August 11, 2017 NOTICE

Transcription

1 August 11, 2017 NOTICE The Kaweah Delta Health Care District Board of Directors will meet in an Audit and Compliance Committee meeting at 1:30 PM on Tuesday, August 15, 2017 in the Kaweah Delta Medical Center Acequia Wing - Executive Office Conference Room {400 W. Mineral King, Visalia}. The Board of Directors of the Kaweah Delta Health Care District will meet in a Closed Audit and Compliance Committee meeting immediately following the 1:30 PM meeting on Tuesday, August 15, 2017 in the Kaweah Delta Medical Center Acequia Wing - Executive Office Conference Room {400 W. Mineral King, Visalia} pursuant to Government Code (d)(2). All Kaweah Delta Health Care District regular board meeting and committee meeting notices and agendas are posted 72 hours prior to meetings in the Kaweah Delta Medical Center, Mineral King Wing entry corridor between the Mineral King lobby and the Emergency Department waiting room. The disclosable public records related to agendas are available for public inspection at the Kaweah Delta Medical Center Acequia Wing, Executive Offices (Administration Department) {1st floor}, 400 West Mineral King Avenue, Visalia, CA and on the Kaweah Delta Health Care District web page KAWEAH DELTA HEALTH CARE DISTRICT Lynn Havard Mirviss, Secretary/Treasurer Cindy Moccio Board Clerk Executive Assistant to CEO DISTRIBUTION: Governing Board Legal Counsel Executive Team Chief of Staff West Mineral King Avenue Visalia, CA (559)

2 KAWEAH DELTA HEALTH CARE DISTRICT BOARD OF DIRECTORS AUDIT AND COMPLIANCE COMMITTEE Tuesday, August 15, 2017 Kaweah Delta Medical Center Acequia Wing 400 West Mineral King Avenue, Visalia Executive Office Conference Room ATTENDING: Guest: Directors; Carl Anderson (Chair) & Herb Hawkins; Tom Rayner, Interim CEO; Gary Herbst, SVP & CFO; Dennis Lynch, Legal Counsel; Ben Cripps, Compliance and Privacy Officer; Suzy Plummer, Director of Internal Audit; Jenelle Mason, Senior Compliance and Internal Audit Analyst, Chris Rodriguez, Compliance Specialist; Lisa Wass, Compliance Specialist Adam Roth and Brian Conner {Moss Adams}, Jennifer Stockton, Director of Finance and Reporting OPEN MEETING 1:30 PM Call to order Carl Anderson, Audit and Compliance Committee Chair Public / Medical Staff participation Members of the public wishing to address the Committee concerning items not on the agenda and within the subject matter jurisdiction of the Committee may step forward and are requested to identify themselves at this time. Members of the public or the medical staff may comment on agenda items after the item has been discussed by the Committee but before a Committee recommendation is decided. In either case, each speaker will be allowed five minutes. 1. Moss Adams Financial Statement Audit 2. Written Reports Committee review and discussion of written reports 2.1 Compliance Program Activity Report Ben Cripps 2.2 Conflict of Interest Suzy Plummer 2.3 Fleet Management Suzy Plummer 2.4 Review of Approved Audit Plan Suzy Plummer August 15, Audit and Compliance Committee Page 1 of 2 Herb Hawkins Zone I Lynn Havard Mirviss Zone II John Hipskind, MD Zone III Carl Anderson Zone IV Nevin House Zone V Board Member Secretary/Treasurer Board Member President Board Member

3 3. Verbal Reports 3.1 Compliance Program Provide an update on the status of Compliance Program activity Ben Cripps 3.2 Internal Audit Program Provide an update on the status of Internal Audit Department activity Suzy Plummer 4. Approvals CP.03 Medical Director and Physician Provider Contracts 5. Approval of Closed Meeting Agenda Kaweah Delta Medical Center Acequia Wing Executive Offices Conference Room immediately following the open meeting o Conference with Legal Counsel - Anticipated Litigation Significant exposure to litigation pursuant to Government Code (d)(2) (8 cases) Ben Cripps, Suzy Plummer and Dennis Lynch, Legal Counsel Adjourn Open Meeting Carl Anderson, Audit and Compliance Committee Chair CLOSED MEETING Immediately following the 1:30 PM open meeting Call to order Carl Anderson, Audit and Compliance Committee Chair 1. Conference with Legal Counsel - Anticipated Litigation - Significant exposure to litigation pursuant to Government Code (d)(2) (8 cases) Ben Cripps, Suzy Plummer and Dennis Lynch, Legal Counsel Adjourn Carl Anderson, Audit and Compliance Committee Chair In compliance with the Americans with Disabilities Act, if you need special assistance to participate at this meeting, please contact the Board Clerk (559) Notification 48 hours prior to the meeting will enable the District to make reasonable arrangements to ensure accessibility to the Kaweah Delta Health Care District Board of Directors meeting. August 15, Audit and Compliance Committee Page 2 of 2 Herb Hawkins Zone I Lynn Havard Mirviss Zone II John Hipskind, MD Zone III Carl Anderson Zone IV Nevin House Zone V Board Member Secretary/Treasurer Board Member President Board Member

