This deck covers 5 critical mistakes that hospitals make with call coverage agreements and how to avoid them going forward. We will cover: - Effective strategies for setting call rates - Determining commercial reasonableness - The most cost-effective ways to pay for call - Which services are likely to be paid - ...and more!

1. 5 MISTAKES HOSPITALS MAKE WITH CALL
COVERAGE AGREEMENTS
AUGUST 2019

2. Nice to meet you!
Allison Pullins
• Experienced healthcare technology
executive with 12+ years in industry
• 200+ hospital/health system clients
• Hosted 65+ educational webinars
• Published author, including
Becker’s Healthcare
• Volunteer and fundraiser for The
Marfan Foundation
Fun Fact: I’m a registered yoga teacher!
2

3. 3
Today’s agenda
A brief history of ED call coverage
Common mistakes to avoid
Best practices for ED call agreements
About MD Ranger

4. ED CALL
COVERAGE
TRENDS
4

5. Once upon a time…
• Paying for call coverage was not
common 40+ years ago
• Physicians on the medical staff
took call as a part of their
privileges
• Seen as a way to build their
independent practices
• Physicians spent time at both the
hospital and their private practice
5

6. 6
• EMTALA passed in 1986
• Proliferation of state laws
• Trauma standards and
regulations
• Treatment protocols, e.g.
STEMI and stroke
accreditation guidelines
• Anti-Kickback Statute in ‘70s
• Stark Law in ‘80s
Regulation changes

7. 7
Shifts in the hospital/physician relationship
• Attitudes shift for
coverage and leadership
duties
• Market consolidation of
both physicians and
hospitals
• Hospital pressures to
reduce costs
• Growing divide between
hospital and outpatient
physician practices
• Overall physician
spending on the rise
7

8. Big dollars in physician contracting
8
MD Ranger Subscriber Total Facility Spending
2016-2019
Source: MD Ranger, Inc. 2019
$0
$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
$10,000,000
2016 2017 2018 2019
Leadership
Medical Direction and Administration
Hospital Based Stipend
Call Coverage

9. Breakdown of total facility spending
9
MD Ranger Subscriber Total Facility Spending by Type
$4,284,150
$3,132,685
$1,769,280
$147,580
Hospital Based
Stipend
Call Coverage
Medical Direction
and Administration
Leadership
Source: MD Ranger, Inc. 2019
The average MD
Ranger
subscriber
spends more
than $3 million
on call coverage
services alone

10. Mean call coverage per diem payment ranges: 2015-19
Source: MD Ranger, Inc. 2019
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Medical Specialties Surgical Specialties All Services
2015 2016 2017 2018 2019
10

11. Highest median per diems by specialty
Source: MD Ranger, Inc. 2019
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000
Trauma Surgery
Orthopedic Surgery - Trauma
Anesthesia - Obstetric
Neurosurgery
Neuro Interventional

12. 12
5 MISTAKES
HOSPITALS MAKE
WITH CALL
COVERAGE
ARRANGEMENTS

13. • Before determining how much
to pay a physician to take call –
hospitals need to evaluate if
they should be paying for the
service in the first place
• An arrangement that is a
sensible, prudent business
arrangement, from the
perspective of both parties
involved, even in the absence of
potential referrals
13
1) Ignoring Commercial Reasonableness

14. 14
• Build a checklist for your organization
to use for all arrangements; here’s
what it should include:
• Is coverage for the position necessary?
• Is the specialty typically paid to take call
coverage at other similar
organizations?
• Is the physician able to successfully bill
and collect for services provided
pursuant to the coverage?
MD Ranger publishes the percentage
of hospitals paying for a service to
help evaluate commercial
reasonableness
Tips for establishing commercial reasonableness

15. 15
1) How
common is it
for hospitals to
pay?
2) Is there data to
support the need for
payment?
3) Build the case
based on facts
that differentiate
your facility;
consider a
valuation.
Core questions

16. Specialties most likely to be paid call coverage
Source: MD Ranger, Inc. 2019
72%
69%
68%
59%
50%
0% 20% 40% 60% 80% 100%
General Surgery
Orthopedic Surgery
Urology
Gastroenterology
Neurosurgery

17. 2) Improperly determining fair market value
Hospitals should have clear policies and
procedures in place to help contracting
officials determine FMV for call
arrangements.
• Do you have access to good market
data on compensation?
• Does the position significantly
reduce a physician’s potential
compensation related to their
practice (ie Restricted or onsite
requirements)?
• What’s the ED call volume?
• Is opportunity cost a factor?
17

18. Use market data with care
18
• Each hospital is different (trauma
status, size, service offerings, payer
mix, local market, etc.)
• Hospitals are similar enough that one
can look to peer hospitals for
guidance in setting rates
• Market data is a good way to
compare so long as it is high-quality
and granular enough

19. 19
Significant factors that influence call
coverage rates:
• Physician specialty
• Restricted vs. Non-Restricted call
• Number of campuses covered
• Hospital size
• Trauma status
Factors without a statistically
significant impact on rates:
• Urban/Rural
• Major geographic region
• Ownership status
• DSH/Medicare percentage
What influences payments?
19

