The document discusses best practices for determining and documenting fair market value (FMV) when contracting with physicians using MD Ranger's database of over 250 physician payment benchmarks. It outlines the importance of FMV, defining it, testing commercial reasonableness of contracts, identifying appropriate benchmarks, and documenting the FMV determination process. MD Ranger provides tools to help standardize rates, look up benchmarks, review contracts, and mitigate compliance risks.

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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

3. About Us
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ABOUT US

4. 4
Our subscribers

5. 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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6. 6
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

7. New services for 2016
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ü Antibiotic Stewardship Medical Direction
ü Bioethics Medical Direction
ü Chief of Staff Elect
ü Neuro Interventional Call Coverage
ü Pediatric Ophthalmology Call Coverage
ü Perioperative/Recovery Medical Direction
ü Robotic Surgery Medical Direction
ü Stroke telemedicine
…And 25+ 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
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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
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10. 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

11. Physician Contract Attributes and
Components
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WHY FMV MATTERS

12. What is FMV?
• An estimate of the market value of a service based on
what a willingbuyer would pay a willingseller
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13. 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 positionto generate business for the other party, on the
date of acquisitionof the asset or at the time of the service agreement”

14. 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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15. 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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16. Most importantly…
• Whatever you choose, it’s critical to define FMV and
consistently that standardapply to all physician
contracts
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17. An example: is this contract FMV?
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18. Hot Topics in Physician Contracting
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DETERMINING FMV

19. 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

20. Initial guidance: be consistent
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• Always apply your organization’s standards to each
physicianagreement
• Contract paymentrates shouldbe evaluatedin a
consistent manner for all agreements
• Have the final agreement approvedby senior
management and/or a board committee, depending
on the value and hospital bylaw requirements

21. 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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22. 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' inthe 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

23. 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

24. 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 attentionto positions with burdensome
implementation or extended hours
• Check restrictedor in-house status for coverage
agreements since this may increase FMV

25. 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?

26. 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 recommendit!
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27. Use MD Ranger tools for proposing rates
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28. No market data?
• If you can’t find an appropriate match in market data,
you’ll need to consider usinganother method
• The cost method evaluates what it would ‘cost’ a
physicianto provide the service in place of the
billings generatedduringclinical time
• This can be done by someone at your organization
who is qualifiedto do a cost valuation, or you can hire
a consultant who will write an opinion on how much
the physicianshouldbe compensatedusingthe cost
method
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29. Process is key
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• Your organization shoulddetermine a FMV
documentation process
• Each step shouldbe undertaken for each contract
• Consistency is key across the compliance function
• When audited, havinga process documentedis very
important

30. DOCUMENTING FMV
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31. 1) Check key elements of the contract
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• Counterparty
• Service
• Dates
• Rates
• Hours
• Supporting
documentation

32. 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?

33. 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

34. 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

35. 5) Determine sign-off process and timeline
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• Who is responsible for determiningand documenting
FMV at your organization?
• When is supportingdocumentation reviewedand
approved?
• Who is the responsible executive for sign off?
• What are the expectations for how long the process
will take?

36. 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?

37. Consider this: will you perform audits?
• Reviewingcontracts line by line is consideredbest
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 auditingresources available at
mdranger.com/resources
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38. 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

39. 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