Close this search box.
Ludi logo blue text and symbol

New OIG Compliance Program Guidance: 4 Key Takeaways and the Impact on Hospital-Physician Relationships

On November 6, 2023, the Office of Inspector General (OIG) overhauled its General Compliance Program Guidance (GCPG) after many years. This long-awaited resource is already making a big splash in the health care compliance community.

There are two ways to think about the GCPG. On one hand, it represents a comprehensive reference guide for health care teams that provides crucial insights on federal laws and compliance program infrastructure and policies.

Then there’s a simpler way to view it: as a roadmap for health care organizations to stay out of compliance trouble. And the GCPG is chock full of good advice to guide you toward that goal.

Believe it or not, the newly released version of this document is a big deal. It incorporates feedback from different industry stakeholders that was received during the agency’s recent modernization initiative. And while the OIG notes that the document is not a “one size fits all” approach or “completely comprehensive of compliance considerations,” it still provides the necessary building blocks for organizations to reduce their risk in 2024 and beyond.

The reality is, health care fraud is occurring at a record rate. In fact, False Claims Act settlements and judgments alone exceeded $2B in 2022. But what can hospital teams proactively do to protect their organization and themselves from compliance risk? That’s what the GCPG is for, and while it’s not binding guidance on any individual or entity, the new version is still a fantastic, must-read resource.

Here are my key takeaways from the updated GCPG as it relates to hospital-physician relationships. I hope it helps!

1. OIG Officially Recognizes the Importance of Financial Arrangement Automation

One of the most notable additions in the updated GCPC is how the OIG underscores the importance for hospitals to track all financial relationships with physicians in a “financial arrangement tracking system.” In other words, leverage automation. This is a huge update from the OIG, as it underscores – for the first time – the notoriously manual nature of processing physician payments that exists still today in many hospitals. As the OIG points out, a “centralized tracking system” helps hospitals ensure a physician’s work is within scope of contract and payment errors are reduced, regular legal reviews and audits are conducted more easily, fair market value (FMV) is achieved and business need of a physician relationship is established. In addition, automating these processes can lessen the administrative burden hospital teams feel today and the burnout physicians experience. For the OIG, having a financial arrangement tracking system is critical for hospital-physician alignment.

2. Monitoring FMV and How Much is Paid in Every Situation is Crucial

As always with physician arrangements, hospitals must adhere to commercial reasonableness (CR) fundamentals by establishing legitimate business purposes for their financial contracts with providers, ensuring that terms are consistent with market and FMV. That includes an ongoing review of duties, effectiveness and need. In the updated GCPG, the OIG outlines the questions organizations should ask in any given risk area in situations where FMV must be analyzed. Specifically, the OIG recommends that organizations leverage someone to analyze if they are in fact "paying for an inflated rate" or using a “reasonable methodology that is uniformly applied and properly documented.” It's interesting to note the emphasis the OIG has on medical director arrangements in this section as an area rife for potential overinflated payments. The agency specifically mentions activity logs being a crucial element of sound financial arrangement management.

3. Stark Law Reminder: Both Hospitals and Providers Are Potentially at Risk

With the Physician Self-Referral Law (Stark Law) – which is separate from the Anti-Kickback Statute – the GCPG reminds readers that the law’s aim is “to prohibit physicians from referring certain designated health services to an entity in which they or their immediate family members have an ownership or investment interest.” There are some exceptions to the law the OIG notes, but referrals can be for anything from medical directorships to stipends (as the new document specifically points out) and other payment situations. Remember, proof of intent to violate the law is not a requirement with Stark. Meaning your intent may have been good, but if you break the law – well, there are still consequences. And, as always with Stark, providers and provider organizations are both potentially liable for errors and oversights, which can result in millions of dollars in penalty fees or even jail time.

4. Organizational Culture Still Matters

Finally, another overhauled section of the GCPC is the guidance around compliance culture at health care organizations. Specifically, the OIG highlights the significance of effective leadership within an organization, comprising of the Chief Executive Officer (CEO) and board of directors. They stress the need for these leaders to establish and maintain stringent compliance standards, and implement a comprehensive training program for employees, incorporating strategies around personal accountability. There is a great resource the OIG published years ago called, “Practical Guidance for Health Care Board on Compliance Oversight,” which takes a deep dive into this area and provides tactical guidance to achieve this goal. It’s another must-read for health care leadership teams.

The recently launched GCPC is an excellent resource for hospital compliance teams, especially as it relates to your physician relationships. The OIG’s new guidance on automating financial arrangements represents a fresh and modern approach from this agency, benefiting both hospitals and physicians by minimizing errors and compliance risks (for organizations and physicians alike). If you haven’t had the opportunity to read it yet, I highly recommend doing so. Even though it’s not mandatory, it provides essential building blocks (and good reminders!) that everyone should consider in their overall compliance strategy. 

Compliance is challenging. We've created a simple infographic that highlights 5 things every physician contract should have.

Find this insightful? Share it using the links below.

Enjoyed this post? Sign up to receive our latest news.

Laptop mock-up showing a preview of Ludi's March 2019 newsletter

Subscribe to our newsletter.

Assess your medical directorship strategy's strength & identify compliance risks with a 5-min self quiz.