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Documenting FMV with MD Ranger

July 27, 2016

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Outline:

• Introducing MD Ranger• Why FMV matters• Best practices for determining and documenting FMV• Using MD Ranger to document FMV

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

New services for 2016

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ü Antibiotic Stewardship Medical Directionü Bioethics Medical Directionü Chief of Staff Electü Neuro Interventional Call Coverageü Pediatric Ophthalmology Call Coverageü Perioperative/Recovery Medical Directionü Robotic Surgery Medical Directionü Stroke telemedicine…And 25+ 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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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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WHY FMV MATTERS

What is FMV?

• An estimate of the market value of a service based on what a willing buyer would pay a willing seller

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How does the government define FMV?

• When we’re talking health care, things get more complicated• FMV cannot be determined by taking into account the volume

or value or referrals to the entity• Stark defines FMV as:

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“Price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation

that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement”

Why FMV is important

• If you are paying a physician more than fair market value for services, you are in violation of both Stark and Anti-Kickback Statutes

• Paying too much for services is poor financial management even if FMV can be documented

• Maintaining positive physician relationships is essential for all health care organizations

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Your organization’s definition

• Given the lack of a bright line, it’s on you to define how FMV will be interpreted at your organization

• In general, most organizations define FMV as an agreement at or below the 75th percentile for the comparable service

• Some organizations, however, don’t want to exceed median benchmarks, particularly if they have no distinguishing characteristics

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Most importantly…

• Whatever you choose, it’s critical to define FMV and consistently that standard apply to all physician contracts

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An example: is this contract FMV?

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Hot Topics in Physician Contracting

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DETERMINING FMV

Initial guidance: set your approach in advance

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• Most organizations decide what market range is appropriate for physician service agreements at their organization

• Typical thresholds are either below the median or the 75th percentile

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

Initial guidance: be consistent

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• Always apply your organization’s standards to each physician agreement

• Contract payment rates should be evaluated in a consistent manner for all agreements

• Have the final agreement approved by senior management and/or a board committee, depending on the value and hospital bylaw requirements

Initial guidance: handle exceptions consistently, and with care

• Document the reasons why your organization would consider a rate that falls above your definition of FMV

• Determine what supporting records and documentation are needed to qualify for an exception

• Consider designing an exceptions process that intentionally limits the number of exceptions processed and permitted

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1) Test commercial reasonableness

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• Before payment rates are set, determine if paying is reasonable

• CMS defines CR as:

"an arrangement will be considered 'commercially reasonable' in the absence

of referrals if the arrangement would make commercial sense if entered into by

a reasonable entity of similar type and size and a reasonable physician (or family

member or group practice) of similar scope and specialty, even if there were no

potential designated health services ("DHS") referrals."

1. Check MD Ranger “Percent Paying” benchmarks for market insights into how commonly a service is paid

2. Once commercial reasonableness is established, document how you determined it for your records

2) Take into account all payments to the physician

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• Before paying a physician a particular rate for a service, check to see if she receives payments for other services

• Aggregated payments for all administrative and coverage services to a particular physician or even group practice are important to determine for compliance purposes

• If the physician is receiving more than one payment, ensure that this is documented, along with total annual payments to that physician and how that compares to benchmarks for total compensation in that specialty

3) Review the contract’s scope of services

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• Though no two contracts rarely are the same, it’s important to compare similar positions

• Examine scope to ensure that hours per month are reasonable; use historical time records and market data to document

• Pay special attention to positions with burdensome implementation or extended hours

• Check restricted or in-house status for coverage agreements since this may increase FMV

4) Identify benchmarks for the service

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• Find the best, most appropriate match for the service• Compare similar organizations • Check sample size• Examine the full market range, and ask:

• What’s the median? What is the 75th percentile?• Are there reasons for my hospital rates to be higher than the median?• Are there characteristics of my hospital, the service, or the physician that

could impact FMV?

5) Select your rate

• Remember your organization’s rules• Your payment rate doesn’t have to be exactly the 75th

percentile; in fact, we don’t recommend it!

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Use MD Ranger tools for proposing rates

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No market data?

• If you can’t find an appropriate match in market data, you’ll need to consider using another method

• The cost method evaluates what it would ‘cost’ a physician to provide the service in place of the billings generated during clinical time

• This can be done by someone at your organization who is qualified to do a cost valuation, or you can hire a consultant who will write an opinion on how much the physician should be compensated using the cost method

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Process is key

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• Your organization should determine a FMV documentation process

• Each step should be undertaken for each contract• Consistency is key across the compliance function• When audited, having a process documented is very

important

DOCUMENTING FMV

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1) Check key elements of the contract

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• Counterparty• Service• Dates• Rates• Hours• Supporting

documentation

2) Ensure rates and hours do not exceed your organization’s standards of FMV

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• Do you feel confident that the rate is within FMV?

• Are the hours reasonable and within FMV?

• If market rate benchmarks shifted at contract renewal time, would your rate remain compliant?

• Has the work been performed and documented with time cards in the past?

3) If not, document exceptions

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• Your organization should develop a process for all contracts that must be negotiated above the 75th percentile for whatever reason

• Reasons for the high rate, along with supporting documentation, must be provided

• Consider requiring an extra level of review/approvals

4) Integrate all elements into one document

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• FMV documentation should be consistent and streamlined

• Collecting all the information previously outlined and inserting it into a supporting document is best practice

• These documents should be reviewed and signed by the responsible executive

• MD Ranger subscribers have access to instant FMV Documentation Reports for each physician contract

5) Determine sign-off process and timeline

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• Who is responsible for determining and documenting FMV at your organization?

• When is supporting documentation reviewed and approved?

• Who is the responsible executive for sign off?• What are the expectations for how long the process

will take?

6) Keep records

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• Determine where the contracts, FMV documentation, and supporting documentation will be kept

• Who will review the records when filed? How frequently will this happen?

• Are you keeping records electronically?

• What is your process for timely renewal and updated FMV documentation?

Consider this: will you perform audits?

• Reviewing contracts line by line is considered best practice. You can perform these annually, or divide your contracts by quarter and audit a small section every few months to spread out the work

• How will you review contracts in aggregate? What tools will you use?

• More auditing resources available at mdranger.com/resources

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Additional MD Ranger resources:• Building a Cost-Effective Physician Contract Compliance Program Using Market

Data• Using Market Data for FMV• Key Elements of Physician Contracting Compliance Programs• Audit Smart: Best Practices• Using Market Data for Physician Contracting

For Subscribers:• Documenting FMV for Call Coverage Agreements• Documenting FMV for Administrative Agreements

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Available on mdranger.com/resources

Need help?

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

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