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Is the Doctor In? Legal Considerations for Hospice Physician Contracting



December 14, 2022
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The hospice physician plays an enormously critical role in hospice operations, from certifying patients as terminally ill to being the hospice’s representative in the community. Just as the physician’s role is critical, so too is the physician’s contract with the hospice. When it comes to contracting for a medical director’s or other hospice physician’s services, there are a variety of pitfalls to avoid and legal considerations to keep in mind. In this episode, Husch Blackwell’s Meg Pekarske and Andrew Brenton share their key tips for structuring hospice physician agreements.

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This transcript was auto-generated using Adobe Premiere Pro.

00;00;05;01 - 00;01;22;24
Meg Pekarske
Hello and welcome to Hospice Insights, The Law and Beyond where we connect you to what matters in the ever changing world of hospice and palliative care. It's great to have another Operational Tips podcast session with you. And this is we're going to talk physician contracts here, which is by specific request by a listener who said, hey, is there anything new in the hospice physician contracts? And I said, that's a great podcast idea. We'll do a podcast on that. So here we are So, yeah, and and you head up our team that does contracts and physician contracts in particular as well, in addition to facility and vendor contracts and staff. I feel like when I have conversations with the clients, the first place I always start is how are you going to pay this physician right after you figure out are they employed or are they an independent contractor? Well, we'll talk about that a little bit later, but I always say, how are you going to pay this person? And so what are when you talk to clients, what are you seeing in terms of how people are paying physicians? Well.

00;01;23;14 - 00;02;13;07
Andrew Brenton
Especially, I would say for independent contractor arrangements we're seeing a lot more kind of hourly rates in terms of kind of paying for hospice physician services. You know, still do see some kind of stipend, whether it be like a kind of a weekly or monthly type stipend. But I would say that typically these days is a lot of hourly based compensation or even kind of task based compensation. For example, you know, paying like a flat fee for a face to face visit or, you know, for attendance at A.D.D.. But, yeah, the kind of methodology by which we pay physicians is very important because that will kind of dictate the specific services that you're contracting for.

00;02;13;16 - 00;03;59;08
Meg Pekarske
I think when we have conversations with clients about how you want this contract to look, it is guiding them through, right? Administrative services. So our contracts are usually broken up between administrative services and professional services, but within administrative services, especially if you want to pay differently for certain administrative services. So as you said, for the face to face visit, some people, they don't want to pay hourly for a physician to do face to face visit they want to have a flat rate that's encompassed of travel and all of that staff. And so therefore you want to define that in your contract. So then it can link to the compensation terms. Same with on call, which I think on call can be challenging sometimes to figure out how you're going to compensate that for that. But I think where we can add value is to ask these probing questions like How are you going to pay for this? How are you going to pay for this? And and sometimes it's, well, I'm going to pay a monthly stipend, and therefore I don't need to break down all these different services. But I think right from an overarching anti kickback perspective and the personal services and management contract, safe harbor in particular, right? You need to be paying for a market value. So doing a stipend doesn't eliminate like, oh, it's all set in advance and I paid that. You need to work backwards right. And say, like, well, if you're breaking this up into an hourly rate, does this look reasonable? What your pain and so timesheets are very important. But other thoughts on that, Andrew.

00;03;59;18 - 00;04;50;07
Andrew Brenton
Kind of speaking about the anti kickback statute in particular, you know, if you are kind of carving out specific services and paying for those services at a flat rate, you know, carved out from the hourly rate, you know, I would avoid kind of tying compensation directly to admitting patients or certifying patients as terminally ill, you know, like $150 for each certification. That kind of, you know, I think would raise some eyebrows. So, you know, rather than kind of pay for an admission, you know, you might pay for kind of an assessment and you know, you know, or the meeting itself where you kind of assess whether the patient is terminally ill, whether or not, you know, the hospice position, in fact, the size that they are.

