Law Department Policy No. L-25 Title:

Transcription

1 I. SCOPE: Law Department Policy No. L-25 Page: 1 of 8 This policy applies to (1) Tenet Healthcare Corporation and its wholly-owned subsidiaries and affiliates (each, an Affiliate ); (2) any other entity or organization in which Tenet Healthcare Corporation or an Affiliate owns a direct or indirect equity interest greater than 50%; and (3) any hospital or entity in which an Affiliate either manages or controls the day-to-day operations of the facility (each, a Tenet Entity ) (collectively, Tenet ). II. PURPOSE: The purpose of this policy is to ensure through the implementation of prudent and reasonable controls that Tenet Entities enter into arrangements with Referral Sources that provide for compensation which is consistent with Fair Market Value. III. DEFINITIONS: A. Fair Market Value means the value in arm s length transactions, consistent with the compensation that is the result of bona fide bargaining between well-informed parties to an agreement who are not otherwise in a position to generate business for the other party at the time of the agreement. B. Independent Appraiser means an individual or entity that provides valuation services. C. Independent FMV Report means a written report prepared by an Independent Appraiser focusing on the Fair Market Value of a financial arrangement between a Tenet Provider and a Referral Source. D. Non-Referral Source Arrangement means an arrangement with any other person or entity not a Referral Source. E. Operations Counsel means, in the case of a hospital, its Regional Counsel responsible for hospital legal operations; in the case of a Physician organization, its Tenet Physician Resources (TPR) Counsel responsible for Physician practice legal operations; and in the case of a non-hospital outpatient facility, its assigned Counsel responsible for outpatient facility legal operations. F. Physician means a duly licensed and authorized doctor of medicine or osteopathy, doctor of dental surgery or dental medicine, doctor of podiatric medicine, doctor of optometry or chiropractor. G. Physician Compensation and Hourly Rate Chart means the chart provided most recently by the Law Department that includes, by physician specialty, the deemed ranges for fair market value of Physician services.

2 Page: 2 of 8 H. Referral Source means a Physician or other person or entity that can influence or recommend the purchasing, leasing, ordering or arranging for any goods, facility, item or service paid for, in whole or in part, by a federal or state healthcare program. It is anyone (including an immediate family member of a physician) who has the capacity to refer or influence the flow of Medicare/Medicaid or other government healthcare programs business to another party including anyone who has referred a patient to the Tenet Provider in the past or who is reasonably anticipated to refer a patient to the Tenet Provider in the future. This definition includes instances when Tenet or one of its Providers is the party in a position to refer or influence the referral of federal healthcare program business to a vendor. See Exhibit A. I. Remuneration means anything of value, including but not limited to cash, items or services. IV. POLICY: Except as provided in this policy, a Tenet Entity shall only enter into an arrangement with a Referral Source if the Tenet Provider is able to objectively demonstrate the terms of the arrangement are consistent with Fair Market Value and all other terms of applicable Tenet policies are met. An arrangement with a Referral Source may be entered into below Fair Market Value if Operations Counsel determines that the arrangement is not intended to induce the referral of patients or to generate other business between the parties. Certain Law Department polices provide guidance regarding the calculation of fair market value for specific arrangements. The guidance provided in this policy shall be supplemental to and shall not replace the specific terms of these policies. IV. PROCEDURE: A. General Considerations 1. The Remuneration paid to or received from any potential Referral Source shall not take into account (or be adjusted or renegotiated based on) the volume or value of any actual or anticipated referrals, or other business generated, between or among the parties. 2. The Law Department shall maintain a list of approved Independent Appraisers. A Tenet Entity shall only use an approved Independent Appraiser unless otherwise approved in advance by Operations Counsel. 3. If a Tenet Entity provides services to a Referral Source, the Tenet Entity shall take into account both the direct and indirect costs of providing the services, including administering the service arrangement, and a reasonable profit. B. Referral Source Services Arrangements

