Be compliance-ready: what to consider when acquiring a physician practice.

For many healthcare organizations, a prevailing component of becoming a successful accountable care organization (ACO) involves achieving physician integration by acquiring physician practices. Hospital leaders may presume that acquiring private physician practices only means a different signature on the payroll check, when in reality significant accreditation and regulatory ramifications can affect the hospital's accreditation and regulatory status. One aspect that a healthcare organization should consider when contemplating an ACO is whether the acquired physician practice should be provider based - and therefore subject to the hospital's regulatory and accreditation requirements - or a separate medical group. Let's explore the regulatory considerations when healthcare organizations choose to acquire physician practices and integrate them into their hospital operations on their journey to creating an ACO.THE PHYSICIAN-HOSPITAL PARTNERSHIPThe current economy and healthcare reform have brought physicians and hospitals together to create partnerships that would have been unlikely in previous years. Physicians see their revenue base declining because economic challenges mean fewer paying patients. Hospitals want to create ACOs and capitalize on the healthcare reform incentives. Both parties need to understand the full implications this union will have on accreditation and regulation.Independent physician practices do not have a compelling reason to obtain accreditation from bodies such as The Joint Commission (TJC), and Medicare has different reimbursement requirements for independent physician practices than for hospitals. When physician practices are acquired by hospitals and become provider based, they fall under the hospital's Center for Medicare & Medicaid Services Certification Number (CCN).The CMS regulations with which private physician practices must comply are less stringent than those hospitals must meet to receive Medicare and Medicaid reimbursement. Private physician offices' process flows focus on efficient throughput. Medical assistants, working under the direction of the physicians, assist with patient care coordination. Physicians create protocols and processes to allow for efficiency and effectiveness of their office practices. If a practice uses an electronic health record (EHR), the EHR aligns with these streamlined processes. When these private physician practices become provider based, a reality shock sets in and may create friction between the hospital and the newly acquired provider-based practice. These practices are subject to the hospital's regulatory and accreditation requirements, and noncompliance places the hospital's accreditation and CMS funding at risk.THE JOINT COMMISSION-CMS RELATIONSHIPWhy have accreditation and regulatory requirements for provider-based practices become major issues with the advent of health reform? The evolving relationship between TJC and CMS plays a significant role in answering this question. (Though healthcare organizations use a variety of accreditation bodies, as TJC accredits the majority of US healthcare organizations I'll use it as the example throughout.)Because of changes contained in the Medicare Improvements for Patients and Providers Act of 2008, TJC must stringently enforce CMS's Conditions of Participation (CoPs) during their surveys. TJC surveyors are trained on CMS requirements and focus their surveys on both organizations' requirements. CMS conducts validation surveys on 5 percent of surveyed hospitals to ensure that CoPs are met and then uses the results from the validation surveys to assess how well TJC is meeting CMS requirements. Consequently, TJC revised several of their standards to align with CMS's CoPs as part of their application process. The CMS designation means that hospitals accredited by TJC may choose to be deemed as meeting Medicare and Medicaid certification requirements (TJC 2010).Furthermore, as part of the deeming application requirement, TJC is required to survey all hospital programs that fall under one CCN. …