Office of Inspector General backs plan to pay for emergency call

A hospital's proposal to pay physicians for providing on-call emergency coverage does not run afoul of the federal anti-kickback statute, says an advisory opinion posted Sept. 27 by the Health and Human Services Dept.'s Office of Inspector General.

Experts said they believe the letter is the first of its kind. It offers some guidance on what the government views as an acceptable plan to address on-call shortages. But that does not mean it's a one-size-fits-all solution, they warned.

The OIG opinion acknowledged that hospitals increasingly are compensating physicians for emergency coverage. "We are mindful that legitimate reasons exist for such arrangements," the agency said. These include scarcity of available doctors in a particular area and compliance with the federal Emergency Medical Treatment and Active Labor Act.

Nevertheless, OIG Chief Counsel Lewis Morris noted that on-call reimbursement still carries considerable legal risks. For example, "physicians may demand compensation as a condition of doing business at a hospital," or the payments "could be misused to entice physicians" to join a medical staff or generate referrals. Both would be considered illegal, Morris noted.

In its letter giving the green light to an unnamed medical center's reimbursement program, the inspector general's office highlighted several components that factored into its decision.

First, the agency noted that the hospital's payments to doctors reflect fair market value for the actual services they provide and are tied to tangible physician responsibilities, rather than referrals. The reimbursement system considers the physician's specialty and the likelihood of any inpatient follow-up care, among other factors. It also requires doctors to provide a minimum amount of uncompensated care.

Second, the medical center -- a community hospital with a high volume of uninsured or underinsured patients -- showed that it had difficulty recruiting various specialists to handle its patient load. As a result, the hospital had to transfer emergency patients to other facilities for initial and follow-up care.

Third, OIG officials said the physician-hospital agreement further minimized the risk of fraud by dividing monthly call obligations as evenly as possible among doctors and by making doctors responsible for follow-up care with any patient they see in the emergency department.

The latter provision "lessens the risk that physicians might 'cherry-pick' only those emergency room patients that are likely to be lucrative," the opinion states. In addition, the requirement that on-call doctors document their services "promotes transparency and accountability."

The opinion is good news, experts said. "What the OIG is trying to do is signal to the industry that there's nothing inherently wrong with paying for on-call coverage when the service is actually needed and a hospital can demonstrate in good faith that it is trying to get coverage for its community," said Eric B. Gordon, MD, an anti-kickback lawyer and partner at McDermott Will & Emery in Los Angeles.

Still some danger

The advisory opinion does not give hospitals carte blanche to pay physicians for emergency call, though, Dr. Gordon said. Facilities that historically have not had trouble getting doctors to cover the emergency department, for example, will continue to have a hard time justifying reimbursement for the services.

Dr. Gordon also cautioned doctors against getting together in a concerted effort and refusing to take call unless paid for it. That would draw antitrust scrutiny, he said.

Michelle B. Marsh, a partner and anti-kickback expert with Waller Lansden Dortch & Davis LLP in Tennessee, agreed that the opinion "gives us a lot to work with." But every physician-hospital relationship is unique and remains highly scrutinized, she said.

The OIG requires payments to be fair market value but doesn't spell out what that is, Marsh noted. In this case, the government approved of the process the hospital used to develop its plan. It started with a committee formed to study the physician shortage problem and included an outside consultant to evaluate doctors' services and calculate appropriate reimbursement rates.

Dr. Gordon also noted the payments were not based on doctors' lost income for time away from their practices. This type of reimbursement would have been a red flag to the OIG.

Marsh recommended that whether doctors are requesting or being offered payment for on-call coverage, they should consider if their agreement with the hospital requires them to provide a reasonable amount of uncompensated care. If not, "it makes it more risky," she said.