20. • Every organization needs a policy with guidelines; set payment rates
accordingly
• While using market data to determine appropriate payment rates,
consider the following:
• Check sample size
• Ensure services are comparable
• Consider use of relevant data slices
• Review the market range
• When selecting your proposed rate, we suggest not selecting the
upper boundary of your policy to mitigate the risk of benchmark
changes year-over-year
20
Set rates with consistent, internal guidelines

21. 21
3) Not considering alternatives
• While per diems are the most
common payment structure for
call coverage, consider
alternatives:
• Not paying
• Per episode payments
• Per activation payments
• Payments for unsponsored care
• Combined payment types
• Even within a per diem rate
structure, consider whether a
separate holiday or weekend
coverage rate may be appropriate
21

22. • Per episode - Payments are made when an on-call physician sees a
patient in the emergency department or provides a procedure to a
patient originating in the emergency department. A payment is
made for each patient that is examined or treated by the on-call
physician.
• Per activation - Rates paid to an on-call physician only when they
are required to respond to a call from the emergency department.
The hospital continues to maintain a coverage schedule that
requires availability of a specific physician (who “carries the
beeper”) but if that physician does not get called, they receive no
compensation for that day.
• Combined rates - Some hospitals pay per diem rate plus per
activation or episode rates. In these situations, the per diem rate is
generally set well below standard per diem market rates.
22
Types of alternative payments

23. 23
• The FMV of per activation and per
episode payments should take into
account market rates for those
payment types as well as the total
annual cost of the coverage services.
• In addition, it is useful to compare
your institution’s annual coverage
costs for a specialty to the total
annual costs that would be incurred if
more common per diem payments
were made.
• This approach can be applied to
combined rates as well.
Determining alternative payments
23

24. • Hospitals can take into account
uncompensated care when
determining ED coverage rates
• The most common method of
payment for uncompensated
care is percentage of Medicare
• Creating an additional payment
for uncompensated and
Medicaid patients can
sometimes be used as a tactic
to prevent an overall increase in
the per diem payment rates for
a specialty that is requesting
higher rates
24
Consider uncompensated care payments

25. While relatively few
hospitals pay differential
rates, higher weekend and
holidays rates are generally
accompanied by decreased
weekday rates.
25
Try weekend or holiday rates
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Single Rate All Days Weekday Rate Weekend Rate Holiday Rate
Median Call Coverage Payment by Payment Type

26. 4) Stacking call payments
• Overpayments in physician agreements can
be easy to spot, such as paying higher than
FMV or paying for too many hours in
administrative agreements
• Sometimes, reasonable-looking payments
that are spread out across agreements or
within one agreement are not reasonable
when looked at in the context of the
physician’s total income, their clinical
practice, and administrative duties
• This problem is commonly known as
stacking
26

27. 27
• Paying a physician for more than
one call panel simultaneously
• Paying a higher rate for “opportunity
cost” of lost private practice income
when the physician does not actually
end up suffering losses
• The aggregate of payments result in
more work than that of a full-time
physician
How stacking can happen in call arrangements

28. • Payment rates for physicians covering more
than one service must be considered
differently – and not just as a sum of the
parts.
• Common service combinations where
stacking most frequently occurs:
• Orthopedic surgery and hand surgery
• Plastic surgery and hand surgery
• Non-invasive and invasive cardiology
• Stroke and non-stroke neurology
• Trauma and general surgery
28
Common stacking scenarios in call arrangements

29. Here are strategies for paying a physician for
call coverage panels for two specialties
concurrently:
• Consider per episode payments
• Consider per activation payments
• Pay for the service with the higher rate
• Benchmark the per diem payments to a
lower percentile (e.g. use the 25th
percentile even if your organizational
standard is 50th or 75th for standard
arrangements)
• Set an aggregate payment cap
29
Compensation strategies

30. 5) Not knowing how much you spend
30
The majority of organizations know how much
they spend on employing physicians. Rarely do
they know how much they spend on payments
for non-salary physician services.
Why?
Traditionally not as easy to track or manage.

31. Call coverage particularly challenging
31
Many organizations lack an ED call
coverage payment strategy.
Arrangements often created “on-
demand” and more reactionary, in
contrast to deliberate and proactive
compensation design.
A well-designed ED call policy should
engage the medical staff and
compliance and be based on:
- Data
- Objective standards of care
- Hospital services
- Medical staff resources

32. Compliance considerations too
32
If you don’t know how much you are
spending, you can’t truly evaluate
compliance
Consistent and regular physician contract
audits are essential for keeping call
coverage contracts compliant

33. Understand total spend; use benchmarks
33
• Beyond a review of call
coverage agreements,
consider an audit of your
total facility spending on
physician contracts
• Unsure of how your spending
compares to other similar
organizations? Use MD
Ranger Total Facility
benchmarks

