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Measuring the Financial Health of Your Physician Contracting Program

February 19, 20159 COMPLIANCE TIPS TO START

THE YEAR RIGHT

Today’s agenda

• MD Ranger intro and physician contracting background

• 9 compliance tips you can use today

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Costs soaring, performance falling

• 4-6% total operating expenses

• Expense that has been largely ignored

• Huge impacts on financial performance, organizational performance, physician relationships

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Physician costs per ADC as a percent of total hospital expense (OSHPD*)

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*Office of Statewide Health and Planning Department (California)

Administrative payments increasing

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Direction and admin total

hospital payments now $1.8M, up 25% from 2014

Leadership position payments

at the 75th percentile grew from $52,630 in

2015 to $60,000 in 2016

Chief of Staff median payments

increased from $36,000 in 2015 to

$48,500 in 2016

Factors driving increased payments

• Economic and market forces such as lower reimbursements, larger group practices with productivity incentives, more part-time and employed physicians, and increasing internal governance demands of physician practices

• Bifurcation of hospital-based and office-based medicine

• Increased time demands on physicians• Competing priorities for doctors mean fewer want

(and can) serve in admin roles

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Specific (and common) challenges

• Current system isn’t working• Physician costs are spiraling• Unsure all your contracts are FMV compliant• No standardization across facilities• Concerned about government audits, whistleblowers• Don’t know what you don’t know

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What do you do?

• Set up systems and processes• Determine if your current spend is appropriate• Valuing physician arrangements• Think strategically about the future, especially

regarding:• Changing reimbursement• Evolving physician compensation structures• Unpredictable, dynamic industry

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What stands in your way?

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Lack of resources

Poor sources of data from bad market surveys

Expensive solutions

250+ Physician BenchmarksCall coverageMedical direction paymentsAdministrative and leadership servicesHospital-based service stipendsDiagnostic testing, etc.Clinic & hourly rates

Online PlatformBenchmark lookups

Contract proposal toolsContract reports by facility and service

Total facility costs + benchmarks

Compliance DocumentationContract-specific FMV documentation reportsReports to assist with real-time monitoring and annual reviews

Research and SupportResources for education and training

On-call experts to help subscribers use benchmarks and tools

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The foundation of your compliance process

Standardize processes and rates

Document FMV

Access 250+ payment

benchmarks

Review contracts and monitor with

easeHave smarter,

data-driven physician

negotiationsMitigate

compliance risks

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Our subscribers and database

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Our benchmarks• Call Coverage (55+)• Medical direction (85+)• Hospital-based services (15+)• Administrative• Medical Staff Leadership• 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• 13 Pediatric services, with more

emerging each year

Hospital-characteristics drill down for ADC, bed size, trauma status, urban/rural, stroke centers, and more.

Used in academic medical centers, integrated delivery systems, and hospital organizations.

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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Meeting the unique challenges of healthcare organizations

Make data-driven decisions for your organization

Stop relying on poor data sources

Streamline documentation and ensure you are protected against costly settlements

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Value for consulting firms, attorneys

Benchmarks for 250 physician services, most of which can be found no where else, at your fingertips.

Benchmarks for making strategic financial and operational choices, like total call coverage costs and benchmarks on number of positions

Online platform for organizing and tracking your clients' performance, as well as easy, on the go lookup tools for MD Ranger physician comp benchmarks

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About your host

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• Chief Marketing Officer at MD Ranger

• Decade plus experience in health care, specifically pertaining to the hospital/physician relationship

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COMPLIANCE TIPS FOR THE NEW YEAR

1 - Educate your team

If the administrators who are negotiating physician contracts or any member of your team are not aware of the penalties for violating Stark and AKS, familiarize them with both the laws themselves and the penalties for noncompliance.

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Offer opportunities

ü Membership to compliance or legal organizationsü Certificationü Webinarsü Encourage them to subscribe to email lists, read

blogs, etc.ü Lunch and learn sessions

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2 - Have contracts for paid positions

• Strive to have an agreement for all payments you currently make to physicians

• Current agreements help you keep track of overall spending, prevent duplicate payments or positions, give control over the scope of services provided, ensure you and your physicians are on the right page, and so much more

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3 - Automate

• Use your contract management system to its fullest potential. Consider setting alerts to remind your team of renewals.