00;04;50;13 - 00;09;07;16
Meg Pekarske
Well, and. I think that when we've talked to folks about that I think the intent is really to say, I want to make sure they're spending time writing good narratives and spending the time but I think that that's taken out of context. It can look like while you're paying them to admit patients and then they're not going to get paid if they don't admit patients. And so I think that the real focus is how are we paying physicians to make sure that they are going to invest the time needed to do a very good job? Because as we talk about one of the most important pieces of clinical documentation in the medical record is the physician narrative, right? And the physician should be spending time doing that. And not see it as, you know, administrative tasks that I'm going to spend one minute if that doing right. And I write for words on here while I'm multiple asking something else. Right. Ideally, that is the linchpin documentation that connects all the dots, answers the question, why is this person terminally ill? And so you really want to make sure that people are spending that time. So anyway, I think we've seen a lot more movement, as you said, to pain an hourly rate for people, especially PART-TIMERS. Obviously, there's some people who have full time hospice physicians and therefore they're salaried and things like that. But one thing I think that's talked about here, it's probably as good a point as any to talk about some of the state law considerations, because when we talk about employing physicians, the first question you need to ask is, does state law let me do that, right? So the corporate practice of medicine in a nutshell and not all states prohibit the corporate practice of medicine, but it's essentially saying corporations can't practice medicine. And so if you're employing someone by definition. Right, your controlling them when you think about it, who's a W2 versus an independent contractor. Right. Is the level of control you as an employer have. And so. Right. The state said, I don't think corporations should be able to practice medicine by employing physicians, nurses in a very natural kind of way. We're explaining this. And so. So some states have even if they prohibit corporations from employing physicians, they have some exceptions apply specifically to hospitals and some apply to sort of health care. Oregon has certain types of health care organizations. And so I think understanding is, can I employ a physician is where you got to start. And there is like in the state of California, there are very stringent corporate practice of medicine laws that are heavily enforced. Other states have really old laws on the books that aren't really enforced. And so it's something to to first take a look at that, because that really determines what kind of structure, how are you going to structure this arrangement. One other thing I think, too, when we talk about the personal services and management contracts, safe harbor, many states have their own fraud and abuse laws. So you should look at is there a parallel state, safe harbor that I can fall into to that I need to structure this arrangement around. And so those are two state law considerations that are pretty important. I mean, rarely do we see hospice licensing laws have a lot of contract requirements for hospice physicians, except I think the big issue, which is reflected both in federal law and state law, is this whole idea you can only have one medical director and why don't you talk about that a little bit and how that's been an issue for some folks?

00;09;07;24 - 00;10;11;00
Andrew Brenton
That's exactly right. There can be one medical director, and Medicare also requires that there be another physician who can kind of stand in the shoes of the medical director in the medical director's absence. But I think it's sort of important to, you know, essentially have your contracts reflect the actual kind of role of the physician. So you don't want to have, you know, a bunch of contracts where the physician is called the medical director again, there's there's one medical director. And then for for your just other hospice physician contracts, you're going to want to have at least or have one of those contracts specify that this physician is the physician designee. So that if the medical director is on vacation, you know, is sick or, you know, just otherwise unavailable, that this other physician is acting as the medical director. But again, is not technically the medical director. Because the law requires that there be just one.

00;10;11;03 - 00;13;56;17
Meg Pekarske
This bubbled up five, six years ago where folks were getting a lot of survey citations around having more than one medical director when in operation they only had one. But something that tripped up, folks was they pulled out their physician contracts and all of them were called medical director, which again, I mean, right form versus function here, like everyone knew who the medical director was. But so I think while there's beyond the medical director and then this term of our called physician designee, which is in the federal law, there aren't any other, you know, defined terms. Right. So we see people use the term by medical director, right? You want to use that, that's a magic term. Then sometimes they use associate medical director to maybe be their physician designee and then everyone else is called a hospice physician or a hospice team physician or whatever. I mean, what you call, you know, other folks isn't again prescribed by law. It's really just that medical director and physician designee. And so I think that can be low hanging fruit on a survey if you have all of your contracts called medical director and you don't have a contract that talks about you are going to be physician designee when the medical director is out. And I think to that point to because so many people have multiple locations, right. So a hospice, multiple location is a location that's under the same provider number as your primary office. And essentially the law is allowing you to have another office under the same provider number on the premise that you can provide appropriate oversight to those multiple locations, including and importantly the medical director. So oftentimes people will have a primary physician at a multiple location, you know, but that person is still reporting to the medical director that's attached to that provider number. Right. And so I think sometimes survey citations stem from how people answer questions. And so making sure your staff understands who is the medical director. And even if they work at a branch or a multiple location, however you want to call it, that they understand that that physician there you know, reports to the medical director, because we've also run into survey issues where, you know, people maybe have misspoken Another issue that comes up, I think Andrew, in this is more in the anti kickback realm. So you obviously want to pay for a market value to your physicians, right. For, you know, services that are fully described in the contract. Right. That's important to meet the safe harbor and avoid scrutiny. Right. But if you have perfect contracts, however, your your census censuses, can patients right and you have 20 physician contracts, someone's going to say you have more physician arrangements than you have patients. Why are you doing that? That's going to look what one might say commercially unreasonable. You're overpaying for a physician services and is that to encourage referral rules like contracting with a bunch of folks in a particular service area to get referrals? And I guess what are what are your impressions on that, Andrew?

