Government Regulation: Dealing with Interventions

No organization looks forward to the Feds knocking on their door, but it is possible to prepare for it and make the process less stressful. Beyond understanding the basics of Corporate Integritity Agreements (CIAs), exploring best practices identified in CIAs could help your organization avoid or prepare for an investigation. Preparation is critical and can make the audit process go more smoothly. And with more than 350(!) CIAs in effect, you have no shortage of resources to use to uncover ways to try and preemptively avoid federal intervention.

Take steps to prevent violations.

If you are not currently involved in an investigation or settlement for Stark or Anti-Kickback violations, don’t rest on your laurels. The OIG is actively investigating potential regulatory violations at healthcare entities. These violations may come to light through routine and programmatic auditing by the OIG or through a whistleblower allegation. By familiarizing yourself with CIAs issued for organizations similar to yours, you can take steps to reduce your organization’s potential violations. Model your compliance program after the requirements outlined in the CIAs so that you can prevent violations.

You can use existing CIAs as a template for a compliance program, as well as a roadmap of what to anticipate if your organization is found to be in violation. CIAs dealing with compliance issues with physician agreements provide insight into what you might be required to do under a CIA. We suggest reviewing several recent CIAs for entities structured similarly to yours. There are a significant number of CIAs available for review, and organizations that have built their compliance programs under a CIA have some of the most robust compliance programs in the industry. Borrow best practices from them!

Create a compliance committee.

A compliance committee should be an integral part of any health care organization, providing a front line of defense to ensure an adequate compliance program that is properly administered and monitored. The committee should advise the compliance officer as well as assist in compliance program implementation. Members of the compliance committee should be well informed about the regulations, legal requirements, and potential risks that may impact the organization. The compliance committee should assess current policies and procedures, develop appropriate new policies and procedures, and monitor performance.

Use the guidelines outlined in CIAs for other healthcare entities similar to yours to structure your physician contracting program.

By using guidelines in CIAs for other healthcare entities similar to yours, you can mimic compliant program requirements. By using the OIG’s requirements, your organization should be well positioned if it’s ever under federal scrutiny.

Physician contracting is an area where healthcare organizations are especially vulnerable to government intervention given Stark and Anti-Kickback statutes. While CIAs vary slightly from case to case, generally they require:

  • A contract management system
  • Tracking of payments and up-to-date time logs for physician services
  • A written review process for all arrangements to ensure they are not violating Stark or AKS. The process should require that each arrangement has documented the following:
    • A review by an attorney with Stark and AKS knowledge
    • Demonstration of a business need for the arrangement
    • Documentation that agreements meet FMV for all payments
  • Annual reviews of all arrangements to be completed by the Compliance Officer and submitted for review by the compliance committee
  • Training for everyone who is involved with arrangements surrounding the contract management system, internal review and approval process, and the tracking of payments corresponding to the arrangements

Evaluate stipulations of CIAs that might pose a problem for your organization.

While you are reviewing other CIAs, think about requirements that could pose an issue if they were placed upon your organization. Some aspects of a CIA are non-negotiable, but you may be able to create alternate policies that are acceptable to both your organization and the Feds. Your in-house and external counsel are key people in negotiating the terms of a CIA, but it is important for everyone to think about the reasonableness and timing of the requirements. For example, if you have an existing personnel training program that covers the requirements outlined in the CIA but requires fewer hours, your lawyers may be able to negotiate an acceptable compromise. For more on CIA negotiations, this article is a great resource.

What happens if an organization fails to comply with a CIA?

Failure to comply with the requirements of a CIA can result in a fine, with $2,500 per day commonly cited. More serious consequences can occur if the OIG considers violations to be breached, including exclusion from federal health programs.

CIAs are serious business. Learning from the mistakes of others may help prevent an audit or mitigate the consequences of an audit if steps are taken that have worked for others. Some of the best in class compliance programs have been developed in response to a CIA, and many of those documents are available for public review.