4 Audit Entrance Meeting Kaweah Delta Health Care District August 15, 2017

5 Audit Committee Kaweah Delta Health Care District Dear Committee Members: Thank you for your continued engagement of Moss Adams LLP, the provider of choice for healthcare organizations. We are pleased to present our audit plan for Kaweah Delta Health Care District for the year ending June 30, We would also like to discuss current-year developments and auditing standard changes that will affect our audit. 2 We welcome any questions or input you may have regarding our audit plan, and we look forward to working with you.

6 Your Dedicated Team Brian Conner Engagement Partner Adam Roth Audit Manager 3 Chris Pritchard Concurring Reviewer Glenn Bunting Reimbursement Specialist

7 Required Communications to those Charged with Governance Now Auditor s responsibility under U.S. and government auditing standards Planned scope and timing of audit Later 4 Significant audit findings Qualitative aspects of accounting practices Difficulties encountered in performing the audit Corrected and uncorrected misstatements Management representations Management consultations with other independent accountants Other audit findings or issues

8 Our Responsibility Under US Generally Accepted Auditing Standards and Government Auditing Standards 1 2 To express our opinion on whether the consolidated financial statements prepared by management with your oversight are fairly presented, in all material respects, in accordance with U.S. GAAP. However, our audit does not relieve you or management of your responsibilities. To perform an audit in accordance with generally accepted auditing standards issued by the AICPA, and Government Auditing Standards issued by the Comptroller General of the United States, and the California Code of Regulations, Title 2, Section , State Controller s Minimum Audit Requirements for California Special Districts and design the audit to obtain reasonable, rather than absolute, assurance about whether the consolidated financial statements are free of material misstatement To consider internal control over financial reporting and internal control over compliance as a basis for designing audit procedures but not for the purpose of expressing an opinion on its effectiveness or to provide assurance concerning such internal control. To communicate findings that, in our judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

9 Audit Process INTERNAL CONTROLS ANALYTICAL PROCEDURES SUBSTANTIVE PROCEDURES 6 Includes Information Technology Revenues and expenses Trends, comparisons, and expectations Confirmation of account balances Vouching to supporting documentation Representations from attorneys and management Examining objective evidence

10 What is Materiality? It s the amount of a misstatement that could influence the economic decisions of users, taken on the basis of the consolidated financial statements It s calculated using certain quantitative (e.g., total assets) and qualitative factors (e.g., covenants, expectations, or industry factors) 7 It s used to identify : Significant risk areas Nature, timing, extent, and scope of test work Findings or misstatements

11 Significant Audit Areas Internal control over financial reporting Revenue recognition and accounts receivable 8 3 rd party settlements Risk management and post retirement liabilities

12 Consideration of Fraud Auditors must consider fraud to improve the likelihood that auditors will detect material misstatements due to fraud in a financial statement audit. 9 How we gather information to identify fraud-related risks of material misstatement: Brainstorm with team Conduct personnel interviews Document understanding of internal control Consider unusual or unexpected relationships identified in planning and performing the audit Procedures to be performed: Examine general journal entries for nonstandard transactions Evaluate policies and accounting for revenue recognition Test and analyze significant accounting estimates for biases Evaluate the business rationale for significant unusual transactions

13 Deliverables We will issue the following reports: Audit report on the consolidated financial statements of Kaweah Delta Health Care District as of and for the year ended June 30, 2017 Report to Those Charged with Governance (Communicating required matters and other matters of interest) 10 Report to Management and the Audit Committee (Communicating Internal Control Related Matters Identified in an Audit) We have also been engaged to perform the following non-attest services: Assist in the drafting of the consolidated financial statements of Kaweah Delta Health Care District Preparation of the Kaweah Delta Hospital Foundation tax returns

14 Audit Timing May 30, 2017 Planning meeting with management July 10, 2017 Interim audit procedures (including test of implementation of internal controls) for consolidated financial statements August 15, 2017 Entrance Meeting with Audit Committee 11 August 21, 2017 Final fieldwork procedures for consolidated financial statements September 25, 2017 Discuss draft consolidated financial statements and auditor s reports with Management Late October 2017 Audit Committee approval of statements and exit meeting Late October 2017 Finalize auditor s reports

15 Accounting Update

16 New Standards GASB 82 Pension Issues an amendment of GASB Statements No. 67, No. 68, and No This Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. Effective for reporting periods beginning after June 15, 2016.

