Service Line Co-Management Agreements

The net revenue of the service line (commonly known as net collection) is a key element that is taken into account in an fmV analysis for service line management. Therefore, determining net revenue is an important part of the data collection process. As mentioned above, service line co-management agreements are generally in place to improve operations and achieve identified results and standards. Within this paradigm, the administrative unit[14] is responsible for implementing a comprehensive list of administrative tasks (the basis of the basic administration fee) and for the implementation of certain performance-based measures (the basis of the incentive management fee). A co-management agreement between a hospital and a cardiology group in which the group received incentive pay based on satisfaction with predetermined performance levels (see “proposed agreement”) (see OIG 12-22 advisory opinion). Although the proposed agreement would not satisfy the safe port of the AKS for personal services and management contracts, since payment was not predeterved in the “four corners” of the written contract, the OIG concluded that the proposed agreement would not violate the AKS for several reasons, including: 1) the payment was compatible with fmV and the group would provide essential services; (2) Compensation did not change with the number of patients treated; (3) in the circumstances, compensation was probably not proposed for removal; (4) Compensation for incentives was linked to performance ratios based on nationally recognized standards; and (5) The proposed agreement was established by a written agreement of a limited duration of three years. As part of a service line co-management agreement, the hospital and participating physicians are working together to develop strategies and set goals to improve the quality of care and operational efficiency of a service line, while reducing the total cost of the service line. The model brings hospitals and physicians together to improve service lines and provides financial incentives for physicians to meet predetermined performance criteria. 3) No new entity is created. The co-management of the service is completed between the hospital and a single physician group practice. Given that many co-management agreements focus on a task-based compensation model[9] in order to preserve the basic or fixed part of compensation (i.e. basic administrative tasks), careful consideration should be given to the continuation and documentation of the actual performance of tasks. Task tracking methods can vary considerably in terms of approach, feasibility and validity, and therefore a comprehensive task-tracking plan should be developed in parallel with the implementation of the co-management agreement.

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