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What You MUST Know

about Physician

Emergency Coverage

February 20, 2014

Allison Pullins

Director

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Outline:

• A brief history of call coverage in the US

• To pay or not to pay?

• Physician specialties most likely to get paid for coverage

• How much other hospitals pay for call (and how you can find

out!)

• Basic elements of coverage agreements

• Cost-effective strategies for coverage

Introducing MD Ranger

• Provides market data benchmarks for broad range of coverage,

administrative, hospital-based, and diagnostic physician

contracts to negotiate competitive contracts, document

compliance, and uncovers potential risks for hospitals and

health systems

• Data tables broken into hospital-based contract characteristics,

e.g. scope of service, incentives, payment types, trauma status,

DHS status, etc.

• Includes custom analytics so that hospitals and systems may

review overall costs and budget appropriately for physician

services

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Our benchmarks:

• 42 call coverage positions

• 65 medical directorships: hours,

hourly, and annual rates

• Hard to find leadership rates (Chief

of Staff, meeting attendance, EHR,

Quality Initiatives, Peer Review)

• Hospital-based stipends and

incentive payments

• Diagnostic and testing services

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Our Tools

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Introducing Allison

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• Director at MD Ranger, Inc

• Background in physician marketing,

recruitment, engagement,

compensation, negotiations

• Helps MD Ranger subscribers

leverage the data, analyze internal

costs

• Follow me on Twitter! @MDRanger

A (Brief) History of Emergency

Call Coverage

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The backstory

• Attitude shifts for coverage and leadership duties

• Growth in burden of uninsured and Medicaid in ED

• Shortage of providers willing to take call

• Market consolidation of both physicians and hospitals

• Stark, Anti-Kickback laws

• Hospital pressures to reduce costs

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Physician costs on the rise

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$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total Physician Costs Call Coverage, Medical Directors, Hospital Based Groups

Source: California Public Data

To Pay or Not to Pay?

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Much to consider

• Is coverage for the position necessary, and does it meet the

commercial reasonableness test?

• If so, should you factor opportunity cost?

• What’s the market rate for the particular service? How do I find

this out?

• What is current hospital policy on paying for coverage?

• How will paying for coverage impact the other physicians on the

medical staff?

• Does the position significantly reduce a physician’s potential

compensation related to her practice?

• What’s the volume in your ED?

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Not all positions should be paid

• Not all coverage positions should be paid, even services that are most

commonly paid

• There are likely good arguments for paying or not paying a physician

for call coverage

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Understand everyone’s perspective

• What is the physician asking for, and what does she

need? What are the underlying causes of the

request?

• What is your hospital’s or system’s position on

compensating for call? Is there a precedent, or

medical staff bylaw requirements?

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Comfortable paying? Now what?

• Is compensating the position commercially

reasonable?

• What is commercial reasonableness, and how can

you determine if the service in question fits the bill?

• Commercial Reasonableness: • According to CMS, a financial arrangement is commercially

reasonable if without referrals the arrangement makes good

business sense if entered into by parties that are similar to the

parties in size and scope

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Using market data to establish

commercial reasonableness

• How common is it for hospitals to pay for the service?

• MD Ranger is the only source to report the percent of hospitals paying for a

service, given its unique approach to data collection

• If many or most hospitals do compensate for coverage, you can use

data to demonstrate that it is necessary to pay for the service

• Drill down to see if there are differences in hospital characteristics that

determine which hospitals pay

• If you believe you must pay and others aren’t, build the case on facts

that differentiate your facility and consider hiring a valuation consultant

to write an opinion that documents commercial reasonableness

• NOTE: FMV and commercial reasonableness are not the same (a payment

rate may be within fair market value but not be commercially reasonable to

pay)

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Specialties Most Likely to

Receive Call Compensation

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Each hospital is unique (but similar

enough)

• Each hospital is a little different from the next one (size, service

offerings, market)

• Yet, hospitals are similar enough that one can look to peer

hospitals for guidance setting rates. Market data is a good way

to do this, as long as it’s high quality and detailed enough for

your needs

• There are services across organizations that are utilized more

frequently for emergencies, and, there are services that are

most likely to get compensated

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Services frequently called:

• General Surgery

• Internal Medicine/Hospital Medicine

• Orthopedic Surgery

• Gastroenterology

• Cardiovascular Services

• Curious to learn more? Check out

blog.mdranger.com

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Services most likely to get paid for

coverage

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How hospitals pay for coverage

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How hospitals pay for coverage

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How Much are Hospitals

Paying for Coverage?

