Compensation relationships created by health care organizations with physicians, other providers and executives present numerous potential financial, operational, compliance and other challenges. Polsinelli has unique and deep experience in assisting clients to navigate these complex waters.
Our legal advisors are highly skilled in assisting clients in developing, implementing and defending compensation arrangements in all phases of physician and executive compensation relationships.
Compensation Structuring and Relationship Formation Phases
Compensation relationships that are appropriately structured, documented and supported at the outset will yield dividends as the relationship is implemented. Strategic structuring and documentation also reduces the organization’s risk in the event of future challenge. Polsinelli’s lawyers have extensive experience with traditional and emerging physician compensation and incentive methods, and an extensive understanding of the operational, financial and compliance pitfalls of each. For physicians and other health care providers in particular, we have crafted, evaluated and addressed challenges related to a variety of provider compensation structures including:
- Systems blending production with quality, efficiency and value in today’s value-based payment environment
- Production-based structures involving work RVUs, time value units and similar metrics
- Base salary plus incentive, XYZ and similar structures
- Revenue minus expense and "virtual private practice" financial models
Compensation and incentive system “best practices” for physician employment and professional service arrangements align internal compensation structures with external payment systems. Similarly, arrangements involving payments from hospitals and other provider organizations to physicians and groups, such as those involving clinically integrated networks and ACOs, bundled payments, hospital efficiency programs, pay-for-quality and co-management agreements, should also be aligned with underlying business and financial goals. All such programs, regardless of structure or setting, must be crafted with attention to regulatory compliance details.
Polsinelli’s lawyers have unique experience in crafting compensation structures. Members of our team have experience as management consultants, financial advisors, and accountants, in addition to legal experience as in-house lawyers, prosecutors and defense counsel. Our team works closely with federal authorities, including in connection with obtaining favorable advisory opinions under the Stark and Antikickback laws, including Advisory Opinion 08-16 involving an innovative pay-for-quality program.
We also have nationally recognized advisors who specialize in tax-exempt organization law, who have extensive experience in working with the Internal Revenue Service on reasonable compensation, private inurement, private benefit and intermediate sanctions issues.
Employee benefits lawyers in our firm use a variety of qualified and nonqualified deferred compensation arrangements and work closely with our health care, tax and tax-exempt advisors to mesh each compensation arrangement’s business objectives with applicable compliance requirements.
Effective compliance starts with compensation relationships that are sound from a business perspective, appropriately structured, documented and adequately supported to withstand future scrutiny. Compliance will be promoted by:
- Ensuring systems are built on an appropriate foundation of financial, community benefit and other facts
- Using well-crafted contracts to document the compensation structure
- Teaming with valuation and other advisors to ensure that external opinions are valid, consistent and as strong as feasible given available facts and circumstances
- Using independent committee decision-making, comparability data, other facts and safeguards to benefit from rebuttable presumptions and to otherwise promote compliance.
Polsinelli’s lawyers have deep experience in assisting clients in developing and implementing compensation-related decision-making processes and support systems. This is of particular importance as provider compensation structures move from volume to value-based incentives, and given that traditional valuation and assessment methods and benchmark resources lag in time and technique.
Traditional assessment practices and methods may not always suffice in unique markets with exemplary client organizations. As a result, our lawyers will commonly work closely with clients and other advisors to ensure that the business case and other support for unique arrangements is as strong as feasible – even if the arrangement does not fit into a “traditional” mold.
Compensation plans must be successfully implemented through effective operational systems and practices. Business and compliance risk is sometimes created unintentionally through operational is understandings and breakdowns that result in inappropriate compensation system implementation.
Our advisors have a wealth of experience in identifying common operational pitfalls, and assisting clients in addressing arrangements that are not or can not be implemented as originally planned. We know where problems frequently arise, including in connection with:
- Administrative systems that fail to align with contractual terms
- Data systems that are inadequate to support the selected arrangement
- Inadequate monitoring and reporting systems
- Deficient internal review and compliance strategies.
Effective compliance programs are essential to keeping client organizations out of harms way. Members of our team actively work with clients to develop appropriate monitoring and auditing systems, and to assess and remedy identified compliance issues. Our work includes working with client personnel and external advisors, commonly at the direction of counsel under the umbrella of the attorney-client privilege, to collect facts, assess risk, develop and implement appropriate strategies to remediate historical problems, and institute changes to prevent future challenges.
Our clients will sometimes consider strategies to address relationships that are judged to be problematic from financial, cultural, compliance or other perspectives. When that occurs, our health care regulatory, tax and other compliance advisors will recommend a range of alternative strategies. Our lawyers work as a team with our clients and each other to consider client business objectives in light of contractual promises, employment law risk and compliance imperatives under tax, fraud and abuse and other applicable laws.
Investigation and Defense Phase
The relationships health care organizations create with physicians and other executives will sometimes come under scrutiny by public agencies or private individuals. In the unlikely event of governmental or private investigations, our team has a deep bench of experience in defending challenges and crafting pragmatic solutions. Members of Polsinelli’s team have experience in civil and criminal investigations, Stark self-disclosures, qui tam
actions, agency investigations involving the Office of Inspector General, Centers for Medicare & Medicaid Services, Internal Revenue Service, working with local U.S. Attorneys and in other settings.
Successfully defending a relationship that's challenged requires a combination of factual, legal and other analysis coupled with effective strategy development, and in some cases, trial work and settlement negotiations. Lawyers on Polsinelli’s team have been in the trenches as agency lawyers, prosecutors, counsel for qui tam
defendants and plaintiffs, and in other capacities.