17 New Standards GASB 87 Leases 14 This Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments leasing activities Effective for reporting periods beginning after December 15, Earlier application is encouraged.

18 Exposure Drafts Fiduciary Activities 15 Clarifies fiduciary activities as having the following characteristics: 1) Government controls the assets of the activity. 2) Those assets are not derived solely from the government s own source revenue. 3) One of the following: The assets result from a pass-through grant or trust agreement. Assets are used to benefit individuals not typical recipients of the government s goods and services (i.e. employees receive the benefit instead of patients). Assets are to be used to benefit other organizations or governments. Would require stand alone business-type entities (i.e. hospitals) with pension and OPEB trusts or patient custodial accounts to report separate fiduciary fund financial statements within the financial statements. Final statement expected in October 2016.

19 About Moss Adams

20 We re pleased to present our 22nd annual health care conference at Red Rock Casino, Resort & Spa in Las Vegas on November 15 17, This year s conference promises to be one of our best yet, featuring: 17 Dr. Sanjay Gupta, Emmy award-winning chief medical correspondent for CNN and practicing neurosurgeon Dr. Tom Coburn, former Republican US Senator (OK), physician, and two-time cancer survivor Wendy Davis, former Democratic state senator (TX), recognized women s equality leader, and Secretary Clinton campaign supporter Ken Leonczyk, legal and public policy expert and Senior Director of The Advisory Board Dr. Lowell Catlett, futurist, renowned speaker, and author This year, the conference will provide a forum for executives to discuss pressing topics including the Trump administration s progress and platform for repealing and replacing the ACA and the impact of reforming health care, again.

21 Our exclusive conference brings together notable C-suite and executive teams from across the country to share industry knowledge, best practices, and new ideas. Dr. Sanjay Gupta Emmy award-winning chief medical correspondent for CNN and practicing neurosurgeon Ken Leonczyk Legal and public policy expert and Senior Director of The Advisory Board 18 Dr. Tom Coburn Former Republican US Senator (OK), physician, and two-time cancer survivor Dr. Lowell Catlett Futurist, renowned speaker, and author Wendy Davis Former Democratic state Senator from Texas, recognized women s equality leader, and Secretary Clinton campaign supporter Register at:

22 Insights and Resources In today s fast-paced world, we know how precious your time is. We also know that knowledge is key. These resources offer what you need to know, when you need to know it, and is presented in the format that fits your life. We ll keep you informed to help you stay abreast of critical industry issues. 19 Moss Adams closely monitors regulatory agencies, participates in industry and technical forums, and writes about a wide range of relevant accounting, tax, and business issues to keep you informed. We also offer CPE webinars and events which are archived and available on demand, allowing you to watch them on your schedule.

23 Accounting Consulting Wealth Management ASSURANCE IT INDIVIDUAL Financial Statement Audits Compliance Tax Employee Benefit Plans Cybersecurity Financial Planning Services Public Company & SEC Internal Audit Outsourced Accounting Contract Compliance Assessment & Planning Development & Integration STRATEGY & OPERATIONS Investments Family Office INSTITUTIONAL Sustainability Business Planning Investments 20 We offer a full range of services and specializations that span accounting, consulting, and wealth management to suit your specific needs. TAX Accounting for Income Taxes (ASC 740) Accounting Methods Performance Audits Succession Planning TRANSACTIONS Insurance Compensation & Benefits Due Diligence Credits & Incentives Investment Banking International M&A Tax State & Local Restructuring Controversy & Dispute Resolution Valuations Tax Structuring Transfer Pricing

24 Hospital and Health Systems Moss Adams serves more than 200 hospitals and health systems, ranging in size from 15 to over 1,000 beds. We offer tailored solutions and health care consulting services to our for-profit, government, and not-for-profit entities. Our clients include: 21 Integrated health systems University-based hospitals Tertiary-care teaching hospitals Community and sole community hospitals District hospitals Critical access hospitals Pediatric hospitals

25 Health Care Industry Experience Our health care professionals dedicate their careers to serving the industry. We cover the full spectrum of health care including: 22 Hospitals and heath systems Independent practice associations Medical groups Community health centers Behavioral health organizations Long-term care Surgery centers Knox Keene licensed health plans Health care ancillary services

26 Brian Conner (209) Adam Roth (916) The material appearing in this presentation is for informational purposes only and should not be construed as advice of any kind, including, without limitation, legal, accounting, or investment advice. This information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Although this information may have been prepared by professionals, it should not be used as a substitute for professional services. If legal, accounting, investment, or other professional advice is required, the services of a professional should be sought. 23 Assurance, tax, and consulting offered through Moss Adams LLP. Wealth management offered through Moss Adams Wealth Advisors LLC. Investment banking offered through Moss Adams Capital LLC.

