Best Practices for Physician Call Coverage Compensation

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Best Practices for Physician Call Coverage

Compensation

Today’s agenda

• MD Ranger intro• A brief history of call coverage• Commercial reasonableness, or: to pay or not to pay?• Paying for call: rates and analysis• Basic elements of coverage agreements• Effective strategies for setting call rates

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250+ Physician Benchmarks• Call coverage rates• Medical direction payments• Administrative and leadership

services rates• Hospital-based service stipends• Diagnostic testing, etc.• Clinic & hourly rates

Online Platform• Benchmark lookups• Contract proposal tools• Contract reports by facility and service• Total facility costs + benchmarks

Compliance Documentation• Contract-specific FMV documentation

reports• Reports to assist with real-time

monitoring and annual reviews

Research and Support• Resources for education and training• On-call experts to help subscribers

use benchmarks and tools

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The foundation of your compliance process

Standardize processes and rates

Document FMV

Access 250+ payment

benchmarks

Review contracts and monitor with

easeHave smarter,

data-driven physician

negotiationsMitigate

compliance risks

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Our subscribers

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Our benchmarks• Call Coverage (55+)• Medical direction (85+)• Hospital-based services (15+)• Administrative• Medical Staff Leadership• Diagnostic/other services e.g.

ROP, autopsy, dialysis• Hospital-based stipends• Clinics, 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, and more.

Used in academic medical centers, integrated delivery systems, and hospital organizations.

Our methodology: key differences

• Providers vs. facilities• Verified data• Thorough data audits• Physician contract experts on-

call to review/advise on challenging contracts

• Comprehensive scope of benchmarks based on full hospital contracting practices

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Meeting the unique challenges of healthcare organizations

Make data-driven decisions for your organization

Stop relying on poor data sources

Streamline documentation and ensure you are protected against costly settlements

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Value for consulting firms

Benchmarks for 250 physician services, most of which can be found no where else, at your fingertips.

Benchmarks for making strategic financial and operational choices, like total call coverage costs and benchmarks on number of positions

Online platform for organizing and tracking your clients' performance, as well as easy, on the go lookup tools for MD Ranger physician comp benchmarks

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About me

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• Chief Marketing Officer at MD Ranger

• Decade plus experience in health care, specifically pertaining to the hospital/physician relationship

• Fueled by serving our subscribers, black coffee, and snuggles from my toddler

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A BRIEF HISTORY OF CALL COVERAGE

Once upon a time

35+ years ago….• Physicians on the medical staff took call as a part of

their privileges• Seen as a way to build their independent practices

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Shifts in emergency care

• EMTALA (1986)• State laws• Growth in burden of uninsured and Medicaid in the

ED

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(Additional) federal regulations

• Seventies: AKS• Eighties: Stark

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Market forces and hospital/physician relationships

• Attitudes shift for coverage and leadership duties

• Market consolidation of both physicians and hospitals

• Hospital pressures to reduce costs

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Physician costs on the rise

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*Office of Statewide Health and Planning Department (California)

TO PAY OR NOT TO PAY

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Much to consider

ü Is coverage for the position necessary and does it meet commercial reasonableness tests?

ü Should you factor opportunity cost?ü What’s the market rate for the service?ü What is current hospital policy for paying for coverage?ü How much will paying for coverage in this service impact

other physicians on the medical staff?ü Does the position significantly reduce a physician’s

potential compensation related to her practice?ü What’s the ED volume?

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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 to take call

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Services most likely to be paid for call

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0 10 20 30 40 50 60 70 80 90 100

Pediatrics

Cardiovascular Surgery

Psychiatry

Ophthamology

Cardiology - General

Vascular Surgery

Neurology

Obstetrics/Gynecology

Orthopedic Surgery

General Surgery

Understand everyone’s perspectives

• What is the physician asking for? What is the underlying causes of the payment request?

• What is your organization’s position on call compensation? Is there a precedent or medical staff bylaw requirements?

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Comfortable paying? Now what?

• Is it commercially reasonable to do so?

• What is commercial reasonableness, and how can you determine if the position and situation in question is commercially reasonable to pay?

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Commercial reasonableness

An arrangement that is a sensible, prudent business arrangement, from the perspective of both parties involved, even in the absence of potential referrals.

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Using market data to establish commercial reasonableness

• How common is it for hospitals to pay?• If many or most hospitals pay for coverage, data can

be used as part of the argument that payment is necessary.

• If you believe you must pay for the service given your market, though others aren’t, build the case based on facts that differentiate your facility and consider a valuation that demonstrates commercial reasonableness.