34. Our total facility benchmarks
34
• MD Ranger aggregates all non-
employed physician agreement
payments as per the terms of the
contract
• Medical director hours are assumed at
max per month/year; these figures are
estimates not actual spend
• Benchmarks are broken down by:
• Total spend
• ED Call
• Medical
direction/administration/leadership
• Hospital-based arrangements

35. What hospitals spend on call
35
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Median Total Call Coverage Spend

36. 36
From OIG advisory opinion 07-10
In this opinion, the OIG calls problematic compensation
structures:
• “payment for lost opportunity cost that do not reflect
bona fide lost income”
• “aggregate on-call payments that are
disproportionately high when compared to the
physician’s regular practice income”
• “payment…resulting in the physician essentially
being paid twice for the same service
BEST
PRACTICES FOR
CALL COVERAGE
POLICIES

37. Key elements of coverage agreements
✓ Specify which payment methods are
used (per diem, per episode, per
activation, uncompensated care
payments)
✓ Specify the payment rate
✓ Clarify whether service includes
coverage of in-house referrals from
other physicians for unassigned
patients
✓ State whether or not there are
restrictions on physician activities
✓ Identify in the agreement if there is
a second on-call physician and, if
so, how payment is handled
37
✓ Establish who is responsible for the
schedule to ensure continuous
coverage
✓ State in the agreement if exclusive
rights are granted to the panel or to
the medical group
✓ Define response times, both for
response to a call and response for
on-site consultation
✓ Decide if it’s necessary for a
specific service to have a panel in
which physicians are restricted
from any material private practice
income generating activities

38. Establish rules about ED call payments
If physicians are holding two call
positions at the same time, set
guidelines around how much they can be
paid. If they are effectively an employed
physician, set an aggregate payment cap
from all sources.
38

39. Standardize!
• Your processes should have straightforward,
objective policies and procedures
• Stick to one or two contract templates to more
easily monitor compliance instead of having
unique frameworks for each agreement
• Consistently use objective validated benchmarks
• Standardize benchmark caps across specialties
• Require administrative and board review and sign-
offs
• Routinely review contract rates and
documentation
39

40. An ED call payment policy template
1. Clear process for contract
negotiation and approval that
involves board and senior
management
2. Standardized, objective benchmarks
across the organization
3. Policies and procedures for dealing
with outliers, based on both dollar
threshold and comparison to
benchmarks
4. Process and organization for
documentation
5. Routine schedule for reviewing and
benchmarking all contracts
6. Awareness of (and tracking!) total
spend
40

41. Goals for your organization
✓ Policies and procedures in place to streamline
physician contracting and mitigate risk
✓ Awareness of what the organization spends on
physician contracts, and if that amount is
appropriate given its characteristics
✓ Consistent, objective benchmarks or valuations to
document FMV and commercial reasonableness of
physician arrangements
✓ Identification and monitoring of high-risk
arrangements (and documentation of FMV)
✓ Strategic thinking, especially regarding:
• Evolving physician compensation structures
• Potential regulation or accreditation standards
• Profile of physician and patient community
• Competitive environment
• Unpredictable, dynamic industry
41

42. 42
ABOUT
MD RANGER

43. 300+ Physician Benchmarks
• Call coverage rates
• Medical direction payments
• Administrative and leadership
• Hospital-based service stipends
• Diagnostic testing, etc.
• Clinic & hourly rates
• Telemedicine rates
Online Platform
• Benchmark lookups
• Contract proposal tools
• Contract reports by facility and
service
• Total facility costs + benchmarks
Research and Support
• Resources for education and
training
• On-call experts to help
subscribers use benchmarks
and tools
Compliance Documentation
• Contract-specific FMV
documentation reports
• Reports to assist with real-time
monitoring and annual reviews
43
Our platform

44. Standardize
processes
and rates
Document
FMV
Access 300+
payment
benchmarks
Review and
monitor
contracts
Have data-
driven
physician
negotiations
Mitigate
compliance
risks
44
The foundation of your contracting process

45. 45
Our database

46. • Call Coverage (55+)
• Medical direction (90+)
• Hospital-based services and
stipends (20+)
• Administrative (12+)
• Medical Staff Leadership
• Diagnostic/other services
e.g. ROP, autopsy, dialysis
• Clinical hourly professional
services
• Telemedicine
• Residency/teaching/GME
• Uncompensated care
• Meeting attendance, peer review,
IT/EHR and quality initiatives
• 13 pediatric services, with more
emerging each year
Hospital-characteristics drill down
for ADC, bed size, trauma status,
urban/rural, stroke centers,
teaching status, and more
Used in such diverse settings like
academic medical centers,
integrated delivery systems, and
critical access facilities nationwide
46
Our benchmarks

47. Let’s talk
⁃ Do you struggle with your physician
contracting policy and strategy?
⁃ Are you spending too much on FMV
opinions?
⁃ Do you think your organization could
become more efficient with access to a
streamlined platform with benchmark
lookups and autogenerated reports?
⁃ Reach out: apullins@mdranger.com or
650-692-8873