7 Signs Your Organization Could Have Risky Contracts
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The document outlines seven signs that indicate an organization may have risky physician contracts, such as a lack of formal processes and executive support. It emphasizes the importance of compliance with federal regulations, including Stark Law and the Anti-Kickback Statute, and provides best practices for mitigating risks, including proper documentation of fair market value and timely contract management. Additionally, it encourages organizations to utilize benchmarks for physician compensation to ensure commercial reasonableness.
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7 Signs Your Organization Could Have Risky Contracts
- 1. 1 7 Signs Your Organization Could Have Risky Contracts
- 2. 2 Outline: • Introducing MD Ranger • 7 signs you might have a problem • Best practices for mitigating risk
- 3. But first, a disclaimer • MD Ranger doesn’t give legal advice • Physician agreements shouldalways be reviewedby an attorney (or two) • All matters regardingpotential legal/compliance issues shouldgo to counsel • A formal review and approval process is foundational to compliance 3
- 6. 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 6
- 7. 7 250+ 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
- 8. 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 8
- 9. 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 ease Have smarter, data-driven physician negotiations Mitigate compliance risks 9
- 10. Extensive education and analysis for subscribers Contracting • 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) 10
- 11. Your speaker 11 • 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
- 12. Physician Contract Attributes and Components 12 7 SIGNS OF RISKY CONTRACTS
- 13. 7 Signs 1. Lack of a physiciancontractingprocess 2. Unfamiliarity with the risks 3. No executive support of physician contracting compliance 4. Assumingphysicians shouldbe paid whenever they ask, for all services 5. Consistently payinghigh rates 6. Spendinghigher in aggregate over peer organizations 7. Thinkingyour hospital is “exceptional” 13
- 14. 1) Lack of a formalized physician contracting process 14 • 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 determinationand documentation, you cannot be confident your arrangements are compliant.
- 15. Key elements of physician contracting programs: • Executive oversight • Contract management • Financial analysis • Compliance checks and processes • A consistent process for determining and documentingFMV 15
- 16. No process? We can help. ü Improving Physician Contract Compliance ü Quick Changes for Big Impact: Compliance Tips You Can Use Today ü Key Elements of Physician Contracting Compliance Programs ü Making Physician Contracting More Efficient 16
- 17. 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 17
- 18. 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 18
- 19. Physician Self-Referral Law (AKA Stark Law) • Limits certain physician referrals of DHS if a physicianor the physician’s family members have a financial relationshipwith that entity, unless an exception applies • Limitedto Medicare and Medicaidprograms • Liabilitystatue, so proof of specific intent to violate the law is not needed 19
- 20. 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 20
- 21. And lastly…. The False Claims Act • Enactedduringthe 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 defraudthe government • Allows whistle-blowers to bring qui tam lawsuits and sue on behalfof federal government for both Stark and AKS violations 21
- 22. Penalties steep for non-compliance • Stark Law: single civil violation couldresult in a fine of up to $15,000 for each service, plus overpayment obligationand potential for high civil monetary penalties assessment • AKS: single criminal violation couldresult 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 22
- 23. AKS vs. Stark AKS • Prohibits solicitingor offeringanythingof 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 referringMedicare/Medicaid patients for DHS to an entity with a financial relationshipwith that physician • Referrals from a physician • DHS • Civil • Intent doesn’t have to be proven 23
- 24. 24 3) No executive-level support for physician contracting • Healthcare organizations’ leadershipshouldbe concernedabout 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
- 25. 4) Assuming you should always pay physicians for any service 25 • Just because compensationis requested, doesn’t mean it shouldbe paid • Organizations must justify that all payments are commercially reasonable • Use MD Ranger’s percent payingbenchmarks
- 26. 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 26
- 27. 5) Consistently paying high rates 27 • As your organization reviews contracts, note trends. • There are good reasons to pay above the 75th percentile in some cases, but not all. No organizationshouldpay above 75th as a standardpractice. • Make sure that your definition of FMV is documentedand those involvedin physician contractingknow your organization’s rules and policies
- 28. Monitor higher payments and riskier contracts 28
- 29. 6) Spending higher in aggregate over peer organizations 29 • 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
- 30. 7) Thinking your hospital is exceptional • Yes, all healthcare organizations are different • However—not so different • Beware of defensive reactions to benchmarks! 30
- 31. Hot Topics in Physician Contracting 31 BEST PRACTICES FOR MITIGATING RISK
- 32. Document proof of FMV • All physicianservices agreements, in order to be compliant, must have documentation that payments are fair market value • Likewise, all payments must be commercially reasonable • FMV documentation couldbe: • High quality market data • Cost valuation • Evidence of extraordinary efforts or circumstances 32
- 33. Don’t negotiate payments above the 75th percentile without justification • Payments under the 75th percentile are generally considered within FMV; however, your organizationcould have a different policy regarding market ranges • Many organizations use the mediansince it gives room for growth or changes in benchmarks at contract renewal • Typically it’s okay to have a few agreements abovethe 75th or even the 90th percentile, if there is reasonable justification • High payments with no or poor justificationshould be analyzed further 33
- 34. Don’t let contracts expire 34 • Expired contracts meanthat 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 andbegin renegotiations early (at least 90 days)
- 35. 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 35
- 36. Keep documentation of non-monetary payments 36 • Are you providingnon-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? • ….?
- 37. Describe the service in detail on the contract • Don’t forget important details, like number of hours in administrative agreements • Record keepingfor time and performance of duties • When in doubt, spell it out 37
- 38. Keep time cards, call sheets • Likewise, if no time cards or call sheets exist, your red flag shouldfly • Time cards are key for administrative contracts given that physicians are typicallypaid hourly or monthly based on a minimum and/or maximum number of hours • Use technology! 38
- 39. Check if you might have too many positions under one service • Some medical directorships might need several physicians servingin administrative roles (cardiology is a good example) • Many do not • If you have more than one medical director per service, investigate commercialreasonableness • MD Ranger’s number of administrative positions report can help! 39
- 40. 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 40
- 41. Do something about non-compliant arrangements. 41 Do you feel confident in your organization’s physician contracting andFMV documentation process? Do you feel like your organization has risky agreements? We can help! Reach out: [email protected] or 650-692-8873