Paying for on-call coverage remains risky under anti-kickback statutes. Here are some recommended steps that can help protect your hospital.

More than three-fourths of emergency department (ED) managers reported a shortage of specialty coverage in a November 2010 survey in Academic Emergency Medicine. It has become increasingly common to address coverage shortages by paying physicians to be on-call, but such arrangements are fraught with risk, according to Sarah Freymann Fontenot, BSN, JD, a health law expert based in Fredericksburg, Texas.

"The key question for hospital leaders is: 'Does the amount paid for on-call coverage rise to the level of potentially being a kickback?'" says Fontenot.

Why On-Call Coverage Is Important

Under the Emergency Medical Treatment and Active Labor Act (EMTALA), EDs are required to provide adequate on-call coverage. Failing to do so could cost a hospital up to $50,000 per violation, or up to $25,000 per violation if the hospital has fewer than 100 beds. Worse, the government could revoke the hospital's provider agreement, a punishment known as the Medicare Death Penalty.

The problem is that many hospitals struggle to provide coverage because they face a shortage of specialists in their service area or because physicians resist being on call. Specialists typically in short supply include neurosurgery, hand surgery, and orthopedics, says Fontenot. That's why many EDs have resorted to paying physicians to agree to be on-call.

Why Paying for On-Call Coverage Is Risky

Paying for on-call coverage puts hospitals at risk of violating anti-kickback statutes. Fontenot says a kickback is payment or exchange of value of any kind in return for referrals or for recommending, ordering, or purchasing a service or item that may be at least partially paid for through a federal program that exceeds "fair market value."

Accepting or offering a kickback is a felony that carries serious risks. Individuals can be slapped with up to five years of prison time and fines of $50,000 per instance. 

What Can Be Gleaned from Two OIG Opinions

The U.S. Office of the Inspector General (OIG) has issued two opinions on payments for on-call coverage.

The 2007 Opinion. In a September 2007 Advisory Opinion (No. 07-10), the OIG gave its take on one hospital's on-call arrangement. Physicians received a per diem rate for each day they spent on call, except for 1.5 days that each physician had to contribute gratis to the rotation every month. The per diem rate that physicians received was based on their specialty and whether the coverage was during the week or on the weekend. Differences in per diem rates among specialties were based on the following.

  • Severity of illness
  • Likelihood of having to respond while on call
  • Likelihood of having to respond to a request for inpatient consults for an uninsured patient when on call
  • Degree of inpatient care typically required for patients admitted via the ED.

One of the reasons that the OIG gave a "pass" to the arrangement was that the hospital certified that its on-call payments did not reflect the volume or value of referrals. The hospital also certified that its per diem rates were fair market value, says Fontenot. Experts routinely define fair market value as the price an asset would bring if negotiated by buyers and sellers who are not in a position to create business for each other.

The OIG also "signed off" because the per diem rate was applied uniformly within a given specialty. In addition, the OIG liked the arrangement because it did not involve funds received from the federal government and assisted the hospital in meeting its charitable mission.

However, the 2007 opinion also offered several warnings to providers against the following.

  • On-call arrangements that superficially compensate physicians for "lost opportunities"
  • Situations in which physicians are paid when no service is actually provided
  • Payment structures that result in double payment to physicians for the same service

The 2009 Opinion. Two years later, the OIG issued a second opinion in May 2009 (Advisory Opinion No. 09-05). The opinion reiterates many of the same points as the earlier opinion, says Fontenot. The hospital requesting guidance in 2009 sought the OIG's opinion on its flat fees for services provided by on-call physicians. Below are some examples.

  • Physicians who performed emergency consultations received a $100 flat fee for each eligible patient
  • Physicians received $300 to care for each eligible inpatient admitted from the
  • ED surgical procedures amounted to a $350 flat fee

The hospital had certified that all of these rates were fair market value.

What concerns Fontenot is how low these figures appear, compared with what she has heard anecdotally from hospitals. "These fees are pocket change," says Fontenot. "I have routinely heard that on-call payments can range from to $1,500 to $2,500 per night, and much more. The figures in the 2009 opinion are nowhere close to what I have been hearing nationally."

"This isn't a true market-driven system, and the amount being paid for call coverage has escalated dramatically over a few short years" adds Fontenot. "At what point will the government determine payment has become excessive, and at what penalty?"

As was true in 2007, the OIG passed on the agreement submitted in 2009, but repeated the warnings from 2007, and reminded the healthcare community that paying for on-call services still carries considerable legal risks. "By no means should these opinions be considered an endorsement of the practice," warns Fontenot.

What Hospital Leaders Can Do

Hospitals that are paying such high figures for on-call payment need to ratchet down their rates and develop new coverage strategies that don't put the hospital at such high risk, says Fontenot. She recommends the following steps for hospital leaders looking to protect their organizations the following. 

  • Ask your legal counsel about your ED's on-call arrangement with physicians; in light of the two OIG opinions, review what "quantifiable services" on-call physicians provide and if merely carrying a beeper qualifies as such a service
  • Review scenarios for potential double dipping: "If you have a well-insured clientele, and on-call physicians are going to be reimbursed for providing care to those patients, be aware that getting paid for also coming into the ED may be construed as double payment," says Fontenot
  • Ensure your organization can demonstrate that no government funds are being used for on-call payments, per the OIG
  • Use an independent consultant or industry survey to help determine fair market value for on-call coverage for each specialty, but also review those findings with your own in-house counsel-don't assume that a survey automatically makes a payment legal
  • If your organization employs physicians, require on-call coverage as a condition of employment

In addition, don't blindly follow on-call payment trends in your community, says Fontenot. "The everybody-does-it-argument is fallacious. In other words, just because a competitive ED pays thousands for on-call coverage doesn't mean you should."

Interviewed for this article: Sarah Freymann Fontenot, BSN, JD, is a health law expert and speaker, Fredericksburg, Texas (

This article is based, in part, on a presentation by Fontenot and Shari Welch, MD, FACEP, at the American College of Health Executives' 2011 Congress on Health Leadership, March 22, 2011.

Discussion Starters

Forum members: Please add your insights, questions, and comments about this article on the Legal & Regulatory Forum's LinkedIn discussion board

  • How has your hospital determined fair market value for call pay? What resources have been the most helpful?
  • At your organization, who is responsible for continually checking to see if your on-call payments are well within accepted limits for fair market value?
  • In your ED, which specialties have been the most difficult in terms of providing on-call coverage?
  • What strategies have you used to help motivate physicians to provide this service at your organization without requiring additional payment?
  • Have you considered submitting your on-call coverage arrangement for review by the OIG? Have you asked your attorney's opinion on doing so?
  • Do you think there are hospitals in this country that are providing incentives for call that could be construed as kickbacks? Do you anticipate there will be penalties levied by the government sometime in the near future?

Or perhaps you have another discussion starter?

Publication Date: Tuesday, September 20, 2011