Use of physician's time in this way is not illegal.   But, it is a management issue. Even the JCAHO requires that physician leaders have job descriptions.  However, payment to physicians for services rendered needs to be arranged and managed in the same way payment for other contractors is managed. The facility may enter into contractual arrangements with physicians. However, a corporate policy should be established to address the laws governing the financial arrangements between the organization and the physicians entering into the contract. Having a policy will ensure that the contracts and their financial implications are structured to reflect federal and state laws as well as meeting the facility's needs.

WHY DOES AN ORGANIZATION NEED A POLICY?

The policy protects the facility and physician from any assumption of violation of kickback and Stark (self-referral) laws.

1. The Anti-kickback Statute imposes criminal penalties on individuals andentities that knowingly and willfully solicit or receive remuneration such askickbacks, bribes or rebates, both direct and indirect, unless there is an exception provided by law, such as an employment arrangement.  In addition, the Department of Health and Human Services (DHHS) have regulations termed "safe harbors." Safe harbors provide healthcare providers with a mechanism to assure them that they will not be prosecuted under the anti-kickback statute for engaging in particular practices. Nevertheless, the DHHS looks at the employment relationship and considers the purpose of the employment, the amount paid for the service, and whether services were performed.

2. The Stark Law, is known as the Federal Self-Referral Law. This law prohibits a physician with financial relationship with an entity from making a referral to that entity, if the referral furnishes "designated health services" for which payment may be made under the Medicare or Medicaid programs.  The Stark Law includes an exception for payment by an employer to an employee or independent contractor. In order to qualify for the exception, the employment contract or personal services arrangement must be set out in writing, describe the services covered, and have a term of at least one year.  Payment must be determined in advance in a manner that reflects fair market value.

WHY IS IT ILLEGAL FOR HOSPITALS TO PROVIDE FINANCIAL INCENTIVES TO PHYSICIANS?

As many hospitals have become more aggressive in their attempts to recruit and retain physicians and increase patient referrals, physician incentives are becoming increasingly common. Some physicians actively solicit such incentives. These incentives may result in reductions in the physician's professional expenses or an increase in his or her revenues. In exchange, the physician is aware that he or she is often expected to refer the majority, if not all, of his or her patients to the hospital providing the incentives.

The Office of Inspector General (OIG) states, in the Health Care Fraud andAbuse Compliance Manual, that incentive programs are being used to compensate physicians directly or indirectly for referring patients to hospitals. It is felt that these incentive programs can interfere with the physician's judgment of what is the most appropriate care for a patient. They can inflate costs to the Medicare program by causing physicians to overuse inappropriately the services of a particular hospital.

WHERE TO START WRITING A POLICY ON CONTRACTUAL AND FINANCIAL ARRANGEMENTS WITH PHYSICIANS

1. Perform an assessment of where contracts may be useful and necessary.  The OIG has identified some red flag incentive situations to look for. To help identify suspect incentive arrangements, ask, "Does our organization"...:

1. Pay for the cost of a physician's travel and expenses for conferences.
2. Pay for a physician's continuing education courses.
3. Pay for services (which may include consultations at the hospital) that require few, if any, substantive duties by the physician for services in excess of the fair market value of services rendered.  If the answer is "yes", especially to question #4, "payment for services that require few duties", your organization will want to develop contracts and job expectations for the duties required to keep the hospital and physician relationships above board and legal.

2. Get together with the staff in administration who authorizes the funding

for the physician arrangement and inventory physician compensation, including:

1. Medical director contracts.
2. Contracts with hospital-based physicians.
3. Other employment or service contracts with physicians, such as physician leaders, committee chairmen and physician advisors.
4. Contracts or arrangements to provide goods or services to physicians with or without charge.

3. Development of the Corporate Policy on Contractual and Financial Arrangements with Physicians.

This policy will discuss the points of interest in complying with the laws of anti-kickback and self-referral. The procedure section will describe how the facility will approach maintaining compliance with the law.

An example of language used in contract policies and procedure follows below.

This is not intended to be legal advise, but content commonly found in contract arrangements.  Intent statement: The Facility shall inform and educate its personnel who are involved with physician contractual arrangements regarding these policies and procedures through the Corporate Compliance Program mandatory training requirements.

There is usually some classification as to the type of contract, for example, here are four categories that describe contractual arrangements with physicians:

1. Employment Arrangement - The facility may wish to employ physicians to furnish medical services to patients of the facility. Prior to the facility employing any physician, compliance with this policy is required.

