On-Demand Webinar: “Physician Arrangements Under the Microscope: Regulatory Risk and Compliance”

Physician Arrangements Under the Microscope: Regulatory Risk and Compliance | October 28, 2026

Presenters: Tynan Kugler and Erin Walker

This transcript was generated with AI and may contain errors or omissions. Please refer to the webinar recording for the most accurate version.

00:06 – Introduction and presenters

PYA Moderator [00:06]: Good morning, everyone. Welcome today’s episode of PYA’s Healthcare Regulatory Roundup webinar series. Today’s topic is physician arrangements under the microscope, regulatory risk, and compliance. PYA is happy to present today’s webinar on this important topic. You may submit questions during the webinar by typing a message into the Q&A pane. Also, immediately following the end of the webinar, you’ll be asked to complete a short survey and submit any additional comments. Any questions posed during the webinar will be responded to via email after the webinar, you can customize your viewing experience by resizing, moving, or minimizing all of the panes within the webinar.net platform. We’ve posted a PDF copy of the presentation slides for your reference in the resources pane. Also, you’ll receive an email later today with a link to a copy of the slides and a recording of the webinar, with that I would like to introduce today’s presenters, Tynan Kugler and Erin Walker.

Erin Walker [01:08]: Thank you, Jen. Hello, everyone. We’re so we’re so excited that you’re joining us today to discuss this important topic. But before we get started, Tynan and I would like to briefly introduce ourselves. My name is Erin Walker, and I am a consulting manager at PYA within our Revenue and Compliance Advisory Services line. Much of my work focuses on healthcare compliance programs, regulatory risk assessments, auditing, monitoring, governance advisory services, which includes physician arrangements, which is part of why we’re here today. Before we dive in, I’m also joined by Tynan Kugler, my esteemed colleague who works in our compensation valuation planning and design services line. Tynan, would you like to take a minute and introduce yourself?

Tynan Kugler [01:54]: Sure. Thanks, Erin, and thanks to everybody for joining us. We really appreciate talking about this and appreciate your taking some time to join us for this presentation. I’m a principal with PYA. I’ve been with the firm for about 22 years and spend, as Erin said, most of my time in our compensation valuation practice looking at the arrangements that we’re going to talk about today, but interface with Erin and our compliance team quite a bit, given the interplay between the valuation of an arrangement and the compliance needs that our clients and organizations have. So, Erin, I think you’re going to get us started.

02:37 – Why physician arrangements remain a compliance priority

Erin Walker [02:37]: I am. Thanks, Tynan. So today we really want to approach physician arrangements to Tynan’s point from both not only the valuation perspective but also from the compliance perspective. Successful compliant arrangements really does require consideration of both of those sides of the equation. So we’re going to do our best today to approach it from both sides so that you can see how they tie in together, and also provide you with some thoughts on frameworks for auditing and monitoring and risks to be on the lookout for. So first, we’re going to start by discussing why physicians arrange physician arrangements. Sorry, remain such a significant enforcement priority. We’re going to talk about some recent settlement activity, just so we can continue to understand why there’s this strong focus still on physician arrangements. We also want to cover the regulatory frameworks involved. There’s several frameworks that govern physician arrangements, including Anti-Kickback and Stark Law, which I’m sure everyone is well versed in and very familiar with. After we do that, though, we want to walk through that framework I was mentioning. How do we review and manage these arrangements? We want to go through some of the common arrangement types that we see regularly, but also as we’re looking at those, tie in the key compliance considerations that should be taken into account when entering into arrangements, and then we’re going to give you some auditing and monitoring strategies that hopefully you can use that will help identify and mitigate arrangement risks from a proactive standpoint instead of a reactive standpoint. So as I mentioned, physician arrangements are continuing to receive significant attention from regulators. They really we’ve talked about the two sides of the equation, but because they sit in the middle of that intersection of compensation, potential referral implications, and healthcare reimbursement, they really are heavily scrutinized, and they can be scrutinized through any of those lenses or all of those lenses. As we know, we’re entering into these arrangements for legitimate business purposes, but we still have to take into account making sure that we’re documenting appropriately that the compensation is appropriate, that we’re monitoring from a proactive standpoint. Regularly monitoring the arrangements to make sure they’re staying consistent with the terms and what was originally agreed upon, and really the arrangement itself, while in and of itself may not be problematic, there’s still risk that comes with any physician arrangement because document documentation, compensation, and oversight can sometimes fail along the way. We don’t necessarily typically see that these arrangements are problematic from the start. Usually, from the start, we see we see that everything is in order. It’s as the arrangement evolves over time and continues over time that we start to see some breakdowns and some of the monitoring and auditing and management of those arrangements, this slide really evidences recent enforcement actions. As you can see here, the information on this slide talks about fair market value, the compensation itself, documentation deficiencies, also referral based compensation structures. As we move as we move forward in the healthcare environment today, the rapidly changing environment, we are seeing that healthcare is still continuing to be the one area that makes up the vast majority of False Claims Act recoveries. We also continue to see a record number, actually, of whistleblower or qui tam lawsuits, which means that us as healthcare organizations are increasingly likely to have our arrangements scrutinized, our practices scrutinized, just to make sure that everything is staying compliant. And one of the most, I think, one of the biggest takeaways from some of the recent enforcement actions and cases that we have seen is that, as I mentioned before, we often do everything right on the front end. We get the signed agreement, we get the appropriate valuation, and we get the appropriate approval documentation, but we’re not monitoring the arrangement through the end of its lifecycle, throughout the entire lifecycle, and that’s where the risk really comes in. So, to shorten that a little bit, I would note that really the risk, as I mentioned before, is not really the arrangement itself. It’s after the contract is signed, what are we doing to make sure that everything is staying in order with what that contract requires,

