Stacking Physician Agreements: Identifying and Mitigating Risks
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The document discusses the risks associated with 'stacking' physician agreements, which occur when a physician holds multiple contracts that may lead to non-compliance, particularly with Stark Law and anti-kickback statutes. It outlines potential scenarios where stacking can happen, its consequences such as overpayments and penalties, and offers best practices for mitigating risks through effective contracting policies and regular audits. Additionally, it provides case studies to illustrate compliance challenges and emphasizes the importance of maintaining fair market value in compensation arrangements.
Stacking Physician Agreements: Identifying and Mitigating Risks
- 1. 1 STACKING PHYSICIAN AGREEMENTS: IDENTIFYING AND MITIGATING RISKS JULY 2019
- 2. 2 Disclaimer! Pull in the experts • MD Ranger doesn’t give legal advice • All matters regarding potential Stark or AKS violations (or questions) should go to your counsel under privilege • Fear overpayments because of stacking agreements? Talk to your attorney to consider your options.
- 3. Hi there! Allison Pullins • Experienced healthcare technology executive with 12+ years in industry • 200+ hospital/health system clients • Hosted 65+ educational webinars • Published author, including Becker’s Healthcare • Volunteer and fundraiser for The Marfan Foundation Fun Fact: I’m a national award- winning tap dancer! 3
- 4. 4 Today’s agenda What is stacking? Why is it risky? Best practices to prevent stacking Case study examples MD Ranger: how we can help
- 6. What is stacking? When a physician or medical group has two or more agreements with a hospital that, when considered together, are potentially non- compliant (e.g. greater than 90th percentile for compensation or the time commitment may require more hours per year than full-time equivalency) 6
- 7. Potential stacking scenarios Stacking can happen when: • Few physicians of a given specialty are available in the market, so the organization must contract with a few physicians to provide an array of services • A healthcare organization contracts with a physician or group on separate agreements • Healthcare organizations don’t have functioning physician contracting policies • Physician contracts aren’t being audited in aggregate (or at all!) • One or more of the physician compensation rates are not commercially reasonable, regardless of whether they fall within FMV 7
- 8. An emergency department call payment rate is based on “opportunity cost” of lost private practice income However, the physician or medical group does not actually end up suffering any losses 8 Another stacking scenario
- 10. 10 Stacking could lead to overpayments, which could lead to…. …Stark violations. • Stark seeks to disconnect payments and physician referrals • A physician (or a physician’s immediate family member) who has a direct or indirect financial relationship with an entity that provides “Designated Health Services” (DHS), cannot refer patients (Medicare/Medicaid) to that entity for DHS, and the entity cannot submit a claim for services unless the financial relationship is within a Stark exception.
- 11. 11 Keep in mind • Strict liability statute • Intent to violate the law doesn’t have to be proven • The Yates Memo (2015) enforces individual culpability
- 12. 12 Repercussions significant • No payment for Medicare claims • Civil monetary penalties, plus an assessment of up to three times the claim • Penalties for “circumvention schemes” • Physicians and entities could be excluded from participating in CMS programs
- 13. • “Depending on the circumstances, problematic compensation structures that might disguise kickback payments could include, by way of example: • (i) “lost opportunity” or similarly designed payments that do not reflect bona fide lost income; • (ii) payment structures that compensate physicians when no identifiable services are provided; • (iii) aggregate on-call payments that are disproportionately high compared to the physician’s regular medical practice income; • or (iv) payment structures that compensate the on-call physician for professional services for which he or she receives separate reimbursement from insurers or patients, resulting in the physician essentially being paid twice for the same service.” 13 From OIG advisory opinion no. 07-10
- 14. 14 Overpayments are not always obvious Overpayments in physician agreements can be easy to spot, such as paying higher than FMV or paying for too many hours in administrative agreements. Sometimes, reasonable-looking payments that are spread out across agreements or within one agreement are not reasonable when looked at in aggregate.
- 15. 15 From OIG advisory opinion 07-10 In this opinion, the OIG calls problematic compensation structures: • “payment for lost opportunity cost that do not reflect bona fide lost income” • “aggregate on-call payments that are disproportionately high when compared to the physician’s regular practice income” • “payment…resulting in the physician essentially being paid twice for the same service BEST PRACTICES TO AVOID STACKING
- 16. Goals for a physician contracting program ✓ Policies and procedures in place to streamline physician contracting and mitigate risk ✓ Awareness of what the organization spends on physician contracts, and if that amount is appropriate given its profile ✓ Consistent, objective benchmarks or valuations to document FMV and commercial reasonableness of physician arrangements ✓ Identification and monitoring of high-risk arrangements ✓ Strategic thinking, especially regarding: • Evolving physician compensation structures • Potential regulation changes • Changing reimbursement • Profile of physician community • Competitive environment • Unpredictable, dynamic industry 16
- 17. A contracting policy template ✓ Clear process for contract negotiation and approval that involves board and senior management ✓ Standardized, objective benchmarks across the organization ✓ Policies and procedures for dealing with outliers, based on both dollar threshold and comparison to benchmarks ✓ Process and organization for documentation ✓ Routine schedule for reviewing and benchmarking all contracts 17
- 18. 18 Policies specifically targeting stacking In order to audit your physician contracting program for stacking risks, your policy should be targeted towards physicians who hold more than one position or who perform more than one service
- 19. 19 Establish rules about ED call payments If physicians are holding two call positions at the same time, set guidelines around how much they can be paid. If they are effectively an employed physician, set an aggregate payment cap from all sources.
