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"Outdated policies from HHS mean not only less than desirable results for taxpayers and for beneficiaries of our programs, but often for patients and payers in the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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Make a Call Coverage Payment Strategy

Organizations that lack policies about when to pay for ED coverage run the risk of making decisions that aren’t always strategic. With the median MD Ranger hospital paying $3.5 million a year for ED call coverage, poor decisions can be costly.

Understanding the “facility profile” is key before developing a call pay strategy. Small hospitals with low ED volumes should have fewer positions that they compensate for call. On the flipside, busy urban trauma centers have high ED volumes where you would anticipate more specialities being compensated to provide coverage.

Though frequency of call is dependent on the services the hospital offers, its market, and other unique factors, there are a handful of specialties that we can assume will be called for coverage again and again. It is important to consider these specialities and determine if it is commercially reasonable to compensate physicians for coverage.

There are also physician specialities that don’t especially have a high volume of calls but are nonetheless typically compensated frequently (and handsomely). These specialties are often higher-paid; ED call stipends usually have to do with the opportunity cost to the physician.

Many facilities who pay for coverage struggle knowing if their overall spending is too much. They lack a vision and strategy for paying call across their organization. If your hospital or health system struggles with this, MD Ranger can help: This email address is being protected from spambots. You need JavaScript enabled to view it..

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