Hospital Physicians, Physician Services

Call Coverage Payments: Trends, Regulations, Statistics and Valuation Considerations

Establishing FMV for call coverage compensation is becoming increasingly difficult as arrangements are evolving and survey data is unreliable. The following will discuss recent trends in paying for call coverage, market statistics and the valuation considerations surrounding certain payment structures.

Growing expenses, industry trends driving call coverage payment growth
In the past, ED call coverage was typically provided by physicians in exchange for admitting privileges. Now, more physicians are demanding payments for call coverage due to:

• Rising costs associated with covering the ED
  • Growth in the uninsured patient population.
  • Fear of malpractice lawsuits.
  • Higher premiums associated with emergency departments.
• Fundamental industry changes
  • Work-life balance has become more important to today’s physicians.
  • There is a decreasing physician supply.
  • Physicians are less reliant on hospitals to build practice with other options for office-based procedures and outpatient facilities.
  • Physicians are seeking equity with other physicians who are being paid for call coverage.

Although the majority of call coverage arrangements are based on a daily or hourly stipend, payment structures are evolving and are more often including additional payments for the uninsured patient population.

Call coverage payments: How industry-wide is it?
The Sullivan, Cotter and Associates’ 2009 Physician On-Call Pay Survey Report states that 82 percent of the survey respondents currently provide compensation to non-employed physicians for call coverage. In addition, more than one-half of those surveyed reported their on-call expenditures have increased in the past 12 months and 20 percent of the respondents indicate they plan on implementing on-call pay within the next six months for physicians currently not receiving pay.

In addition to these recent trends, Sullivan Cotter statistics show overall expenditure for call payments have been increasing exponentially since 2006. From 2006-2009, the median expenditures increased by 546 percent for non-trauma centers and 141 percent for trauma centers.

Regulatory guidelines to consider when determining on-call payments
Since many healthcare organizations are currently considering on-call payments for the first time, a basic understanding of the regulations and payment models for on-call coverage are essential. Currently, there are two OIG opinions related to call coverage.

The OIG’s opinions related to on-call payments have warned of a substantial risk that improperly structured payments for on-call coverage could be considered unlawful remuneration if the payments exceed fair market value. Therefore, when implementing an on-call arrangement, healthcare executives should start by understanding what the OIG has stipulated as factors to be considered low risk arrangements for fraud and abuse.

In determining if payments are at FMV, one should account for the burden of call. Factors affecting the burden of call include volume of call, payor mix and patient acuity. The OIG has stated that obtaining an independent third-party analysis to determine if the compensation reflects FMV for the services furnished is an important safeguard.

Read this informative article by Jen Johnson, CFA, Managing Director, VMG Health
in full at Beckers Hospital Review