COVID-19 Takes Center Stage in the World of Physician Contract Strategy: Part 1

By now, just about everyone and every business has been impacted by the effects of COVID-19. Hospitals, and the overall health care delivery system, have taken a significant hit (to say the least). In a recent webinar hosted by Ludi, I joined forces with Allison Pullins, Chief Strategy Officer at MD Ranger, to talk about some of the short-term and long-term implications of COVID-19 in the world of physician contracts. In this two-part mini-blogging series, I’ll first highlight Allison’s section of the webinar, which focused on advice for setting up physician contracts during COVID-19 (and beyond). Next week I’ll post a recap of my section of the webinar, which offered tips on managing those contracts all year-round (COVID-19 pandemic or not).

According to Allison, since COVID-19 first emerged in the United States, we’ve seen a large increase in telemedicine arrangements. Hospitals have also hired more staff and more likely to renegotiate physician contracts. But the biggest changes are yet to come she noted. In fact, Allison predicted that we’ll likely see a higher rate in physician retirement in the near future, along with more doctors leaving behind independent practices for more financial security with health systems. She also mentioned that we might experience an acceleration toward value-based care models and away from productivity-based incentives.

And then there’s Stark Law…Blanket waivers were issued back on March 20, 2020 (and retroactive to March 1), which allowed providers to address their COVID needs quickly, but they’re in no way intended to weaken Stark Law regulations. And while the blanket waivers are certainly helpful, Allison pointed out that hospitals would be wise to remember that “fraud is fraud” and they need to stay the course in monitoring their physician arrangements, COVID or not. 

Setting up your physician contracts during the COVID-19 era
Despite all these changes from the pandemic, one thing has stayed the same and, according to Allison, will likely NOT change: the importance of consistent, compliant physician contract management. If you do not have physician contracting policies and guidelines for determining and documenting FMV, your organization is at financial, legal, and compliance risk.

Here’s Allison’s advice to address that: 

Step 1: Take a close look at your policies and guidelines. 

  • Create clear, simple guidelines and procedures to streamline physician agreements and mitigate risk
  • Create a step-by-step process for negotiation and approval that involves senior management
  • Use standardized, objective benchmarks
  • Set guidelines for dealing with outliers, based on both dollar thresholds and market ranges
  • Ensure consistent documentation of commercial reasonableness and FMV
  • Identify awareness of overall  physician contract spend – that is, every dollar you spend on physician contracts
  • Identify and monitor all high-risk arrangements, as well as routine auditing of all contracts

Step 2: Dive deeper into each arrangement. 

  • Ensure you have a complete job description with payments clearly outlined (monthly or annual hours capped for admin)
  • Ensure commercial reasonableness assessment/justification of position and payment
  • Make sure it meets FMV guidelines of your organization
  • Remember, all above documentation must be filed with a signed copy of the agreement and stored
  • Complete regular, annual audits of documentation and payments

Step 3: Automate where you can. 

If you aren’t using technology to streamline your physician payment strategy, you’ll be left behind. 

  • Most physician contracts (e.g., ED call, directorships, administrative roles) don’t need valuations—high quality market data will suffice
  • Ensure FMV documentation exists, is consistent and organized and accessible to those who need it

Now that you have policies and processes in place to set up your arrangements, how do you manage and execute on them in the COVID-19 era? I’ll save that advice for next week’s blog post! But if you’d like to jump ahead and listen to our full webinar, check it out here!

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