Tynan Kugler [07:25]: and Erin, one of one of the things to just note on that slide previously is that you know these are just high level some of the settlements that we’ve seen. We’ll talk about one when we get to medical directors, which was earlier this year as well. That was on the commercial reasonableness side, so not fair market value, commercial reasonableness. So this just a representative sample, you know, going from some pretty high dollars to a couple million. But there are a number of others that we could have listed. So lots of good reading for us and good for us to think through these and to read the allegations in the settlements because you can learn a lot as to what the government’s looking for and what errors people have potentially inadvertently made so that you can enhance your own compliance efforts.

08:19 – Enforcement lessons and documentation failures

Erin Walker [08:19]: Yeah, I think that’s a really good point, Tynan, to note that by reviewing these types of settlements and seeing how the government interpreted the arrangements and what went wrong and what went right, we really get we really get insight into what the government does expect. So it’s also a useful tool to look at these and you know do the do the pressure test against our processes. Would we be able to show that. Speaking of lessons learned from enforcement activity, we have seen several themes. I know I’ve got 11 on this slide. We’re not going to read, you know, verbatim from the slide, but really, one lesson learned is, as you noted, as we saw on the Previous slide: The whistleblower-related lawsuits are at a record high, and whistleblowers can come from any level of your organization. Really, where these concerns get identified is with the individuals who are involved in the weeds, in the processes, in the day-to-day administration and operational aspects of the arrangements. Next, the next important theme to take away, lesson learned, is documentation is so important. We frequently see organizations struggling to be able to support the payments that are made under an arrangement. Do we have time records? Do we have activity logs? Are the time records and activity logs just copies of the very first one that was ever submitted, and nothing has changed. You know, do we have appropriate invoices, and have those been reconciled back to the arrangement itself? And finally, evidence that services are actually completed in accordance with the requirements of the arrangement. And to that end, because of some of those struggles that we see with all of the documentation, some of that stems from the fact that sometimes these arrangements tend to, after a while, they just kind of operate on autopilot. So we don’t really see, you know, if there’s a change in duties or if maybe were changing the compensation methodology, adding locations or moving locations. We’re not really seeing a reassessment of that arrangement when those things come into play. It’s arrangement we’ve had for a while. It’s been working really well, and so it just kind of continues to operate as is, and we never really stop to take another look at it. And so we would we would recommend that there are three things really that we would point out here when it comes to looking at these arrangements. What does the agreement say? What payments have been made, and what actually happened as it relates to the services that are being performed? We start to see compliance risks and compliance concerns when one or two or all three of those components don’t really align anymore, and then it just starts to the risk starts to creep in. And so we would just caution that we make sure we’re not only doing what the agreement says, but we’re also staying on top of that throughout the lifecycle. You’ll hear us talk about that as we go through this presentation. That the that an arrangement is really a lifecycle. There’s no start and stop until we’re actually done with the arrangement. So I mentioned the regulatory framework. We’re all familiar with Anti-Kickback and Stark Law, which we will focus in on during today’s discussion because they do drive a lot of the compliance analysis process that takes place for these arrangements, but we’ll also point out some other considerations that can apply because it won’t always just be Anti-Kickback in Stark Law, and so we are going to start there though. But before we dive into Stark and Anti-Kickback, I think it’s important to point out that you know an arrangement may have specific legal requirements based on the arrangement in and of itself and how it’s set up. But there are common compliance components or principles that we see across physician arrangements, things such as fair market value, is there an appropriate business purpose? Are we using appropriate compensation methodologies? Are services being performed as required or as arranged or contracted, our payments following the approved terms within the arrangement. And one thing we hear a lot is, “Well, we got a fair market value, and it’s within fair market value.

