Join us to learn: ---1. The key components of physician contracting programs ---2. Steps to take to avoid risky contracting situations ---3. Best practices for creating internal processes

1. 1
Measuring the Financial Health of Your
Physician Contracting Program
February 19, 2015
MITIGATING PHYSICIAN
CONTRACTING RISK
JANUARY 2018

2. Today’s agenda
• Intro to MD Ranger
• Key elements of physician contracting programs
• Steps to mitigate risk in physician arrangements
2

3. 275+ Physician Benchmarks
• Call coverage rates
• Medical direction payments
• Administrative and leadership
services rates
• Hospital-based service stipends
• Diagnostic testing, etc.
• Clinic & hourly rates
Online Platform
• Benchmark lookups
• Contract proposal tools
• Contract 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
• Resources for education and training
• On-call experts to help subscribers
use benchmarks and tools
3

4. The foundation of your compliance process
Standardize
processes
and rates
Document
FMV
Access 275+
payment
benchmarks
Review
contracts and
monitor with
ease
Have smarter,
data-driven
physician
negotiations
Mitigate
compliance
risks
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5. 5
275+ Benchmarks include:
• Call Coverage (50+)
• Medical direction (90+)
• Hospital-based services (19)
• Administrative and Medical Staff
Leadership (22)
• 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
• Pediatric-specific services (13)
• Total hospital spending
• Percent paying
• Number of administrative
positions
Hospital-characteristics drill down for
ADC, bed size, trauma status,
urban/rural, stroke centers, and more

6. Our methodology: key differences
• Providers vs. facilities
• 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
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7. Suggestions While Listening
• Think about how your organization addresses (or fails
to address) each of the checkbox items
• After the webinar:
• Determine what’s missing in your program
• Delegate responsibilities to your team
• Plan to address key areas of risk
• Call MD Ranger!
This checklist is a resource that provides general information to healthcare organizations as they evaluate
their physician contracting program and processes. No information contained in this webinar should be
construed as legal or valuation advice. MD Ranger, Inc. is not a law firm, consulting firm or valuation
consultant. The information should not be used as a substitute for obtaining legal advice from an attorney.
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8. 8
KEY ELEMENTS OF
PHYSICIAN CONTRACTING PROGRAMS

9. Oversight considerations for physician
contracting programs
• Executive should be in charge of contractual
and strategic decisions
• Could be Compliance Officer, General Counsel,
CMO, CFO, or CEO
Executive
oversight
• Proactive management of physician contracts
can control costs
• Ensure agreements are commercially
reasonable and FMV
Financial
oversight
9

10. Managing your physician contracting
process
• Organize contracts by: expiration date, dollar
value, and service
• Manage contracts on two levels: contract by
contract AND high-level
Contract
management
• Education
• Creating specific guidelines, processes,
procedures
• FMV determination and documentation
processes=key!
Compliance
management
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11. STEPS TO MITIGATE RISK
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www.mdranger.com/insights

12. 12
1. KNOW THE REGULATIONS

13. AKS vs. Stark
AKS
• Prohibits soliciting or
offer of 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
13

14. Stark has exceptions...
• Personal services arrangements
• AMC arrangements
• Medical staff incidental benefits (must be provided to all)
• Physician recruitment
• Non-monetary compensation up to $398
• Employment (legitimate)
• Office spaces leases
• Hospital ownership (must be greater than 50%)
• Compliance training
Not an exhaustive list
Work with your attorney
Each exception has very specific elements that must be met and
documented. Play it safe.14

15. As does AKS, safe harbors include…
• Ambulatory surgical centers
• Discounts
• EHR items and services
• Electronic prescribing items
and services
• Equipment rental
• Health centers
• Investment interests
• Payments made to bona fide
employees
• Personal services and
management contracts
• Practitioner recruitment
• Referral services
• Space rental
• Warranties
15

16. How much are we talking?
AKS
• Criminal penalties are up
to $25,000 plus up to a five-
year prison term per
kickback violation
• Additional civil penalties
are as much as $50,000 per
violation in addition to
three times the amount of
damages sustained by the
government
• Providers can be excluded
from federal healthcare
programs
Stark
• No payment for claims
• Civil monetary penalties for
each service ($15,000) plus an
assessment of up to three
times the claim
• Penalties up to $100,000 for
“circumvention schemes”
• Physicians and entities could
be excluded from participating
in CMS programs
16

17. False Claims Act
• Imposes liability on people/organizations who
defraud government programs
• Violations of Stark and AKS could be subject to
penalties
• Allows whistle-blowers to bring qui tam lawsuits and
sue on behalf of the federal government for both
Stark and AKS violations
17