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Our analysis: top trends in coverage

compensation

• Trauma status has a consistently strong correlation to payment rates and

commands an average 25 percent premium across all services.

• Restricted status increased coverage payment rates by 47 percent compared to

other contracts.

• Arrangements that include both restricted and on-site requirements were

associated with a 51 percent premium.

• Multi-campus arrangements were 30 percent less costly per campus than single

campus arrangements.

• Each additional average daily census increase of 100 is tied to a 12 percent rise

in coverage payments.

• In 2012-13, unlike previous years, the analysis found only a weak independent

versus system hospital difference, with independents' rates 12 percent higher.

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Coverage rates are stabilizing (but

overall physician spending continues

to grow)

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Emergency coverage is a significant

portion of physician spending

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19.4%

59.6%

10.2%

What are hospitals (like me) spending?

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Three approaches to determine call

coverage rates

• Market Data

• Internal or external proprietary formulas

• Internal or external ad hoc FMV Opinions (valuations)

Most hospitals use a combination of two or all three

methods above.

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All approaches have advantages and

disadvantages

• Market data: • Pros: Cost effective, flexibility, easy to scale, immediate access

• Cons: Doesn’t work if you don’t have apples to apples comparisons

• Proprietary formulas: • Pros: Hands-off, easy to scale, immediate access

• Cons: Proprietary formulas aren’t transparent to the user

• FMV opinions: • Pros: Most detailed and specific

• Cons: Can be hard to scale given the cost, cost, turnaround

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Most MD Ranger subscribers: • Use market data from our reports for a vast majority of their contracts

(80-95%)

• Pull in valuation firms or internal experts for the complex agreements

• Always document their rates with proof of fair market value,

whichever method they choose

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High-Quality Market Data

DOCUMENT RATES

Ad Hoc FMV for Complex

Deals

Basic Elements of Coverage

Agreements

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Essential elements of call coverage

agreements

• Specify which one (or more) of the following mechanisms of compensation are

to be used: per diem payment, per episode payment, and/or supplementation of

low fee for service payments by third parties

• Clarify whether service includes (in addition to ED coverage for unassigned

patients), coverage of in house referrals from other physicians for unassigned

patients

• State whether there are restrictions on the activities of the physician while on

call

• Identify in the coverage agreement whether there is a second on-call physician,

and discuss how payment for this is handled

• Specify, the extent of requirements for post discharge follow-up care

• Establish who is responsible for the schedule to assure continuous coverage,

and name the responsible party in the contract (an individual if possible)

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Essential elements of call coverage

agreements

• Specify if the agreement grants exclusive rights for the on-call coverage

business to the panel members or group

• Decide if best to have panel in which physicians are restricted from any material

private practice income generating activities (this can be reasonable and

beneficial when the service is active, and when specialization in acute inpatient

medical care leads to better clinical outcomes)

• Note the extent that the effect of the Affordable Care Act (ACA) reduces the

proportion of uninsured patients and increase the proportion covered by

Medicaid (as well as increase the proportion of patients covered by private

insurance), because professional fee income streams will be higher

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Most Cost-Effective Strategies for

Call Coverage Compensation

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Make sure you need to pay

• Always ensure the

request to compensate

coverage is commercially

reasonable (and back it

up with data or other

evidence)

• Explore alternative ways

to compensate beyond a

“per diem” payment

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Per diem alternatives

• Offer to pay for uncompensated care, or Medicaid patients (if not

currently practiced at your facility)

• Consider paying a per diem rate only if a physician has more

than two or three nights of call per month

• If your facility will have a low volume of patients for the service,

consider a “per episode” payment instead of per diem payments

• Potentially “blend” strategies to accommodate both physician

and hospital needs

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We want to hear from you!

www.mdranger.com

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Allison Pullins

Director

apullins@mdranger.com

650-692-8873