12:53 – Stark Law and Anti-Kickback Statute considerations

Erin Walker [12:53]: And Tynan, I know, can speak more to this, but you know, fair market value does not always establish compliance. It does not always mean everything else about the arrangement now is compliant because we have an appropriate or we’re within fair market value. But on the flip side of that, and more in my world, having an executed agreement does not always establish compliance. So that’s where our worlds tend to intersect and collide a little bit because there’s not really just one thing in an arrangement that you can say because we have this one thing it’s compliant we’re good and we and we don’t have to think about it anymore. So we just wanted to give you some principles and common themes that we see within arrangements and kind of point out that they can overlap because one does not necessarily mean compliance. Moving into Anti-Kickback statute, I know all of you are more than likely very familiar with this statute, but you know we just want to point out that it its focus and intent is that we’re not making payments or providing remuneration in order to induce a reward referrals for or for other federal healthcare program business consequences for violations of this of the AKS can be significant. They can include civil monetary penalties, exclusion from federal healthcare programs, criminal liability, as well as lead into potential False Claims Act exposure, and so it is it is imperative that we remain familiar with this and we make it a part of our arrangement analysis process, and really, you know, as we’re doing that analysis process from an Anti-Kickback statute perspective, another important component is: Does any purpose of the arrangement, even if its intent is not to do this, could it be viewed as inducing or rewarding referrals? And you know, from a from a regular standalone review, could it be viewed as such? And so that’s why it’s. Important because the intent we don’t necessarily really ever see that the intent was to you know induce referrals or reward referrals, but sometimes it can be viewed as doing so inadvertently, and that’s why we always say from the compliance perspective, take a look take a look at that and give it some thought. One important distinction between Anti-Kickback and Stark Law is that the Anti-Kickback statute is intent based. There has to be intent to induce a reward for referrals or federal healthcare program business. But Stark, on the other hand, is a strict liability statute. So really, intent here doesn’t matter. It just is. Is it? And if it is, then if a financial relationship exists and we don’t have a Stark exception satisfied, we may have a Stark issue, and it won’t matter whether we intended to have it or not. When it comes to Stark Law risk potential violations. We typically see more operational failures than necessarily legal failures. Things like unsigned agreements, those missing time logs that we’ll probably mention several times as we talk as we go through this. Failure to monitor whether the exception, the exception requirements that we’re that we’re utilizing continue to be met throughout the lifecycle of the arrangement. Really, one of the biggest challenges we see is a lot of times organizations will focus on whether they had those documents initially and everything looked great, but we’re not periodically reassessing to make sure it still does look great and that it still continues to satisfy those exceptions that we’re relying on. As I mentioned, you know those autopilot type arrangements where things just kind of go on autopilot. Things change over the life of an arrangement, and so making sure that those changes aren’t leading into some potential non compliance with the exception requirements under Stark is an important component of monitoring arrangements. We really just wanted to provide you this slide just to summarize the distinctions between the two, Anti-Kickback and Stark Law, but also to where you can see some of the practical overlaps. You know, do we do we have the documentation? Is the compensation appropriate? Can we support it? Do we have oversight? Do we have ongoing monitoring?

17:37 – Additional federal, state, tax-exempt, and policy requirements

Erin Walker [17:37]: Are we proactively identifying issues that maybe that may be either apparent under AKS or Stark, and I’ll say that a lot of times, many physician arrangement reviews, when we take a look at them, we will evaluate both frameworks simultaneously at the same time. Is there is there a risk either under one or both, and that just because the same facts that we’re looking at can often lead to compliance issues under one or both of these of these regulations. And then finally, before I turn it over to Tynan, we just wanted to point out it’s not just Anti-Kickback and Stark Laws at the federal level that we have to take into consideration when we’re looking at arrangements. There’s state level self referral and Anti-Kickback laws that we have to think about and consider. There’s tax exempt requirements for those organizations that are tax exempt. Maybe you’re in a state that where we need to take into consideration corporate practice of medicine, as well as your own policies, procedures, and approval requirements. Are these arrangements following those? We have seen where maybe everything else looks good from the regulatory perspective, but the approval process didn’t follow what our policies and procedures require, and so that leads to risk because then the documentation is not would not be considered sufficient for that arrangement or those arrangements. So just wanted to point that out that there are other considerations to keep in mind. And now wanting to turn it over to Tynan so that we can talk about what’s what does this framework look like? What’s practical for us, and what do what do we see, and what are some best practices? So Tynan,

19:26 – Fair market value, commercial reasonableness, and arrangement lifecycle

Tynan Kugler [19:26]: oops, thanks, Erin. One of the things, no, that’s okay. One of the things too is you know Erin and I are not attorneys, so we. But it’s an area when she talked about all the frameworks, it’s an area where we work closely with counsel and their organizations because part of what we will often see are the arrangements have been structured. They’ve been structured to meet an exception or a safe harbor, but there have been a couple times recently. It’s been a collaboration between compliance counsel and either you know C-suite or ops people because people are trying to figure out an arrangement to help them bring care to the community to make sure physicians are compensated appropriately to make sure that it’s commercially reasonable, but there is that lens of we still have to make sure that it’s compliant from a regulatory perspective with attorneys weighing in as to that interpretation. So, that’s another sort of when I think about the lifecycle and the lifecycle not only of you know the arrangement itself but the people that are involved in the arrangement. It really is a collaboration. So, with that said, we’ll talk through you know fair market value, which again is nothing new to probably this group, but fair market value and commercial reasonableness. Erin and I live in this world in different ways, but fair market value and what I like to do is when we think about the difference between fair market value and commercial reasonableness, is you know fair market value is really the dollars, so the cents, the C-E-N-T-S associated with an arrangement. So what am I going to pay a physician? What am I going to pay for a service? You know, as compensation. Whereas commercial reasonableness is, you know, does the arrangement make sense? So that’s the S-E-N-S-E. So if you can never remember or have trouble remembering the two, that’s an easy way to think about: Am I covering, you know, both bases with the dollars and cents, and does it really make sense from a from a business purpose? And we’ll talk about some of the frameworks that we use and some of the criteria that we think through. Erin’s really talked about the operational compliance, and I think that’s another area where, as we start seeing some of these settlements and some of these cases, we’re starting to see some more that are self-disclosed, and when you see the ones that are self-disclosed, you know likely somebody along the way has realized we maybe had a breakdown in our operational compliance arena, or we’ve missed a skip somehow, and we’ve potentially our processes have caught something that we then have had to rectify, and again, with counsel, decide that’s something that they self-disclose. So, thinking about operations, and then documentation and oversight. Evergreen is when Erin says, “Okay, they’re ongoing. We haven’t heard anything about them, or they just sit; they don’t get touched. Everything’s working well. That’s not unusual for, like, in hospital rates arrangements, for example. If an organization has had an arrangement with a radiology or an anesthesiology or a pathology group for a period of time, it’s just one of those things that just keeps going, you know, without some checks and balances, so lots to cover here. But hopefully that sort of sets the stage from a life cycle or lifecycle perspective. So when we and this really I’ll say sort of the same thing as we just talked through, but just presented differently, is that you know, and the nice thing about compliance, where Erin referenced that really is a lifecycle, is a lot of the things that we ask for to determine what’s fair market value or commercially reasonable, are the same things that need to be recorded and documented, and so when we come to ask things about well, you know, productivity volumes-not volume or value of referrals, but volumes to identify burden, so that we can think about what’s the burden associated with a service. The documentation of that and having good documentation can help facilitate that fair market value analysis because we’ve got that data available. It’s been tracked. It’s been monitored.