27 COMPLIANCE PROGRAM ACTIVITY REPORT Open Meeting Ben Cripps, District Compliance and Privacy Officer May through July 2017 EDUCATION Live Presentations by Compliance Department Family Medicine Residents Privacy Overview Privacy and Security Education provided at the Nursing Potpourri Compliance and Patient Privacy New Hire Orientation Compliance and Patient Privacy New Resident Orientation Written Communications sent from Compliance Department Mandatory All Staff Training (MAT I) Compliance and Patient Privacy Review and Exam Code of Conduct ( ) Department Compliance Representatives Safeguarding Information, logging out, safeguarding work papers ( ) Department Compliance Representatives Code of Conduct (Communication Boards) All Staff Communication Reporting a Concern (Communication Board) All Staff Communication Privacy Best Practices Minor Consent ( ) Select Departments PREVENTION AND DETECTION California Department of Public Health (CDPH) All Facility Letters (AFL) Review and distribute AFL s to areas potentially affected by regulatory changes; department responses reviewed and tracked to address the regulatory change and identify potential current/future risk Medicare and Medi-Cal Monthly Bulletins Review and distribute bulletins to areas potentially affected by regulatory changes; department responses reviewed and tracked address the regulatory change and identify potential current/future risk Patient Privacy Walkthrough Monthly observations of privacy practices throughout the District; issues identified are communicated to area Managers for follow-up and education KD HUB (Cerner) Participation in Current and Future State planning sessions; evaluating impact and identifying risk mitigation strategies User Access Privacy Audits Daily monitoring of user access to identify potential privacy breaches Office of Inspector General Exclusion Attestations Quarterly monitoring of department OIG Exclusion List review and attestations Medicare PEPPER Report Analysis Quarterly review of Medicare Inpatient Rehabilitation, Hospice, Mental Health and Acute Inpatient PEPPER statistical reports to identify outlier and/or areas of risk; evaluate with District leadership as appropriate Prepared: July 2017

28 OVERSIGHT, RESEARCH & CONSULTATION Fair Market Value (FMV) Oversight Ongoing oversight and administration activities for physician payment rate setting Sequoia Cardiology Clinic Licensing and Consultation Implementation planning, evaluation, consulting, risk mitigation, and preparation of California Department of Public Health Licensing packet Medicare Recovery Audit Contractor (RAC) and Medicare Probe Audit Activity Records preparation, tracking, appeal timelines, and reporting Compliance Program Assessment Ongoing assessment of compliance program effectiveness tracking and reporting strategies; Compliance Program administration Best Practices Source Patient Testing Regulatory research and consultation; drafted Communicable Disease Exposure Response form template Skilled Nursing Facility Advanced Drug Delivery Systems Regulatory research and consultation; completed comprehensive regulatory analysis and drafted formal notification letter to California Department of Public Health Trauma Program Reporting Requirements Regulatory research and consultation; evaluated Trauma Level III general reporting requirements Request For Proposal Process Research and consultation; working with Finance and select Directors to evaluate current RFP process, thresholds, and compliance with policy Death Notification and Reporting - Policy research and consultation; death notification process was reviewed; prepared formal response back to the requesting department Social Media and Employee Policy research and consultation; investigated a potential Photography and Videography Policy violation; collaborated with Management and Human Resources to address the matter Policy Management Research and consultation; met with select Directors to discuss Kaweah Delta s Policy Management process and oversight of policy software system; Compliance to serve as policy software support for non-clinical departments Medical Director and Physician Provider Contract Policy Policy research and consultation; met with executive leadership to refine and clarify the Fair Market Value (FMV) process; completed a review and update to the Medical Director and Physician Provider Contract Policy AUDITING AND MONITORING Notice of Privacy Practice Review The Notice of Privacy Practice was reviewed and updated to reflect current Kaweah Delta operational processes and ensure compliance with regulatory guidelines. Accounting of Disclosures of Protective Health Information Review A review of randomly selected patient encounters for the period January 2016 June 2017 to assess the Health Information Management departments process and compliance for Accounting of Disclosure s; Compliance noted substantial compliance with the Privacy Rule as well as some process opportunities/efficiencies. Prepared: July 2017

