The Department of Health and Human Services Office of Inspector General ("OIG") issued an advisory opinion on September 20, 2007, in which the OIG indicated that it would not impose sanctions against the requestor, a hospital that has developed an arrangement to compensate physicians for on-call coverage. The hospital had historically faced difficulty in securing on-call coverage from physicians in various specialties. The hospital, a not-for-profit with a charitable mission to provide services to the indigent, operates an emergency department ("ED") that, in accordance with state law, always remains open and accepts patients regardless of their ability to pay. Due to various factors, including the financial burden of providing uncompensated patient care and malpractice insurance costs, local physicians had grown reluctant to provide on-call coverage or follow-up care for patients who had presented in the ED. The hospital consequently developed a program to compensate physicians for providing on-call and indigent care services.

The OIG analyzed the details of the hospital’s program and concluded that, despite its continuing concern that that "on-call coverage compensation potentially creates considerable risk that physicians may demand such compensation as a condition of doing business at a hospital," this particular arrangement "presented a low risk of fraud and abuse." The OIG noted that it has become increasingly common for hospitals to compensate physicians for on-call coverage in EDs and that this is a result of the difficulty faced by hospitals that must comply with EMTALA and provide necessary emergency care services, the OIG indicated that the following factors raised its comfort level with the arrangement:

The payments appeared to be fair market value for actual services needed and provided. Under the arrangement, physicians are paid a per diem rate that reflects the burden on the physician and the likelihood that a physician in a particular specialty will be required to respond while on-call. In return for the on-call compensation, the physician is required to (1) provide gratis one and a half days each month of on-call coverage, (2) provide follow-up care to any patient seen by him or her while on-call in the ED, regardless of the patient’s ability to pay, (3) maintain medical record documentation, and (4) participate in the hospital’s care and risk management and performance improvement efforts.
The payments are tailored in a manner that does not take into account potential referrals. The per diem payments are uniform within specialties with the only variance being extra compensation for on-call coverage provided on weekends. The difference in payments for different specialties is intended to account for the extent to which uncompensated responsibilities will likely fall on certain specialties.
The hospital demonstrated that there was a "legitimate, unmet need for on-call coverage and uncompensated care physician services." The OIG found this fact made it less likely that the arrangement was developed for the purpose of funneling remuneration to physicians in exchange for referrals.
The arrangement included features that minimize the risk of fraud and abuse, including the following: (1) the arrangement is provided uniformly to all physicians in the various specialties; (2) the on-call obligations are divided among physicians as equally as possible; (3) physicians are required to provide follow-up care regardless of the patient’s ability to pay (avoiding the potential to "cherry pick" only the more lucrative ED patients); and, (4) the requirement that physicians complete medical records "promotes transparency and accountability."

Ober|Kaler's Comments: Hospitals that currently make on-call payments to physicians or are contemplating such arrangements should review this advisory opinion. Although every hospital operates under unique circumstances, a hospital should attempt to establish a program that takes into account the various safeguards mentioned by the OIG in this advisory opinion.

Advisory Opinion 07-10 can be accessed at:
www.oig.hhs.gov/fraud/docs/advisoryopinions/2007/AdvOpn07-10A.pdf.