale

• Cons: Proprietary formulas aren’t transparent to the user

• FMV opinions: • Pros: Most detailed and specific

• Cons: Can be hard to scale given the cost

29

Most MD Ranger subscribers:

• Use market data from our reports for a vast majority

of their contracts

• Pull in valuation firms or internal experts for the

remaining complex agreements

• Always document their rates with proof of fair

market value, whichever method they choose

30

Documenting compliant rates

• Ad hoc FMV opinions can be filed away to

demonstrate compliance

• Outline other processes in your compliance

document. Some ideas are: • MD Ranger individual contract reports (shown with market range

and specific contract’s rate)

• Internal certification document with market data

• Combination of the above

31

Market Data and Compliance

32

Can market data be used for

compliance purposes?

• Most of the time, yes

• High quality data is efficient and cost effective for

any organization

• OIG Advisory Opinion 07-10 (9/20/07)

• Phase II Stark safe harbor

• Sometimes you’ll need more than just data,

particularly for complicated agreements or situations

33

High Risk? Potential Red Flags

34

Make sure you need to pay

• Always ensure the

request to compensate a

physician is commercially

reasonable (and back it

up with data or other

evidence)

• Explore alternative ways

to compensate beyond a

“per diem” payment

35

Are you the snowflake?

• Yes, all hospitals are different

• However, not very different

• Benchmarks aren’t the end-all, be-all—though they

are the only way we can truly compare ourselves to

peers

• Beware the defensive reaction

36

Are your rates consistently high?

• There might be good reasons to have rates on the

higher side, though never always

• If you are in the beginning stages of a compliance

program, review all your physician contract rates and

determine where in the market data each one falls.

Consistently high rates might need revision or a plan

to lower rates

37

Are you spending more in aggregate?

• Use benchmarks to compare yourselves in overall

spending to peers

• There might be a good reason for over-spending;

there might not

38

We want to hear from you!

www.mdranger.com

39

Allison Pullins

Director

apullins@mdranger.com

650-692-8873