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Healthcare Affiliates, Inc.
1 Vale Road, Suite 200
Bel Air, MD 21014
Phone: 410.879.3264
Fax: 410.879.3266
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Contingency vs. Hourly Arrangements

A number of hospitals today have a policy regarding Contingency-based contracts. These policies have increased because of recent high-profile cases of abuse within the system by a small group of consultants. CMS does not specifically prohibit contingency contracts. This type of arrangement should be used to limit a hospital's downside risk.

Our firm uses the contingency-based arrangements for the following reasons:

- Our clients have no exposure if we fail to achieve a positive result.

- Our clients have the right to veto any proposed submission to the Intermediaries.

- Our work product is audited by the Intermediaries prior to the Hospital receiving any additional reimbursement and our fee is not due until 30 days after that date. Therefore, cash flow out is after cash flow in and only if additional reimbursement (or credit) is received.

- It is sometimes difficult for a client, board member, or outsider to understand the amount of time and expense that has gone into the research to develop the profile that has directed us to the hospital and the probable levels of recovery.

- Additionally, there is no need for discussion related to the consultant's pursuit of a 'dead-end item', or what may appear as unproductive time, in fact it encourages the consultant to be more productive .

- Other firms are on a contingency or percentage basis such as lawyers, investment bankers, collection agencies, physicians and cost reduction consultants.

Clearly, we feel that our issues, as presented to and audited by the Intermediaries, produce an unquestionable benefit to the client, that heretofore had been overlooked. Further, if there was a clear prohibition on contingency-based contracts, a prestigious law firm like Hooper,Lundy would not have proposed such a fee arrangement for their group appeal for the Medicare outlier issue. Therefore, we feel that the contingency approach serves the client well as a vehicle to obtain proper additional reimbursement.