We've seen arrangements ranging from adding completely new services to providing backstops for physicians whose office practice volumes fell precipitously. Let me share some examples.
A hospital I worked with created a series of new services to address COVID, including an urgent care and testing site, a mobile unit to visit senior care facilities and a dedicated hotline. The hourly rate for physician services was set approximately 20 percent over the standard rates paid for urgent care. But the physician’s PSA also had to be adjusted to include double payment if hours in the COVID site overlapped and reduced hours required in the PSA.
I've also seen increased ICU staffing needs resolved in different ways. In one situation, a contract amendment was needed for an intensivist group to allow per diem payments for additional staff while in another, an anesthesia contract was amended to repurpose anesthesiologists from outpatient surgery to care for critical patients in the ED and ICU.
I've also seen a number of medical groups amending PSAs that paid physicians based on productivity due to the 50 to 80 percent declines in patient visits. Compensation plans were adjusted in the short term, with some groups selecting a benchmark-based floor or guarantee and others looking back to historical compensation to stabilize income.
In each of these situations, contracts had to be amended with negotiated payments, performance and length of contract decisions, many of which will require ongoing discussion and revisions. The short turnaround required to execute contracts in response to the crisis was facilitated when organizations had ready access to high quality benchmarks and a designated contract manager who was familiar with existing contracts and could monitor payments and terms.
It's important to understand that these waivers don't impact the vast majority of provisions within Stark and fraud of any kind is still prohibited. So understanding what you can and you can't do under the blanket waivers is key. Note that the intention of CMS is to make it easier on providers to act quickly and nimbly to respond to the pandemic and not to relax Stark, per se. Because if you're working at or advising health care organizations right now, you know firsthand that organizations are amending existing contracts or even arranging new ones fast to address COVID.
So, the first thing you need to know is the waivers cover arrangements retro to March one 2020 and are only in effect as long as there's a public health emergency. New arrangements or payments that fall under these waivers must be solely related to COVID-19. All arrangements do need to have a limited timeframe and scope.
Second, you don't want to stop tracking physician time activities or payments just because this is a global health crisis. Any and all records must be available and accessible to prove that payments aren't fraudulent, and you need to keep and maintain those records.
Lastly, and this is something everyone's been wondering about; payment may exceed or fall below fair market value, but only for arrangements that are related to the COVID response.
Here are our responses to some critical questions we have been asked by some of our subscribers relating to the unfolding COVID-19 crisis.
Question: Can we increase the hours that are defined in various physician contracts to address our response to COVID-19?
Answer: Yes. The response to a public health emergency is an extraordinary circumstance that can justify waiver of the Stark ‘set in advance’ guidelines.
Question: Can we compensate physicians for higher than our standard hours or hourly rates, if necessary, to secure needed services related to COVID-19?
Answer: Yes. These efforts epitomize the kind of extraordinary circumstances that reasonably allow for normal benchmark limits to be exceeded to secure needed physician services. In standard valuation practice, typical compensation benchmark guidelines are between the 25th to 75th percentile of market rate benchmarks, or in some cases up to the 90th percentile. Your organization should consider its current internal guidelines and determine if conditions require efforts above and beyond standard payment terms.
Question: How should the principle of allowances for extraordinary circumstances be translated into practice?
Answer: Consider and execute the following:
- Adjustments to compensation should be documented as directly connected to the COVID-19 response.
- Adjustments should be clearly defined as temporary with applicability only until the heightened response is no longer required (with a provision for periodic review).
- Work hours and compensation rates can exceed the 75th percentile or even the 90th percentile as indicated by sound justification of the need for services, and prudent negotiations that reflect reasonable judgement.
Question: What service benchmarks are relevant to this extraordinary event?
Answer: This depends on the hospital and how you are responding to the crisis. Some positions that we think may be relevant include infectious disease-related positions, medical directors of service lines such as emergency services, internal medicine hospitalists, OB and critical care. Similarly, hourly rates for urgent care or outpatient clinic staffing may be useful.