Best Practices to Avoid Stacking

Stacking can be a huge compliance risk for healthcare organizations and physicians. Here are some quick tips to avoid stacking in the first place.

  1. Develop a policy and review process regarding physicians who hold more than one position or perform more than one service with the hospital or affiliated organizations.
  2. If physicians are holding two call positions at the same time, set guidelines around how much they can be paid. If they are effectively an employed physician, set an aggregate payment cap from all sources.
  3. Ask physicians for time documentation that delineates activities for each role. Time tracking should be standard for all physician administrative positions.
  4. As much you can, automate time tracking and coordinate effectively between all parties: physicians, finance, and administration.
  5. Don’t pay a physician to take call for two services at the same time. Common service combinations where stacking most frequently occurs:
    • Orthopedic surgery and hand surgery
    • Plastic surgery and hand surgery
    • Non-invasive and invasive cardiology
    • Stroke and non-stroke neurology
    • Trauma and general surgery
  6. Ask the physician to sign a statement to certify that his or her private practice cannot be rearranged to avoid lost income. Another way is to monitor physicians’ OR utilization to compare elective volume with and without on-call coverage.

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Catching Hidden Overpayments in Physician Agreements: Stacking Risks

Thankfully there are ways to catch most overpayments in physician agreements, particularly if the contracts are straightforward and benchmarking is available. Risks for overpayments are things like paying above FMV, or paying for too many hours per administrative deal are straightforward to discover with careful review and analysis of contracts.

But, there are overpayments that are a lot harder to catch—particularly when reasonable looking payments are spread across multiple agreements and turn out not to be commercially reasonable when considered in aggregate. We call these problematic payment structures “stacking” and the compliance risks associated with the issue are significant.

So, what does the OIG tell us about problematic physician compensation structures? Advisory Opinion 07-10 from 2007 talks about three areas to pay particularly close attention to that could result in compliance issues.

  • “payment for lost opportunity cost that do not reflect bona fide lost income”
  • ”aggregate on-call payments that are disproportionately high when compared to the physician’s regular practice income”
  • “payment…resulting in the physician essentially being paid twice for the same service”

So how does stacking commonly happen? Let’s talk about some scenarios. The most common and rather difficult to catch is that a physician or physician group has two or more agreements with a hospital for coverage or administrative/medical direction services and payments for both haven’t been considered in aggregate. Though it’s certainly possible that the physician can coordinate his or her time to fulfill both responsibilities within a time frame generally understood as required to fulfill each agreement separately, the payments for both may go beyond what is commercially reasonable (particularly in the context of the physician’s clinical practice).

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Stacking – Risks and Prevention

Stacking is a popular topic in physician contract compliance, and for good reason. While overpayments, such as paying higher than FMV or paying for too many hours in administrative agreements, can be easy to spot sometimes payments that look reasonable in one agreement are not reasonable when looked at in aggregate across all agreements.

Stacking has come to greater prominence following an OIG advisory opinion that defines problematic compensation structures. These stacking structures can easily occur when a physician or group has multiple agreements with a hospital for coverage, administrative, or medical director services. While the agreement may be compliant when considered independently, when taken in total, payment may be greater than 90th percentile or the time commitment, particularly in the context of the physician’s clinical practice, requires more hours per year than full time! Stacking may additionally occur if an emergency department call payment rate is based on opportunity cost of assumed lost private practice income but the physician or group is not actually suffering losses.

Despite the challenges that the risk of stacking can create, an organization can take clear approaches to develop best practices and review procedures to avoid stacking. A first major step should be to develop policies and review procedures, targeted towards physicians who hold more than one position or who perform more than one service. These policies should focus on diligent administrative time tracking, reviewing and monitoring restricted call payments, establishing guidelines and payment caps for physicians being paid for two simultaneous call positions, and staying aware of physicians receiving multiple emergency department call payments.

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9 Key Strategies for Successful Physician Contract Negotiations

Preparing for a physician contract negotiation can present many challenges. Maintaining best practices and having clear strategies for every negotiation can help smooth out organizational processes and ensure the eventual contract remains compliant. Use these 9 key tips from MD Ranger for your next physician contract negotiations:

  1. Review All Prior and Existing Agreements: Review the contract in question, as well as all prior contracts with the physician and/or group, including key terms and the scope of services. If the negotiation is for a new arrangement, familiarize yourself with what has already been offered to the provider and the proposed scope of services.
  2. Check if Additional Contracts Exist: Investigate whether additional contracts with the provider exist, because multiple contracts with the same physician or group can sometimes lead to overpayments associated with “stacking” arrangements. Keep careful documentation of total payments to a single physician or group.
  3. Establish Goals and Objectives: Determine the ideal outcome for your organization and know where you can and can’t compromise in the negotiation. Strategize ahead of time to anticipate and understand the provider’s goals for the negotiation.
  4. Have a Draft Job Description Prepared: Defining the scope of the job and reviewing it internally will help to set expectations and to anticipate questions from the provider.
  5. Research the Market: Doing due diligence and researching your market is critical for establishing commercial reasonableness, staying within FMV ranges, and understanding factors that could affect payments like trauma status or heavier call burden.
  6. Consider Alternatives: Make sure to anticipate and plan for pushback from the provider on any sticking points in the negotiation.
  7. Review Contracting and Compliance Guidelines: Consider reviewing your organization’s contracting and compliance guidelines. If your organization doesn’t have guidelines in place, put their creation on your compliance to-do list. Guidelines help create objectives standards and can limit feelings of favoritism.
  8. Document Compliance: Certifying that physician agreements are FMV is the cornerstone of effective physician contracting programs; it is likewise important in negotiations. Taking the time to document compliance demonstrates your organization takes compliance seriously.
  9. Gather All Documentation Together: Keeping all documentation together helps to reduce confusion and mistakes in the negotiation process.

To learn more about preparing for your next physician contract negotiation, watch our video on how to implement these strategies.

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