What compliance professionals should know about auditing physician compensation arrangements

In an environment of increasing integration and financial relationships with physicians; a rigid and technical regulatory framework; aggressive government enforcement; and disproportionate penalties and enterprise risk under the Stark Law (42 U.S.C §1395nn), it is incumbent for health care organizations to have an audit plan and process for physician compensation arrangements to ensure such arrangements comply with Stark law requirements. In a webinar presented by the Health Care Compliance Association (HCCA), Curtis H. Bernstein, Principal, Pinnacle Healthcare Consulting and Joseph N. Wolfe (Hall, Render, Killian, Heath & Lyman, P.C.) provided insight into considerations for managing risks, an overview of the Stark Law and its exceptions, and tips for planning an audit and the audit process.

Managing the risk

Wolfe stressed the importance of ensuring that compensation arrangements with referring physicians are defensible. When it comes to compensation arrangements, organizations should ask, “How will the organization defend itself?” Wolfe recommended that the organization focus on the Stark Law’s technical requirements, which were updated in 2016, and the three tenets of defensibility: (1) fair market value, (2) commercial reasonableness, and (3) not taking into account the value or volume of referrals. Wolfe emphasized the need for health care providers that enter into physician arrangements to ensure that individuals involved in the process have an in depth understanding the Stark regulations and the exceptions

The plan and the process

Bernstein explained that the scope of the audit depends on the size and complexity of the company, prior experience with the process under audit, recent changes in the company or company’s operations, and previously recognized deficiencies, as well as circumstances that may arise during the audit. The audit process involves several steps.

  • A list of currently executed physician contracts must be compiled.
  • Compliance personnel must interview individuals commonly involved in physician relationships. The individuals conducting the audit should understand interview processes, including strategy, documentation, approval, and selection of interviewees.
  • The interviews must be reconciled to currently executed physician contracts. Common issues arising in reconciliation include the use of space, office equipment, and other items by physicians for professional or personal use, and payment for services not provided.
  • Time sheets or other attestation forms must be reviewed for completeness and accuracy.
  • Fair market value and commercial reasonableness must be documented for each agreement. Consider:
    • Who is providing the service?
    • Why are the services required?
    • When are the services performed?
    • How are the services provided?
  • All other terms of agreement and necessary steps must be performed in executing agreements and verified.

Bernstein noted that other items to consider during the process include the compensation structure, the length of a fair market value opinion versus the length of the contract, whether the compensation was set in advance, if the agreements were executed, and whether the agreements expired.

The compliance component

While the basic elements of an effective compliance program apply to physician arrangements, Wolfe explained that as compliance applies specifically to physician arrangements, it should be compensation focused and documentation and governance should support defensibility. He recommended that organizations adopt a compensation philosophy, have a written compensation plan, establish parameters for monitoring compensation, and form a compensation committee. In addition, organizations should (1) ensure that policies align with the new Stark technical requirements; (2) establish a consistent process for obtaining third party valuation opinions; and (3) periodically audit physician compensation arrangements. Finally, organizations should continue to monitor the enforcement climate.

All Medicare stakeholders need to know MACRA

Although the Medicare Access and CHIP Reauthorization Act (MACRA) (P.L. 114-10) is best known for changing Medicare provider payments, its true goal is improving the quality of care delivery across the health spectrum. As a result, according to Todd Gower and Lisa Alfieri from the Risk Transformation, Health compliance sector of EY, providers must enhance their relationships and contracts with providers. Gower and Alfieri, speaking at a Health Care Compliance Association (HCCA) webinar titled “MACRA: Not just for Providers,” explained that having the proper infrastructure to obtain and organize all necessary documentation is the key to surviving MACRA.

Gower and Alfieri stressed the need for new discussions within health systems, noting that MACRA has potential to transform the health care system “equally, if not far more” than the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). As it implements MACRA, HHS is having new conversations with stakeholders including whether the shared risk will actually improve care, and whether the current proposed criteria (see Halfway through QPP ‘transition year,’ CMS proposes substantial changes , June 21, 2017) are too restrictive. They praised HHS’ website on the Quality Payment Program as a new way to communicate with providers and other stakeholders.

MACRA is a complex law with wide-reaching repercussions. Gower and Alfieri suggested infrastructure updates, and predicted that the most-advanced providers will be seeking commercial payer partners by 2019 to maximize incentives for value-based care (VBC) payment models. Therefore, payers should create or enhance existing VBC offerings now to meet that expected need. MACRA steering committees are important to ensure compliance and update risk management programs for providers, but also for non-provider groups.

Kusserow on Compliance: Free Webinar! Conducting Internal Investigation Interviews—Some Best Practices and Tips

Wolters Kluwer is hosting a complimentary webinar on January 26, 2017, entitled, “Best Practices for Conducting Internal Investigations.” The presenters are Richard P. Kusserow, former FBI executive and HHS Inspector General, and Kashish Chopra, JD. Both have extensive experience with conducting internal investigations. Today’s blog provides some tips on the most critical part of most investigations; conducting witness interview. This subject will be provided in more depth during the webinar.

