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1 
Audit Smart: Best Practices for Auditing Your Physician Contracts 
October 23, 2014 
Allison Pullins, Director
2 
Outline: 
•Introducing MD Ranger 
•Why audit your physician contracts? 
•Planning and timing the project 
•Who should b...
This webinar will 
•Share best practices for internal audits or “reviews”, which are periodic, informal examinations of ph...
This webinar will not 
•Substitute for your organization’s attorney 
•Substitute for a formalized, external audit 
•Demo M...
5 
MD Ranger 
MD Ranger is a market data company that collects non-employed physician contract data directly from hospital...
6 
MD Ranger Includes: 
•A secure, web-based Data Tool to collect and organize contract data (uploads via Excel available,...
MDR Benchmarks: 
•80+ administrative services: hours, hourly and annual rates 
•Includes hard to find data on: 
•Committee...
Introducing Allison 
8 
•Eight years experience in healthcare consulting and technology; specializing in physician marketi...
Goals of an Internal Audit 
•Provide overview and oversight of organization-wide contracting practices 
•Uncover potential...
Why audit? 
10
Uncle Sam says… 
•Federal regulations govern physician payments 
•Goal is to reduce/eliminate fraud 
•Vague language, lega...
Physician Self-Referral Law (AKA Stark Law) 
•Limits certain physician referrals of DHS if a physician or the physician’s ...
Anti-Kickback Statute 
•Prohibits the exchange or offer to exchange anything of value in an effort to induce the referral ...
And lastly…. The False Claims Act 
•Enacted during the Civil War, the law imposes liability on people/organizations who de...
Penalties steep for non-compliance 
•Stark Law: single civil violation could result in a fine of up to $15,000 for each se...
Internal Audits = strong financial and compliance controls 
•Ensure all contracts are paying “fair” rates 
•Identify redun...
Maintain key physician relationships 
•Strong physician relationships key to a successful organization and to promote clin...
Planning and timing your audit 
18
How often should audits occur? 
•Check your organization’s policy 
•Understand how other departments and business function...
Take both top-down and bottom-up approach 
•Bottom-up: individual review of contracts for compliance 
•Top-down: use bench...
Top-down audit suggestions 
•Check total hospital-wide payments for physician contracts across different types of contract...
Additional top-down audit suggestions 
•Net professional collections for hospital-based groups 
•No hours minimums/maximum...
Outcomes from top-down audits 
•Uncover underlying compliance issues 
•Reveal duplicate or excessive payments to individua...
Large organization or health system? 
•Determine appropriate timeframes, taking into consideration both the number of cont...
Who should be involved? 
25
Know your team and your resources 
•Your audit process depends on your organization 
•Previous audits: figure out what wor...
If resources are limited… 
•No auditing team? No problem! 
•You don’t need much infrastructure for a successful internal a...
Executive involvement and support 
•A member of the hospital’s executive team is typically accountable for the audit 
•The...
The auditing process: guidelines and suggestions 
29
Current auditing procedures? 
•Determine if your facility or health system has procedural guidelines for internal audits 
...
Check processes in your contracting program 
•Document outlining contracting guidelines 
•FMV process 
•Review specifics 
...
Essential questions for teams auditing contracting teams 
32
Do you have a written and signed contract? 
•Stark and AKS require written contracts for physician services with payment t...
Is the contract current? Expired? 
•Expired contracts are more common than you’d think 
•Expired contracts mean that you d...
Are you providing non-monetary compensation to the physician, and if so, is it documented? 
•Are you providing non-monetar...
Is the service provided defined in detail? 
•The services to be provided must be described in detail in the contract. 
•Do...
Is paying for the service commercially reasonable? 
•Just because you are paying a physician for a service doesn’t necessa...
Has the rate changed within the first year of the agreement? 
•Are there any amendments to the agreement that alter the pa...
Is your rate within fair market value? 
•Check the fair market value documentation with the agreement to ensure that metho...
Did you apply your organization’s “FMV Process” to this contract? 
•Your organization should have a thoroughly documented ...
Could a contract imply that you are paying for referrals (in any way)? 
•Paying for referrals or bribing physicians in any...
Is everyone complying with the agreement? 
•Ensure that the hospital is paying the appropriate rates as per the agreement ...
Documentation and follow-up 
43
Documentation 
•Review the entire auditing process and document what you did step by step 
•Create a file or document to c...
Red flags? 
•Every organization has a few; don’t panic 
•Someone has to be at the 90th percentile: it might be this contra...