24:04 – Framework for reviewing physician arrangements

Tynan Kugler [24:04]: So it’s one of those situations I think where it’s the help us, help you, help us kind of thing from the perspective of our ability to help you or help clients, organizations be compliant from the get go. So really, what we if we’re thinking about any arrangement, it’s who are the parties to the arrangement, how are they going to get paid, what is the exception that they will fall into, or the safe harbor. So that’s a determination that typically counsel will make with organizations. We want to validate the business purpose and why are we doing this. So even in the absence of a commercial reasonableness opinion or assessment, you know it’s important to say: Do we really, from a financial perspective, do we really need this particular service that we’re asking for? Or engaging on, we want to evaluate the things that are going into the determination of fair market value, commercial reasonableness, what we need in order to effectively document our files and maintain compliance. And then, as we kind of get towards the back end, the arrangement’s been in place. We want to make sure that we’re looking at what does the arrangement say in the written agreement, and if the written agreement doesn’t represent what’s actually operationally happening, do we need to amend that agreement? Are there actual services that been have been provided that have been paid for, and are the services still being performed? So we’ll talk in one instance. Medical directorships. I think you would think we would have learned about compliance with medical directorships, but those seem to be the ones that keep cropping up from a compliance perspective. So that’s where operations, approvals, and supporting documentation can be really key. And then, as you think about, and Erin will get into more of this, but documenting any concerns, corrective actions. So you find something when you’ve done your compliance assessment. What do you need to do from a documentation perspective, and sometimes even a change management or corrective action perspective to make sure that the same the same issues aren’t repeated on a go forward basis. So compensation valuation considerations. We when we do comp valuation opinions, and I know Erin mentioned things like corporate practice of medicine, and we may have folks listening today that are on the provider side from a hospital health system have arrangements with physicians, which we’ll talk through. But we also see a lot of organizations that have management services arrangements, professional services arrangements, and so while the questions that we might ask and the data that we might need can be different from arrangement to arrangement. Really, the considerations that we’re asking or that we’re having to think about are going to be the same. So it’s, you know, what are the provider, are the service provider qualifications, duties? How much time is required for this? If it’s an arrangement that has, you know, an hourly rate, for example, and more and more we’re seeing quality incorporated into arrangements, and so it’s important that the outcomes of what we’re paying for are defined and tracked. We would not be good appraisers if we and we you know, as sort of a requirement as an independent third party based on government, you know, guidance is that we have to look at multiple objective benchmarks. And so there’s nothing that says you know how many we look at, but you know an n of one doesn’t constitute a benchmark from a are we going to hang our hat on it from a valuation perspective for a number of different reasons. But we look at benchmarks, we look at market data, and market data depending on your market, depending on whether you’re rural, whether you’re urban. There are a number of different things that we think about. There we think about and with operators and with finance folks and with compliance, we do think about why you know are we doing this? Are we providing these services elsewhere for some reason? So we will we will ask for a lot of data.

28:32 – Valuation benchmarks and supporting documentation

Tynan Kugler [28:32]: But the reason we do that is to make sure from our end there aren’t those inadvertent contracts sitting in different departments if there is decentralization in an organization where different people, for example, are approving, reviewing, approving medical directors, for example, we will always, if it’s an outside third-party appraisal that our name as an independent appraiser is going on, we will look at the three valuation approaches: cost, market, and income, and we’ll make an independent decision as to which one of those we’re going to use to come up with our valuation conclusion, and then we will document everything. So we’ll document what did we look at, what did we do, what was our analysis, and what did we conclude, and why did we conclude that, and that would be in a work product that would then go in a file, if you if you do it as an internal exercise or if you get an independent third party to do it as well. Some other things, you know, Erin mentioned documentation, and I said documentation. So timesheets. If we think about a medical directorship, if we think about you know a physician compensation arrangement, it’s things like productivity reports, so that we can look at does their compensation support their production. If it’s a call coverage arrangement, it’s things like how many times did they have to take calls while they were on call? What types of calls did they take? So there’s a lot of data that, again, like I said, goes into the contract that, if it’s monitored and there’s documentation, then becomes the information request for the next cycle when they when an arrangement gets reviewed. So we’ll talk in a little bit more detail about some of the specifics. Stark Law again, Erin and I can’t help ourselves when it comes to both Stark Law compliance and Anti-Kickback. But this just some of the guidance. You know, went for a period of time with just looking through some of those cases, understanding what the settlement agreement said, understanding what corporate integrity agreements consisted of, but in you know about 2021, the government came back and said CMS came back and said, okay, we’re just going to clarify a couple of things for you because we think there have been some misinterpretations about what we’re thinking about your physician arrangements, and so they gave us some nuggets to all think about as you know, depending on whether you’re a Tynan doing an evaluation or you’re an Erin doing a compliance risk assessment, and some of those guidelines were you know salaries in and of themselves. So salary surveys don’t constitute fair market value. There, I’m sure all of you would have had a physician or in your role, somebody say, “Well, MGMA is an excellent survey, but we will often get, well, MGMA says that I should be getting paid at the 75th percentile, and here’s the 75th percentile per MGMA that constitutes fair market value. That’s not something we subscribe to, but we’ll often hear that because it’s a known benchmark in the industry or with other benchmarks, what CMS said was you know salary surveys are a great starting point, but there are lots of other things that you have to consider in order to determine what constitutes fair market value. The other thing you know, and we will look at that. This appraisers, and lots in the industry do. You know, you’ll look at sort of what constitutes low risk, what constitutes high risk, and make a decision. You know, as to what detail are you going to go into when you when you think about where somebody falls from a percentile perspective. And essentially, what the government said was just because something is over the 75th percentile doesn’t mean it’s not fair market value. You could have something at the 10th percentile and it not be at fair market value. So you really have to think about the facts and circumstances.