29 Kaweah Delta Health Care District Internal Audit Conflict of Interest Review 8/2/17 Overview The Political Reform Act, administered by the State Fair Political Practice Commission (FPPC), requires local governmental agencies to adopt a Conflict of Interest Code (COI). The COI covers members of our Board, Executive Team and other administrative personnel that make or participate in making decisions. The purpose of the code is to prevent such individuals from engaging in decision making in which they may have a personal financial interest. The District has adopted policy AP.23, Conflict of Interest, which requires designated individuals to complete the Form 700-Statement of Economic Interest. The purpose of this review was to determine if designated individuals are completing the form on an annual basis and that those entering and leaving designated positions complete the form within 30 days of appointment or departure. The review also focused on the manner in which disclosures appearing on the submitted Form 700s were reviewed and addressed. Key Observations The annual process to request completion of the Form 700 from required individuals is well communicated and appropriate follow up occurs. Based on review of the completed Form 700s, there were no reported disclosures that needed additional review The process whereby a Form 700 must be completed within 30 days for newly hired or terminated individuals is lacking. There is no notification process to the Board Clerk, who currently manages the process, when required individuals are hired or terminated. There does not appear to be a defined process on how to handle individuals transferring to new Director roles or for those who are on a leave of absence during the annual disclosure process. There is currently no process in place for review of the completed Form 700 documents. As such, there is no mechanism to assess whether or not the disclosed items represent a conflict that would require further review or action. Based on our review, there appears to be a lack of understanding regarding what is to be disclosed on the forms. This was apparent upon review of the completed 700s when we observed variances in disclosures related to salaries received from the District, disclosure of personal property that represents a primary residence, as well as other areas. Management has developed an action plan to address these key observations. Time frames for completion will be established and Internal Audit will implement an annual review of the disclosure forms.

30 Kaweah Delta Health Care District Internal Audit District Fleet 8/2/17 Overview The District currently has a fleet of 31 vehicles, 20 are owned and 11 are leased through Enterprise. The District participates in a maintenance program for all vehicles through Enterprise and participates in a fuel program, WEX. The decision to enter a lease agreement for eleven vehicles was to provide safer vehicles for staff and patients and to replace an aging fleet in a cost effective manner. Both the Enterprise and WEX programs also provide tools to assist with fleet management, fuel cost management and preventive maintenance needs. Procedures Completed The following were areas of focus during the review: Testing of the terms outlined in the Enterprise agreement related to mileage, maintenance and insurance requirements Discussions with leadership in operational areas and in Finance to understand the expectations regarding management s responsibility for the fleet vehicles and the WEX program Review of reporting available through the Enterprise Fleet and WEX online portals Discussion of safety programs and driver training requirements Key Observations Forty months into the sixty month lease period, four (4) of the eleven (11) vehicles have exceeded the allowable mileage for the entire lease term and one additional vehicle is projected to exceed the mileage by the end of the lease. As of 7/13/17, thirteen (13) vehicles had past due oil changes listed on the Fleet Management Report. One of these vehicles was retired earlier in the year, but not removed from the Fleet Maintenance agreement. Of the remaining twelve (12) vehicles, four (4) are leased and eight (8) are owned. We identified one leased vehicle that was not listed on the insurance policy as an additional insured/loss payee and the current deductibles are higher than those listed in the Enterprise Agreement. While an employee has been designated as the fleet manager, concern was expressed that this individual does not have the capacity to effectively manage all fleet vehicles. As such, safety, condition of vehicles, required maintenance; mileage monitoring as well as other areas are not being consistently monitored. Further, the Enterprise Fleet reports are not currently being reviewed or monitored in a meaningful way. The WEX Fuel program was implemented as a means to reduce fuel costs and provide additional mileage information that would be used to manage certain aspects of maintenance on vehicles. The program also has a portal that provides analytical reports related to vehicle use, mileage, fuel costs and exceptions related to location of fuel service, time of day, etc. At the current time these reports are not being reviewed or monitored. No retrospective review has been completed to determine if the expectations related to the Fleet and WEX Fuel programs are being met. Vehicle inspection processes are not in place. These inspections would provide drivers and management an opportunity to assess the vehicle s physical and mechanical condition. Policies were drafted but not formally approved by the Board. Management has developed an action plan to address these key observations. Time frames for completion will be established and Internal Audit will monitor completion of action items.

31 Annual Audit Plan January 2017-December 2017 Suzy Plummer, Director of Internal Audit

32 Estimate of Budgeted Hours 2017 Audit Plan-Breakdown of Hours Planned Assurance Audits-60% Management Consulting/Project Requests-30% Follow Up Testing-10%

33 2017 Planned Audits and Reviews Tier 1 Kaweah Delta Medical Foundation-Billing and Collections Review-Completed Enterprise Fleet Contract Review-Completed Mental Health Denials and Administrative Days Write Offs-Q4 Retrospective Performance Review for new Service Lines-Expected to Actual Analysis-In Process Tier 2 Shipping Charges and Prompt Pay Discounts-TBD