All arrangements with physicians to serve as employees of the facility must be in writing and have obtained legal review, before the facility will execute the contract. This will ensures the arrangements are structured in light of federal and state self-referral and anti-kickback laws as well as federal guidelines regarding tax exempt organizations.  The employment contract will be approved and executed by administration who will keep copies of the physician employment agreements. A panel consisting of administration, human resources and a medical staff member appointed by the executive committee of the medical staff shall be responsible for conducting a study of compensation included in the employment contract. A written assessment of the determination that the compensation is consistent with fair market value and any supporting documentation, should be kept on file in administration by the secretarial staff who supports the panel's work. Each position's compensation may vary depending upon the physician's education, expertise, experience and geographic location.

2. Personal service contracts - (This is the most common type of arrangement for peer review and leadership activities)

The facility has determined that it may wish to enter into contractual arrangements with physicians. Such arrangements could include contracts for services as a medical director or consultant. Such arrangements are referred as "personal services contracts" or "independent contractor agreements," and they required compliance with this policy.

All personal service contracts must be structured in light of federal and state self-referral and anti-kickback laws as well as federal guidelines regarding tax exempt organizations. All personal service contracts must be reviewed by the facility's general counsel before execution, and follow the same management process as the employment contract.  All personal service contracts must be in writing and executed by both parties, must be for a term of at least one year, and must specify the services covered under the contract. The personal service contract must require that time records be kept and that the physician submit invoices in order to receive payment for services rendered. Any deviations from this standard must be obtained prior to review and approval by legal counsel.

The payments made to physicians under the personal service contracts must be commensurate with the fair market value for such services. The same methods as under the "Employment" section shall be used to determine the fair market value. In addition, fair market values determinations for compensation in excess of "x"(state amount) dollars for Medical Director services and "x" dollars for other personal services shall be reviewed by legal counsel and supported by an independent determination of fair market value.

All personal services contracts must include a patient choice/disclosure paragraph form that includes language such as:

"I understand that my physician may enter into financial relationships with health care providers to which I may be referred for medical services or supplies. Because my physician may be in a position to recommend or refer vendors of medical services and supplies to me, I have signed below acknowledging that my choice of vender was made freely." The choice form should be completed and returned to the organization named.

3. Equipment and space rental arrangements -

This policy is provides detail about office space and equipment rental requiring much of the above language. The requirement for an agreement of at least one year is included as well as the patient's choice/disclosure form.

4. Honoraria - If physicians are requested to serve as teachers, speakers, or educators, the facility may provide honoraria to facilitate physician participation. This honoraria to physicians is provided in the form of an approved contractual arrangement.

In the context of the facility's budget process, funds can be set aside for disbursement for the payment of honoraria. Determine who will provide the vehicle for managing these funds and hold them accountable for putting all invitations to speak in writing. The policy should include the name of whoever provides approval of the invitations, as well as the terms of speaking.

If a physician agrees to serve as a teacher on only one occasion per calendar year, such an occasion shall be considered a "limited transaction". In these circumstances, the physician shall be required to submit an invoice to the facility in order to receive payment of the honorarium. If a physician agrees in advance to serve as a teacher on more than one occasion, the facility shall enter into a personal services contract (described above in #2).

Payments made to physician teachers should be commensurate with the fair market value for such services The panel who determines fair market value (noted in Employment #1) will provide documentation for the file of the physician speaker. There may be other financial arrangements with physicians that need oversight within an organization. These, however, are commonly included in the Corporate Compliance Plan. There will need to be education of not just physicians, but administration and staff members in the organization about how to implement these policies.

For example, procedures, such as a form or a "time card" for physicians to request payment, should accompany the physician education. Details to be included in such a "time card" document are:

Document Purpose:

This time study record shall be used to count for time spent fulfilling duties specified in a Professional Services Agreement.

Instructions: (About how to fill out the "time card" form)

1. In the boxes on the form, for each instance of time spent fulfilling duties, show the date and time of day, function(s) performed and time incurred. Time should be documented in 1/4 hour (.25) increments.

2. This record covers one month of services. Upon completion of a month, please send the form to the attention of Accounts Payable at the facility.

3. Maintain a copy for your records.

4. Disbursement will be made on properly completed forms.

Contractor Attestation:

"I, the above noted contractor, attest that the hours shown above as 'incurred' were truly worked by me. Also, the hours shown are for services consistent with those required of me in my contract." Only hours worked will be compensated. Under no circumstances will hours be compensated in excess of hours contractually obligated.

Contractor Signature:

Leave a blank to sign off. It is common practice for the staff who support the physician's work also sign off on the "time card".   Regulation and compliance has forced facilities to look at arrangements that were previously common place and perhaps taken for granted. The requirements to outline job functions and expectations can help both physicians and facilities understand what is required in review functions and recognize the work that is done by the physician. For those in quality, risk, infection control and utilization and case management working with physicians are integral to getting the job done. Understand your role is within your facility in preparing physicians to work, accounting for physician hours of duty and providing them resources they need. In these times of raging change the only way to survive is to weather the change together.