Physician overpayments and compliance risks are often clear and easy to identify. Many of these pitfalls can be avoided by by determining fair market value or establishing rigorous compliance procedures. However, some overpayments are harder to spot–particularly when agreements are “stacked.” Stacking is where physician agreements that would be reasonable when considered individually are unreasonable in aggregate.
One of the best ways to understand how federal regulators view these risks is found in the OIG Advisory Opinion No. 07-10.
The OIG identifies the following situations as problematic compensation structures:
- Payment for lost opportunity cost that do not reflect bona fide lost income
- Payment when no identifiable services are provided
- Aggregate on-call payments that are disproportionately high compared to the physician’s regular medical practice income
- Payment resulting in the physician essentially being paid twice for the same service
Many of the situations noted by the OIG above can be referred to as “stacking.” Stacking commonly occurs in two ways:
- A physician or physician group has 2+ agreements with a hospital for coverage or medical direction services. When this happens, it is possible for the physician to coordinate his or her time to fulfill both responsibilities within a timeframe understood as required to fulfill each agreement separately. When considered independently, the agreements may appear compliant–however, when taken together, payment may be greater than the 90th percentile or the time commitment may require an unreasonable amount of hours.
- An on-call payment rate is based on an estimated “opportunity cost” of lost private practice income, but the physician does not actually suffer losses.
How should hospitals identify and prevent stacked physician arrangements? Here are a few tips:
- Develop a policy regarding physicians who hold more than one position or perform more than one service. If physicians are holding two call positions at the same time, set guidelines for how much they can be paid or an aggregate payment cap from all sources.
- Ask physicians to document the time they spend in each role. Time tracking should be a standard process for all physician administrative positions.
- Be careful with restricted call payments. Ask the physician to sign a statement to certify that his or her private practice cannot be rearranged to avoid lost income. Monitor physicians’ OR utilization to compare elective volume with and without on-call coverage.
- Don’t pay a physician to take call for two services at the same time.
I know what you’re thinking. No, this isn’t that CIA. The Central Intelligence Agency could care less about your compliance violations. The Office of the Inspector General (OIG), however, may have something to say about it.
As we’ve seen, defrauding the government has consequences. On top of a civil settlement–or in some cases, jail time–a violation of the False Claims Act (FCA) requires a healthcare organization to enter a Corporate Integrity Agreement (CIA) with the OIG.
A CIA is a tool implemented to strengthen an organization’s compliance program with government-approved policies and procedures. The OIG wants to be sure that an organization will take steps to prevent future violations. Each agreement focuses on one or more categories of violations: claims review, focus arrangements, quality of care, and covered function review. They remain active for 3-5 years.
In the past, the OIG responded to all violations with a CIA. Now, however, the OIG will evaluate each violation on a case-by-case basis, assessing each violator’s capacity for change. Organizations deemed low-risk for future violations avoid this penalty. Factors the OIG takes into consideration include:
- Relevance: how long ago did the violations occur?
- Recurrence: was there a pattern of misconduct?
- Readiness: are there compliance procedures already in place?
If an organization self-discloses their violations, the OIG is much less likely to pursue a CIA. Self-disclosure is evidence of an already effective compliance program.
No one is exempt from CIAs. They can be issued to all types of healthcare entities–even individual physicians. Once issued, an organization is likely to accept a CIA in order to continue their participation in Medicare, Medicaid, or other Federal healthcare programs.
You evaluate your contracts against market data. Your organization is in compliance with fair market value. You have a comprehensive compliance plan. All is well in the world.
Until benchmarks change.
Several factors play a role in shifting benchmarks from year to year. By understanding why these benchmarks change from year to year, you can adapt your compliance plan to prepare for change. Having a process already in place can help your organization deal with potentially challenging conversations.
Benchmarks can change from year to year, but significant shifts are uncommon. The average change for any benchmark at the 50th or 75th percentile is 5%. This 5% change is often accounted for by: general salary inflation and cost of living increases; shift in responsibilities for a physician role; change in hospital characteristics; or new counterparties in a contract.
In some cases, adding only one contract can change benchmarks. When contract values are clustered, one outlier could cause a drastic shift. Data sets with larger, more diverse sample sizes are less prone to benchmark change than data sets with smaller, clustered samples.
A few things to remember for dealing with changing benchmarks
- If a contract was documented within FMV when signed, payment rates can remain as is until the contract expires. This is where documentation is imperative. Even if a benchmark shift skyrockets your rates out of FMV, you don’t have to change them until the contract expires.
- Be strategic in setting your payment rates. Perhaps your organization has given the green light to rates at or below the 75th percentile–this doesn’t mean that every contract should be signed there. Give yourself some wiggle room to account for fluctuation so that you have a little cushion to fall back on.
- Demonstrate your efforts. Documenting the conversations and efforts made to set a payment rate at FMV is essential–especially if you are unable to set a low rate.
Late last week, Ohio Valley Medical Center (OVMC) in Wheeling, West Virginia and East Ohio Regional Hospital (EORH) in Martins Ferry, Ohio announced their impending closure. The two facilities are set to close in a few months, putting nearly 1,200 employees out of work.
President and CEO Daniel C. Dunmyer’s statement reads: “OVMC, EORH and their physician practices have lost more than $37 million over the past 2 years as they struggled to overcome declining volumes, declining reimbursement, and the substantial harm caused by the conduct alleged by the government in United States of America ex. rel. Louis Longo v. Wheeling Hospital, Inc., R&V Associates, LTD., and Ronald L Violi.”
Back in March, the Department of Justice (DOJ) entered a federal whistleblower lawsuit alleging that West Virginia’s Wheeling Hospital was in violation of the Stark Law, Anti-Kickback Statute, and the False Claims Act.
Louis Longo, Wheeling’s former executive vice president, claimed that the hospital nurtured a relationship with R&V Associates founded on overcompensation and kickbacks. The duration of Wheeling’s relationship with R&V saw the hospital a $90 million profit.
For the most part, Stark, AKS, and FCA violations are seen only as harmful to the government–faceless men in suits. The phrase ‘defrauding the government’ hardly elicits an emotional response.