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  • Writer's pictureRaymond "Sonny" O'Kelley

Ray O'Kelley, CEO Business Data Applications, Inc. Talks High Risk Healthcare Contracting

Updated: Aug 2, 2021

I've been around healthcare contracting for almost 20 years and I've learned a thing or two about what was missing. Here's a little bit of it for you. What we all already know is that contracting with third party entities accounts for one of the highest cost expenditure for healthcare facilities, second only to employee costs. An organization’s contracting processes also introduce a considerable amount of regulatory risk into what appear, on the surface, to be common day-to-day tasks. Taking proactive measures including increasing access and visibility as well as establishing controls for contract management operations not only save organizations money but greatly reduces the risk of violations and non-compliance of the laws, regulations and standards that they are required to operate within.

Cost and Compliance Issues Arising from Contracting

It's 2021 and we are still seeing the Department of Justice announcing settlement after settlement and prosecution after prosecution for violations of Stark, Anti-Kick-Back Statute and related False Claims. I thought 2020 would end up being a slim takedown year for fraud violators but HHS announced"The Department of Health and Human Services Office of Inspector General, along with our state and federal law enforcement partners, participated in a health care fraud takedown in September 2020. More than 345 defendants in 51 judicial districts were charged with participating in health care fraud schemes involving more than $6 billion in alleged losses to federal health care programs.*1"

Healthcare CLM Effect

A well-designed, healthcare specific and expertly implemented solution has been proven to affect how hospital organizations control the prevention of fraud, waste and abuse. It's just a fact and here are some of the areas that your organization already has on the "Risk Radar":

• Physician/Vendor Payments – By managing all contracts in a healthcare specific CLM, organizations can easily identify fraud and abuse focused within payments outside of contractual provisions to include over/duplicate payments to Health Care Professionals (HCPs), Fair Market Value (FMV) outlier payments, payments on expired or unsigned agreements and payments on expired/unenforceable contracts.

• Service/Material Vendors – A great healthcare specific CLM gives administrators a powerful tool which identifies waste by managing fees, accelerator provisions, end of term cost increases and by providing all the data necessary to consolidate/standardize vendors and services, resulting in lower costs. Also helps ease the evaluation process of service providers contracted for same/similar services and helps to identify multiple agreements with the same vendor allowing for weighted scales of economy when negotiating aggregate rates.

• Compliance with Accreditation Agencies for Contract Language and Monitoring Requirements – The availability of custom data sets within the solution enable administrators to document an unlimited array of standards of care performance measurement details which enhance reporting capabilities and demonstrate organizational willingness of adherence to accreditation requirements and CMS Conditions of Participation. Quality monitoring of clinical and nonclinical contracts, results in reduced waste and increased effectiveness of overall operations at the fiscal level.

• Business Associate Agreements – Managing the Business Associate and Covered Entity Relationship required by the Office of Civil Rights (OCR) according to the ACA is complex. Your healthcare CLM should provide logical relational organization structures designed specifically to manage this very important requirement. If your current vendor doesn't know how to spell "BAA" you should look for a replacement. If you spend more than five seconds educating them on the differences between a BA and a CE. Same!

Electronic Contract Management Service

No need to rage against the machine when the culprit is your outdated legacy software built on old technology running in achaic shared physical datacenter subject to SOC audits. The effectiveness of an electronic contract management system is significantly improved if that functionality is made available as a Web-based application. Web-based contract management allows organizations to widen access to the solution and streamline their processes while decreasing costs and dependence on staff for support and maintenance.


Corporate Integrity Agreements (CIAs)

Your healthcare CLM provides direct support and solutions to address specific areas of concern covered in Department of Health and Human Services (HHS) Corporate Integrity Agreements (CIA). Organizations typically will utilize their healthcare CLM to perform the following requirements:

• Creating and maintaining a database of all existing and new or renewed Focus Arrangements*2 that shall contain the information specified in the Focus Arrangements Databases

• Tracking remuneration to and from all parties to each Focus Arrangement

• Tracking service and activity logs to ensure that parties to the Focus Arrangement are performing the services required under the applicable Focus Arrangement

• Monitoring the use of leased space, medical supplies, medical devices, equipment or other patient care items to ensure that the applicable Focus Arrangements’ use is consistent with the terms of establishing and implementing a written review and approval process for all Arrangements. This includes but is not limited to a legal review of Focus Arrangements by counsel with expertise in the Anti-Kickback Statute and the Stark Law as well as appropriate documentation of all internal controls. These measures help ensure that all new, existing and/or renewed Arrangements do not violate the Law

• Requiring the Compliance Officer to review the Focus Arrangements Database, internal review and approval process, and other Arrangements Procedures on at least a quarterly basis and to provide a report on the results of such review to the Compliance Committee

• Implementing effective responses when suspected violations of the Anti-Kickback Statute and Stark Law are discovered, including disclosing Reportable Events and quantifying and repaying overpayments when appropriate Hospitals that have found themselves in violation and subject to CIAs relative to Agreements/Arrangements understand that having a centralized, real-time and on-demand functional database with enterprise access to “One Version of the Truth” is the cornerstone to compliance with the legal, moral and fiduciary responsibilities they are faced with daily.



Visibility and controls are the first steps in managing day-to-day contractual terms and provisions between hospitals and physicians/ vendors. Having the ability to predetermine the elements by which agreements are regulated and proactively manage these elements greatly reduces risk of violations and non-compliance of the laws, regulations and standards which hospitals must follow. The use of web-based applications allows organizations to streamline the deployment of these best practices across all lines business, helping to ensure the incorporation of compliance and broaden the reach of accountability.

*1 HHS OIG - 2020 National Health Care Fraud Takedown

*2 Focus Arrangements refer to every Arrangement between an entity and any actual source of healthcare business or referrals to that entity and involves, directly or indirectly, the offer, payment or provision of anything of value.

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