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Changes to Stark Law on the Horizon?

The federal Department of Health and Human Services announced this week that they are nearing the end of the process to introduce new modernizing rules to both Stark Law and the Anti-Kickback Statute.

"Outdated policies from HHS mean not only less than desirable results for taxpayers and for beneficiaries of our programs, but often for patients and payers in the private market as well. The role played in paying for services by our own policies at HHS is dominant, which means where we aren't innovating, we hold things back." - Deputy HHS Secretary Eric Hargan

These changes have taken place within the Regulatory Sprint to Coordinated Care, announced last fall. In evaluating Stark Law, originally passed in 1989, HHS is attempting to reexamine the role of the Law as healthcare shifts towards a more value-based care model.

"In a system where we're paying for value, where the provider is ideally taking on some risk for outcomes and cost overruns, we don't have nearly as much need to interfere with who's getting paid for each service. Of course, in considering changes to the Stark Law, we have to remain acutely aware of the need for competition in the healthcare marketplace. In an ideal world, we can do both at the same time."

Despite these possible changes to Stark and AKS on the horizon, physician contract compliance should remain a top priority at healthcare organizations as the initial compliance goals set forth by these laws continue to be praised by HHS.

If you have questions regarding physician contract compliance at your organization please feel free to contact us to learn more about how MD Ranger helps healthcare organizations.

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Where on the market range do you pay? Profile your facility

Executives and leadership must determine how “fair market value” is defined and interpreted at their organization. While the federal government does provide baseline guidance, it is ultimately up to the organization itself as to where on the market ranges they choose to pay.

Some organizations pay only up to the median. Others are fine with payments as high as the 75th percentile. And of course, there are always a some agreements that for whatever reason must be paid at or above the 75th or even 90th percentile. How does an organization go about determining what range of the market they are comfortable paying? We suggest creating a “profile” of your facility or facilities to help answer that question.

When you are deciding where the majority of your contracts should be in the market range you should consider the following attributes of your organization.

  • Size
  • Trauma status
  • National reputation
  • Academic medical center/teaching hospital status

You can profile your organization internally if you have an experienced team who has done their research, including viewing opinions from experts who have characterized the facility previously.

Lastly, you must factor your leadership team’s comfort with risk. Some organizations are okay with hospitals setting rates anywhere below the 75th percentile, while other leadership teams want to be involved with any payment rate negotiated above the 50th percentile.

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Physicians: Use Market Data for Negotiations with Hospitals

Negotiations over contracts with hospitals can be stressful. Whether it’s because you’re non-confrontational, or you are dealing with a difficult situation, there are steps you can take to prepare yourself. One such step is using market data to have a data-driven, powerful argument. If you walk into a negotiation without knowing what the market rates look like for your specialty, you’re missing a huge opportunity.

Here are some quick, yet effective, tips for using benchmarks while negotiating:

  • Know exactly where on the market ranges you’re currently being paid. Understanding where in comparison your rates fall is key. If you are being paid at the median yet you have been practicing for 20+ years and are well-respected on the medical staff, you could create a compelling argument for being paid closer to the 75th percentile.
  • If the sample size is robust, call it out. The bigger the sample, the better the data. If you are working with market data that has contracts from physicians at over 50 hospitals, the more stable (and reputable) the benchmarks are.
  • Regional benchmarks can be helpful, but only to a point. MD Ranger has analyzed tens of thousands of contracts and cannot find a statistically significant difference in rates between the major “regions” of the US (e.g.: Southeast vs. Northeast). If you are able to find a third-party survey of physician payment rates that has a strong sample size, you may be able to use the benchmarks very effectively. However, if the sample size is poor you are much better off using national benchmarks.
  • Use facility demographics to your advantage. Are you taking emergency call at a trauma center? If so, use market data benchmarks taken only from other trauma centers to get the most accurate rates. MD Ranger has found that trauma centers (Levels I and II) generally have a 30% premium for call rates.

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