1

Measuring the Financial Health of Your Physician Contracting Program

February 19, 2015

PHYSICIAN CONTRACTING COMPLIANCE RISK CHECKLIST

ALLISON PULLINS, CMO, MD RANGER

Getting value from our discussion

• While listening to the webinar, think about how your organization addresses (or fails to address) each of the checkbox items

• After the webinar:• Determine your top 2-3 areas of risk from our list• Delegate responsibilities to your team• Project plan for addressing areas of risk?• Call MD Ranger!

2

Outline

• Introductions• Compliance program overview• The checklist

3

Our database and subscribers

4

5

MD Ranger includes:

• Benchmarks, available as reports and online queries, with market data for call, medical direction, administrative services, leadership positions, hospital-based services, uncompensated care, clinics and diagnostic testing services

• A secure, web-based contract data tool to collect and organize contract data (uploads via Excel available)

• FMV documentation tools• Analytics to benchmark internal contracts and total expenditures, identify

compliance issues, compare facilities and analyze expenditures• Cost and compliance reports• Resources and research to support compliance efforts• Customer support by experts in physician compensation, FMV

documentation, and compliance

Your host

6

• Nine 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

7

KEY ELEMENTS OF PHYSICIAN CONTRACTING COMPLIANCE

PROGRAMS

Elements

• Executive oversight• Contract management• Financial oversight• Compliance management

8

Executive oversight

• An executive should be in charge of both contractual and strategic decisions

• They should report to both the CEO and the Board• Commonly this executive is the Chief Compliance Officer,

the General Counsel, or the CFO

9

Contract management

• Organize your contracts by key elements like • Expiration date• Dollar value• Service

• Have an alert system to spark negotiation reviews well before the expiration date

• Formalize renewal processes• Manage contracts on two levels: contract by contract AND

high-level strategic management

10

Financial oversight

• Non-employed physician costs average 5% of a hospital’s total operating budget

• Proactive management of physician contracts can control costs

• Make sure all agreements are commercially reasonable• What’s your definition of FMV? Is it financially feasible

for your organization?• Benchmark your facility against peers

11

Compliance management

• Education• Because compliance has so many moving parts, it is

important to be deliberate and specific with guidelines, processes, and training

• FMV determination and documentation processes=key!

12

CHECKING OFF THE BOXES: THE COMPLIANCE RISK

CHECKLIST

13

14

1. HOW WELL DOES YOUR TEAM KNOW THE REGULATIONS?

Stark Law

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

• Limited to Medicare and Medicaid programs• Civil penalties up to $15,000 per service; additional

penalties up to $100,000 for circumvention. Exclusion from CMS also possible.

• Strict liability statute, so no intent needed to violate the law• Physicians are at risk too; make sure to educate them as

well!

15

Anti-Kickback Statute

• A criminal statute that forbids the exchange or offer to exchange anything of value in an effort to entice or reward the referral of federal health care services or business

• Penalties of $25,000 plus up to 5 years in prison per violation

• Additional civil penalties of up to $50,000 per violation and up to three times the amount of damages sustained by the government

16

False Claims Act

• 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 the federal government for both Stark and AKS violations

17

Educate your team

• Staff should know about regulations and penalties• Hold regular trainings and refresher sessions• Make sure new employees receiving training during

onboarding

18

19

2. DO YOU HAVE AGREEMENTS?

Every paid service must have an agreement

• Must have an agreement, but best practice to have a contract

• Consider agreements for unpaid services, too• Key elements:

• Signatures form both sides• Defined duties• Defined time requirements• Dates of service

20

Are agreements being carried out properly?

