Regulatory Compliance Impacts Recruiting

As healthcare becomes more complex, regulatory compliance becomes a greater concern for the human resources professional. Specific governmental scrutiny of human resources’ activities is increasing and whistleblower reporting on missed steps can have severe consequences for the organization. Under recently announced guidelines from OIG and CMS, physician recruiting practices are becoming the subject of even greater scrutiny as a part of the relationship between organizations and physicians.

Doctors In September 2007, the Center for Medicare and Medicaid services (CMS) announced a plan requiring five hundred (500) selected hospitals to disclose the financial relationships with their contracted physicians. This Disclosure of Financial Reporting Relationships (DFRR) is meant to serve as a preliminary gauge on whether these financial relationships are in compliance with Stark Physician Referral law (Stark Act). Furthermore, if these results indicate a prevailing problem, CMS has stated that it may expand its inquiry to all hospitals receiving reimbursements from the Medicare program, including Medicaid.

Among the information being solicited by CMS on the selected hospital’s arrangements with the physician and physician groups are:

The space and equipment rental deals within the parties
The personal services arrangements between the parties
The stock equity arrangements between the parties
Secured debt established resulting from the financial relationship
Capital equipment obtained or purchased from the resulting arrangement
Physician recruitment including relocation expenses

Competition for top providers and executives has never been more intense. The HR executive needs to aggressively recruit physicians while remaining aware that the compensation for the physician, including relocation expenses, are not designed to improperly impact referral patterns to the organization. A competitive and yet fair compensation package that violates neither the Stark Act nor the anti-kickback statutes complies with three factors:

The compensation package represents a fair market value for the services desired
The arrangement is an arm’s length transaction
The total compensation and expense reimbursement is reasonable

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