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Post-Acute Providers – Focus on Compliance with Physician Administrative Services

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Post-Acute Providers – Focus on Compliance with Physician Administrative Services

Published: 04/03/2018 | Author: Barbara Landy, MBA, MHS, FACHE success smart medical doctor working with operating room as concept

As post-acute care providers continue to maintain excellent service and strive for improvements in their compliance programs, and as nursing facility operators and managers prepare for the November 2019 enforcement of regulations for compliance and ethics programs under CMS regulation 42 CFR 483.85, many are focusing on areas not previously highlighted in existing compliance programs.  One of these areas is ensuring compliance with Stark and Anti-Kickback regulations from a fair market value (“FMV”) and commercially reasonableness perspective, especially as it relates to agreements between post-acute providers and physicians providing compensated administrative services.Physicians continue to be an integral component of, and are compensated for, their involvement in the management of administrative activities for post-acute care organizations.  These organizations include long-term acute care hospitals, nursing facilities, and home health care organizations, with such physicians serving as medical directors and consultants in a wide variety of clinical specialties and unique operations.  The administrative role of physicians is critical to health care’s transition to value based payment systems, as organizations work with affiliated groups striving to achieve mutually necessary goals, such as reducing readmissions to acute care facilities. 

In assessing the FMV and commercial reasonableness of medical director/administrative services arrangements in the post-acute care setting, comparisons to other arrangements in existence in the marketplace for traditional acute care providers do not necessarily provide a primary basis for establishing FMV as it pertains to the post-acute care setting.  Such arrangements may not be directly comparable, and may contain an overcompensation bias.  Unlike physician compensation data, limited survey information exists related directly to physician administrative services compensation arrangements, and the determination of the FMV of many administrative services arrangements, such as medical directorships, entails a significant amount of informed judgment.   

FMV Pitfall
As owners and operators of post-acute settings implement and monitor their physician administrative arrangements, it is important that undue reliance not be placed on general market data or anecdotal compensation rates. Administrative services relationships are diverse, making comparisons among arrangements difficult, and while certain local or anecdotal data may be available, it may not be indicative of the FMV of the specific relationship in question.

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