34 2017 Audit Support and Consulting Projects Sequoia Regional Cancer Center-Contract Compliance Review-In Process PRIME Project Metric Validation and Audit Support-On Going Core Measure Validation Support-Completed Meaningful Use Attestation Verification- Completed Conflict of Interest Statement Review- Completed

35 Ongoing Audits and Support Physician Contract Payment Reviews-On Going Employee Expense Reviews-Q3 Cash Audits-Q4 MRSA (Methicillin-resistant Staphylococcus aureus) swab testing-regulatory Requirement-Q3 EPO-Apprise Program Testing-Pharmacy Regulatory Requirement-Q4 Kaweah Kids Billing Review-Q3 Kaweah Korner Inventory Review-Q4

36 Compliance and Risk Management, Compliance Manual Policy Number: CP.03 Date Created: 07/29/2014 Document Owner: Lisa Wass (Compliance Date Approved: Not Approved Yet Specialist) Approvers: Board of Directors (Administration), Compliance Committee, Ben Cripps (Compliance & Privacy Officer) Medical Director and Physician Provider Contracts Printed copies are for reference only. Please refer to the electronic copy for the latest version. Purpose: To establish a process that complies with regulatory requirementsfederal and state regulatory guidance for dical Director and Provider Physician contracts entered into between Kaweah Delta Health Care District ( District ) and a physician. Policy: The District shall execute Medical Director and Physician Provider contracts with physicians according with to the requirements outlined in CP.12 Physician Relationships Physician Relationships. Monthly payments to Medical Directors will be made only pursuant to approved time records submitted by the physician. Likewise, monthly payments to Physician Providers will require documentation of availability and/or services rendered. Vice Presidents are responsible for assuring the necessity of a Medical Director position for the District. To determine those Medical Director positions required by Federal, State, or local regulations or Joint Commission accreditation, Vice Presidents are required to review Exhibit A for any applicable requirement relating to that position. Vice Presidents are responsible for ensuring the physician satisfies any qualification or training requirements and provides required services. If a Vice President is aware of a statute, regulation, or other requirement for a Medical Director that is not identified in Exhibit A, the Vice President must notify Compliance immediately immediately in order for the policy to accurately reflect the District s needs. If a Medical Director position is not required as identified in Exhibit A, the Vice President must provide documentation of the necessity and/or benefit to the District, its staff, and/or patients and present the need to the Executive Team for review and approval.. The Vice President shall make certain the contract is fully executed by all necessary parties and copies of the signed contract are forwarded to legal counsel and the Finance Department. Procedure:

37 Medical Director and Physician Provider Contracts 2 I. Medical Director and Physician Provider Contracts shall be prepared and executed using the process outlined in Exhibits B and C, respectively. To support the process outlined in Exhibits B and C, the following clarifications have been noted: A. Fair Market Value (FMV) Compliance will work directly with legal counsel to obtain periodic updated fair market value compensation data from a nationally recognized evaluation firm. B. Compliance will then prepare a listing of all Medical Director positions by specialityspecialty and the corresponding FMV range up to the 50 th percentile. A.C. The Vice President will work with Compliance and legal counsel to obtain the information necessary to prepare the specific contract for the selected candidate. 1. The proposed payment rate shall be at fair market value. a) Market analysis must be documented. b) The agreement must contain a specific description of the services to be provided and the time requirements to perform such services. c) Rate setting will be established using the following methodology: (1) Medical Director Agreements Vice Presidents may negotiate rates up to the 50th percentilerate must be negotiated within FMV range. Negotiations between the 51 st and 65 th percentiles required documented justification and CEO approval. Negotiations beyond the 5065 th percentile require Executive FMV Committee approval (CEO, Board Chair, and Compliance Officer).established approved by the Fair Market Value Committee (a sub-committee of the Compliance Committee). (2) Exclusive and Non-Exclusive Providers Rate must be established through an external fair market value assessment. 2. The contract shall be prepared by legal counsel using the negotiated rate that falls within the approved fair market value range. Formatted: Superscript Formatted: Font: Not Italic Formatted: Font: Not Italic Formatted: Font: Not Italic, Superscript Formatted: Font: Not Italic Formatted: Font: Not Italic, Superscript Formatted: Font: Not Italic Formatted: Font: Not Italic, Superscript Formatted: Font: Not Italic Formatted: Font: Not Italic B. Modifications - In the event the physician requests any modifications to the contract language, the Vice President shall forward the requests to legal counsel for consideration. If the changes are agreeable, a modified contract will be provided to the Vice President. If changes are not agreeable, legal counsel will provide explanations to the Vice President.

