Home Health & Hospice Week

New reg clarifies physician payment gray areas. Home care providers confused about how to pay physicians have some newly sanctioned alternatives.

The new Stark II regulations spell out a number of ways home health agencies, home medical equipment suppliers and others can appropriately pay physicians who do work for them as medical directors, board members or in other capacities.

Hourly Pay

The new rules spell out "fair market value of a physician's services can be based on an hourly rate," says attorney Tim Webster with Amarillo, TX-based Brown & Fortunato. Two methodologies are OK'd by Stark II, notes Webster and Burtonsville, MD-based attorney Elizabeth Hogue: 1. The hourly rate is less than or equal to the average hourly rate for emergency room physician services in the market, provided there are at least three hospitals providing emergency room services in that market.

How to do it: This means providers must ob-tain the rates at which at least three local hospitals pay physicians who staff their emergency rooms, Hogue advises. "This information must be documented in writing and maintained by providers to demonstrate compliance." That includes periodic, documented updates to the information.
2. The hourly rate is less than or equal to the average of the 50th percentile national compensation level for physicians with the same physician specialty in at least four of five specified national surveys, divided by 2,000 hours.
 If the physician specialty is not identified in the survey, use the general practice figure, Hogue counsels. This method is useful for areas that don't have three local hospitals, she adds. Defining specific ways to calculate fair market value hourly rates is very helpful, notes attorney Mark Langdon with Arent Fox Kintner Plotkin & Khan in Washington, DC. If your compensation fits within the survey, you have a green light for Stark, Langdon notes.

But "these methods of determining fair market value are not mandatory, and the parties may determine fair market value in other ways," Webster reminds providers. Other compensation issues in the regs include: Consulting. An exception for personal services arrangements may include payments to referring physicians for consulting services, Hogue notes. To fit within the personal service safe harbor, the arrangement must adhere to a number of requirements, including using a formula to set payment in advance of the services provided.

"Use of a formula for payment based upon units of service appears to allow providers to pay a flat fee for actual participation in each of a variety of meetings such as Professional Advisory Board (PAB) meetings, team meetings, case conferences, interdisciplinary team meetings, ethics committee meetings, etc.," Hogue says. Termination. Also under the personal services arrangement, which requires a contract with a term of one year, is a clarification on terminating the [...]