A Pontus White Paper

Transcription

1 A Pontus White Paper To: Healthcare System General Counsel Cc: Healthcare System Executive Leadership Date: September 2007 Re: New CMS/Stark Disclosure Compliance Contents: 1. Summary of the New CMS/Stark Disclosure Requirements 2. Nuts and Bolts of Compliance 3. The Burden of Compliance 4. Alternative Means of Responding 5. The Opportunity of a Stark Audit Threat 6. The Pontus Approach - Aligning People, Process and Technology to Comply with the New CMS Stark Disclosure 1. Summary of the New CMS/Stark Disclosure Requirements The Center for Medicare and Medicaid Services (CMS) has now created a virtual Stark audit for Medicare participating hospitals. In September, CMS will notify 500 hospitals initially selected for its new comprehensive mandatory reporting of financial relationships between hospitals and physicians. 1 It is expected that ultimately all U.S. hospitals will be asked to submit a Disclosure of Financial Relationships Report ( DFRR ) to the CMS as it collects the initial set of data and refines this audit process. 2 In addition to the challenge of compliance with Stark, hospitals and health systems are now faced with their most significant administrative burden relating to Stark since the passage of the law nearly 18 years ago. Each institution s DFRR must be signed by the CEO or CFO certifying the accuracy of the disclosure. Failure on the part of the selected entities to submit a complete and accurate DFRR within allotted 45-day time period could result in monetary penalties of up to $10,000 for each day of delay in reporting Nuts and Bolts of Compliance CMS had previously attempted to survey 500 hospitals voluntarily, However, because many hospitals did not respond to our survey questions on investment interests and compensation arrangements (or did not respond completely), we are sufficiently concerned about potential tainted relationships and will begin seeking financial disclosure with those hospitals and will implement a regular disclosure process. 2 [Emphasis added] Page 1

2 Now in its attempt to locate the tainted relationships, it is essentially requiring full disclosure of all financial relationships between a hospital and its physicians. Even for those in full compliance with Stark, locating all relevant documents and data within the documents is a significant challenge as CMS is demanding submission of precise reports and supporting documentation. The DFRR is a disclosure instrument consisting of six detailed worksheets. The hospitals will be required to provide complete information including, but not limited to the following: All compensation arrangements with physicians; Leases of space or equipment with physicians or members of the physicians immediate family; Loans or loan guarantees for physicians; Isolated transactions between the physician and hospital; Physician charitable contributions to the hospital; Physician personal service agreements. 3. Burden of Compliance with the New CMS Requirements The nature of the DFRR and the information required to be submitted pursuant to it have placed hospitals in a tight spot. CMS suggests that it will take about 4 hours to search existing data resources, gather data, complete and review the information. This estimate assumes that all original agreements, amendments, addendums, etc. are assembled in a single repository, searchable across similar fields of standard legal forms. Many organizations who have begun searching for these documents are finding varying electronic and paper formats, scattered throughout different departments of the hospital. Some critical physician documents reside with medical staff leadership, others with the facilities departments, and still others in human resources. Finance, Risk Management and multiple other hospital departments are also likely in possession of the some vital contracts. Internal and external legal teams also find themselves with copies of essential documents. Of course, the physicians themselves sometimes possess the only locatable copies necessary for complete and accurate reporting. As a result of disparate and out-of-date filing systems, the simple, yet critical, administrative tasks involved in just searching for the information present a daunting challenge. Once a collection of the relevant documents is conducted, extracting and reporting the necessary information also presents a challenge beyond mere clerical-type data entry. Because most hospitals find that their agreements are not standardized or are crafted by various parties, review should be conducted by the internal or external legal teams to assure compliance. Therefore, organizing and reporting from the information could take weeks or maybe months and cost hundreds of thousands of dollars in attorney fees and internal resources depending on the number of physicians contracting with the hospital. Some of the obvious challenges facing hospitals as a result of the new disclosure requirements: Time Demands: After spending just a short time executing around an internal plan to gather and organize information to complete the DFRR, it is clear that accurate and full disclosure will take longer than the four hours suggested by CMS. Page 2

