The cost of emergency call coverage has become an increasingly large component of many hospital budgets. Knowing when, how, and how much to pay are crucial to controlling costs and documenting fair market value compliance. This webinar shows how much other hospitals pay for call coverage, the most cost effective ways to pay for call, and which services that are most likely to be compensated.

1. 1
What You MUST Know
about Physician
Emergency Coverage
February 20, 2014
Allison Pullins
Director

2. 2
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

3. 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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4. 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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5. Our Tools
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6. 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

7. A (Brief) History of Emergency
Call Coverage
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8. 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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9. 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

10. To Pay or Not to Pay?
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11. 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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12. 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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13. 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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14. 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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15. 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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16. Specialties Most Likely to
Receive Call Compensation
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17. 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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18. 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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19. Services most likely to get paid for
coverage
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20. How hospitals pay for coverage
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21. How hospitals pay for coverage
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22. How Much are Hospitals
Paying for Coverage?
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23. 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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24. Coverage rates are stabilizing (but
overall physician spending continues
to grow)
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25. Emergency coverage is a significant
portion of physician spending
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19.4%
59.6%
10.2%

26. What are hospitals (like me) spending?
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27. 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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28. 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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29. 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

30. Basic Elements of Coverage
Agreements
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31. 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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32. 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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33. Most Cost-Effective Strategies for
Call Coverage Compensation
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34. 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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35. 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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36. We want to hear from you!
www.mdranger.com
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Allison Pullins
Director
apullins@mdranger.com
650-692-8873