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The challenges of hospital and physician alignment [PODCAST]

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In this episode, Rob Senska, Director of Compliance Services and Associate General Counsel at BESLER, discusses the challenges and risks associated with hospital and physician relationships.
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Michael Passanante:   Welcome back to the Hospital Finance Podcast. This is Mike Passanante, glad you could be with us.

Today, I’m joined by Rob Senska. Rob is the director of Compliance Services and Associate General Counsel here at BESLER Consulting. Rob is going to be talking with us about challenges associated with hospital-physician alignment.

Welcome, Rob.

Rob Senska: Thanks, Mike. I appreciate being here.

Michael: Rob, you’re very knowledgeable on this topic. I know you’ve been a chief compliance officer in past lives, so why don’t we dive right in. In your mind, why is hospital physician alignment such an important issue for hospitals today?

Rob: Well, Mike, given the current marketplace with hospitals and physicians and the continued movement towards population health initiatives, ACO’s, as well as other bundling programs, and really, at the end of the day, payment restructuring globally from both federal payers and private payers, it’s key and crucial today, and has been for several years for hospitals and physicians to fully align.

Now, when I think of alignment, Mike, it’s important for hospitals and physicians to align on the compliance piece of what they’re doing, but also to integrate those initiatives with driving quality and overall accomplishing better care.

So at the end of the day, the hospitals and physicians are challenged by structuring transactions and working towards common goals that accomplish all of those objectives.

What we’ve seen in the marketplace, especially the last three to five years, is a huge, huge shift towards more contracting between hospitals and physicians, and at the federal level, more specificity with respect to how bills are submitted and how they’re paid.

At the end of the day, we need in our marketplace and for our clients, the hospitals, to be more efficient and effective to how we deliver care. All of this presents great challenges. We’re really a fragmented industry still. Many physicians and physician practices are operating in a way that doesn’t lend itself to collaboration with hospitals.

And likewise, many hospitals are still operating in a vacuum. And we know, as an industry, that these things need to change from the quality perspective and from the compliance perspective.

Michael: So you said hospitals need to improve on how they manage their physician networks. Can you elaborate on that?

Rob: Absolutely! We’ve seen a flurry of activity with hospital alignment (hospital physician alignment that is) and really, a massive consolidation in the marketplace from exactly the reasons I just stated with respect to the payer system and what’s going on in the federal and state level, the regulatory side.

So what they really need to do is think of ways to improve their overall strategy. We see this in the northeast especially. In the New Jersey marketplace, in our backyard, many hospitals have what I would call a defensive or reactive strategy, rather than a proactive strategy.

And that doesn’t lend itself to the efficiencies and the overall compliant behaviors that the industry and the hospitals need to be engaged in.

What I’ve seen from past life as being a lawyer, both in New York and New Jersey, is that in many cases, the hospitals have a lack of, or don’t really engage in true due diligence pre-acquisition. So what they find themselves or the predicament they find themselves in is having a network of misaligned or unaligned physicians across specialties, and they don’t know what they have now in terms of risk profile.

They have physician practices operating in essentially silos. One thing that they can do is to have a better playbook for these acquisitions and to have a solid foundation for them to operate from a corporate structure and a managerial structure and an acquisition structure.

So these are some of the challenges and some of the things that they can embark upon.

Michael: Rob, what are the biggest concerns hospitals face from a risk perspective with respect to their networks of physician practices?

Rob: Flat out, and this shouldn’t be news to hospital executives to chief compliance officers to general counsels or to those folks who are running what I call the physician enterprises, overseeing all of these newly-acquired physician groups, really, the simple answer is submitting improper claims to the federal government or even to a state payer.

The regulatory risk is enormous, both the state level and the federal level, for any fraudulent claims submitted to the government. The risk isn’t only the punitive risk or the lost revenue risk. It can be exclusion up to including exclusion from a federal payer or even a private payer.

So those risks alone really require careful attention, careful strategy for how you’re contracting. And really, at the end of the day, it can be quite challenging for hospital clients.

Michael: So expanding a hospital’s physician network footprint seems to be very key for hospitals today. Can you walk us through some of the regulatory risks associated with contracting with physicians?

Rob: Clearly, if you’re not structured right from a contract perspective, you run a whole gamut of risks. I touched on the improper claims submission. But also, just from a contracting standpoint, if you don’t have your contracts structured in a way that meets the requirements of the Anti-Kickback Statute, the Stark Law, and ultimately, the False Claims Act, then you’re going to have huge issues.

In particular, what you need to do is have your client, or have your contracts fair market value and commercially reasonable. If you don’t have those two things at a baseline level, then you’re not going to be able to guarantee you’re aligned and compliant with these federal laws. And the implications are huge, Mike.

Michael: So, as you mentioned, the regulatory risks are immense and they continue. Why do you think the government remains so intense on this topic? Why is there such continued scrutiny?

Rob: Honestly, one key piece of this is that there’s revenue generation at the federal level. In fact, the OIG has touted for many years in its budget justifications to the Central Budgeting Office at the federal level, its return on investment with respect to its anti-fraud activities. In 2015, they touted an ROI (return on investment) of for every $1 spent for anti-fraud activities, there’s an $8 return.

And any business line that I can think of, you’d continue to embark down that business line.

Also, there’s still in this industry bad or what I call in many cases, negligent actors. And unfortunately, the reality is that some providers across the nation and some administrators are unscrupulous and are still gaming the system or pushing the system to the limit.

In those cases, the fraud and abuse laws come into play, obviously, but they ruin the pot for the entire hospital system across the nation.

And also, I’d like to point out in the context of government scrutiny, the government has become much more proficient in coordinating its efforts across federal government agencies, as well as state agencies.

One example of this is the HEAT Initiative, the Health Care Fraud Prevention and Enforcement Action Team that the Department of Health and Human Services and the Department Justice created back in 2009.

This has been a cabinet-level priority of the federal government and has really turned (no pun intended) the heat up on hospitals across the nation.

So the revenue generation at the federal level, also the state level by way of an analogy, as well as the inter-collaboration or coordination amongst these agencies has really, truly turned the heat up on physicians and hospitals alike.

Michael: Rob, what do you see as the main safeguards or hospital initiatives for mitigating these regulatory and financial risks with respect to their physician networks?

Rob: That’s an excellent question. I think it’s a question that many boards need to ask themselves, as well as many hospital executive teams, especially as they roll out their initiatives to acquire practices. And I think very simply, the common sense answer to me is having a good plan or strategy that’s approved and understood by the board and the executive team.

Without that, without having the acquisition strategy and the alignment strategy set forth and approved and understood and blessed by the board and the executive team, it’s very hard to ensure compliance and to ensure revenue integrity and revenue enhancement from the physician billing side and from, overall, the business side.

I think as part of that strategy, you’d absolutely need to have a well-developed and well-thought out compliance component or compliance plan. And in fact, what I’d like to say is that you really need to have a compliance plan in place that specifically addresses the nuances of the physician contracts and the various physician arrangements and alignment strategies that you’ve put in place.

Many hospitals have thought about compliance in the context of the in-patient setting, but have not thought about compliance in the context of having a huge network over a larger geography of varying specialties, specialists, and different providers.

So, having that as a core element of your overall compliance plan is essential, in my opinion, to managing all of the risks, to managing the risk of violations of the laws we just spoke about, and to enhancing your revenue.

I think also, Mike, in terms of having a standardized approach to auditing and monitoring, that’s also a key sub-element, if you will, of having an effective compliance program.

Michael: Rob,that was great information. Thanks for taking some time with us today.

Rob: Thank you very much.


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