• Track hours• Track duties• Watch those expiration dates

21

22

3. DO YOU (TRULY) KNOW YOUR CONTRACTS?

Know the scope

• Small community hospitals tend to have 50-75 physician contracts

• Large organizations can have hundreds to thousands• Best practice to conduct budgeting and financial planning• Knowing your contracts will help you uncover potentially

risky arrangements

23

Flag your high-risk agreements

• Key service lines• Politically charged situations• Typically large hospital-based agreements• Track coverage arrangements

24

25

4. IS CONTRACT MANAGEMENT UP TO SNUFF?

Hopefully in a centralized location

• Are your contracts stored in a centralized location?• Obtain or create a contract management system• Garbage in, garbage out• Create an automated process for renegotiations, starting 3-

6 months before the renewal date

26

Don’t know what you don’t know? Get on it.

• It’s more common than you’d think for a hospital to not manage contracts properly

• Make sure you feel 100% confident that all contracts are kept in one location and monitored by staff

27

28

5. HOW DO YOU HANDLE EXCEPTIONAL AGREEMENTS?

What counts as exceptional?

• Your organization should have a policy defining FMV standards

• Some organizations compensate at or below median; others consider anything below the 75th percentile as FMV

• Exceptional agreements might be:• Higher hourly rate• More hours per year (e.g. start up costs• Rock star physicians• Undesirable panels

29

Create a process

• When you must pay a physician above FMV, create a consistent review process

• Have a criteria for what counts as an exception• What is the process for reviewing these exceptions?• Who needs to sign off on exceptions?

30

May we suggest making it difficult?

• The more difficult your exceptions approval process is, the less likely it is that administrators will pursue higher rates

• Don’t make it impossible, but make it onerous• Over the course of a few years, you will probably see

lower costs!

31

32

6. DO YOU DETERMINE FMV?

Define FMV

• What is the criteria for FMV and commercial reasonableness at your organization?

• What’s your process to determine commercial reasonableness?

• What tools will you use to establish FMV? Market data? Valuations?

33

Document FMV

• How will you consistently document rates?• What other documents, besides proof of FMV, should you

require?• How will you track compliance?• Will you perform annual audits?

34

35

7. DO YOU HAVE THE RIGHT PEOPLE INVOLVED?

Day to day management

• You should designate a point person to handle physician contracting, even if not full time

• Give this person the tools they need• Designate an executive the point person directly reports to

for physician contracting

36

Tone comes from the top

• Essential to have an executive who is knowledgeable and responsible for physician contracting

• She should contribute to the compliance program creation and be familiar with the day-to-day

• Responsible in the unfortunate event of an audit

37

38

8. DO YOU AUDIT AND MONITOR?

Auditing

• An annual internal audit can identify potential patterns of non-compliance or outliers that have not been properly documented

• Auditing happens on a regular basis and looks retrospectively across the organization

39

Monitoring

• Monitoring contracts throughout the year to ensure they are being paid and performed according to what was agreed upon

• Monitoring is real-time management of physician contracts• Elements should include looping in AP, tracking physician

time

40

41

9. HAVE YOU REVIEWED CORPORATE INTEGRITY

AGREEMENTS?

They provide a look inside the OIG’s process

• Learn from organizations who made mistakes • CIAs can be long, but provide step-by-step requirements to

be in compliance in their eyes

42

43

ü KNOW THE REGULATIONS

ü HAVE WRITTEN AGREEMENTS

ü KNOW YOUR ORGANIZATION’S CONTRACTS

ü KEEP THEM WELL-ORGANIZED

ü DETERMINE HOW TO HANDLE EXCEPTIONS

ü DEFINE WHAT FMV MEANS

ü DETERMINE HOW FMV WILL BE DOCUMENTED

ü PICK LEADERS AND STAFF INVOLVED

ü AUDIT AND MONITOR YOUR AGREEMENTS

ü REVIEW CIA’S FOR BEST PRACTICES

Could we help?

44

Could your organization use tools to help manage financial oversight of physician contracting?

MD Ranger helps hospitals better understand physician expenditures and become more strategic with contracting decisions.

Reach out to us: we can help.apullins@mdranger.com or 650-692-8873