REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 27, 2023
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
Agreement with ECG Management Consultants for Fair Market Value Determinations and Audits of Contracted Physician Agreements
End
RECOMMENDATION(S)
Recommendation
Approve an Agreement, including non-standard terms, with ECG Management Consultants to perform fair market value determinations and audits relating to the performance of contracted physician services agreements, in the not-to-exceed amount of $1,250,000, for the period of July 1, 2023 through June 30, 2028
(Presenter: William L. Gilbert, Director, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The cost of $1,250,000, is funded by State Medi-Cal, Federal Medicare, private insurances, and other departmental revenue. Funding sources may change in the future pending any legislative activity related to the repeal and/or replacement of the Affordable Care Act. Adequate appropriation and revenue have been included in the Arrowhead Regional Medical Center (ARMC) 2023-24 recommended budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
Approval of the Agreement will allow ARMC to contract with ECG Management Consultants (ECG) to evaluate fair market value (FMV) for all physician service agreements, and audit physician performance to ensure compliance with the terms of the agreements.
FMV evaluations for physician services agreements are necessary to assist ARMC in determining appropriate compensation, adding services, making changes in services, and to comply with applicable fraud and abuse laws.
ECG will, at the request of ARMC, conduct audits for all physician services agreements and the following activities to identify compliance gaps in the level of service provided under the agreements:
1. Productivity Assessment: Evaluate physician productivity relative to the industry benchmarks, ensuring the level of services provided is consistent with the physician services agreement.
2. Administrative and Medical Directorship Assessment: Review of administrative and medical directorship positions, time required for their successful completion, and the continued necessity of the positions (e.g., required per regulatory requirements, fills a strategic need for ARMC, or requires significant administrative hours to ensure the proper function and quality of the dependent).
3. Teaching and Graduate Medical Education Assessment: Validate that teaching positions align with current requirements of accrediting bodies and the positions require faculty to have protected administrative time.
4. Call Coverage: Assess compliance with need for specialty physicians to be immediately available or on call and promptly available per the terms of agreements and based on Level I trauma center designation requirement.
5. Operational Assessment: Benchmark physician services and coverage to provide consultation to hospital administration under multiple types of provider agreements.
The Agreement with ECG is based on the standard County contract, negotiated by the parties, with the following terms that deviate from the standard County terms:
1. Except for indemnification claims, ECG limits its liability ECG’s liability for damages resulting from gross negligence, willful misconduct, or violations of law is limited to three times the total amount paid for services, and for all other claims that liability is limited to the amount paid for ECG’s services.
• There is no limitation of a vendor’s liability in the standard County contract.
• Potential Impact: Damages could exceed the liability cap, leaving the County financially liable for the excess. The County’s liability under the Agreement is not similarly limited.
2. ECG limits its indemnification liability with respect to the use, access, maintenance, and disclosure of protected health information to the greater of $1,000,000 or three times the fees paid by the County under the Agreement.
• There is no limitation on a vendor’s indemnification liability under the standard County Contract.
• Potential Impact: ECG caps its indemnification liability as stated above for all claims relating to the use, access, maintenance, and disclosure of protected health information. Claims could exceed the liability cap and contract amount leaving the County financially liable for the excess.
3. Except for cases where ECG is a party to the litigation, in the event that ECG must respond to a subpoena, reply to a request for production or interrogatories, or appear for a deposition for a proceeding from matters pertaining to the Agreement, the County must reimburse ECG for all reasonable expenses and time at ECG’s standard rates.
• The County standard contract requires the vendor to participate in the discovery process at its own cost.
• Potential Impact: In the event that ECG is required to participate in the discovery process in which it is not a party to the case, the County would be responsible for reimbursing ECG for reasonable expenses and their fee.
ARMC recommends approval of the Agreement, including the non-standard terms, as ECG’s services are necessary to enable the County to comply with applicable laws relating to physician compensation.
PROCUREMENT
The Request for Proposal (RFP) No. ARMC122-ARMC-4864 for Physician Compensation Evaluation and Contract Performance Assessment was released through the County’s Electronic Procurement (ePro) network on March 15, 2023. The intent of the RFP was to seek proposals from qualified vendors to provide evaluation and review of contracted physician agreements. Four proposals were received in response to the RFP, as follows:
|
Agency |
Location |
|
ECG |
San Diego, CA |
|
Alvarez & Marsal Healthcare Industry Group |
Los Angeles, CA |
|
InHealth Advisors, LLC |
Englewood, CO |
|
VMG Holdings LLC d/b/a VMG Health |
Dallas, TX |
Evaluation of the proposals was completed by a committee comprised of representatives from ARMC’s Administration and supporting staff. All proposals were evaluated based on qualifications and experience, cost, references, and technical review. The evaluation committee determined, based on the depth of knowledge and familiarity with the proposal requirements, that ECG best met the needs of ARMC and recommended for a contract. On May 31, 2023, a tentative award letter was sent to ECG. No protests were received.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Deputy County Counsel, 387- 5455) on June 1, 2023; Purchasing (Ariel Gill, Buyer III, 777-0722) on June 2, 2023; ARMC Finance (Chen Wu, Finance Budget Officer, 580-3165) on June 5, 2023; Finance (Jenny Yang, Administrative Analyst, 387-4884) on June 7, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on June 8, 2023