Orange is Not Your Color: Recent Uptick of Stark Law Violations

I worked for a large non-for-profit system “papering” physician employment, loans, and other physician alignment strategies. I regarded compliance as a necessary evil.

It’s actually smart to conduct your organization’s business within in the bounds of federal regulations. The Department of Justice (DOJ) hasn’t taken 2018 off and when they hit an organization, the fine tends to go big. And, now it’s even personal – healthcare executives are being given prison time. As one Ludi client has stated, “Orange is not my color.”

The DOJ does not mess around when it comes to compliance. And you shouldn’t either.

Does your system embrace compliance standards? Does your compliance officer have a seat at the table when physician arrangements are being constructed and operationalized? These folks are not simply to be ignored or steered around; they offer sound business insight to help the health system ensure it is acting legally within the context of its physician partnerships.

Tip 1

First, find your physician arrangements. Do you know where they are? Who owns them? I assure you these first two questions will keep a whole staff busy for several weeks in order to wrap their arms around the paper deals floating between a hospital campus and its physician partners.

Tip 2

Does your physician partner KNOW they have an agreement with you? I know this sounds a bit “smart aleck-y” but at Ludi, some of our clients have run into this problem – a few of their physician partners weren’t aware that a physician administrative role was part of their employment compensation and that they had specific duties that must be carried out to be paid as part of that agreement.

Have you reviewed your physician administrative agreements? At Ludi, we have noticed an uptick in the “evergreen” which means the contract continues to roll. At the outset, this may look like a time saving device. But, it can lead to overall system complacency and a lack of management of what the agreement is, who is it with, does it meet Fair Market Value (FMV), and in determining if the relationship has gone stale?

Tip 3

Audit – I hate this word with a passion, as it’s a downer and invokes chills, but if you are living and breathing compliance as a tenant of good business, you gotta audit your physician agreements. Has your legal and compliance team set a template that is followed? Did you over pay your physician partner? What’s the process of rectifying physician administrative payments? Are the duties compensable? Do you have a process for FMV? What is the process for physician documentation that supports the physician payment for the work?

There are legal and possibly personal ramifications for ignoring compliance standards for physician partnerships. Your health system, board, physicians, and family really do not need the additional burden and stress of an OIG investigation. Stay in the bounds of compliance because orange is not your color.

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