3 Page: 3 of 8 1. Unless otherwise approved by Operations Counsel, Referral Sources that contract with Tenet Entities are responsible for billing for their clinical services. 2. In determining the Fair Market Value in an arrangement for personal services obtained through a Referral Source, the Tenet Entity shall consider the following resources, as applicable the particular arrangement: a. Physician Compensation and Hourly Rate Chart; b. Medical Group Management Association ( MGMA ) surveys (including but not limited to, On-call Compensation Survey; Physician Compensation Survey by Years in Practice (recruitment arrangements), Academic Compensation Survey); c. Other surveys or Independent Appraiser FMV tools approved for use by the Assistant General Counsel 1 or General Counsel; d. Medicare Fee Schedule; e. Medicaid Fee Schedule; f. Commercial Payor rates; g. Workers Compensation Fee Schedule; h. Tenet-wide guidance to Tenet Entities by the Assistant General Counsel or General Counsel concerning certain arrangements (e.g., Governing Board attendance or Physician Leadership activities); i. Independent FMV Reports engaged by the Tenet Provider with approval of Operations Counsel; and j. Competitive bids for the services arrangements. If none of the above resources sufficiently define Fair Market Value in light of the circumstances of the particular arrangement, the Tenet Entity shall consult with Operations Counsel to determine whether an Independent Appraiser should be engaged or whether there are suitable alternative approaches. 3. Guarantee and Subsidy Arrangements 1 Assistant General Counsel means the Assistant General Counsel or other attorney in the Tenet Law Department who oversees Tenet s Operations Counsel. or, for USPI, its General Counsel. Throughout this policy, the Assistant General Counsel approval can also be accomplished by Tenet s General Counsel.

4 Page: 4 of 8 a. In appropriate circumstances, a Tenet Entity may need to provide a collections or net income guarantee to a contracting party in order to obtain the type and quality of services needed to fulfill the legitimate needs of the Tenet Entity. The Tenet Entity may only offer a collections or net income guarantee if the contracting party s projected actual and reasonable costs of performing the services are expected to exceed the collections to be received. b. A Tenet Entity may consider a guarantee of collections or net income for hospital Departments/Services requiring 24/7/365 coverage, including but not limited to the following: Anesthesiology, Pathology, Radiology, Emergency Department, and Inpatient Hospitalist Programs, including specialty hospitalist coverage such as critical care intensivist or neonatology. Prior to proposing a guarantee for any other Department/Service, the Tenet Entity shall consult with Operations Counsel. (1) A Tenet Entity may consider reasonable and ordinary business expenses in a guarantee, including but not limited to: (a) (b) (c) (d) (e) (f) (g) Physician total compensation at Fair Market Value; Non-physician provider total compensation at Fair Market Value; Support staff salary at Fair Market Value; employment benefits (generally should not exceed 25%); insurance coverage, including but not limited to malpractice premiums; recruitment costs; and billing and collection expenses (generally should not exceed 8%). (2) The Tenet Entity shall include a detailed financial statement demonstrating how the guarantee amount was calculated, including how the number of FTEs was determined. c. A Tenet Entity may enter into a subsidy agreement for physician coverage for Hospital-based services as described in 3.b above which involves payment of a monthly stipend rather than a

5 Page: 5 of 8 4. Teaching Services guarantee payment if (1) the Referral Source declines to accept compensation in the form of a collections or net income guarantee and (2) the Referral Source s aggregate compensation, including the stipend and the Referral Source s projected collections for its services, is capped at Fair Market Value. The Referral Source s actual collections shall be reported to the Tenet Provider not less frequently than quarterly. A Tenet Entity may enter into a subsidy agreement for non-hospital-based services with the approval of the Assistant General Counsel. a. Historically, many physicians have participated in medical student, residency and fellowship programs on a voluntary basis. Physicians may participate in healthcare professional training programs without compensation. b. In determining the Fair Market Value of any arrangement for contracted Physician teaching services, the Tenet Entity shall take into account whether the teaching will be conducted, in part or whole, in a clinical setting where a claim for a professional service by the teaching Physician may be generated. c. For clinical teaching services where a claim for a professional service by the teaching Physician may be generated a Tenet Entity may compensate a Physician at a rate up to 25% of the MGMA median hourly rate for the applicable specialty. d. For administrative teaching services, where clinical services are not involved in the service, a Tenet Entity may compensate a Physician at a rate up to the hourly rate set forth in the Physician Compensation and Hourly Rate Chart. 5. On-Call Arrangements a. A Tenet Entity may, but is not required to, compensate a Physician for on-call services in order to fulfill its EMTALA obligations or otherwise provide quality services to its patients. The Tenet Entity may compensate on a Per Diem or hourly basis, may provide a payment guarantee for professional services rendered to an unassigned/indigent population or a combination of approved options which, in the aggregate, is consistent with Fair Market Value. Additionally, a Tenet Entity may offer remuneration in another form, such as an activation fee, with the approval of Operations Counsel.

