Governmental complaints in the healthcare sector have been on the rise in the last half of 2024, highlighting the critical need for continued compliance with regulations such as the Stark Law and Anti-Kickback Statute. These regulations are designed to prevent financial incentives from influencing medical decisions, ensuring patient care remains the top priority. In most instances, complaints from governmental agencies cite fair market value (FMV), commercial reasonableness (CR), and/or the volume or value of referrals as a concern.
PYA offers 10 additional lessons learned from governmental complaints in the last half of 2024 that provide valuable insights into how healthcare organizations can avoid pitfalls in 2025:
- Data Accuracy and Monitoring: Accurate data [e.g., professional collections and work relative value units (wRVUs)] is essential for physician compensation planning. Inaccurate data can lead to flawed physician compensation models or FMV and CR opinions that cannot be relied upon for their intended purposes.
- Contract Documentation: Proper documentation, such as timesheets for part-time administrative services, is a best practice and can be vital to ensure physician compensation is based on actual services performed.
- Be Cautious with Significant Pay Increases: For example, paying newly hospital-employed physicians significantly more than their private practice earnings can raise red flags. Ensure such increases are justified, documented, and compliant with FMV/CR regulations.
- Consider All Forms of Physician Compensation: When designing and evaluating total physician compensation, ensure all forms of physician compensation, such as base compensation, productivity bonuses, call coverage, and medical directorships, are considered. This “stacking” approach helps identify if the total compensation is excessively high.
- Conduct Regular Agreement Reviews and Updates: Establish a process for regularly reviewing and updating physician compensation models and agreements. This practice helps maintain compliance with evolving FMV and CR conditions and allows for adjustments to contract language that with a “fresh eye” may appear to be vague.
- Separation of Duties: When possible, separate the roles of those designing physician compensation models from those who track referrals and financial performance (i.e., do not consider the volume or value of referrals when determining physician compensation). This approach helps maintain objectivity and compliance with applicable regulations.
- Education and Training: Provide ongoing education and training for staff involved in physician compensation planning and compliance. Keeping abreast of regulatory changes and best practices is essential for avoiding compliance pitfalls.
- Monitor Changes to Fair Market Value: FMV can change over time due to market dynamics. Regularly monitor and update physician compensation formulas and models to reflect current FMV.
- Avoid Opinion Shopping: Seeking multiple valuation opinions for a single transaction can be problematic. Stick to one reliable valuation to avoid allegations of opinion shopping.
- Scrutinize wRVU Calculations: If using wRVUs in physician compensation formulas, ensure they are calculated correctly (e.g., personally performed, modifier adjusted) and supported by accurate coding and medical necessity.
Learn more:
For more information about and additional lessons learned from recent 2024 governmental physician/hospital complaints, visit PYA’s webinar, Timely, Tough, or Tricky: Going for Gold in Physician Compensation Planning.
If you would like additional guidance related to provider compensation design or any matter related to compensation valuation, commercial reasonableness, compliance, or strategy and integration, our executives are happy to assist.
