Relationships in healthcare are changing.
Physicians are adapting
The government uses the “Honor System” when paying for healthcare.
Payments to the wrong person, of the wrong amount, or for the wrong reason cost Americans an estimated $98 billion in 2009, with $54 billion coming from Medicare and Medicaid. The Obama Administration has pledged a crackdown on healthcare fraud.
Prohibits a physician from making a referral to an entity with which she or her immediate family has a financial relationship if the referral is for the furnishing of designated health services, unless the financial relationship fits into an exception set forth in the statute or impending regulations.
Provides for criminal penalties for certain acts impacting Medicare and state health care (e.g., Medicaid) reimbursable services. Of primary concern is the section of the statute which prohibits the offer or receipt of certain remuneration in return for referrals for or recommending purchase of supplies and services reimbursable under government health care programs.
Stark exception to the referral prohibition related to compensation arrangements for bona fide employment relationships with physicians (or an immediate family member of the physician)
Anti-Kickback Safe Harbor for employment relationships
PWC, From Courtship to Marriage, April 2011
When money is exchanged between a hospital and a physician –
the payment should reflect the fair market value of the goods or service received.
The value in arm’s-length transactions, consistent with the general market value. “General market value” means the price than an asset would bring as a result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement. Usually, the fair market price is the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition, or the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account the volume or value of anticipated referrals.
42 CFR 411.351
Fair market value requires an arm’s length transaction.
Fair market value buyers and sellers are interested … but not desperate.
FMV in healthcare does not consider the value of “down-stream referrals”.
1. What is the physician’s scope of influence?
2. How Do We Define Quality?
4. How Do We Evaluate Performance?
92 medical director titles in IHS Medical Director Survey
Source: ACPE, 2011 Physician Executive Compensation Survey, Positions