Always project a professional image

This begins with how one is attired. An interview is a formal business meeting and those conducting them should dress accordingly. Dressing down in jeans or other casual clothing does not project a professional image. Those interviewed are not friends; and therefore investigators should not dress and act as if they were. The demeanor of interviewer is important to outcome of interview. If interviewer appears quietly competent and professional, it will encourage confidence in the individual being interviewed. It also reduces nervousness in innocent parties, increases nervousness in guilty ones. The manner should always be polite but firm. Cooperation is essential; intimidation is counter-productive and possibly disastrous in outcome. Treat those interviewed with dignity, respect, and courtesy; and avoid use of any investigative jargon or slang

Begin with why the person is being interviewed

Identify self and any others participating in the interview and explain the purpose of the investigation, along with the authority to conduct inquiry. Make it clear they have a duty to provide complete and accurate facts and explain their comments will be kept confidential to the degree possible

Take time to establish rapport

This is critical to the result of the interview. Beginning an interview with five or ten minutes of easy conversation has the advantage of reducing tension and increases better communication and cooperation. It also permits the investigator to observe the person and their behavioral patterns during this initial more relaxed discourse that often proves very valuable when assessing responses when questioning begins addressing more serious issue areas. Any rapport established can be easily lost by careless use of terms or phrases that may evoke negative connotations, or cause the person to become more defensive and less cooperative.

Best way to have a productive interview is to do one’s homework in advance

This means (a) knowing the objectives of the investigation; (2) having an investigative plan to achieve those objectives; (3) identifying facts needed to properly understand and assess the issues; and (4) what the person being interviewed may offer in terms of facts. It is useful to prepare the key points to be covered for use as a guide, but just going down a list of questions is a bad practice, as it turns the interview into something more akin to an interrogation. Use open-ended questions and allow the person to speak. Often they will cover many of the points on your guide in their discourse. At the end of the interview, review the guide to see if all the points were covered”.

Keep control of the interview by asking, not answering, questions

The interviewer is not the dispenser of information and, as such, they should not reveal the status of the work; offer opinions; indicate what has been found so far; or what has been said by others. Offer no opinions relating to the investigation. Losing sight of that principle often leads to losing control of the interview and is one of the major causes of bad outcomes in the process.

Always remember the interview purpose is to establish facts

It is critical that the investigator remain at all times focused on facts. It is common to have those being interviewed to drift off of facts, especially if they are uncomfortable with the direction of the interview. Therefore, always follow through on questions asked and not be diverted by other comments. Ensure basic questions such as who, what, where, when, how, and why have been addressed. Keep the questions simple and direct, avoiding compound sentences. Ask open-ended questions and allow the person to fully answer.

Take notes, discreetly

It is important to maintain the interview as much like a conversation as possible. Losing eye contact can throw the interview off and detract from results. As such, although it is critical to take notes throughout the interview, it should be done as discreetly as possible. This means writing only key words and phrases that can be filled out after the interview is over. Taking copious notes and losing eye contact risk turning the interview into something that may appear to the individual as an interrogation and makes individuals tighten up and be less forthright in their comments.

Click here to register.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Free Webinar! Best Practices for Conducting Internal Investigations

Channeling employees who wish to report allegations or complaints internally is critical to any effective compliance program, as well as to avoid the liabilities and other consequences to having them report externally. The HHS Office of Inspector General (OIG) and Department of Justice (DOJ), as well as other enforcement agencies, continue encouraging “whistleblowers” by offering great bounties for successes from their information. In 2016, recoveries totaled $3 billion with whistleblowers receiving as their share—$519 million. In addition, nearly a quarter-million whistleblowers contacted the OIG directly or through the agency’s hotline during the same period. Wolters Kluwer is hosting a complimentary webinar on January 26, 2017 from 1:00-2:30 PM EST, entitled, “Best Practices for Conducting Internal Investigations.” The presenters are Richard P. Kusserow, former FBI executive and HHS Inspector General, along with Kashish Chopra, JD. Both have extensive experience with conducting internal investigations. Today’s blog focuses on the predication of internal investigations that is also addressed in the webinar in more detail. There are many ways be called upon to respond to a complaint or concern raised by an employee, including compliance officers, human resource management (HRM), legal counsel, privacy/security officers, and risk managers, among others; however, only a few complaints would rise to the level of requiring an investigation.

An investigation is a search to uncover facts and seek the truth of an issue (who, what, when, where, why, how) and involves a detailed inquiry or systematic examination to gather facts and information to solve a problem, or resolve an issue. Other activities can meet this definition, including conducting audits, evaluations, and inquiries. All these other activities involve a detailed examination of facts. The fact is that vast majority of hotline complaints can be resolved fairly quickly—within hours or a day or two—without a formal investigation. Many complaints, allegations, and concerns are routine in nature and may be resolved through normal management procedures or through HRM. In determining how to respond to complaints and allegations properly, it should be a standard practice to, in effect, “triage” all the facts known, similar to what medical staff does when a patient arrives at an emergency room at the hospital. This involves an analysis of the complaint and any allegations to determine who is best equipped to resolve the issues. It may be the multiple functions may need to be involved. From this initial analysis, an investigative plan can be developed.

However, when it is determined that a matter requires an investigation, the key is how to do this properly, preferably using properly trained individuals to conduct the investigation. Anyone called to conduct an investigation must understand how to plan an investigation, conduct proper interviews, organize evidence, prepare written reports, and document management. Is unrealistic to have professional investigators in compliance offices, but certain basic principles should be taught to anyone taking on the role of an investigator, whether they come from the compliance office, HRM, legal counsel, privacy office, etc. Anyone who is likely to conduct an internal investigation should have as a minimum a basic understanding of best practices and methods. The upcoming webinar is designed to provide some of the basic principles in conducting a proper investigation in a timely manner.

Click here to register.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.