38 Medical Director and Physician Provider Contracts 3 C. Board Approval Board Approval is required as described below: a. Medical Director Agreements The Vice President will forward all new and/or unbudgeted Medical Director Agreements to the Board of Directors for review and approval. Established Medical Director Agreements whereby the expense has been accounted for within the current fiscal budget do not require Board review and approval. b. Exclusive and Non-Exclusive Providers The Vice President will forward all new and/or unbudgeted Exclusive and Non- Exclusive Provider Agreements to the Board of Directors for review and approval. If the expense has been accounted for in the current fiscal budget, Board review and approval is not required. II. III. Monthly payments to Medical Directors must be supported by approved time records as follows: A. Physician must track time spent on activities/responsibilities outlined in his/her agreement with the District. B. Physician shall record activities by date in the electronic time record system. Please note: a Physician may use a method other than electronic to document and submit time records when approved by the responsible Vice President and by Finance. C. Physician time records submitted in any format must include an attestation statement signed by the physician (electronic signature process is used in the electronic system). D. The responsible Vice President, or designated delegate, must review and approve time records and approve the payment amount to authorize payment and evidence such approval by original signature of the Vice President. Electronic records must be approved in the electronic system. E. Upon receipt of the approved time record and payment amount, Accounts Payable will process the payment for the amount approved by the Vice President. F. The responsible Vice President, or designated delegate, will promptly meet with the Medical Director or Physician Provider if the Medical Director or Physician Provider fails to (i) submit time records in a timely manner or (ii) provide services in the manner set forth in the contract. Recurring performance issues shall be reported to the Compliance Officer. Compliance shall monitor Medical Director contracts and payments as follows: A. Compliance or Internal Audit may complete periodic audits of monthly time records and payments to Medical Directors and Physician Providers. B. Prior to the contract end date, the responsible Vice President is required to evaluate position duties, requirements, and hours, and to solicit input

39 Medical Director and Physician Provider Contracts 4 from key stakeholders including District staff and/or Medical Staff ass appropriate., complete the customer service evaluation form (Exhibit D), and to provide an assessment of the key position requirements and expectations.

40 Medical Director and Physician Provider Contracts 5 EXHIBIT A MEDICAL DIRECTOR AUTHORITY Medical Director Required by Required by Medicare Position Licensing 22 CCR Anesthesiology Identified Duties 22 CCR BH - Psychiatry Certification Req d Identified Duties Call Standby 22 CCR Emergency Service Identified Duties 22 CCR Cardiac Catherization 70435(a)(1) Lab Certification Req d Identified Duties Cardiac Rehab Cardiovascular Surgery Chief of Staff Dialysis 22 CCR 70435(b)(1) Certification Req d Identified Duties 22 CCR Certification Req d 22 CCR Certification Req d & Minimum Training Medicare Coverage Issues Manual Section Requires MD to be immediately available in case of emergency; Does not require a medical director. 42 CFR Qualifications Identified Duties Required for Accreditation Emergency Services (Basic & Comprehensive) Hospice ICU ICU - Acute Respiratory Care in ICU ICU - Coronary Care Service in ICU 22 CCR Qualifications Identified Duties 22 CCR Qualifications Identified Duties 22 CCR Qualifications Identified Duties 22 CCR Certification Req d 22 CCR Certification Req d Identified Duties 22 CCR Certification Req d NICU Identified Duties 22 CCR Nuclear Medicine Certification Req d Pediatrics 22 CCR CFR Conditions for Participation

41 Medical Director and Physician Provider Contracts 6 Medical Director Position Perinatal Service Radiation Therapy Radiology Acute Inpatient Rehabilitation Respiratory Care Service Skilled Nursing Sub Acute Sleep Disorders Lab Surgery Services Required by Licensing Certification Req d 22 CCR Certification Req d Identified Duties 22 CCR Certification Req d & Training 22 CCR Certification Req d 22 CCR CCR Certification Identified Duties 22 CCR Certification Req d Required by Medicare 42 CFR (f) Qualifications & Training Identified Duties Required Time Commitment 42 CFR 483.5(b)(2)(iii) Conditions for Participation 42 CFR (i) Identified Duties Required for Accreditation Possible Requirement for Accreditation with American Academy of Sleep Medicine

42 Medical Director and Physician Provider Contracts 7 EXHIBIT B MEDICAL DIRECTOR CONTRACT CHECKLIST Finance to notify accountable VP, Director of Marketing, Medical Staff Office Manager and VP/CMO of Medical Director opportunities (> twelve (12) months prior to expiration of contract) A notice of renewing medical directorship opportunities will be published in the Medical Staff Newsletter (Eight (8) months prior to expiration of contract) Accountable VP to provide current position duties and requirements to MEC and to seek input regarding those requirements from MEC (Six (6) months prior to expiration of contract) Accountable VP solicits input from District staff and Medical Staff on: 1) Quality of performance by current provider and/or potential candidates 2) Recommendations or revisions to the current duties or requirements VP works with Legal and fair market value process to develop/revise contract and to determine compensation range VP and physician/physician group negotiate and reach agreement VP takes those physician contracts stipulated in CP.03 to Board of Directors for approval

