The Emergency Medical Treatment and Labor Act of 1986 (EMTALA) created a need for hospitals that participate in
Medicare to have physicians available to provide
emergent medical services to patients in the
hospital’s Emergency Department (ED). Thus,
EDs are either staffed or have physi-
cians available to respond to emergent
cases within a predetermined time-
frame. As a result, there has been a
proliferation of hospitals entering into
agreements with physicians to provide
both restricted (i.e., remain on-site) and
unrestricted call coverage services.
This trend continues today and has created the
need for hospitals to understand both the finan-
cial and regulatory impact when determining
the appropriate call coverage rates. In addition,
one of the most commonly misunderstood
concepts relates to the compensation that can
be paid to physicians who are employed by a
hospital/health system versus physicians who
serve as independent contractors.
Unrestricted call coverage is often defined
as “off-site,” “availability,” or “beeper” coverage
where an on-call physician must be available
to report to the hospital in person within a set
timeframe (typically 30-45 minutes, but this
may vary by state) for emergent cases. Hospital
administrators are faced with a dilemma
when preparing unrestricted call coverage
agreements—determining the appropriate
rate to pay both employed and independent
contractors. One may intuitively think that
the rate should be the same, since the exact
same service is being provided regardless
of the employment status of the physician.
However, this may not be the case, because
the value drivers of each rate are considerably
different. In fact, paying the same rate could
potentially lead to a rate that may not be consistent with fair market value (FMV). FMV is
by Bartt B. Warner, CVA
be compensated more
than employed physicians?
» Physician on-call coverage arrangements are subject to various laws and regulations.
» Understanding the underlying value drivers of unrestricted call coverage is crucial.
» The fair market value (FMV) rate for independent contractors is normally not the same as the FMV rate for employed physicians.
» Understand the Stark Law and Anti-Kickback Statute and review with internal legal counsel for compliance.
» Seek an independent valuation firm to complete an FMV opinion if there is any concern related to the on-call coverage payments.
Bartt B. Warner (Bartt. Warner@vmghealth.com) is a Manager with VMG
Health and is based in VMG Health’s Nashville office.