Last week, the HHS Office of Inspector General published Advisory Opinion 12-15. The opinion concerned whether an arrangement under which an unnamed hospital pays specialist physicians in its community a flat 24-hour shift (i.e., per diem) rate to provide call coverage at the hospital's emergency department potentially violates the federal Anti-Kickback Statute.
While the OIG has previously addressed similar arrangements in Advisory Opinion 07-10 and Advisory Opinion 09-05, its most recent opinion provides guidance on specific features hospitals can build into their call coverage arrangements in order to safeguard against prosecution.
The arrangement was summarized in the opinion as follows:
• The hospital offers all specialist physicians on its staff the opportunity to provide unrestricted (i.e., on-call) coverage of its ED in exchange for a flat per diem rate specific to each specialty, which is set annually and paid regardless of whether on-call physicians are contacted by the ED during their assigned shifts.
• Any physician who admits a patient while on-call is required to provide appropriate inpatient and follow-up care to that patient within a timeframe specified by the ED physician.
• The hospital sets each specialty's per diem rates based a study of actual services provided and has engaged an independent consultant to evaluate whether the rates were consistent with fair market value without regard to referrals or other business generated for the hospital by the specialists.
The opinion also discussed the market factors underlying the arrangement, which apply to many hospitals around the country. Specifically, the OIG noted that hospitals are increasingly compensating for on-call coverage and that legitimate, market-specific reasons exist for the execution of these types of arrangements, such as provider shortages or a lack of physicians voluntarily taking call. These issues can lead to the inability to provide necessary emergency coverage, as mandated by the federal Emergency Medical Treatment and Labor Act, without compensation for on-call coverage.
The common thread in the OIG's opinions on call coverage is that while it is possible to set up an arrangement that complies with all relevant statutes and regulations, call coverage payments could be used to disguise illegal payments for referrals. Advisory Opinion 12-15 provides examples of risky payments, which exceed fair market value, that are derived based upon a physician's potential lost income, do not compensate for identifiable services, are disproportionately high in the aggregate when compared to a physician's regular medical practice income, and/or "double pay" physicians for professional services for which reimbursement is also received from insurers or patients.
Ultimately, the OIG opined that the specific arrangement under study likely does not violate the Anti-Kickback Statute and that it would not impose sanctions on the hospital. It is important to note that an OIG advisory opinion cannot be relied upon by anyone other than the parties requesting it. However, hospitals looking to make their on-call arrangements compliant can ensure that they are following best practices, including documenting that any payments to on-call physicians:
• Are commercially reasonable, given market factors and required services;
• Are consistent with fair market value (verified by an independent valuation, if possible);
• Are only made in exchange for actual and necessary services; and
• Do not burden federal health programs (e.g., Medicare and Medicaid) with any additional costs.
Until the government provides specific guidance to hospitals looking to address a very real need in their markets, the OIG's Advisory Opinion 12-15 can be used as a model for establishing an on-call coverage arrangement that is unlikely to trigger enforcement by regulatory authorities.
Curtis H. Bernstein, CPA/ABV, ASA, CVA, MBA, is the managing director of transaction and valuation services at Sinaiko Healthcare Consulting. Stuart J. Schaff is a senior consultant of transaction and valuation services at Sinaiko Healthcare Consulting.
While the OIG has previously addressed similar arrangements in Advisory Opinion 07-10 and Advisory Opinion 09-05, its most recent opinion provides guidance on specific features hospitals can build into their call coverage arrangements in order to safeguard against prosecution.
The arrangement was summarized in the opinion as follows:
• The hospital offers all specialist physicians on its staff the opportunity to provide unrestricted (i.e., on-call) coverage of its ED in exchange for a flat per diem rate specific to each specialty, which is set annually and paid regardless of whether on-call physicians are contacted by the ED during their assigned shifts.
• Any physician who admits a patient while on-call is required to provide appropriate inpatient and follow-up care to that patient within a timeframe specified by the ED physician.
• The hospital sets each specialty's per diem rates based a study of actual services provided and has engaged an independent consultant to evaluate whether the rates were consistent with fair market value without regard to referrals or other business generated for the hospital by the specialists.
The opinion also discussed the market factors underlying the arrangement, which apply to many hospitals around the country. Specifically, the OIG noted that hospitals are increasingly compensating for on-call coverage and that legitimate, market-specific reasons exist for the execution of these types of arrangements, such as provider shortages or a lack of physicians voluntarily taking call. These issues can lead to the inability to provide necessary emergency coverage, as mandated by the federal Emergency Medical Treatment and Labor Act, without compensation for on-call coverage.
The common thread in the OIG's opinions on call coverage is that while it is possible to set up an arrangement that complies with all relevant statutes and regulations, call coverage payments could be used to disguise illegal payments for referrals. Advisory Opinion 12-15 provides examples of risky payments, which exceed fair market value, that are derived based upon a physician's potential lost income, do not compensate for identifiable services, are disproportionately high in the aggregate when compared to a physician's regular medical practice income, and/or "double pay" physicians for professional services for which reimbursement is also received from insurers or patients.
Ultimately, the OIG opined that the specific arrangement under study likely does not violate the Anti-Kickback Statute and that it would not impose sanctions on the hospital. It is important to note that an OIG advisory opinion cannot be relied upon by anyone other than the parties requesting it. However, hospitals looking to make their on-call arrangements compliant can ensure that they are following best practices, including documenting that any payments to on-call physicians:
• Are commercially reasonable, given market factors and required services;
• Are consistent with fair market value (verified by an independent valuation, if possible);
• Are only made in exchange for actual and necessary services; and
• Do not burden federal health programs (e.g., Medicare and Medicaid) with any additional costs.
Until the government provides specific guidance to hospitals looking to address a very real need in their markets, the OIG's Advisory Opinion 12-15 can be used as a model for establishing an on-call coverage arrangement that is unlikely to trigger enforcement by regulatory authorities.
Curtis H. Bernstein, CPA/ABV, ASA, CVA, MBA, is the managing director of transaction and valuation services at Sinaiko Healthcare Consulting. Stuart J. Schaff is a senior consultant of transaction and valuation services at Sinaiko Healthcare Consulting.
More Articles on Hospital Call Coverage:
Per Diem Call Coverage and the Anti-Kickback Statute: What is Compliant?
3 Major Trends of Call Coverage, Medical Direction
13 Statistics on Daily Stipends and On-Call Physician Compensation