6 Page: 6 of 8 (1) Per Diem arrangements. The Tenet Entity should utilize the Physician Compensation and Hourly Rate Chart to establish the top end of the range of Fair Market Value. If the Tenet Entity believes that the rate determined by the Physician Compensation and Hourly Rate Chart is not appropriate for the services it seeks to obtain, it should consult with Operations Counsel to determine whether an Independent Appraiser should be engaged to determine Fair Market Value. (2) Unassigned Indigent Patients. A Tenet Entity can enter into an on-call arrangement and limit compensation to a Physician for patients who are indigent pursuant to the Tenet Entity s policies and are ineligible for Medicare, Medicaid or any other similar federal or state program assistance. The compensation rate for services rendered to unassigned indigent patients shall be consistent with Medicare or Medicaid rates and may include services required to address the patient s condition upon presentation to the Tenet Entity, including post-discharge follow-up care for a period not to exceed thirty (30) days. b. Concurrent Call Coverage. A Physician may receive compensation for being scheduled on-call on the same day at more than one Tenet Entity or Tenet Entity campus provided the aggregate compensation is consistent with Fair Market Value. Concurrent call coverage compensation will be less than the sum of the rate payable for call at each Tenet Entity. A Tenet Entity should consult with Operations Counsel to determine if an Independent Appraiser is required to determine Fair Market Value. c. Restricted & Unrestricted Call (1) Restricted call occurs when a Tenet Entity requires the physician to remain on the Tenet Entity s premises. (2) Unrestricted call occurs when a physician is not required to remain on the Tenet Entity s premises but is required to respond within a specified period for time. (3) Emergency Department On-call services are generally unrestricted call. (4) Restricted call coverage considerations include: (i) the frequency of physician contact during call schedule; (ii)

7 Page: 7 of 8 specialty; (iii) acuity of patients presenting in the specialty; and, (iv) trauma designation. Compensation for restricted on call coverage may need to take into account any collections received for professional services rendered during the restricted period. Generally, restricted call hourly rates will be less than the hourly amount in the Physician Compensation and Hourly rate chart but more than the hourly rate for unrestricted call. Operations Counsel should be consulted for assistance in determining Fair Market Value of restricted call coverage arrangements. C. Sale or Purchase of Items between a Tenet Entity and a non-tenet Referral Source 1. If the aggregate value of items is expected to be less than $10,000, the Tenet Entity can demonstrate Fair Market Value by providing the average pricing for 3 comparable items identified from public sources or by obtaining the opinion of an Independent Appraiser. If the aggregate value of items is expected to be greater than $10,000, the Tenet Entity shall obtain the opinion of an Independent Appraiser. 2. Neither the book value nor depreciation value of an item is to be used solely as the Fair Market Value for purposes of entering into a financial arrangement with a Referral Source. D. Joint Venture Arrangements A Tenet Entity must obtain the opinion of an Independent Appraiser if it proposes to contribute any of its assets or businesses to a joint venture involving a Referral Source. E. Agreements by a Tenet Group Purchasing Organization If a Tenet Group Purchasing Organization has provided the Tenet Entity with an agreement negotiated with a Non-Referral Source, the Tenet Entity shall not be required to obtain any further comparable price information. F. Corporate Implementation 1. The Assistant General Counsel may provide Tenet Entities with a range of remuneration that may be used to compensate referral sources for certain services (e.g., Governing Board appointments or Medical Staff Officers). The Tenet Entity shall include any communication from the Assistant General Counsel, as applicable, in the ecats package as support for Fair Market Value.

8 Page: 8 of 8 2. The Assistant General Counsel may determine, on a case-by-case basis, that the compensation in a proposed Referral Source arrangement that exceeds the guidelines for compensation in this or any other Law Department Policy is acceptable. G. Responsible Person The Tenet Entity CEO and CFO (or other relevant Tenet Entity leadership) are responsible for ensuring that all personnel adhere to the requirements of this policy, that these procedures are implemented and followed, and that instances of noncompliance with this policy are reported to the responsible Compliance Officer. H. Enforcement V. ATTACHMENTS: All employees whose responsibilities are affected by this policy are expected to be familiar with the basic procedures and responsibilities created by this policy. Failure to comply with this policy will be subject to appropriate performance management pursuant to all applicable policies and procedures, up to and including termination. Such performance management may also include modification of compensation, including any merit or discretionary compensation awards, as allowed by applicable law. - Exhibit A Examples of Referral Sources and Non-Referral Sources