32:33 – Business purpose and commercial reasonableness

Tynan Kugler [32:33]: They also commented on investment value, which is which is an important consideration from a commercial reasonableness perspective, one of the big things that they gave us from a you know how do we do our work and how do we support our opinions is even if a if an arrangement is not profitable doesn’t mean it’s not commercially reasonable but we what you do have to do is make sure that you can support the legitimate purpose of that arrangement. So, if you’ve got a physician practice that’s in a specialty, for example, where you might only have a number of patients, and you might have to pay more to that physician in order to provide that service, you might lose money on the professional side of that arrangement. That doesn’t mean at face value that it’s not commercially reasonable. So they gave us some clarity there. They gave us some clarity about constitution of a business purpose with some arrange–you know, they gave some good examples. They gave some good–here I say medical director example again, and then to Erin’s point, the reevaluation that actually was in some of the content that they provided. So they are telling us we are looking at whether arrangements get evaluated. Hence, why they have become more incorporated into the compliance lifecycle. So commercial reasonableness. We typically, when we look at commercial reasonableness, we’ll really look at five what I’ll call separate areas. We look at the business need and the strategy. We’ll look at provider qualifications. So, why are you engaging this specific specialty? Why are you engaging this specific provider? We’ll look at what the duties and responsibilities are for that arrangement. Are the responsibilities clearly defined? Are the outcomes measurable? Are the duties duplicative of duties that might be provided elsewhere? You see this oftentimes if you’re not doing a good job of tracking arrangements because, you know, and we’ve seen this where we maybe had a program director who’s providing the same thing as an administrative director. The contracts are different. We get them. We review them. The duties are the same, but two different people are getting paid for the same thing. That’s an inadvertent, “Hey, we just haven’t compared contracts, and we’ve got different nomenclature for some administrative responsibilities”, and then oversight and monitoring. So, you know, an example for of commercial reasonableness that I often think about from the perspective of let’s use call coverage. Sometimes we’ll get medical oncologists, or we’ll get a an institution that wants to pay a medical oncologist for call coverage, well, most cancer patients have an assigned physician, and if you are paying somebody for unassigned call, because most cancer patients have a assigned physician, and that physician would get called, we will then say, okay, is it commercially reasonable that you pay call coverage for unassigned cancer care in medical oncology when that’s not typically the norm for a cancer patient to present you know as an unassigned without a physician. We’ve had instances where we’ve had some hospitals say, well, actually that does happen, or radiation oncology, where we say somebody presents and they need radiation oncology. So the facts and circumstances are really important from a CR perspective. And again, that has nothing to do with what are you paying for that service. It has to do with do you need that service and is there a legitimate business purpose? We won’t go into all the details of all of the different arrangements, I’ll hit on some of the highlights of ones that, or some of the, I’ll say, risk areas that we typically see within the spectrum of arrangements. But I think sometimes it’s easy to forget that when we talk about physician arrangements, I mean we’ve got two pages of different types of arrangements and some detail associated with all of those, but they’re you know the typical employment arrangement, productivity-based compensation. Low-hanging fruit these days is use of advanced practice providers and making sure that the services. This still an issue, and it’s because sometimes practice management, EMR systems, you may be able to segregate what’s personally performed, you know, incident-to or split/shared services.

37:17 – Common physician arrangement types and risk areas

Tynan Kugler [37:17]: But if you can’t, or if you don’t have your system set up that way, it makes it harder to then draw the bright line between what has the physician really performed and what has an advanced practice provider really performed. And again, personally performed is something that Stark focuses on. So, employment productivity based outcomes. So, if we have quality metrics in an arrangement and we’re paying for quality, but we don’t reassess whether we’re moving the needle on quality. Yet we’re still paying the same thing, or we’re increasing payment to reach the same outcomes that we’ve achieved 100% of. That’s a risk area. Medical directorships, biggest issue. Medical directorships is documentation, and pushing the easy button. Erin referenced it before. Of you know the same number of hours recorded every month for the same duties recorded every month. That’s going to raise a bit of a red flag. Professional services agreements. I’m going to throw subsidy arrangements in here to professional services arrangements can be a challenge. You know, are you what are you paying for from a professional services arrangement? Do you have a contracted service that you already are paying an employed physician to do? That’s an area where you also need to be careful. Space and equipment, space and equipment. I think sometimes is just the afterthought, and we realize sometimes after the fact. Oh yeah, and I think sometimes, Erin, you can probably attest to this. This caught during a risk assessment or a compliance assessment, where it’s like, oh gosh, we realize that this physician’s using this space and we don’t have an arrangement or we haven’t accounted for it. Is it reasonable? Do we need it? But that’s one to not fall off your radar screen, and it can be an assessment in and of itself, which we’ve had some clients do. Call coverage. Biggest thing with call coverage, I’ll say there are, you know, are we what identifying the burden? So is the is this a physician that’s getting called all of the time, or is this a physician that just has to be available? Big difference between what we would pay and whether we need that service, if you’re never getting called, and it’s not a requirement, then it begs the question of: Do we even need this arrangement? Recruitment and relocation-we have seen an uptick in income guarantee arrangements. We can talk about that in just a minute, but. There’s some compliance and documentation areas that I think very easily. If you’re not used to doing those, you haven’t done them for a while, but you’ve started doing them again. That’s an area that can be fraught with some inadvertent compliance risk, joint ventures, ownership interests, and then nonmonetary compensation. We could also do a full presentation on non monetary compensation and tracking there too. But that’s one to be aware of as well. So high level, Erin. Did we miss any there?