00;13;56;27 - 00;15;23;04
Andrew Brenton
Well, yeah, no, that's absolutely right. I mean, kind of a foundational principle of any physician arrangement is that it is commercially reasonable. So if you are, you know, contracting with a bunch of physicians when, you know, your census doesn't really support that I think that will raise eyebrows. And as we're kind of talking about an eye kickback statute a lot here, and you already talked about the personal services and management contracts, safe harbor to the federal statute. And then, you know, the extent to which there are state safe harbors as well. You know, one thing we haven't talked about yet is stark law. I think our listeners probably know that this federal law does not apply to hospice services specifically. They are not considered designated health services under the stark law. But this kind of a thing to keep in mind, you know, a lot of our hospice clients are kind of exploring or continuing to explore ways to get further upstream and provide, you know, sort of non hospice services, whether it be you know, kind of traditional palliative care or home health services or just really any type of, you know, quote unquote upstream care You know, as we get more into that area, the Stark law could apply again depending on what specific services you are or the physician in this case is providing.

00;15;23;07 - 00;19;12;23
Meg Pekarske
Well, and why that matters is if you don't need a stark safe harbor, it's a per se violation. The anti kickback statute, safe harbor the personal services and management line that's like, quote, optional, right? It's not even if you don't squarely fall within a safe harbor, it's not per say, a violation of the federal anti kickback statute. And Stark is written, you must fall within an exception in order to avoid violating Stark. And so obviously hospitals have to deal with this a lot. And and people need to make repayments if you don't have a contract with someone. So I think there is actually some misunderstanding people I've talked to clients who use you know in exchange for one another stark and anti kickback and they're in fact very very different laws and they have how they work is very different. I think what confuses people is the exceptions and safe harbors can sometimes look really similar. But again, they function fairly differently, which I think as we wrap up here, I think this is why we don't sell a physician like a physician contracting tool kit. I think the relationships with physicians are too varied. There's different risks. It can get pretty complicated. And so while we work with clients on customizing something that works for them and I think we can do that a real cost effective way, unlike other kinds of contracts that we offer for like a flat amount or something, this is not one of those areas just because it is pretty nuanced. And I think when you've seen one physician relationship, you've seen one physician relationship because I think hospices do things differently. And so I think having us help you navigate through that and do something that's workable for you and also being mindful of the legal risk, because unless if a physician isn't working full time for you, my guess is they do have a private practice and they do have the potential to refer business. And therefore, it can be that relationship can be scrutinized. So what's in that contract? Act and, you know, keeping timesheets and all of these other things that we could go on and on about of the importance of both having proper written contract that sort of, you know, meets the safe harbor. But then really operationalizing that and making sure what you're doing actually complies with their contract. Right, because you and I, Andrew, can draft the best contract possible. But if you don't it requires time sheets, but you don't ever get them from people like that doesn't look good. And so I really think that the physician contract should guide, you know, actual action, not just be a piece of paper that sits on the shelf because there is I think in when you look at false claim cases, against hospices, oftentimes something related to physician relationships can is often alleged like you're paying for referrals. You're you know, somehow there is something about how you're working with physicians that may be led to the admission or retention of an patients. So I think it's a really critical area and we do a lot of work in this area. And you in particular Andrew and leading the team on this. So appreciate that.

00;19;12;28 - 00;19;27;06
Andrew Brenton
Yeah, no, happy to do so. Just like you said, we we do a lot of this work and you know, have developed over the years some sample language. You know, we know the right questions to ask. So I can do this work pretty efficiently.

00;19;27;18 - 00;19;40;27
Meg Pekarske
Fantastic. Well, thanks again for your time, Andrew. I think this was a great episode. I think gives listeners some helpful guidance on how to give perhaps a fresh look to their physician arrangements.

00;19;41;05 - 00;19;42;09
Andrew Brenton
Very happy to be here.

00;19;45;19 - 00;20;01;11
Meg Pekarske
Well, that's it for today's episode of Hospice Insights, The Law and Beyond. Thank you for joining the conversation. To subscribe to our podcast visit our website at or sign up wherever you get your podcasts. Till next time, may the wind be at your back.


Andrew Brenton

Senior Associate