Under the federal Emergency Medical Treatment and Labor Act (“EMTALA”), hospitals are required to provide an appropriate medical screening examination to all individuals who come to their emergency departments seeking treatment, regardless of their insured status. In conjunction with EMTALA, and as an express condition of participation in the Medicare program, hospitals must have in place–on a 24 hour/365 days-per-year basis–on-call coverage arrangements with physicians in all medical specialties who can respond to the emergency department (“ED”) and provide necessary treatment to stabilize an individual with an emergency medical condition. When on call, physicians, even if not required to be on the hospital’s premises, must stand by and be available to respond promptly if summoned by the ED. Increasingly, physicians are demanding compensation from hospitals for agreeing to be on call. If not structured carefully, such on-call compensation arrangements between hospitals and physicians can pose risks under the federal Anti-Kickback Statute , which prohibits compensation arrangements intended to induce or reward referrals of items or services reimbursable by a federal health program.

On October 30, 2012, the Office of Inspector General (“OIG”), the government agency charged with the civil enforcement of the Anti-Kickback Statute, published Advisory Opinion 12-15, which provides some helpful guidance on the subject. Under the arrangement in question, the hospital paid a per diem fee to physicians practicing in cardiology, ENT, hematology/oncology, neurosurgery, orthopedics, pulmonology and numerous other specialties who agreed to provide on-call coverage pursuant to formal contracts with terms of at least one year. Among other things, a participating physician was required to respond to the ED, in person if requested or at least by phone, within 30 minutes of a request from the ED physician. Additionally, after responding to the ED and examining/treating the patient, the participating physician had to follow the patient not only while in the hospital, but also for any follow-up office treatment, regardless of the patient’s insured status. (The hospital estimated that 19% of the patients seen in the ED and hospital afterward receive uncompensated care by the hospital and participating physicians.) The hospital paid each participating physician a per diem rate. In addition to the per diem compensation, if summoned to respond, the participating physician was permitted to bill and retain any professional fees associated with services actually provided to the patient. However, if the patient was uninsured, the per diem amount was the physician’s only compensation.

The OIG opened its analysis by observing that if the on-call arrangement had been structured to fit within one of the regulatory “Safe Harbors,” it would be immune from liability under the Anti-Kickback Statute. This on-call arrangement, however, did not perfectly fit within the applicable Safe Harbor for “personal services and management contracts”   because, although the per diem rate for calculating the compensation was determined in advance, the inability to specify the on-call schedule for each physician resulted in the inability to determine the aggregate annual compensation to be paid to each participating physician, as expressly required by this Safe Harbor. The OIG warned that paid on-call arrangements potentially create considerable risk under the Anti-Kickback Statute where neither the services provided nor external market forces (e.g., shortage of on-call physicians in the specialty) support the compensation or they otherwise appear to be misused to entice physicians to join or remain on the hospital’s staff. In this case, however, the OIG determined that the paid on-call arrangement posed a low risk of abuse; therefore, it would not impose sanctions. Among others, the OIG found the following factors particularly significant:

• The per diem rate was supported by an independent valuation (of fair market value and commercial reasonableness) and seemed tailored to reflect the burden on the participating physician, the likelihood that the physician would be required to respond, and the likelihood that uncompensated care (and the extent of same) would be provided;
• The per diem amount was determined annually, in advance, based upon a uniform methodology applied to all physicians in the specialty;
• Even though the physicians were also able to receive separate reimbursement from patients or their insurers for services actually provided, OIG recognized that the participating physicians provided actual and necessary services (e.g., availability to respond in 30 minutes and provide follow-up care to patients regardless of ability to pay) for which they received no compensation other than the per diem; and
• The hospital offered all physicians on its staff within a particular specialty the opportunity to participate in the arrangement on an equitable basis (same per diem and allocation of on-call days) that did not selectively reward only the highest referring physicians.

A complete copy of Advisory Opinion 12-15 can be found here.  If you have questions about this Advisory Opinion or about on-call arrangements between hospitals and physicians, please contact a member of the Health and Life Sciences Practice Group.

¹Such arrangements also must be reviewed for compliance with the Stark Law, but that is outside the purview of the OIG.
²See 42 CFR § 1001/952(d).