OIG Advisory Opinion Finds Low Risk of Fraud in Per Diem Emergency Department Coverage Agreements


An October 30, 2012 advisory opinion posted by the HHS Office of Inspector General (OIG) found a “low risk of fraud and abuse” in a hospital’s arrangement with specialty physicians to provide on-call coverage of the hospital’s emergency department.  The hospital used an independent valuation consultant to calculate per diem rates for physicians in a variety of specialties.  Under the arrangement, the hospital would pay a per diem rate to those physicians who were available for telephone consultations with the hospital’s emergency department, and able to respond in-person to an emergency department call within 30 minutes.  Participating physicians who admitted emergency department patients also would be responsible for treating the admitted patients and providing follow-up care in their offices after discharge, regardless of the patient’s ability to pay.  Though the arrangement did not fit squarely within a safe harbor to the federal anti-kickback statute, 42 U.S.C. 1320a-7b, OIG stated it would not impose sanctions on the arrangement.

While OIG expressed concern that per diem coverage arrangements can be abused to provide compensation to physicians either in excess of fair market value or for services not actually rendered, OIG found that the specific circumstances of this arrangement did not raise those concerns.  First, the per diem rate was calculated by an independent valuation consultant and the hospital represented that the per diem rates represented fair market value.  The hospital paid different rates to each type of specialist, reflecting the estimated amount of work each type of specialist would provide while on call.  The rate did not vary among physicians within each specialty to favor those physicians who provide referrals to the hospital.  The rate is set in advance every year, and the hospital had established procedures for ensuring that on-call physicians actually provided the necessary coverage according to a coverage schedule.  Participation in the coverage arrangement was open to all specialists on its medical staff, regardless of referrals.

OIG cautioned, however, that hospitals are not required to provide on-call coverage compensation and that such arrangements should be “scrutinized closely to ensure that [they are] not a vehicle to disguise payments for referrals.”  The advisory opinion is available by clicking here.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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