On September 27, 2007, the Office of Inspector General (“OIG”) published Advisory Opinion No. 07-10, in which the OIG concluded that it would neither exclude from Federal health care program participation nor impose civil monetary penalties and other administrative sanctions on a non-profit medical center for paying physicians to provide on-call coverage and uncompensated care services in its emergency department, despite the potential for the arrangement to violate the Federal health care program anti-kickback statute, 42 U.S.C. §1320b-7b(b). See http://www.oig.hhs.gov/fraud/docs/advisoryopinions/2007/AdvOpn07-10A.pdf.
Need for the Compensation Arrangement
Similar to the experiences of many hospitals, the medical center requesting the Advisory Opinion (the “Hospital”) indicated to the OIG that, due to the growing financial burdens of uncompensated care and malpractice insurance costs faced by physicians, it was having severe difficulties finding physicians to provide emergency department (“ED”) on-call coverage and uncompensated inpatient follow-up care for patients coming to its ED. As a result, the Hospital was hindered in its ability to fulfill its mission of providing charitable care to the underinsured and uninsured population. Consequently, the Hospital developed a proposed compensation arrangement for staff physicians in certain medical specialties to provide ED on-call coverage, respond to patient emergencies in the ED, and provide continuing inpatient care for uninsured patients (the “Arrangement”).
The Compensation Arrangement
Under the Arrangement, the staff physicians would be obligated to:
- Participate in a monthly call rotation schedule for his or her specialty;
- Provide inpatient follow-up care to the ED patients seen while on-call, until the patients’ discharge;
- Timely respond to calls from the ED and subject their response rates to Hospital review;
- Collaborate with the Hospital’s care management staff and participate in Hospital initiatives related to discharge planning, utilization, and review of observation patients (and be subject to suspension and/or termination for failing to so collaborate); and
- Timely document their services to all patients seen under the Arrangement.
The Hospital would pay the physicians a per diem rate for each day on-call, with the exception that each physician would be required to provide 1.5 days per month of gratis on-call coverage. The per diem rate would vary based on only two factors: (1) the physician’s specialty, and (2) whether the physician is on-call on a weekday or weekend. When seeking to determine the proposed per diem rates for each specialty, the Hospital examined (a) the severity of the illness that physicians in a given specialty typically encounter when on-call; (b) each specialty’s likelihood of actually needing to respond while on-call; (c) the likelihood that the specialist would need to provide uncompensated care; and (d) the degree of inpatient care each specialty typically provides to patients admitted from the ED.
Standard for Evaluating Call Coverage Arrangements, Generally
Acknowledging that hospitals are increasingly compensating physicians for on-call coverage in EDs, and further acknowledging that there are legitimate reasons for such arrangements (compliance with EMTALA, scarcity of certain physicians within particular service areas, etc.), it is notable – first and foremost – that the OIG recognized the need for hospitals to provide compensation to physicians for on-call services.
However, the OIG also recognized that call coverage arrangements can create significant risks of abuse and be structured in a manner that violates the anti-kickback statute. Generally, the OIG indicated that call coverage arrangements may be the result of physicians’ demand for compensation as a condition of doing business at a hospital, even when neither the services provided nor external market factors warrant it. In addition, the OIG noted that (a) hospitals may use such arrangements to entice physicians to join or remain on the medical staff or generate additional business; and (b) physicians may use such arrangements to induce referrals from the hospital (i.e., by offering to provide call coverage at below fair market value rates). More specifically, hospitals and physicians alike should take note that the OIG specifically identified the following as potentially improper aspects of call coverage arrangements:
- payments for “lost opportunity” that do not reflect bona fide lost income;
- payments when no identifiable services are provided;
- disproportionately higher aggregate on-call payments compared to the physician’s regular medical practice income; and
- structures that pay for services for which the physician is paid twice, i.e., that allow the physician to receives separate reimbursement from insurers or patients for the same services.
Regardless, the OIG concluded that a call coverage arrangement could be structured in a manner that satisfies the anti-kickback statute’s safe harbor for personal services and management contracts (42 C.F.R. §1001.952(d)).
The OIG’s Analysis of the Hospital’s Call Coverage Arrangement
The OIG relied on the Hospital’s certification that the payment rates would be fair market value for services provided and would not account for either party’s referrals or other business generated, and that the services were actually needed and provided.1 The OIG determined that the risk of fraud and abuse was minimized not only as a result of the Hospital’s manner of determining each specialist’s per diem rate (discussed above), but also because the Hospital offered the per diem payments uniformly to all doctors on its medical staff and in the specialty at issue, without regard to individual physicians’ referrals to, or other business generated for, the Hospital.
The OIG took comfort that substantial services would be provided, documented, quantified, and accounted for because the Arrangement required the physicians to:
- Continue to provide inpatient follow-up care until the patient’s discharge;
- Provide eighteen days per year of uncompensated on-call services;
- Assume responsibility for recording their services in medical records; and
- Cooperate with the Hospital’s care, risk management, and performance improvement efforts.
In this vein, the OIG also considered that the Hospital legitimately needed physicians to provide call coverage and uncompensated care, as it had been transferring ED patients to other medical facilities for care.
Additionally, the OIG focused on the following safeguards as further minimizing the risk of fraud and abuse:
- The Hospital would offer the Arrangement to all physicians on its medical staff and in the relevant specialties;
- The Hospital would establish a call coverage schedule that would divide the monthly call obligations in each specialty as equally as possible;
- The physicians would be required to provide inpatient follow-up care to any ED patient seen while on-call;
- The physicians would be required to document their services in medical records; and
- Costs being absorbed by the medical center and no costs accruing to Federal health care programs.
Advisory Opinion 07-10 is important because it provides overdue guidance on hospitals’ ability to offer (and physicians’ ability to accept) payment for on-call coverage. Indeed, many providers may see the opinion as providing a roadmap to an arrangement with minimal risk, despite the OIG’s legally questionable assertion that “[t]his advisory opinion may not be introduced into evidence in any matter involving an entity or individual that is not a requestor of this opinion.” Of course, providers must consider that advisory opinions are legally binding only on the requesting entity, and further that this opinion does not speak to the application of the physician self-referral law, i.e., the Stark Law.
1 The Hospital retained an independent health care industry consultant to provide advice on the reasonableness of the per diem rates. The OIG noted that, in providing this advice, the consultant had reviewed both publicly available data and proprietary data concerning practices and pay rates at dozens of medical facilities.