Ways for Hospitals to Ensure Compliance in Contract Management - Baltimore Post-ExaminerBaltimore Post-Examiner

Ways for Hospitals to Ensure Compliance in Contract Management

While the ability to manage contracts effectively and to live up to all that has been promised within them is necessary for businesses in all industries, it holds particularly true for healthcare facilities or hospitals. Hospitals are faced by a number of compliance regulations to protect the interests of all patients looking for care within the facilities. In line with these compliance obligations, it is of paramount importance for hospitals to not only ensure strict contract management, but to also follow the regulations laid down by the law.

Although the primary function of most healthcare facilities is to deal with patient care and the provision of health services, just like any other business, hospitals also have to deal with a high volume of contracts. These contracts can be of varying natures and dictate the way certain stakeholders are managed and looked after. Contracts managed by a healthcare facility include agreements with doctors and healthcare professionals working on the premises, contracts made with pharmaceutical and equipment vendors to procure capital assets and medicines for patients and other contracts with IT providers and administrative staff members. Even though these contracts may not be directly tied to the delivery of care and health services, non-compliance in following them can lead to grave repercussions.

Importance of Healthcare Contracts

Due to the highly sensitive nature of administering healthcare services, the agreements and contracts in the industry are regulated and governed by a number of relevant laws. These laws require special attention to detail and compliance.

While there are numerous compliance regulations that hospital staff and members should be well acquainted with, the Federal Anti Kickback Statute and Stark Law come to mind before any other. These laws govern the financial relationships between entities that bill Medicare and doctors.

While these contracts make for a complex network of spiraling regulations and commands, it is highly necessary that hospitals take the desired steps to ensure compliance or face hefty penalties. The William Beaumont Hospital in Detroit, Michigan area recently had to empty their pockets and pay a hefty fine of $84.5 million over multiple patient referrals against what is mentioned in the Stark Law.

The settlement alleged that the William Beaumont Hospital provided undue compensation to certain physicians who would bring excess patient referrals. The compensation was above fair market value and was considered to be a violation of Stark Law.

If these allegations were untrue, the William Beaumont Hospital could have used healthcare contract management software to prove their records and payrolls – justifying the fair market pay rate that they gave to each one of their doctors.

Hospitals today realize the importance of complying with legal clauses and just how important a role contracts play in the entire process. We now move on to discuss 3 important contract management practices that healthcare facilities can follow today to minimize non-compliance and the penalties that come with it.

Regularly View Obligations and Ensure Contracts Are Up to Date

Almost all the rules and regulations concerning the healthcare market are updated from time to time to include new timelines, terms and other guidelines. These guidelines are updated to ensure maximum progression and fair practices.

As such, it is necessary that all contracts today are prepared with all current and past regulations in mind. Even the most recent and up-to-date regulations should be considered in your contracts for fair practice.

If you’re drafting new contracts from scratch or repurposing old contracts from the past, you should ensure that they include all relevant details and clauses that have been added recently. It should be of primary concern for you to take out the time and re-draft the contracts in a way that they include all necessary information.

You can also have a set of standard agreements to use whenever you enter a contract. The standard agreements can be reviewed by legal teams, time and time again, to be adjusted according to the legal position in today’s market.

Ensure Centralized and Secured Contracts

It is important for all healthcare facilities to secure and store contracts in a centralized and organized location, where they can be easily accessed by authorized and interested individuals. While this is necessary for record-keeping, it is even more important for healthcare facilities when it comes to compliance.

Many organizations have a lax approach toward storing and organizing contracts, which is why they don’t have the right paperwork when push comes to shove. In the case regarding William Beaumont Hospital above, the situation would be a lot easier to manage if the hospital had all contracts contradicting the allegations available at their disposal. To ensure compliance, make sure you have a centralized and secure solution for storing contracts.

Conduct Periodic Compliance Checkups

While different types of contracts require different compliance requirements, it can suit you well to periodically check up with regulations and make sure that they are being met by your facility. You need to determine what compliance is for each type of contract and find relevant changes and necessities for it. You can have automated reminders in place, while onboarding new contracts, to ensure that compliance protocols are met.


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