OIG Issues Opinion Allowing Hospitals to Pay Physicians for On-call Emergency Room Services

On May 14, 2009, the Office of Inspector General (OIG) issued Advisory Opinion 09-05. The Advisory Opinion addresses a fact that speaks to our time – to obtain full physician coverage at emergency rooms, hospitals need to pay their physicians. South Florida hospitals are not immune to this problem.

The facts upon which the ruling was made were not complicated. The medical staff bylaws of the applying hospital required its active medical staff to provide emergency room call coverage. However, when the patients treated by the physicians were uninsured, the physician was not compensated for the service (the hospital itself was being compensated through a state-funded program). As a result, many staff physicians were reducing their coverage to the minimum required under the bylaws, which often left the emergency room with a shortage of on-call specialists. This frustrated the hospital, which stated that while “physicians historically performed on-call coverage out of a sense of duty to their profession, that sentiment is no longer shared by all…”

The hospital thus adopted a plan, subject to obtaining a favorable Advisory Opinion, to pay its physicians for on-call coverage. The OIG approved the plan, even though it did not meet all the elements of any Federal anti-kickback law (AKB) safe harbor. Some of the principal elements of the approved plan were:

• All members of the medical staff (other than hospital-based physicians) are eligible.
• The physicians are compensated through published flat fee payments, which depend upon the services rendered, and the amounts of the payments are certified to fall within the range of fair market value for services rendered.
• Payments are only made if the patient is totally without insurance coverage (including Medicare and Medicaid).
• Each physician electing to participate must sign a letter of agreement, agreeing to certain hospital policies and to abide by certain minimum standards of care.
• Payments made to the physicians are made solely for services provided and without regard to hospital referrals.

Note that in OIG Advisory Opinion 07-10, the on-call issue was addressed where physicians were paid on a per diem basis, as opposed to per service rendered.

In Advisory Opinion 09-05, the OIG expressed concern that these relationships could create an avenue for payment of kickbacks, as “physicians may demand such compensation as a condition of doing business at a hospital…” Notwithstanding that concern, the OIG determined that the proposed arrangement “presented a low risk of fraud and abuse,” and approved it.

As stated above, the OIG was in fact dealing with a reality in the market place – payments to physicians by hospitals for on-call services to indigent patients has become the norm. OIG Advisory Opinion 09-05 is helpful because it sets forth written standards that will allow a hospital to provide such payments, and physicians to accept them, with low risk of being in violation of the AKB laws.