Arriving at appropriate fair market value (FMV) compensation for physician on-call coverage is a key factor in a Hospital’s ability to adequately staff its emergency department in compliance with state and federal regulations. Determining the FMV range of compensation for these arrangements requires a thorough analysis of the unique dynamics and structure of each specific arrangement, combined with a knowledge and comprehension of the characteristics surrounding the local marketplace.
The ‘typical’ variables which affect the FMV range of a given on-call arrangement include: (i) whether the facility is a designated trauma center; (ii) the average number of coverage days provided by each physician over a monthly period; (iii) the frequency and nature of call events to which the on-call panel is expected to respond; (iv) the ‘minimal reimbursement’ payor mix which the physicians are expected to experience; and (v) additional factors such as concurrent hospital coverage, ability to bill and collect for professional services rendered, and separate fee-for-service reimbursement for professional services provided to unfunded patients.
While these variables are commonly considered in call coverage analyses, other relevant factors could include:
Call event response time requirements
- When a physician is required to adhere to an especially stringent response time, this generally increases the burden on the physician providing the coverage. Some causes of heightened response time include: the nature of subject specialty (e.g., neurology and the rapid need for tPA assessment), expected patient acuity, the hospital’s trauma designation, and/or facility bylaws among other reasons.
- Regarding call events initially handled by telephone, if a physician is required to present to the hospital for an in-person consultation, a greater burden is placed on the physician than a call event which is handled solely via a telephone consult. While not rising to the level of a call event requiring the physician to immediately present to the Hospital, the burden is increased if all, or a portion of, telephonic call events require a follow up face-to-face encounter.
Hospital’s location in a rural area, Health Professional Shortage Area (HPSA), and/or a Medically Underserved Area (MUA)
- Hospitals that are located in these areas may often face a shortage of physicians who are willing and qualified to provide the requisite coverage.
- However, hospitals that are not in a HPSA or MUA may face similar difficulties in obtaining physician coverage for a variety of reasons.
- If a physician travels from outside the hospital’s service area in order to be able to comply with response-time requirements under a given on-call arrangement, but is not “restricted” to the hospital, then a quasi-restricted analysis may be applicable. While the burden on the physician is greatly increased in this scenario, it does not rise to the level of a traditional restricted coverage arrangement.
In addition to traditional variables such as call frequency, payor mix, and number of expected call days, a thorough analysis of an on-call coverage arrangement requires an in-depth understanding of the unique dynamics and structure of the specific arrangement, combined with knowledge and comprehension of the characteristics surrounding the particular marketplace. Providing valuators with as much detail as possible about each on-call arrangement will ensure that an appropriate and defensible FMV range can be established.