The Office of Inspector General (OIG) recently issued Advisory Opinion 09-05, approving a creative call coverage arrangement for a hospital to pay physicians on its medical staff for services provided to indigent and uninsured patients. A nonprofit hospital requested the opinion because of its pressing need to pay physicians for certain medical services. The hospital indicated that many of the physicians on its medical staff had reduced call coverage to the minimum required under the medical staff bylaws to avoid the burden associated with providing the ongoing medical care to indigent and uninsured patients that begins when treating a hospital emergency room patient. The OIG noted that, while hospitals can receive Medicare disproportionate share (DSH) payments from the federal and state governments for hospital services rendered to indigent and uninsured patients, there is no similar mechanism to compensate physicians for professional services rendered to this patient population. The lack of a mechanism to compensate the physicians, combined with the increasing number of uninsured patients, can result in an increasing percentage of patients not getting care.
The arrangement approved by the OIG includes several components aimed at ensuring that the compensation reflects fair market value for services actually provided by physicians to uninsured patients. First, only "eligible physicians" may receive payment, although the arrangement is offered uniformly to all physicians within each department or specialty. Eligible physicians must be on the hospital's medical staff and must agree to comply with the requirements set forth in the hospital's call coverage policies, including responding timely to call requests, evaluating the patient in person, and providing additional care as appropriate. Second, physicians are only compensated after the patient is determined to be an "eligible patient," defined as one not enrolled in Medicare, Medicaid or any health insurance plan and not otherwise eligible for Medicaid coverage. This requirement eliminates the risk of physicians being paid twice for the same service.
The OIG also noted that payments made to physicians under the arrangement "appear to be scrupulously tailored to reflect the value of services actually provided," although it declined to opine as to whether they were actually fair market value. The fees were derived by the hospital using a valuation methodology that took into account a number of factors, including: "patient acuity levels for ED patients; a blended fee incorporating fees across public, private, and self-pay payers; an overall average length of stay based on actual average lengths of stay for public, private and self payers; payer mix and physician's likely time commitment for the service." The fees established by the hospital to compensate physicians in the program who treat eligible patients are:
- Emergency consults - $100 flat fee
- Ongoing care to patients admitted as inpatients - $300 per admission
- Surgical procedure - $350 for the primary surgeon of record
- Endoscopy procedure - $150 for the physician performing the procedure.
In spite of the opportunity to increase DSH payments arising from the services to indigent and uninsured patients, the OIG determined that the payments to the physicians for the medical care provided to such patients did not amount to payment for referrals to the hospital. The OIG cautioned, however, that the opinion should not be construed to require hospitals to pay for on-call coverage and that such payments should be carefully scrutinized to ensure that they are not used to entice physicians to join or remain on the hospital's staff or to generate additional business for the hospital.
While this payment arrangement will be welcomed by many hospitals as another possible means to obtain medical services for indigent and uninsured patients, the arrangement is quite different from customary call coverage fees in which a physician is paid to be available to take call. In 2007, the OIG approved an arrangement in which a hospital would pay a fair market value per diem fee to members of the medical staff for being on the call rotation, timely responding to calls, providing medical services, and completing medical records. (See OIG Advisory Opinion No. 07-10.)
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