Erin Walker [40:35]: I don’t think we missed anything. I would also add too, from the joint venture and ownership perspective. You know, not only are we looking at that from the arrangement perspective, but also from like a conflict of interest perspective. So does that does that bleed more into you know is that provider that has that joint venture ownership interest you know making decisions on behalf of the organization? How are we managing that? Are they you know what is their role at the organization? So you can see where just one arrangement can bleed into three or four different spaces. And back to the space and equipment lease, I know we just said space and equipment, but I would throw personnel in there too, because a lot of times what we see is inadvertently someone’s using you know some shared staffing for certain things, and that needs to be included as part of that arrangement that you’re putting out there is the staff itself.

41:30 – Medical directorships, call coverage, and co-management

Tynan Kugler [41:30]: And I think we’ve seen more of that in the in the context of something has just started with one purpose, and it continued, and it continued because it worked, but it just wasn’t looked at again. And then, I mean, we’ve done a couple where we’ve had to go back five, six years to say, do we have an issue, and what’s the magnitude of that issue to make a determination. And it’s not a qui tam; it’s just a, it’s an oops kind of thing that we found. So, Okay, so we talked a little bit. Well, let me talk about medical directorships a little bit more. One of the things that we have found that folks are doing to try and get their arms around medical director need is similar to provider needs assessment, which we’ll hit on in just a minute. But their organizations are looking at do we have a need for a medical director? And without going through all of the detail in here, we’ve done some analyzes where we’ve said, okay, let’s look at let’s catalog all the medical director agreements that you have. Let’s not just say medical director, but let’s look at program director. Let’s look at administrative director. Looks at let’s look at anything that has a kind of medical-director feel, and that’s where we found some of the compliance and documentation issues. But let’s start at the beginning and say, from either a regulatory perspective, because you know you need that medical director because of a service line or a program that you have, let’s just rule out all the ones that you need in order to provide patient care. Then let’s look at the ones that you have that you need because you’ve got a lot of unassigned call. Then let’s look at the ones that maybe you’ve got a medical director, but you’ve got a department of one physician, and that medical director is not needed, but somewhere along the way, the physician got both clinical base compensation or total, you know, for clinical work, and then added on the administrative work. But they’re medically directing themselves. You might have fair market value, but is that commercially reasonable? And then what are we doing to make sure if we don’t have a process of who’s approving additional medical directorships? So that’s kind of where this needs assessment lifecycle is really kind of confined to one type of physician arrangement, but it takes into consideration all of the concepts that Erin and I have been talking through. Call coverage won’t go into this in detail, but have listed if you are looking at your call coverage arrangements. What are some of the things that you want to track and review? You know, payer mix is a big one. Who’s providing call coverage? Is the physician taking first call, or is an advanced practice provider taking first call, that all goes into the fair market value assessment of what should that payment be. Co-management, I think we’re starting to see co-management arrangements come back, make a bit of a resurgence, and we see these in some specialties more than others, orthopedics, cardiology, oncology. We’ve seen some in general surgery, and the goal here is where you’ve got a service line, for example, in a hospital that maybe you know needs the expertise from both. The clinical and the administrative perspective of an outside practice, and the two parties together can better run and better provide a service to the patient. And what that means to the practice is that the practice gets paid a fixed payment, typically with portion of the total payment at risk pursuant to whatever metrics the hospital or the health system has deemed they have a good business need to pay for, and how do the two work collaboratively? One of the things that we talked about recently in a general surgery one is you had a chief of surgery that had some duties that were similar to what would happen in a co-management arrangement for general surgery. How do we make sure that we’re not double paying or we’re not paying for the same services twice? So co-managements can be complex, but the biggest issue here too is defining what we’re co-managing. Professional service agreements we talked about. I know I mentioned something about subsidies.

