How Medical Time Tracking Reduces Compliance Risk

Even though Stark Law and the Anti-Kickback Statute have been on the books for some time, many healthcare organizations are still tripping over the details of the complex requirements. Healthcare entities discover potential violations of Stark Law during routine compliance audits without even knowing the violation occurred until it’s too late. The penalties for violating Stark Law can be severe—civil monetary penalties or even jail.

Hospitals need to take care when contracting physicians for medical directorships. The OIG has issued alerts on physician compensations arrangements, emphasizing the importance of “ensuring that those arrangements reflect the fair market value for bona fide services the physicians actually provide.”

As provider and hospital relationships continue to evolve, it’s important to pay attention to medical director compensation arrangements and ensure that the agreements structure complies with all applicable laws and regulations to avoid any potential liability.

Medical director arrangements can easily run afoul of the Anti-Kickback Statute and Stark Law. Under the Anti-Kickback Statute or AKS, it is a criminal offense to knowingly and willfully exchange any remuneration to induce or reward referrals of items or services payable under a Federal healthcare program.  Remuneration includes anything of value: money, discounts, office space, paying expenses. The AKS applies to any organization that receives payments from any Federal healthcare program including physicians, hospitals and pharmacies. There are, however, specific safe harbors under which arrangements can meet specific requirements and be exempt from violating the AKS.

Stark Law is a liability law that does not require proof of intent to violate the law. It prohibits any type of financial relationship between physicians and entities in which physicians make referrals for designated health services. A designated health service includes outpatient prescription drugs, inpatient hospital services, laboratory and diagnostic imaging, physical therapy and other services. As with the AKS, Stark Law has a number of exceptions which, if all criteria is met, can ensure that the arrangement does not violate the statute. The medical directorship compensation arrangement must meet all the requirements of an AKS safe harbor or Stark Law exception to be compliant.

The OIG sniffs out bogus arrangements where the medical director is just a cover to disguise otherwise illegal payments for referrals. However, it is perfectly legal to pay a medical director who is providing real and necessary services. There are a few key points to keep in mind to maintain compliance, especially for a physician and any healthcare organization entering into a medical directorship arrangement where the physician will be referring patients to the healthcare organization.

1.  Fair Market Value. The hospital contracting the medical director must pay fair market value for the work the medical director is performing. A fair market valuation (or FMV) of services must be performed and this can be done using a third-party healthcare consulting firm.

2. Document Real Services. Medical director services must be documented and must be legitimate services on behalf of the employer.

3. Track Time. The medical director must document the time spent on services provided and submit a detailed time sheet at least monthly to the hospital as a condition of payment. To ensure proper documentation of services provided, medical time tracking should include the date, time spent and the services provided. Making the submission of time sheets or logs as a condition of payment prevents payment of unsupported or undocumented services.

Paper-based medical time tracking can create serious compliance issues. Medical time tracking often involves handwritten paper time sheets that are incomplete or illegible. Hospital staff are left to locate the physician to interpret, complete and/or sign the log. This resource consumption is frustrating, time consuming and inefficient.

To combat compliance risk and waste of staff and physician resources, hospitals often employ a physician timekeeping app to digitize and automate the recording of time, time spent and activities performed for medical directorships. An app such as Dynafios TRACE can save time, increase productivity and better mitigate compliance risk. Log entry can be completed on any handheld device, cannot be submitted if incomplete or a duplicate. Plus, TRACE provides completes transparency in the log approval and invoicing process. It is clear that using a physician time keeping app can significantly increase AKS and Stark Law compliance.

4. The Contract. The healthcare organization must also execute a contract with the medical director in writing with both parities signing for a period of at least one year. The agreement should cover all services the medical director will perform during the contract period. It should also set the aggregate compensation for the services to be performed, and this compensation should align with the fair market value of the services as identified in #1 above.

Dynafios healthcare consulting services help reduce risk and ensure compliance with physician compensation arrangements. Dynafios can assist in every step of the process from providing fair market valuations to creating comprehensive physician co-management arrangements, measuring initiatives with periodic audits to ensure compliance, and finally, healthcare contract adjudications. Plus, Dynafios offers TRACE, a medical time tracking app that provides the documentation required to avoid AKS and Stark Law noncompliance, eliminates unsupported or duplicate payments and provides a digitized audit trail for complete transparency.

If a medical directorship or a more comprehensive co-management arrangement is part of your service line planning, find out what more than 500 healthcare systems already know—Dynafios creates healthcare transformation. Give us a call at 877.858.3282 (DATA) or email us at info@dynafios.com.

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