Why it takes 60 minutes or less to find a Stark Law violation at a hospital

Hospitals have multiple physician contracts.The arrangement may be for a medical directorship, a co-management contract, on-call, teaching, research or clinical guidance for clinical integration strategies.

These agreements must fit within the complex regulatory environment.

Safe Harbors

Physicians are referral sources to hospitals meaning care must be taken in physician arrangements. All contracts between physicians and hospitals must fit within the safe harbors for Stark Law and the Anti-Kickback Statute. There are seven elements of the safe harbors: the contract's duration must be at least a year; in writing and signed by both parties; specify aggregate payment which is set in advance; payment is reasonable and fair market value; payment must not relate to volume or value of business; the exact services to be performed must be outlined; and be commercially reasonable.

Typical violations

Presuming an agreement is set up in a compliant fashion from the start, common errors result due to business practice failures. The majority of the technical errors do not occur because the contract was not set up correctly, they occur because of process failures. They are often called technical violations; they were not intended, but occurred because the hospital wasn't technically following the agreement. Current processes do not prevent technical violations, but enable them:

- The compensation paid extends past the monthly maximum;
- The contract ends, yet the physician keeps turning in a time log and the hospital keeps paying the physician after the contract ends;
- An annual maximum payment limit is exceeded, yet payments continue;
- The physician turns in two time logs for the same month, the hospital doesn't catch it;
- The physician documents a duty on a time log requesting payment for a duty that is not part of the contract;
- Adjudication is never performed on stipend payments until an audit and errors are found;
- The physician is paid for the same duty in two different contracts, resulting in an overpayment;
- Time logs are not examined against the contracted duties, so physicians are paid for services not outlined in the agreement;
- The amount of time allowed for submission is exceeded, yet the time is paid;
- The wrong party is paid.

In order to ensure every payment made is within scope of the agreement, operationally and financially, the adjudication must take place every time a time log is paid.

60 minutes or less

Current processes are on paper with paper systems foster errors. The details of physician agreements are so complex, it is impossible to follow the rules of contracts without automation. One hour sifting through 50 paper physician time logs and payments will result in a finding of at least one of the technical violations above. Payments are being made incorrectly because the processes are complex, time-consuming and manual. Today's settlements are not a result of an incorrect contract set up, but due to inability to follow rules within.

A terrific analogy is the personal banking industry. Before online banking, it was easy to make an error caught only when balancing the checkbook. It would take time to determine if a transaction hadn't been recorded, if a number had been transposed, etc. Today, with accounts online you can balance your checkbook with one keystroke.

Hospitals are still processing physician time logs on paper – adding check requests to each payment and routing for approvals, the equivalent of personally balancing a checkbook. In essence, hospitals are using a checkbook to record and attempt the monitoring of physician payments. Errors occur because automation has not been engaged to ensure operational and financial success. Recent settlements indicate, if the OIG arrives, it will be a short hour before the hospital writes a check. An ounce of prevention can prevent technical violations.

Gail Peace is president and CEO of Ludi, who works with hospitals and health systems to strengthen physician alignment. Its first product, DocTime Log®, is a software as a service (SaaS) solution that manages physician arrangements by centralizing necessary information with regard to physician-hospital integration. Physicians are a mission critical partner for hospitals; DocTime Log® is a robust, easy-to-use platform that builds trust and efficiency for this relationship. The software ensures accurate & proper payment, in-depth reporting for long-term trend analysis, and a compliance process benefit.

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