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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Psychiatry Call Coverage Shows Largest Percent Growth in Per Diem Payments

We have previously looked at the largest dollar increases in call coverage per diems. We’ll now examine which medical and surgical physician specialties have seen the largest percent growth in their per diem call coverage payments, comparing MD Ranger’s 2017 physician contracting benchmarks to 2009’s benchmarks.

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The specialties with the largest percent increases are Psychiatry, Urology, Plastic Surgery, Neurology, Vascular Surgery, and Obstetrics/Gynecology. These highest percent growth specialties have all seen their rates rise by at least 50%, or more than $180, in the past 8 years.

Given the length of time we are evaluating, the set of services with the highest percent increase in median call coverage rates has remained consistent year over year. Only Obstetrics/Gynecology is a new addition to this to the group this year.

It is worth noting that while some of these specialties have high percentage increases and high actual dollar rates, others simply experienced a growth in rates that were relatively low in the first place. Psychiatry is the best example of this—despite the huge percentage increase in rates, the median per diem for all hospitals in 2017 was a comparatively low $300 per diem. Meanwhile, Obstetrics/Gynecology is $620 at the median.

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Overall Trauma Centers Spend More on Physician Compensation

In addition to looking at physician contract benchmarks for call coverage, medical direction, and hospital-based agreements, MD Ranger examines aggregate spending on physician contracts at the facility level. These benchmarks are calculated by summing estimated values for all reported coverage, direction, and hospital-based contracts. Taking each facility as a single data point, a distribution of facility total spending is formed and the percentile values are reported. Analysis of what a hospital spends across all its contracted physician agreements can help administrators get a holistic view of their organization’s finances and can help spot potential compliance risks that may not be evident at the individual contract level.

Using MD Ranger’s 2017 Total Facility Benchmarks, let’s investigate what effect trauma center status, a major accreditation that many hospitals have achieved or are looking to pursue, has on a hospital’s total facility spending.

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At the total facility spending level, trauma centers pay more than twice as much as their non-trauma counterparts. This differential is consistent across all percentiles.

The benchmarks demonstrate the steep differences of physician payments between trauma and non-trauma hospitals. On a contract-by-contract basis these differences can be observed in the MD Ranger service-level benchmarks as well. Based on annual analysis of MD Ranger’s 2017 database, trauma centers pay on average 38% more for call coverage agreements, up from 32% more last year.

However, these payment differences don’t fully account for higher facility payments because trauma centers are required to have more positions covered in the emergency department and usually have more medical directorships -- thus explaining the larger differences in facility-wide benchmarks.

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