Home Health & Hospice Week

Contracts must reflect reality, experts warn.

Keeping your physician relationships spic and span is more important than ever.

If you have even minor problems with your compensation arrangements with physicians who refer patients, you could end up losing the reimbursement for every patient they refer, as Aging Care Home Health Inc.'s recent lawsuit decision shows.

Heed this expert advice on how to keep your physician compensation arrangements above board:

1. Write doc contracts that comply with the Stark II law. Providers must use an exception set out in the Stark II law if they want to compensate physicians for services provided. Agencies can get familiar with the law's exceptions in the final rule implementing the statute at www.access.gpo.gov/su_docs/fedreg/a040326c.html  scroll down to Centers for Medicare & Medicaid Services.

Home care providers are likely to use the personal services exception to the Stark II law prohibiting financial relationships between physicians and the agencies they refer patients to. 

They might also use the bona fide employment exception, legal experts offer.

The Aging Care decision "points out the importance of fitting squarely within the bounds of the Stark exceptions," notes attorney Ross Lanzafame with Harter Secrest & Emery in Rochester, NY.

Just meeting some of the requirements isn't enough to protect you from a lawsuit. "The contract should meet every point of the exception," stresses attorney Robert Markette Jr. with Gilliland Markette & Milligan in Indianapolis.

2. Focus on fair market value. Under the personal services exception, paying fair market value for services the physician furnishes is crucial. Make sure your compensation is reasonable for the services rendered.

Fair market value comes into play if the physician isn't performing the services at all, Markette contends. "Giving something for nothing is the opposite of fair market value."

3. Enforce the contract. A piece of paper that complies with Stark II means nothing if your referring physicians don't actually do what's set out in it. In Aging Care's case, "the contractual arrangements with the outside physicians were 'form over substance,'" says attorney Marie Berliner with Austin, TX-based Lambeth & Berliner. According to the federal court's opinion, the agency compensated the physicians in excess of fair market value and the physicians furnished only a fraction, if any, of the services covered under the agreement, she tells Eli.

"If you are paying a physician for services, they ought to provide them," Markette emphasizes. "If you have a contract and are paying money, but the physician is not performing the services outlined in the contract, you are not within the exception."

Stand tough: "Providers should make sure that any arrangements with physicians for consulting or medical director services have some teeth to them," Berliner urges. The arrangements should require the docs "to actually do what they are required to do on the face of the agreements."

4. Document, document, document. Just having physicians perform their services isn't enough. You have to be able to prove that the docs did them if the authorities investigate.

Examples: Some ways physicians can document services are by producing written materials, summaries, recommendations, policies and procedures or reports; attending and actively participating in meetings, where attendance is taken and the physician's presence reflected in meeting records of minutes; and actually conducting training or educational seminars with accompanying written materials, Berliner suggests.