43 Medical Director and Physician Provider Contracts 8 EXHIBIT B MEDICAL DIRECTOR CONTRACT CHECKLIST Finance to notify accountable VP, Director of Marketing, Medical Staff Office Manager and VP/CMO of Medical Director opportunities A notice of renewing medical directorship opportunities will be published periodically in the Medical Staff Newsletter Accountable VP to evaluate current position duties, requirements, and hours and considers input from District staff and/or Medical Staff as appropriate VP works with Legal Counsel and Compliance to determine FMV compensation range VP selects candidate and reaches agreement on compensation amount VP submits negotiated rate to Compliance for review and approval (Executive FMV Committee engaged as necessary) VP works with Legal Counsel and Compliance to develop/revise contract VP takes those physician contracts stipulated in CP.03 to Board of Directors for approval

44 Medical Director and Physician Provider Contracts 9

45 Medical Director and Physician Provider Contracts 10 EXHIBIT C PROVIDER CONTRACT RENEWALS Exclusive and Non-Exclusive Provider Agreements Finance to notify accountable VP and Medical Staff Office of upcoming Provider Contract expiration Accountable VP to provide and discuss current provider duties and requirements with Medical Staff Officers Medical Staff Officers considers input from medical staff on: 1) Quality of performance by current provider and/or new potential providers 2) Recommendations or revisions to the current duties or requirements Accountable VP considers input from District staff on: 1) Quality of performance by current provider and/or potential candidates 2) Recommendations or revisions to the current duties or requirements MEC Recommendations: (Six (6) months prior to expiration of contract) 1. Provider evaluations 2. Performance changes/revisions to the expectations/ services (Medical Staff Organizations role is completed at this time and MEC acknowledgement of opportunity to provide input into the provider s performance and into expectations/services incorporated into the agreement will be documented in MEC s minutes) Formal Request for Proposal (RFP) is conducted (if appropriate) Physician/Physician Group is selected VP works with Legal Counsel and FMV Consulting Firm to establish FMV range VP and physician/physician group negotiate and reach agreement on rate Negotiated rate and FMV analysis to Compliance for Review VP works with Legal Counsel and Compliance to develop/revise contract VP takes those physician contracts stipulated in CP.03 to Board of Directors for approval

46 Medical Director and Physician Provider Contracts 11

47 Medical Director and Physician Provider Contracts 12 EXIHIBIT D CUSTOMER SERVICE EVALUATION EXHIBIT D NEW PROVIDER CONTRACT Exclusive and Non-Exclusive Provider Agreements Kaweah Delta Health Care District Board of Directors request MEC to review Exclusive/Non-Exclusive Provider arrangement MEC (or Subcommittee appointed by Chief of Staff) review quality of care and service implications of proposed exclusive provider contract. Review includes evaluation from: 1. Members of applicable specialty involved 2. Members of other specialties who directly utilize or rely on the specialty under evaluation 3. District Administration Board receives and reviews MEC Report and makes decision to proceed with exclusive provider contract or Board Resolution Formal Request for Proposal (RFP) is conducted (if appropriate) Physician/Physician Group is selected VP works with Legal Counsel and FMV Consulting Firm to establish FMV range VP and physician/physician group negotiate and reach agreement on rate Negotiated rate and FMV analysis to Compliance for review VP works with Legal Counsel and Compliance to develop/revise contract VP takes those physician contracts stipulated in CP.03 to Board of Directors for approval TO: FOR MEDICAL DIRECTORS FOR:

48 Medical Director and Physician Provider Contracts 13 DATE: DATE DUE: SPECIFIC POSITION REQUIREMENTS 1=Poor 3= Avg 5= Outstanding Comments: INTERPERSONAL RELATIONS 8 Works collaboratively 9 Actions - reliable, consistent Respectful, positive Feedback is given in a constructive, educational and improvement manner 12 Responds timely Comments: QUALITY FOCUS 13 Demonstrates desire to improve interdisciplinary processes Facilitates solutions which focus on issues, not personalities Assess staff development needs Comments EDUCATION 16 Effective assists in planning and providing education as needed Provides impromptu education when possible Resource for staff Comments ADDITIONS

49 Medical Director and Physician Provider Contracts 14 "These guidelines, procedures, or policies herein do not represent the only medically or legally acceptable approach, but rather are presented with the recognition that acceptable approaches exist. Deviations under appropriate circumstances do not represent a breach of a medical standard of care. New knowledge, new techniques, clinical or research data, clinical experience, or clinical or bio-ethical circumstances may provide sound reasons for alternative approaches, even though they are not described in the document."