Follow up 
•Execution and accountability are essential for a successful audit, which is what makes follow up so important ...
Get organized with MD Ranger support 
•Top-down and bottom-up internal audits supported by MD Ranger benchmarks and online...
Your turn 
48 
Does your organization need help with reviewing contracts? 
Do you need better resources for physician cont...
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Audit Smart: A Best Practices Webinar for Physician Contracting

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Organizations routinely audit physician contracts to comply with federal regulations, practice good financial management, and maintain relationships with key physicians.

Our compensation benchmarks and online analytics offer unparalleled insights into physician compensation. MD Ranger empowers executives to be able to analyze, negotiate, and document physician contracts. Executives and their teams can determine appropriate compensation rates, negotiate competitive contracts, comply with federal regulations, and identify opportunities for cost savings with MD Ranger.

You can contact the MD Ranger team with questions or for more info at inquiries@mdranger.com.

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Audit Smart: A Best Practices Webinar for Physician Contracting

  1. 1. 1 Audit Smart: Best Practices for Auditing Your Physician Contracts October 23, 2014 Allison Pullins, Director
  2. 2. 2 Outline: •Introducing MD Ranger •Why audit your physician contracts? •Planning and timing the project •Who should be involved in contract review? •Straightforward auditing process guidance •Documentation and follow up post-audit
  3. 3. This webinar will •Share best practices for internal audits or “reviews”, which are periodic, informal examinations of physician contracting program and individual contracts •Show how MD Ranger subscribers use benchmarks and online analytics platform for auditing activities, in particular: •High-level benchmarks for total spending •Percent of subscribers paying for services •Analytics that reveal total costs across services, specialties, and facilities •Individualized contract reports for compliance purposes 3
  4. 4. This webinar will not •Substitute for your organization’s attorney •Substitute for a formalized, external audit •Demo MD Ranger product capabilities and features (though will be referenced for the benefit of MD Ranger subscribers joining us) 4
  5. 5. 5 MD Ranger MD Ranger is a market data company that collects non-employed physician contract data directly from hospitals. Our approach to capturing all contract data from an organization allows us to not only determine what to pay, but also when to pay. We help hospitals analyze their internal physician contracting costs to enable negotiation of competitive rates with physicians, and documentation of FMV and compliance with Stark.
  6. 6. 6 MD Ranger Includes: •A secure, web-based Data Tool to collect and organize contract data (uploads via Excel available, too) •Web-based Analytic Tools to benchmark a hospital’s individual contracts, identify compliance issues, and analyze where dollars are spent •Benchmarks, available as full reports and online queries, with market data for call, medical direction, leadership and other services, hospital-based services, uncompensated care programs, and diagnostic testing services •Contract Reports to document FMV compliance and assist in audits •Consultations with our experts
  7. 7. MDR Benchmarks: •80+ administrative services: hours, hourly and annual rates •Includes hard to find data on: •Committee and meeting attendance •Quality initiatives •EHR and IT initiatives •Department chairs and section chiefs •Medical staff officers and leadership •50+ emergency call coverage services, including uncompensated care rates •15 hospital-based services (pathology, hospitalists, etc.) •Stipends •Methods of payment •Incentives •Diagnostic and testing services: EEG, EKG, stress, autopsy, etc. •Key contract terms: payment type, scope of service, incentives 7
  8. 8. Introducing Allison 8 •Eight years experience in healthcare consulting and technology; specializing in physician marketing, recruitment, engagement, compensation, negotiations •Helps MD Ranger subscribers leverage data, analyze internal costs and structure physician contract compliance programs
  9. 9. Goals of an Internal Audit •Provide overview and oversight of organization-wide contracting practices •Uncover potentially non-compliant agreements, and bring them to the attention of your legal and/or compliance team •Ensure all agreements have necessary documentation and are accurate •Check for duplicative services 9
  10. 10. Why audit? 10
  11. 11. Uncle Sam says… •Federal regulations govern physician payments •Goal is to reduce/eliminate fraud •Vague language, legal complexity, and physician relationships themselves can make adherence challenging 11
  12. 12. Physician Self-Referral Law (AKA Stark Law) •Limits certain physician referrals of DHS if a physician or the physician’s family members have a financial relationship with that entity, unless an exception applies •Limited to Medicare and Medicaid programs •Liability statue, so proof of specific intent to violate the law is not needed 12
  13. 13. Anti-Kickback Statute •Prohibits the exchange or offer to exchange anything of value in an effort to induce the referral of health care services (any items) from any person or provider •Much more broad than Stark •Applies to all federal health care programs •Intent must be proven 13