46:00 – Subsidies, recruitment, and provider need

Tynan Kugler [46:00]: One of the challenges with subsidies, so if you’re a hospital or a health system and you’re providing an income guarantee or a subsidy to a practice, is one of the things that, from a fair market value perspective and from a business perspective, we want to make sure that we’re addressing is that we’re not subsidizing poor business practices. So one of the things that we will do is look at how does that practice, for example, are they collecting everything that they could potentially collect so that the underlying payment that eventually goes to them is truly to support compensation that they can’t pay themselves and overhead that they can’t cover with the collections that they are bringing in. So that’s an area that looking at, for example, adjusted collection ratio is a big one now when we’re looking at subsidies, physician recruitment arrangements. I would say that from my perspective, that very first bucket is important. So looking at those common recruitment tools, I think where Erin is going to be looking at is okay. Do we have all of the things when we’re doing an assessment of a compliance assessment that are kind of in the second bucket, and then what are the risks that we’ve identified as a result of those requirements in that second bucket, and then finally, just a couple more slides from the perspective of risk or provider need. One of the biggest, and we use this in fair market value, but also in commercial reasonableness, is identifying and qualifying either quantitatively or qualitatively what the need for a provider or a service in a community is. If you have no need, identifiable need, in your community for a physician of a certain specialty, doesn’t mean you’ve got a compliance issue, or doesn’t mean you can’t compensate that physician. It just means that you have to be able to tell the story of what’s the legitimate need for having that provider or paying that provider, so we do in almost every fair market value opinion we look at. We ask about provider need. We ask about you know is there a surplus or a deficit? What is there is there a demand for the specialty, and we do that through a pretty prescriptive process, and we ask hospital and health systems, have you done that, and to give us details about that. So that’s an important consideration of the lifecycle too. So that in the last 10 minutes that we have, Erin’s going to take you home on now that we’ve appraised it and determined that it’s commercially reasonable. Now we’re going to check everything, monitor everything, put the bow on it at the end. So take it, take it away, Erin.

48:52 – Auditing and monitoring the arrangement lifecycle

Erin Walker [48:52]: Thanks, Tynan. So I would say you know when we talk auditing and monitoring, I know there’s some where this their favorite part of the process. I know there’s some where they’re like this just not this just not my thing. But really, what we what we want to point out about auditing and monitoring is it’s so imperative to do it proactively. It’s so imperative to have a regular schedule and to base it off of your highest risks, right? So there are plenty of times when we’re doing an arrangements review, we will we will take the arrangements, and we will look at them from you know specialty. What are some high risk specialties? What are some highly paid provider arrangements? You know where do we start with that risk universe? But really, what the goal of auditing and monitoring is to identify the issues before they become a problem, right? And so, we really want to make sure that we’re honing in on not only the beginning of the arrangement, which I think we see a lot. There’s great processes. It’s just really throughout the lifecycle. So, in order to manage the lifecycle of all of your arrangements, we really have to start with that inventory. Where are we maintaining all of these arrangements? Are we? Is it a centralized location? What is our process? One thing we see a lot of times is the documentation is ultimately present, but it might be maintained in six different areas, and we’re kind of having to scramble to pull everything together. Which I’m not saying you can’t do it that way, but one thing we’ve seen when we’re helping organizations, maybe under a corporate integrity agreement, is the government really wants to see a centralized repository because that tells them there is a defined process, all the right players are involved, all the right stakeholders are involved, and we’re keeping everything together so that when somebody comes in, such as someone from internal audit or somebody from the compliance department doing a risk assessment. They can go to one place; it’s one source of truth, and everything is there. When Tynan talked about evaluation of that business need and setting the arrangement up, what factors do we need to consider based on you know types of arrangements? As part of that process, what are the reviews and approvals doing? Sometimes we wind up with duplicative arrangements where people are performing duplicative duties because the review and approval process is fragmented across the organization. Are we making sure that do we have anything like a checklist or something that we’re looking at to make sure that not only are we covering all of our bases from a regulatory perspective, but that we’re covering our bases from a compliance perspective and getting all the right reviews and approvals to make sure that everyone, every one of those operational stakeholders that are involved in the arrangements process, are being able to review and approve. And are we documenting it? I speak of documentation, a lot of times this where we see some of the biggest gaps. It can be we’ll be coming in, and when Tynan talks about help us, help you, help us, we’re trying to ask for all of the documents and all of the information to Tynan’s point that you would have needed to enter into that arrangement, but what we find is they don’t always actually make their way to the documentation point. We may have all of the information, but maybe it was dispersed through emails or you know conversations or just around the table planning, but we don’t actually have it documented, and it doesn’t allow you then to be able to tell that full story for why the arrangement makes sense and why it’s compliant. And so, without that documentation, you really you can’t. The story just kind of stops once you’ve entered into the arrangement. You’re not able to tell the story throughout the full lifecycle. Whereas from a an auditing and monitoring perspective, you should be able to tell. You should be able to see, read the entire story of that arrangement to the date of your review, whether that’s a month later or whether that’s 10 years later, and we’re still involved in the arrangement.