• Create standard templates for call coverage and medical director contracts. Negotiate rates as consistently as possible.

• Automate documentation with MD Ranger• Yearly audits should use technology to prioritize and

sort.• Always look for ways to be more efficient!

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4 - Identify and segment the riskiest agreements

• Call coverage or medical direction agreements, unless above the 75th percentile in payments, are typically straightforward.

• If your organization has negotiated contracts that are high profile, these deals may require more stringent documentation and closer monitoring. Other risk factors include multiple contracts with the same physician or for similar services.

• If your organization flags such contracts and creates strict guidelines around negotiation and renewal, you can protect your organization from pitfalls.

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Flag and track risky agreements

• If your organization flags such contracts and creates strict guidelines around negotiation and renewal, you can protect your organization from potential pitfalls.

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5 - Have a system for handling exceptional agreements

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• Exceptional agreements might be:• Higher hourly rate• More hours per year (e.g. start up costs• “Rock star” physicians• Undesirable panels

• When you must pay a physician above FMV, create a consistent review process

• Have a criteria for what counts as an exception• What is the process for reviewing these exceptions?• Who needs to sign off on exceptions?

Results

• 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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6 - Define FMV and set documentation standards

Define FMV• What is 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?

Documentation Standards• 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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7 - Set the tone from the top

• Essential to have an executive who is knowledgeable and responsible for physician contracting

• She should contribute to the compliance program creation and be familiar with the day-to-day

• Responsible in the unfortunate event of an audit

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8 - Audit annually; monitor continuously

• Auditing happens on a regular basis and looks retrospectively across the organization

• An annual internal audit can identify potential patterns of non-compliance or outliers that have not been properly documented

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8 - Audit annually; monitor continuously

• Monitoring is real-time management of physician contracts

• Monitoring contracts throughout the year to ensure they are being paid and performed according to what was agreed upon

• Elements should include looping in AP, tracking physician time

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9 – Review CIAs

• Learn from organizations who made mistakes • CIAs provide step-by-step requirements to be in

compliance in the eyes of the OIG

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9 – Review CIAs

A CIA is a tool used by the OIG to enforce compliance with healthcare regulations. It is usually coupled with a civil settlement between the provider and the government as a means to avoid being excluded from federal health programs.

By using guidelines in CIAs for other healthcare entities similar to yours, you can mimic compliance program requirements outlined in CIAs. By using the OIG’s requirements, you are setting your program up for success.

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CIA’s include many best practices mentioned here!

• Implement a contract management system.• Track payments, as well as ensure the services physicians

are entering into time logs are covered by the arrangement.

• Create a written review process for arrangements to ensure they are not violating Stark or AKS. The process is to include for each arrangement:• A review by an attorney with Stark and AKS knowledge• Steps to demonstrate a business need for the existence of the

arrangement• A method to determine and document FMV for all payments

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CIA’s include many best practices mentioned here!

• Perform annual reviews of all arrangements, to be completed by the Compliance Officer, and submit the review to the compliance committee.

• Train everyone who is involved with arrangements surrounding the contract management system, internal review and approval process, and the tracking of payments corresponding the arrangements.

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ü EDUCATE YOUR TEAM

ü HAVE CONTRACTS FOR PAID POSITIONS

ü AUTOMATE

ü IDENTIFY AND SEGMENT THE RISKIEST AGREEMENTS

ü HAVE A SYSTEM FOR HANDLING EXCEPTIONS

ü DEFINE FMV AND DETERINE DOCUMENTATION STANDARDS

ü SET THE TONE FROM THE TOP

ü AUDIT ANNUALLY, MONITOR CONTINUOUSLY

ü REVIEW CIA’S

Need help?

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Ø Do you feel confident in your organization’s physician contracting and FMV documentation process?

Ø Are you confused how much to pay physician leaders for their time?

Ø Do you feel like your organization has risky agreements?

Call us: apullins@mdranger.com or 650-692-8873