Contract Auditing

Pre and Post Execution
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#1
Contract auditing begins before the contract is executed and
continues until performance is no longer required.
#2
“doveryai no proveryai”
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In 1998, comedian Dana Carvey underwent double-bypass surgery to relieve an arterial
blockage.
When Carvey’s symptoms were not relieved, a diagnostic angiogram proved that a healthy
artery had been bypassed instead of the unhealthy artery.
The surgeon’s defense was that Carvey’s anatomy was unusual and, therefore, he was not to
blame for the mistake.
With a few exceptions, patients and surgeons generally do not have written contracts.
Instead, patients like Dana Carvey rely on an unwritten, implied contract the surgeon will
do what he said he would.
All contracts, whether implied or in writing come down to promises and expectations.
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Contract negotiation is a pre-execution audit of your contract.
Once a contract is executed, contract terms are fixed.
Pre-execution audits are critical to post-execution contract performance.
A contract provided by the vendor generally favors the Vendor.
Vendor’s should be open and willing to negotiate contract terms.
Once a contract is executed, performance is required
If performance under a provision isn’t possible, that provision should be
revised or struck
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Disseminate key provisions
Stakeholders should analyze provisions that affect their respective
processes and personnel
Stakeholders should be clear on what is expected under the contract
Parse-out and delineate specific “action items” to determine what is or
is not possible
“Action items” that cannot be performed in strict accordance with the
contract should be revised or struck
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Contract execution is traditionally undertaken as an administrative function with little
input from department personnel or end-users.
HOWEVER
Once executed, performance under a contract can become a house-wide obligation.
Share contract performance details with affected departments and staff.
Implement policies and guidance that are easily referenced, are informative, and are
consistently practiced.
A breach of contract typically occurs because the requirements of a contract are unclear or
unknown by those tasked with performance.
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Contract Approval Policy
Do you have one?
Do you follow it?
How do you know?
Contract Review Checklist
Lists key contracting policy requirements
Required insurance limits
Required clauses
Term and termination requirements
When review by legal counsel is required
Contract Approval Form
Acts as a cover sheet
Provides key information about the vendor, the product or service,
Indicates stakeholder departments have reviewed and signed-off
Indicates when a compliance or legal review was required
Requires sign-off of department administrator(s)
Assists with set-up in contract database
Don’t Forget:
Sanction Checks
Corporate Integrity Agreements “CIA”
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Vendor provides service for benefit of hospital’s patients
Language should be reflect hospital’s intent to control the service
This should be reiterated throughout the contract
CMS is very clear that hospitals must administrate control and manage
these services as they would if they were providing the service
When hospital is the provider, the expectation is reversed.
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Keeping language narrow allows an organization to
Convey specific behavior and expectations
Compel compliance
Keeping language broad allows an organization to
Convey specific behavior and expectations
Compel compliance
Revise expectations when processes, policies, technology,
regulations, etc., change
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Parse out specific required "action items“
Develop processes and strategies for carrying-out required “action items”
Develop a strategies and methodologies for monitoring, measuring, and reporting when and how
“action items” are carried out
Develop a policy and protocol for when, how, and to whom those there or not those "action items'
are being met
What does the contract say about payment?
What is required before the physician is paid?
What processes are in place?
Are those processes being followed?
Are those processes being followed for every physician payment?
How do you know?
What is required for contract renewal?
What processes are in place?
Are those processes being followed?
How do you know?
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Assigning and managing contract review and approval workflow
Tracking draft versions and communication
Assists to satisfy Stark regulation for cross-referencing/master list
Manage tracking , notifying, and reminding of upcoming renewal and expiration
Tracking contract language discrepancies by centralizing notes and commentary
Tracking and storage of audit data and documentation
Manage tracking of TJC clinical performance monitoring
Tracking, monitoring, and reporting audit data
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If You Only Remember Two Things
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Kristen Walker, BSLS, Paralegal
Contract Compliance Specialist
kristen.walker@lmh.org
Thank you!!!!
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