02 Jun 2017

Should on-call independent contractors be compensated more than employed physicians?

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By Bartt B. Warner, CVA
Compliance Today


The Emergency Medical Treatment and Labor Act of 1986 (EMTALA) created a need for hospitals that participate in Medicare to have physicians available to provide emergent medical services to patients in the hospital’s Emergency Department (ED). Thus, hospitals are required to ensure their EDs are either staffed or have physicians available to respond to emergent cases within a predetermined timeframe. As a result, there has been a proliferation of hospitals entering into agreements with physicians to provide both restricted (i.e., remain on-site) and unrestricted call coverage services. This trend continues today and has created the need for hospitals to understand both the financial and regulatory impact when determining the appropriate call coverage rates. In addition, one of the most commonly misunderstood concepts relates to the compensation that can be paid to physicians who are employed by a hospital/health system versus physicians who serve as independent contractors.

Unrestricted call coverage is often defined as “off-site,” “availability,” or “beeper” coverage where an on-call physician must be available to report to the hospital in person within a set timeframe (typically 30-45 minutes, but this may vary by state) for emergent cases. Hospital administrators are faced with a dilemma when preparing unrestricted call coverage agreements—determining the appropriate rate to pay both employed and independent contractors. One may intuitively think that the rate should be the same, since the exact same service is being provided regardless of the employment status of the physician. However, this may not be the case, because the value drivers of each rate are considerably different. In fact, paying the same rate could potentially lead to a rate that may not be consistent with fair market value (FMV). FMV is defined as, “The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arms‐length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.” Click here to view the full article.

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