Specialists’ Call Coverage and Per Diem Compensation

Specialists’ unrestricted call coverage arrangements with non-profit hospitals (which may include, among others, cardiology, gastroenterology, hematology/oncology, nephrology, surgery, otolaryngology, ophthalmology, orthopedics, pediatrics, plastic surgery, pulmonology, urology, and vascular surgery) may be paid per diem under certain instances.

Hospitals have on-call coverage arrangements with all medical specialties to provide necessary treatment as well as stabilization of an emergent medical condition (EMTALA) as a condition of participation in Medicare. Following an advisory opinion published October 30, 2012, by the Department of Health and Human Services’ Office of the Inspector General (OIG), specialists with staff privileges may be compensated per diem in exchange for unrestricted call coverage at a hospital ED provided that their arrangement for professional services has safeguards that adequately protect against a violation of the federal Anti-kickback Statute.

The Anti-kickback Statute ascribes criminal liability to both sides of an impermissible “kickback” transaction where either party knowingly and willfully offers, pays, solicits, or receives anything of value to induce or reward referrals of items or services reimbursable by a federal healthcare program. OIG opines that the Anti-kickback Statute’s safe harbor for personal services and management contracts protects specialists’ unrestricted call coverage arrangements with hospitals as long as the agreement satisfies all conditions of the safe harbor (and any applicable Stark law requirements) and incorporates additional safeguards against fraud and abuse.

The OIG’s concerns were that such a scheme: (i) creates considerable risk that physicians may demand compensation as a condition of doing business at a hospital; (ii) could be misused to entice physicians to join or maintain staff privileges to generate additional business for the hospital; and (iii) could covertly engender kickbacks if payment is in excess of fair market value, payment is for no identifiable services, or the aggregate on-call payments are disproportionately high.

However, in its advisory opinion, OIG highlighted several safeguards that could further protect a per diem fee arrangement:

1. The independent valuation determines per diem payment amounts as commercially reasonable, within a range of fair market values for actual and necessary services provided without regard to referrals or business generated among the parties;

2. The funds allocated for each participating specialty are calculated in advance and uniformly for all such physicians without regard to business generated for the hospital;

3. The specialists provide actual and necessary services in an arrangement that does not intend to compensate for all care provided to ED patients, whether it be for a quick in-person response, follow-up care, or furnishing services for in-patient care through to the patient’s discharge; and

4. The hospital appears to have an equitable policy that offers payment scheme uniformly to all physicians within each specialty, does not selectively reward the highest referrers and the method of scheduling on-call coverage is governed by its bylaws.

Although only the parties requesting an OIG advisory opinion can rely on it, this opinion helps expand possible compensation opportunities for physicians.

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