52:49 – Ongoing payment review and aggregated arrangements

Erin Walker [52:49]: So, really, what I would point out is it’s not that single annual review where we go look at all of our arrangements. It’s a it’s a connected process that starts with contracting, go. through approval, but then we’re double checking our payments. We’re looking at are the duties being performed as needed. We’re doing it continually, and I’m not saying that means you have to do it every single day. But we really don’t want to just wait a year or two before we reevaluate or wait till an agreement comes up for a renewal or it is expiring. Those are definitely great points at which to review the arrangement, and we should continue to do that. But we should be able to be auditing these arrangements as they’re as they’re working, as we’re going through them, so that we can pick up on anything that’s happening that’s maybe outside of the arrangement or not in line with the payment requirements, so that we’re catching those before we run into we run into problems. And just like I was saying, not every arrangement is going to need to be reviewed at the same frequency. When I was talking earlier about when we’re doing a risk assessment for an arrangements or an arrangements review, we’ll go in and look at higher risk specialties. We’ll look at highly paid. We’ll look at arrangements that we already know are over the 75th percentile or into the 90th percentile. Those we might need to look at more frequently, just because they in and of themselves, whether or not they’re appropriate, they can be completely appropriate, like Tynan was talking about. But we want to make sure we’re keeping our finger on the pulse and watching those. But I would say, you know, our regular reviews are really coming down to payment calculations, inconsistent payment payments, inconsistent calculations, which we should be able to be picking up on through our accounts payable department, or you know, monitoring those reports. We paid 5000 last month, and now we’re paying 12. What are we? You know, what does the contract say? Are there? Do we have any flags or any triggers for payments? What about if. If the duties are changing, all of a sudden a provider is no longer taking call, but we have a call coverage arrangement with the provider. But we now know the provider is not taking calls. So how are we how are we looking at that? What about looking at multiple arrangements? That’s an easy one to start with when you have a provider with multiple arrangements. And I say that because each arrangement, in and of itself, may be perfectly compliant. But when you stack them together, when you aggregate them together, now all of a sudden we are we are at risk for non-compliance. Whether it’s from an FMV perspective, whether it’s from now we’ve got duplicative duties. To Tynan’s point about the medical director directing himself, you know how are all of those as a whole affecting the arrangement itself? Because at the end of the day, the review will come down to the all arrangements together. They will look at them as a whole, not as standalone arrangements. And that’s where that review and approval process is so imperative, because if we’ve got different ways that we’re doing these reviews and approvals, somebody over here is doing medical directorships, somebody over here is doing a call coverage. You’re you may not catch that there could be three arrangements out there with one provider. But when we have that streamlined, centralized documentation process, that repository, and that streamlined review and approval process. You’re much more likely to catch those on the front end, or at least much quicker than you would than you would after that. We just wanted to point out here for productivity-based compensation arrangements. These are just some recommendations for things to look at from a monitoring perspective. You know, Tynan mentioned the quality incentives, the compensation caps, or the thresholds. Retrospective adjustments. Some of those are triggers that should kind of you know turn on, set off an alarm, and kind of go. Maybe we need to look at this. But are we actually?

Erin Walker [56:59]: Is there any kind of analysis that the productivity was that the productivity-based compensation, as determined, was determined appropriately? That was a lot of long words, but are we are we making sure we’re that our methodology, our conversion factors, all of that information is being done appropriately, and that we’re paying according to not only what the contract says, but that we’re calculating the payments appropriately. Tynan, would you say I missed anything on that

Tynan Kugler [57:28]: one? Nope. This a good list just to keep as a checklist.

57:36 – Governance, accountability, and practical review procedures

Erin Walker [57:36]: And then finally, I’ve mentioned this. Well, not finally. I think we still have one or two more slides, but I will. This the second to last. But really, governance is really important. We’ve we just wanted to list here just some various areas that come into accountability for arrange for physician arrangements, and you can see we have a lot of different areas: compliance, legal, human resources, the reviews and approvals, the escalation for when there’s an issue identified, and so we really need to make sure we’ve defined who’s responsible for what and that we follow it because governance is a really important component of physician arrangements. So is accountability, and you are going to cross into you know lanes are going to cross a little bit, but there should be some really clearly defined lanes for who’s going to handle what and how we’re going to make sure it happens appropriately. Depending on the nature or issue identified as we’re doing these reviews, we may also need to bring in the compliance committee and/or the board, which is why we’ve listed them here, because you know significant concerns, significant risks should be reported up through governance, and that includes your compliance committee and the board. So that’s why we’ve put those them on here as well. But really, what we’re trying to do is make sure we’re ensuring that accountability remains constant throughout the lifecycle of the arrangement, and that we’re not just holding people accountable to get all the signatures at the beginning, and then nobody’s staying on top of what’s actually occurring throughout the arrangement. And finally, we just wanted to give you a list here of some practical auditing and monitoring procedures. Some of these are pretty easy to find, and I will reiterate again. You can go read a corporate integrity agreement that’s related to referral source arrangements. And I believe there’s eight–, usually about 16 to 18 areas that, when that entity has to do their referral source arrangements review annually, there’s 16 to 18 areas that they’re required to document that they have satisfied, that is a great checklist for how to do your arrangements reviews because it starts all the way from did we get the document signed and goes all the way to how are we monitoring and what’s our approval process for that. So we just we put many of those on this slide, but. I would also recommend you go look at some of those CIA’s just to see what the expectations are because it really is a great indicator of what the government expects. And then finally, we wanted to leave you with some resources. Again, on our website, we’ve provided the links here. There’s much more out there as well. We just couldn’t we couldn’t add it all to the slides, so we wanted to give you these resources. Feel free to pull the links and take a look through. And as mentioned at the beginning of the webinar, we’re also happy to answer questions if you have any follow ups that you’d like to send our way. So Jen, I’m going to turn it back to you to take us home. All

1:00:42 – Closing remarks

PYA Moderator [1:00:42]: right. Thanks to our presenters, Tynan and Erin. Please remember to stay on the line once the webinar disconnects to complete a short survey. Later today, you’ll receive an email with a link to their contact information and a recording of the webinar. Also, the slides and recordings for every episode of PYA’s Healthcare Regulatory Roundup series are available in the thought leadership section of PYA’s website, pyapc.com. While at our website, you may register for other PYA webinars and learn more about the full range of services offered by PYA. Please remember to stay on the line once the webinar disconnects to complete the short survey and post any additional questions you may have. On behalf of PYA, thank you for joining us. Have a great rest of your day.