The On-Call Regulatory Environment
Securing on-call coverage for both emergency departments (“EDs”) as well as unassigned inpatients has been an ongoing necessity for hospitals. Fulfilling this need, however, has changed dramatically over the years and the challenge for hospitals has been two-fold:
In recent years, call coverage compensation arrangements have been the subject of multiple advisory opinions, considerable rulemaking, and commentary from the Office of Inspector General (OIG). As a result, hospitals are facing an increase in regulatory guidance when structuring on-call compensation arrangements, with a laser eye focus on assuring salary payment is commercially reasonable and consistent with fair market value (FMV”).
HealthCare Appraisers’ approach to valuing physician on-call services arrangements extends beyond looking at equivalent agreements at other hospitals in the marketplace (i.e., a direct Market Approach). For example, such arrangements may contain an overcompensation bias and/or sufficient details may not be available in order to ensure valid comparisons (i.e., two hospitals in the same marketplace may have vastly different demographics). As such, HealthCare Appraisers developed and relies upon a “Scoring Algorithm Methodology,” as described below, in establishing the range of FMV applicable to on-call compensation arrangements.
The HealthCare Appraisers Solution
Our proprietary “Scoring Algorithm Methodology” determines the range of FMV for compensation applicable to our clients’ on-call coverage arrangements. When determining the FMV of an physician on-call pay, characteristics unique to the hospital, physician, and arrangement itself should be considered. Although there are countless factors to be taken into consideration, below are primary factors, as also noted by the OIG, to be considered in determining the FMV of an arrangement:
Unrestricted vs. Restricted Coverage “restricted” coverage requires the physician to remain on the premises during the entire coverage period, whereas “unrestricted” coverage requires the physician to be capable of presenting to the premises as required but is otherwise not required to remain on the premises
Emergent Call Frequency the likelihood that the physician must respond to an emergent event, either by telephone or in person; the more emergent calls a physician must respond to, the higher the burden on the physician.
Call Panel Specialty on-call compensation varies dramatically by the required specialty of the call panel. Surgical on call panels generally have a higher rate of compensation than those of other medical specialties.
Acuity of Care / Hospital’s Trauma Designation trauma centers will require physicians to treat patients with a higher acuity and intensity of ailments, thus, placing a larger burden on the physician.
Payor Mix hospitals with a high volume of indigent patients or a large unassigned patient load with less-than-desirable reimbursements place a higher risk on physicians with respect to reimbursement for professional services.
While we also consult market data related to on-call coverage agreements (e.g., Sullivan Cotter (SCA) and Medical Group Management Association (MGMA)), such data does not allow differentiation related to the “burden” of any particular on-call arrangement. Therefore, consistent with statements made by the OIG in Advisory Opinions No. 07-10, 09-05, and 12-15, our Scoring Algorithm Methodology is specifically designed to accurately and consistently measure the actual burden placed on physicians providing on-call coverage.
Contact An Expert
HealthCare Appraisers has a dedicated staff of professionals from varying backgrounds, who work directly with our clients when assessing physician on-call compensation for coverage arrangements. Given the heightened government scrutiny on arrangements involving remuneration between healthcare providers, assuring that physician on call pay rates are consistent with FMV is vital in avoiding costly federal litigation, sanctions, and/or possible exclusions from federal healthcare programs.