  14. 14. And lastly…. The False Claims Act •Enacted during the Civil War, the law imposes liability on people/organizations who defraud government programs •Payments to a hospital for services that violate both Stark and AKS could be subject to penalties because they defraud the government •Allows whistle-blowers to bring qui tam lawsuits and sue on behalf of federal government for both Stark and AKS violations 14
  15. 15. Penalties steep for non-compliance •Stark Law: single civil violation could result in a fine of up to $15,000 for each service, plus overpayment obligation and potential for high civil monetary penalties assessment •AKS: single criminal violation could result in a fine of up to $25,000 for each service and imprisonment of up to five years, and even absent of conviction, violators may face exclusion from federal health care programs. •False Claims Act: amplifies above penalties 15
  16. 16. Internal Audits = strong financial and compliance controls •Ensure all contracts are paying “fair” rates •Identify redundant or excessive contracts •Find opportunities for efficiency •Determine appropriate leadership staffing levels •Benchmark against similar facilities 16
  17. 17. Maintain key physician relationships •Strong physician relationships key to a successful organization and to promote clinical excellence •Compensation decisions impact physicians immensely: be deliberate, thoughtful and consistent •Remember that all physician financial relationships, even non-monetary compensation, should have a contract and FMV documentation 17
  18. 18. Planning and timing your audit 18
  19. 19. How often should audits occur? •Check your organization’s policy •Understand how other departments and business functions are audited at your organization •Depending on your facility, you might hold audits every other year or yearly •Audit to prevent surprises 19
  20. 20. Take both top-down and bottom-up approach •Bottom-up: individual review of contracts for compliance •Top-down: use benchmarks and comparisons to see how your agreements and spending look in total 20
  21. 21. Top-down audit suggestions •Check total hospital-wide payments for physician contracts across different types of contracts (coverage, administration, etc.) and use MD Ranger benchmarks for comparison •Review how much is being spent per specialty or service line across agreements with MD Ranger Analytics •Determine if number of medical directors for each specialty/service is appropriate using MD Ranger tables 21
  22. 22. Additional top-down audit suggestions •Net professional collections for hospital-based groups •No hours minimums/maximums for administrative contracts •Medical directors when specialty is staffed by just one doctor or just one practice •Multi-campus deals •RFPs in contentious/excessive situations 22
  23. 23. Outcomes from top-down audits •Uncover underlying compliance issues •Reveal duplicate or excessive payments to individual physicians or groups •Serve as a financial management •Help plan your budget •Negotiation support (comparisons in rates across specialties, consistencies, etc.) 23
  24. 24. Large organization or health system? •Determine appropriate timeframes, taking into consideration both the number of contracts and the estimated time it will take to perform the audit •Decide at what level of the organization the audits need to take place •Facility-level audits could be more practical on a yearly basis, involving corporate office in line by line reviews less frequently 24
  25. 25. Who should be involved? 25
  26. 26. Know your team and your resources •Your audit process depends on your organization •Previous audits: figure out what worked, what didn’t •Involve staff with contract oversight responsibility and if you can, integrate other staff or contractors to assist 26
  27. 27. If resources are limited… •No auditing team? No problem! •You don’t need much infrastructure for a successful internal audit •High quality market data and analytics can support your internal auditing efforts 27
  28. 28. Executive involvement and support •A member of the hospital’s executive team is typically accountable for the audit •The individual should have the authority to execute follow up steps •Executive should report the audit’s results to other hospital management and determine if external audit is warranted 28
  29. 29. The auditing process: guidelines and suggestions 29
  30. 30. Current auditing procedures? •Determine if your facility or health system has procedural guidelines for internal audits •If there are steps in place, read carefully to see if additional steps need to be considered and if the current process takes into account physician contract-specific needs (such as Stark violation considerations, AKB risks, etc.) 30
  31. 31. Check processes in your contracting program •Document outlining contracting guidelines •FMV process •Review specifics •Is time commitment specified consistently in contracts with hourly payment rates? •Are time records kept and submitted? •Are contract renewals timely? •What is the approval process? •Is FMV documented at the time of approval? •Consistent application 31
  32. 32. Essential questions for teams auditing contracting teams 32
  33. 33. Do you have a written and signed contract? •Stark and AKS require written contracts for physician services with payment terms set in advance! •Both the hospital and the physician must sign the agreement •Though this step is obvious, sometimes it can be quite challenging to determine if a contract exists. Do your homework. •PRO TIP: show me the money. Check with AP and contract manager; if there is a monetary exchange, there should be a contract 33
