What to consider when structuring a hospital-based coverage agreement

June 20, 2020

Published in Compliance Today, June 2020

With the goal of increasing quality of care while containing costs, hospitals and healthcare systems are focused on reducing lengths of stay, decreasing complication rates, and cutting readmission rates. One way to effectively accomplish these objectives is purchasing hospital-based service line coverage from physicians and/or clinical management groups. These arrangements involve a wide range of specialties, including, but not limited to, hospital, intensive care, emergency medicine, obstetrics and gynecology, trauma surgery, radiology, and neonatology services.

With shrinking reimbursements and increasing provider salaries, healthcare systems are perpetually contending with increased compensation demands by contractors.[i] For example, proposed changes to the rules associated with balance billing raise concerns over their impact on contractor revenues.[ii] As a result, hospitals are feeling pressure from contractors to increase the compensation terms within their professional services agreements (PSAs). These market and regulatory factors will continue to challenge both the system and compliance professionals.

As hospital-based programs increase in number throughout the country to meet these challenges, compliance professionals within hospitals and health systems will encounter a wide variety of PSAs. It is important to consider the structure of these agreements and their impact on compliance. Three key items to consider are: (a) the difference between a collection guarantee and subsidy arrangement, (b) terms that can mitigate financial and/or compliance risk, and (c) the use of advanced practice providers (APP).

Read more here to further understand these key items in structuring hospital-based coverage agreements.

By Joe Aguilar, MBA, MPH, MSN, CVA

Joe Aguilar  is a Partner with HMS Valuation Partners in Atlanta, GA

Copyright 2020 Compliance Today Magazine, a publication of the Health Care Compliance Association (HCCA).


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