18. Educate your team
• Staff should know about regulations and penalties
• Hold regular trainings and refresher sessions
• Make sure new employees receive training during
onboarding
• Don’t forget doctors!
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19. 19
2. HAVE AGREEMENTS

20. Every paid service should have an
agreement
• Best practice to have a contract for each service
• Consider written agreements for unpaid services, too
• Do you have:
• Signatures from both sides?
• Defined duties?
• Defined time requirements?
• Dates of service?
20

21. Are agreements being carried out
properly?
• Track hours
• Track duties
• Paid out
properly?
• Watch those
expiration dates!
21

22. 22
3. TRULY KNOW YOUR CONTRACTS

23. Know the scope of your commitments
• Smallish 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

24. 24
Flag your high-risk agreements
• Key service lines
• Politically charged situations
• Typically large hospital-based agreements
• Track coverage arrangements

25. 25
4. UP YOUR CONTRACT
MANAGEMENT GAME

26. Know them, keep them close
• Are your contracts stored in
a centralized location?
• Obtain or create a contract
management system
• Create an automated
process for renegotiations
• Garbage in, garbage out
26

27. Don’t know what you don’t know?
• 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
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28. 28
5. HAVE A PROCESS FOR HANDLING
EXCEPTIONAL AGREEMENTS

29. 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

30. Create a process
• When you must pay a
physician above FMV,
create a consistent review
process
• Have criteria for what
counts as an exception
• What is the process for
reviewing these
exceptions?
• Who needs to sign off on
exceptions?
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31. 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!
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32. 32
6. DETERMINE FMV AND COMMERCIAL
REASONABLENESS

33. Define FMV, commercial reasonableness
• What are 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

34. 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?
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35. The Commercial Reasonableness Checklist
35
Category Criteria Impact
1. Alignment
with Mission and
Goals
Does the arrangement align with and
facilitate achievement of the organization’s
mission and goals?
If not, it may not be commercially
reasonable.
2. Industry
Practice
Is the arrangement reasonably prevalent in
similar organizations (size, type) or are
there legitimate reasons for an atypical
arrangement?
The more uncommon, the less likely
it is to be commercially reasonable.
3. Frequency
and Intensity of
Need
How often is the service needed? How
intense is the workload?
If frequency or intensity of service is
low, commercial reasonableness
may be questionable.
4. Alternatives
Are there less costly alternatives that are
equivalent or better with respect to quality
of care?
If yes, the arrangement may not be
commercially reasonable.
5. Duplication
Is there a duplication of service
arrangements?
If yes, the arrangement may not be
commercially reasonable.
6. Financial
Performance
Does the cost of the arrangement justify
identifiable benefits?
If the associated service results or
contributes to economic losses, it
may not be commercially
reasonable.
7. Qualifications
Is the physician qualified to provide the
services?
If not, the arrangement may not be
commercially reasonable.
8. Evaluation
metrics
Are there well defined and objective
measures of performance? Is the evaluation
process defined?
If not, the arrangement may not be
commercially reasonable.
9. Payment
terms
Is there a defined payment amount, with a
defined maximum payout?
If not, the arrangement may not be
commercially reasonable.

36. 36
7. DO YOU HAVE THE RIGHT PEOPLE
INVOLVED?

37. Day to day management
• Designate a point person to handle physician contracting,
even if not full time
• Give this person the tools they need
• Ideally this person should report to the executive
responsible for contracting
37

38. Tone from the top
• Essential to have an
executive who is
knowledgeable and
responsible for
physician contracting
• Compliance-oriented,
physician-oriented.
38

39. 39
8. DO YOU AUDIT AND MONITOR?

40. 40
• 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
Auditing

41. Monitoring
• Monitoring contracts
throughout the year to
ensure they are being paid
and performed according to
what was agreed upon
• This is real-time
management of physician
contracts
• Elements should include
looping in AP, tracking
physician time
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42. 42
9. REVIEW CORPORATE INTEGRITY
AGREEMENTS?

43. They provide a look inside the OIG’s
process
• Learn from organizations who made mistakes
• CIAs provide step-by-step guidance and best
practices
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44. 44
ü KNOW THE REGULATIONS
ü HAVE WRITTEN AGREEMENTS
ü KNOW YOUR ORGANIZATION’S CONTRACTS
ü DETERMINE HOW TO HANDLE EXCEPTIONS
ü DEFINE FMV
ü DETERMINE HOW FMV/CR ARE DOCUMENTED
ü PICK LEADERS AND STAFF
ü AUDIT AND MONITOR YOUR AGREEMENTS
ü REVIEW CIA’S FOR BEST PRACTICES

45. Could we help?
45
Did you miss a checklist item (or two)?
Reach out: we can help.
--call 650-692-8873 or
--email Casey Maas, cmaas@mdranger.com
www.mdranger.com/insights