  34. 34. Is the contract current? Expired? •Expired contracts are more common than you’d think •Expired contracts mean that you do NOT have a contract in place with the physician and you are technically violating Stark and AKS. •Contract terms must be set in advance •PRO TIP: use your contract management software to set alerts at least 3-6 months in advance to negotiate deals (longer for more sophisticated hospital-based agreements) 34
  35. 35. Are you providing non-monetary compensation to the physician, and if so, is it documented? •Are you providing non-monetary payments to independent physicians (that you aren’t providing to the entire medical staff) that exceed the cap? •Parking spaces? •Meals? •Electronic health records? •Overhead from charity events involving doctors? •Joint marketing? •Office artwork? •Technology? •Infrastructure? •….? 35
  36. 36. Is the service provided defined in detail? •The services to be provided must be described in detail in the contract. •Don’t forget important details, like number of hours in administrative agreements •Record keeping for time and performance of duties •Periodic ‘audits’ of time cards to see if they are accurate, meetings attended, reports filed, etc. •PRO TIP: When in doubt, spell it out 36
  37. 37. Is paying for the service commercially reasonable? •Just because you are paying a physician for a service doesn’t necessarily mean it’s commercially reasonable to do so •Review commercial reasonableness documentation during audit to ensure argument still holds •No documentation? Use MD Ranger data to get a gut check: •Percent paying •Payment rates •Number of positions •Overall service payments 37
  38. 38. Has the rate changed within the first year of the agreement? •Are there any amendments to the agreement that alter the payment rate less than a year from the start of the contract? •Contact AP to ensure that payments remain consistent for contracts within their first year (Stark mandate) 38
  39. 39. Is your rate within fair market value? •Check the fair market value documentation with the agreement to ensure that methods/data are sufficient •If documentation or methods are questionable, look up market data for the service •If no documentation exists and payment rates were determined by something other than fair market value, flag the contract for follow up 39
  40. 40. Did you apply your organization’s “FMV Process” to this contract? •Your organization should have a thoroughly documented process to determine FMV, and all contracts should have gone through the steps of the process as they were negotiated •If the contract doesn’t have all steps or documentation, or seems suspect for other reasons, flag the agreement for later follow up •PRO TIP: Need help with a physician contracting process? We have resources at www.mdranger.com/resources 40
  41. 41. Could a contract imply that you are paying for referrals (in any way)? •Paying for referrals or bribing physicians in any way is illegal •Due diligence is required when reviewing contracts to ensure that the payments are not for referrals; lack of documentation leaves you vulnerable to technical Stark violations •Remember: the government doesn’t have to prove intent for Stark violations 41
  42. 42. Is everyone complying with the agreement? •Ensure that the hospital is paying the appropriate rates as per the agreement •Check physician documentation is up to standard (medical directorship hours especially) •Read through the description of the service and ensure it is not only being adhered to, but if it is also still needed •PRO TIP: Check up on ‘special deals’ that didn’t follow standard procedures or legacy contracts that haven’t changed in years 42
  43. 43. Documentation and follow-up 43
  44. 44. Documentation •Review the entire auditing process and document what you did step by step •Create a file or document to capture your internal process. Include: •Memos written by responsible executive or leader •Minutes from meetings •Flags and notes •List of follow up items in one place, as collected from above documents, notes, memos, and emails 44
  45. 45. Red flags? •Every organization has a few; don’t panic •Someone has to be at the 90th percentile: it might be this contract •Nothing found? Check contracts negotiated under tough circumstances or odd agreements that have been in place for years again. Due diligence is often required for these types of agreements. •Loop in compliance •Loop in legal 45
  46. 46. Follow up •Execution and accountability are essential for a successful audit, which is what makes follow up so important •Track all next steps in one document; review progress weekly in the month following the audit and monthly post-audit •Good project management is key 46
  47. 47. Get organized with MD Ranger support •Top-down and bottom-up internal audits supported by MD Ranger benchmarks and online tools •Use Total Facility Reports for high-level spending analysis and comparisons with other hospitals’ payments •Use Benchmarks to check each contract for FMV, and document compliance with Standard Contract Reports •Spreadsheet can be helpful for tracking questions will be available for MD Ranger subscribers by end of year 47
  48. 48. Your turn 48 Does your organization need help with reviewing contracts? Do you need better resources for physician contracting? Email or call me—we can help you! apullins@mdranger.com or 650-692-8873

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