Documenting FMV with MD Ranger
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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.
Documenting FMV with MD Ranger
- 1. 1 Documenting FMV with MD Ranger July 27, 2016
- 2. 2 Outline: • Introducing MD Ranger • Why FMV matters • Best practices for determining and documenting FMV • Using MD Ranger to document FMV
- 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 5
- 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 7 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 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. Your speaker 10 • 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 11 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 12
- 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: 13 “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 14
- 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 15
- 16. Most importantly… • Whatever you choose, it’s critical to define FMV and consistently that standardapply to all physician contracts 16
- 17. An example: is this contract FMV? 17
- 18. Hot Topics in Physician Contracting 18 DETERMINING FMV
- 19. Initial guidance: set your approach in advance 19 • 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 20 • 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 21
- 22. 1) Test commercial reasonableness 22 • 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 23 • 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 24 • 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 25 • 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! 26
- 27. Use MD Ranger tools for proposing rates 27
- 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 28
- 29. Process is key 29 • 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
- 31. 1) Check key elements of the contract 31 • Counterparty • Service • Dates • Rates • Hours • Supporting documentation
- 32. 2) Ensure rates and hours do not exceed your organization’s standards of FMV 32 • 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 33 • 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 34 • 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 35 • 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 36 • 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 37
- 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 38 Available on mdranger.com/resources
- 39. Need help? 39 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