- 20. • Don’t pay a physician to take call for two services at the same time • Common service combinations where stacking most frequently occurs: • Orthopedic surgery and hand surgery • Plastic surgery and hand surgery • Non-invasive and invasive cardiology • Stroke and non-stroke neurology • Trauma and general surgery 20 Beware of multiple ED call payments
- 21. Here are strategies for paying a physician for call coverage panels for two specialties concurrently: • Consider per episode payments • Consider per activation payments • Pay for the service with the higher rate • Benchmark the per diem payments to a lower percentile (e.g. use the 25th percentile even if your organizational standard is 50th or 75th for standard arrangements) • Set an aggregate payment cap 21 What to DO when docs take two services
- 22. 22 • Ask physicians to certify that their private practice cannot be rearranged to avoid lost income • Consider monitoring physicians’ operation room utilization to compare elective volume with and without on- call coverage Review and monitor restricted call payments
- 23. 23 • Time tracking should be standard for ALL physician administrative positions • Leverage technology • As much as you can, automate time tracking and coordinate effectively between all parties: • Physicians • Finance • Administration Pro Tip: follow the money Track administrative time carefully
- 24. 24 Additional best practices for administrative time tracking It should be standard practice to keep time logs even for employed physicians who serve as medical directors. Hours and payment for administrative services should be defined within a PSA (Professional Services Agreement). Different specialties and services may be worth different rates even when the same physician is involved (e.g. a surgeon may be paid one rate for clinical care and another for serving as a committee chair for peer review).
- 26. • Dr. Sally Smith is a hospitalist at a 300-bed community hospital, covering shifts and serving as medical director of the hospitalist panel • Serves as the Vice Chief of Staff • Has consulting arrangement with the hospital to assist with EHR transition • Rate for each position falls within the fair market value for that position 26 Example 1: hospitalist, administrator, consultant
- 27. 27 • Dr. Smith is being paid more than the 90th percentile of the annual income for a full-time hospitalist • So, if a hospital pays a physician to be a full-time hospitalist, and also pays the individual for three additional jobs, can the physician be effective in all the roles? Example 1: hospitalist, administrator, consultant
- 28. Key Takeaway: Dr. Smith’s total compensation must fall within FMV for the positions she fulfills, and justification for excess payment must be documented to demonstrate non-duplicative payments and duties. 28 Example 1: hospitalist, administrator, consultant
- 29. 29 Example 2: ED call payments • Dr. Lara Perez is one of the few ENT physicians on the medical staff who is trained and willing to handle major facial injuries • She staffs two separate panels: ENT and facial injuries • Both panels are paid at the 75th percentile of respective fair market value ranges; she takes simultaneous call for both panels • These arrangements contradict the principles in the OIG advisory opinions and OIG guidelines
- 30. • Some organizations pay physicians in a similar situation at the high end of the market range for the best paid position • Other organizations will select a rate that blends across the services • Be aware of paying for two jobs at the same time; carefully justify and document whatever payment is made 30 Example 2: ED call payments
- 31. 31 Dr. James Kim is a neurosurgeon taking restricted call coverage Neurosurgery is particularly vulnerable to hidden compliance risks Frequently restricted coverage; private practice revenue comes from a relatively small number of surgical cases Example 3: restricted coverage & opportunity cost risks
- 32. • The standard for Levels I and II trauma centers is that neurosurgeons must be immediately available and cannot conduct private practice (“restricted call”) • Compensation benchmarks for trauma center neurosurgery assume physicians suffer lost private practice income 32 Example 3: restricted coverage & opportunity cost risks • However, the physician may not suffer any opportunity cost • Aggregate compensation could be significantly beyond the 90th percentile of benchmark annual neurosurgery compensation
- 33. 33 Example 4: employment plus+++ • Dr. Grace Williams is a cardiologist that works with a medical group that has a PSA with the local hospital • The group has negotiated a co- management agreement and additional medical directorship payments, including ad hoc payments for meeting attendance and peer review participation • Though her per diem call coverage payment is the 25th percentile, she and her colleagues are paid call stipends, too
- 34. 34 Example 4: employment plus+++ Additional payments for services on top of employment arrangements could result in payments to doctors that end up well above fair market value!
- 36. 300+ Physician Benchmarks • Call coverage rates • Medical direction payments • Administrative and leadership • Hospital-based service stipends • Diagnostic testing, etc. • Clinic & hourly rates • Telemedicine rates Online Platform • Benchmark lookups • Contract proposal tools • Contract reports by facility and service • Total facility costs + benchmarks Research and Support • Resources for education and training • On-call experts to help subscribers use benchmarks and tools Compliance Documentation • Contract-specific FMV documentation reports • Reports to assist with real-time monitoring and annual reviews 36 Our platform
- 37. Standardize processes and rates Document FMV Access 300+ payment benchmarks Review and monitor contracts Have data- driven physician negotiations Mitigate compliance risks 37 The foundation of your contracting process
- 38. 38 Our database
- 39. • Call Coverage (55+) • Medical direction (90+) • Hospital-based services and stipends (20+) • Administrative (12+) • Medical Staff Leadership • Diagnostic/other services e.g. ROP, autopsy, dialysis • Clinics, professional services • Telemedicine • Residency/teaching/GME • Uncompensated care • Meeting attendance, peer review, IT/EHR and quality initiatives • 13 Pediatric services, with more emerging each year Hospital-characteristics drill down for ADC, bed size, trauma status, urban/rural, stroke centers, teaching status, and more Used in such diverse settings like academic medical centers, integrated delivery systems, and critical access facilities nationwide 39 Our benchmarks
- 40. Let’s talk ⁃ Do you struggle with your physician contracting policy and strategy? ⁃ Are you spending too much on FMV opinions? ⁃ Do you think your organization could become more efficient with access to a streamlined platform with benchmark lookups and autogenerated reports? ⁃ Reach out: apullins@mdranger.com or 650-692-8873