OIG Issues Advisory Opinion Stating Hospitals May Compensate On-Call Physicians for Treating Uninsured Patients

On May 21, 2009, the Office of the Inspector General (OIG) issued Advisory Opinion 09-05 in which the OIG concluded that the requester, a non-profit hospital, (Hospital) may enter into arrangements with its medical staff physicians to provide emergency call coverage and compensate those physicians for services rendered to uninsured patients without incurring administrative sanctions under the federal Anti-Kickback Statute.

The Hospital, a 400-bed non-profit hospital and the only acute care inpatient hospital in its county, cited recent trends (i.e., physician aversion to on-call coverage due to professional practice interference, personal life disruptions, and liability issues) rendering it difficult for the Hospital to maintain needed specialists for on-call coverage. The Hospital proposed amending its bylaws to allow a program wherein participating physicians would submit claims to the Hospital for payment for services rendered to certain uninsured patients presenting to the Hospital’s emergency department. The Hospital certified that payments (of between $100 and $350) made under the arrangement with physicians would be (i) made solely on the basis of services actually needed and provided; (ii) without regard to referrals or any other business generated between the Hospital and the physicians; and (iii) fair market value for services rendered. The OIG found that the proposed arrangement, which provided for payments that could vary from month-to-month, did not qualify for protection under the safe harbor for personal services and management contracts, as this safe harbor requires that compensation be set in advance. However, after analyzing the facts and circumstances of the proposed arrangement, the OIG determined that it would not subject the Hospital to sanctions under the Anti-Kickback Statute because, in addition to certifying that the payments made would be fair market value without regard to referrals: (1) the proposed arrangement would tailor payments to cover "substantial, quantifiable services, all of which would be furnished to uninsured patients that present to the Hospital's emergency department;" (2) the Hospital has a legitimate rationale for revising its on-call coverage policy; (3) the proposed arrangement would be offered uniformly to all of the Hospital’s medical staff physicians, imposing contractual duties on them, including requiring participating physicians to respond within 30 minutes to emergency department calls and to submit their claims for payment with the date of service, description of service, dollar amount, patient’s full name, and patient’s social security number, which the OIG suggested would further minimize the risk of fraud and abuse; and (4) the proposed arrangement is a fair method by which to compensate physicians who actually provide the care required by the Hospital’s state so that the Hospital would be eligible for state program funding for eligible uninsured patients. Although finding that the Hospital's proposed arrangement would not elicit sanctions under the Anti-Kickback statute, the OIG concluded that on-call coverage compensation should always be "scrutinized closely to ensure that it is not a vehicle to disguise payments for referrals."