3 Reassignment of Internal Priorities: Various critical hospital projects will take a back seat until the DFRR is completed and submitted to CMS in order to meet the urgent deadline and avoid potential financial penalties. Creating and Executing a Cost Effective, Systematic and Repeatable Approach: An appropriate response to the new CMS challenge centers on having dynamic systems and processes in place to provide lawyers and decision makers with instantaneous access to the critical information needed to complete the DFRR and assure compliance with Stark. Creating these processes internally requires various critical parties including, but not limited to, in-house counsel, outside law firm(s), Chief Medical Officer and administrative staff, human resources leadership, compliance officers, risk management representation, and the list goes on. This group is challenged with creating a short term solution to meet the deadline, but should explore a more systematic approach to access and report for future inquiries. Potential for Inadvertent Exposure Under Stark: The safe assumption is that all hospitals intend to comply with the letter and spirit of Stark. Even with the best intentions, as with most issues the challenge is with oh, we did not see that or we just uncovered this. These issues are probably the most significant challenge for all organizations and the teams designated to comply with the new requirements. Knowing where to look and how to find relevant information can be a demanding and critical administrative nightmare. 4. Alternative Means of Responding Complying with this CMS request requires significant time, additional resources and strategic planning. There are many components of a solution in which hospitals can go about complying with the request. Build a Solution Internally (and execute within 45 days): Of course this approach starts with identifying an internal leader that is not challenged by other priorities. Then the leader must find available resources that are not challenged by their own more significant priorities. He or she must then access technological support amidst other IT concerns. After locating all physician documents, a team must be trained to appropriately match the terms requested in the CFRR with the language of the various contracts. Then there is the step of completing the DFRR and conducting a quality assurance review before obtaining the CEO/CFO signature and submitting the form and supporting documentation to CMS. Purchase Contracts Management Software: Hospitals may also opt for document management software to augment their internally created processes. Such software solutions often include a licensing fee and generally require significant additional human resources to manage implementation of the program and load documentation into the system. Additionally, the tail often wags the dog, meaning that an internal team must build its plan around the technological and term limitations of the software. In many cases the costs of such solutions outweigh any benefits gained, thus negating the return on investment in this approach. Page 3

4 Document Management Company: Another option to consider is document management companies which would help sort and load documents into an electronic filing system. Some companies offer the service of data extraction, but trusting this step to external data entry clerks that may not be familiar with critical healthcare or legal terms could be disastrous, especially without the understanding of the nature of the problem and risks involved. Outsourcing the Administrative Process to Law Firms: Law firms providing advice on Stark and other related healthcare regulations are certainly qualified to understand the gravity of the issues. However, the bulk of the work, although critical, is largely administrative in nature and not cost effective given the market rates for law partners and associates. Further, the processes are not optimized for future disclosures, thus resulting in repeated exercises. 5. The Opportunity of a Stark Audit Threat Most hospitals and health systems have mastered the art of managing urgent or crisis situations. In many cases, hospital leadership will choose to manage just the Stark audit with their outside legal team executing around a sufficient, but costly ad hoc approach. However, the threat of this compliance challenge could be the opportunity to build something more systematic to manage not just files, but data contained within an array of documented physician relationships. A systematic approach to managing physician agreements creates opportunities to ask the formerly un-askable questions because of the demands of responding. For example: Are we unknowingly paying physicians beyond the terms stated within their agreements? Where do we have non-standard terms between various physician contracts that create Stark issues? Do we still have agreements that have automatic renewal clauses? Cleansing and centralizing critical physician relationship information with immediate access to data, not just documents, creates the opportunity for the legal department to proactively manage physician compensation issues and reduce costs via an efficient contracts process. With an efficient contracts process, lawyers and administrative staff will be able to concentrate on more pressing issues rather than administrative tasks to support crisis management. Lawyers and administrators can then make more timely and effective decisions by having immediate access to information they need rather than them having to conduct a time consuming and exhaustive search to find it. 6. The Pontus Approach - Aligning People, Process and Technology to Comply with CMS/Stark Disclosure. A new paradigm has been developed by the legal process experts at Pontus. This paradigm integrates teams of highly skilled attorneys with refined processes and leading technology. The offering applicable to a hospital's immediate CMS/Stark issues, is called Strategic Legal Management for Contracts. SLM - Contracts presents an opportunity for leading hospitals to not Page 4

5 only immediately gain control of the underlying information required for CMS/Stark compliance, but also optimize the underlying process for continued compliance. All of this is accomplished with a significant and demonstrable return on investment. Pontus SLM - Contracts allows: Your talented, yet expensive legal resources to focus their efforts on high level, strategic thinking. Your internal resources to focus on their current priorities. Your legal department to eliminate unnecessary outside legal fees. Your organization to achieve an immediate and substantial return on investment. Your compliance team to respond to the new CMS and other regulatory burdens with composure and confidence. Pontus can help you optimize these process challenges and create immediate cost saving opportunities while significantly increasing your internal capabilities. Please contact David Bax, Director of Customer Operations at david.bax@pontusglobal.com or by calling for additional information. 1. See United States Department of Health and Human Services, Center for Medicare and Medicaid Services website at 2. See United States Department of Health and Human Services, Final Report to the Congress and Strategic and Implementing Plan Required under Section 5006 of the Deficit Reduction Act of 2005 at Page 5