9 Exhibit A L-25 Referral Source Fair Market Value Page 1 of 3 EXHIBIT A Examples of Referral Sources and Non-Referral Sources Examples of Referral Sources include, but are not limited to: Physicians (M.D. or D.O.), a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor; Any Entity or vendor owned in whole or in part by a Physician who is in a position to refer patients to the Tenet Entity (use the Stark II Inquiry form to ascertain Physician ownership), but excluding ownership by a Physician in (1) publicly traded companies or (2) other passive investments such as pension funds, real estate mortgage investment conduits (REMICs), or other fund or investment vehicle for which investments are made by a manager on behalf of multiple investors where the individual investors do not have ability to influence the investments or activities of the company or fund; Hospitals, SNFs, LTACs, ASCs, clinics, hospices, home health agencies, psychiatric facilities, nursing homes; Ambulance companies; Third party managers of a facility or a department of a facility such as Horizon or Rehabcare; Physician extenders such as nurse practitioners, Physicians assistants, CRNAs, but only to the extent that the practitioner is privileged at the hospital and licensed to independently order procedures for patients of the Tenet Entity; Physical, speech and occupational therapists and athletic trainers; Providers of clinical-related Services, such as dialysis providers, lithotripsy providers, wound care providers; OR monitoring Services/neuromonitoring Services; Psychologists; Any arrangement with an academic medical center or component of the AMC that is affiliated with or refers business to the Tenet Entity; Locum tenens arrangements; Reference labs if the lab sends specimens to the Tenet Entity for processing or if the reference lab is in a local hospital; Any arrangement with a DME supplier, pharmaceutical manufacturer or distributor, medical device manufacturer or distributor for continuing medical education (CME)

10 Exhibit A L-25 Referral Source Fair Market Value Page 2 of 3 sponsorship, clinical research studies or fellowship programs. Notwithstanding the above, arrangements with any vendor whose sole connection with the Tenet Entity is selling or otherwise providing medical supplies or equipment to the Tenet Entity are not Referral Source arrangements; and Arrangements between Tenet hospitals and Tenet Physician practices. Examples of Non-Referral Sources and arrangements include, but are not limited to, the following: Security Services; Food service agreement (e.g., Morrison); Agreements with organ procurement agencies, including eye and tissue banks; Medical physicists and radiation physicists; Technicians, including but not limited to, ultrasound, ECHO, radiology, polysomnographers, dosimetrists, audiologists; Perfusionists; Pharmacists; Teleradiology agreements for the sole purpose of remote interpretation of film studies; Respiratory therapists; Prosthestitists and orthotists; Psychiatric emergency response teams (PET); Social workers; Surgical first assistants; Master s level counselors; Reference labs (provided the lab Entity does not refer to the Tenet Entity); and Autotransfusion Services or cell savers; Instructors (aerobics, BCLS, ACLS, weight management, aquatic, nutritionist, lactation, etc.); Blood banks; Housekeeping Services;

11 Exhibit A L-25 Referral Source Fair Market Value Page 3 of 3 Linen Services; Ground keeping, lawn care, maintenance Services; Pastoral counselors; In-house hospital transporters; Agreements executed by HealthTrust Purchasing Group or other group purchasing organizations; Outsourced valet Services; Non-ambulance transport providers; Consulting agreements with non-physician owned Entities or with Physician owned Entities where the Physicians are not on the Tenet Entity s medical staff and are not expected to refer business to or generate other business for the Tenet Entity; Arrangements with an agency or other Entity that provides supplemental staffing such as RNs, PTs or other providers who would be a Referral Source if the hospital has an arrangement directly with the individual; Any vendor whose sole connection with the Tenet Entity is selling or otherwise providing medical supplies or equipment to the Tenet Entity; Infant hearing screeners; CME Physician speakers (if not on Tenet Entity medical staff and not practicing in Tenet Entity service area); Law firms; National accounting firms; Political campaigns; Arrangements between Tenet hospitals. Notwithstanding the above, if any of the above Entities are owned in whole or in part by a Physician who is in a position to refer patients or generate other business for the Tenet Entity or is a Referral Source for any other service arrangement, then an arrangement which would otherwise be considered a Non-Referral Source arrangement will be a Referral Source arrangement. Likewise, if any person listed above as a Non-Referral Source is an Immediate Family Member of a Physician, then the arrangement will be a Referral Source Arrangement. As mentioned above, use of the Stark II Inquiry Form is necessary to ascertain whether a Physician or an Immediate Family Member of a Physician is an owner in an Entity or whether the vendor is an Immediate Family Member of a Physician