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Three Steps to Reduce Fraud and Abuse Compliance Risks

Effective ways for mitigating risks in hospital-physician deals

Greg Anderson
Mon, 03/20/2017 - 12:01
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The most astute executives in health systems are rightfully concerned about compliance risks in physician contracting. Among these risks are that a transaction or an arrangement between a hospital and a physician are consistent with fair market value (FMV) and are commercially reasonable (CR) as those terms are defined in the healthcare regulatory context.

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Many such transactions and arrangements are susceptible to FMV and CR compliance risk, including acquisition transactions, direct employment relationships, medical directorships, part-time coverage arrangements, on-call arrangements, joint ventures, and leases. Components of transactions and arrangements that may raise red flags include the following: payments inconsistent with fair market value, contract terms that are not commercially reasonable (e.g., long-term commitments, hospital-owned physician practices operating at a loss, and payments for efforts that cannot be documented), and the inclusion of revenue in compensation that can be linked to the volume or value of referrals.

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