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Remember: FMV and commercially reasonable do not mean the same thing

• FMV and commercial reasonableness are not the same• A payment rate may be within fair market value but not be

commercially reasonable

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PAYING FOR CALL: RATES AND ANALYSIS

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Each hospital is unique (but similar enough)

• Each hospital is different (size, service offerings, market, payer mix, etc.)

• Hospitals are similar enough that one can look to peer hospitals for guidance in setting rates. Market data is a good way to do this, as long as it is high quality and detailed enough for your needs.

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Frequently called services

There are services across organizations that are utilized more frequently for emergencies

• General surgery• Internal/hospital medicine• Orthopedic surgery• Gastroenterology• Cardiovascular services

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Median coverage per diem rates for frequently paid services:

• General surgery: $800• Internal/hospital medicine: $500• Orthopedic surgery: $980• Gastroenterology: $500• Cardiovascular services:

• $600 general cardiology• $850 for cardiovascular surgery• $600 for interventional/STEMI

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Significant factors that influence rates

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• Specialty • Restricted/Non-restricted (e.g., trauma surgery:

$2,310 per diem)• Number of campuses covered• Hospital size• Trauma status

Factors that do not have a statistically significant impact on rates include urban/rural, DSH, Medicare percentage, major geographic region, and ownership status

Mean call coverage per diem payment ranges: 2012-present

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$0 $300 $600 $900

Medical Specialties

Surgical Specialties

All Services

Per Diem Payments

2013

2014

2015

2016

Source: MD Ranger, Inc.

Highest compensated call specialties

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$0

$500

$1,000

$1,500

$2,000

$2,500

Critical / Intensive

Care

OB Anesthesia

Neuro Surgery

General Hospitalists

Orthopedic Surgery -Trauma

Trauma Surgery

Per

Diem

Rat

e


Largest dollar increases in median call coverage per diems since 2009

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$0

$100

$200

$300

$400

$500

Anesthesia Cardiothoracic Surgery

Neurosurgery Cardiovascular Surgery

Anesthesia-OB

Incr

ease

in p

er d

iem

rat

e


Largest percent increases in median call coverage per diems since 2009

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0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Plastic Surgery Cardiothoracic Surgery

Urology Cardiovascular Surgery

Psychiatry

Call coverage payment methods

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0% 20% 40% 60% 80% 100%

Hospital-Based Specialties

Medical Specialties

Surgical Specialties

Percent of Contracts by Payment Type

Calendar

Per Diem

Per Episode

Unit GuaranteeOther


BASIC ELEMENTS OF COVERAGE AGREEMENTS

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Key elements of coverage agreements

• Specify which one (or more) of the following mechanisms of compensation are used: per diem payment, per episode payment, or uncompensated care payments

• Clarify whether service includes coverage of in-house referrals from other physicians for unassigned patients (in addition to ED coverage)

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• State whether or not there are restrictions on the physicians activities

• Identify in the agreement if there is a second on-call physician, and discuss how payment will be handled if yes

• Establish who is responsible for the schedule to ensure continuous coverage and name the individual (or party) in the contract

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• State in the agreement if exclusive rights are granted to the panel or to the medical group

• Decide if it’s best to have a panel in which physicians are restricted from any material private practice income generating activities—this can be reasonable to ask if specialization in acute inpatient care leads to better clinical outcomes.

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EFFECTIVE STRATEGIES FOR SETTING CALL RATES

Creating a standard, simple-to-use physician contracting process is more important than ever

• Your process should have straightforward policies and procedures.

• Try sticking to one or two templates to more easily monitor compliance instead of having different compensation frameworks for each physician contract.

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Creating a standard, simple-to-use physician contracting process is more important than ever

• Standardize benchmark levels across specialties and require administrative and board review and sign-offs

• Consistently use externally validated benchmarks• Routinely review contract rates and documentation

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Three approaches to determining call coverage rates

• Market data• Internal or external

proprietary formulas• Internal or external ad hoc

FMV opinions (cost method)

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Most hospitals use a combination of two or all three methods

All approaches have strengths and weaknesses

• Market Data:• Pros: cost effective, flexible, easy to scale, immediate access• Cons: doesn’t work in all cases, like when there’s no market

data available

• Proprietary formulas:• Pros: easy to scale, immediate access• Cons: aren’t transparent to the parties involved, setting up

can be expensive

• FMV Opinions:• Pros: most detailed and specific• Cons: difficult to scale, expensive, slow turn around

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MD Ranger subscribers:

• Use market data for the vast majority of physician contracts, including call coverage

• Pull in valuation firms or experts for more complex agreements, again, not typically call coverage

• Always document their rates with proof of FMV, whichever method they choose

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Consider alternatives:

• Not paying• Uncompensated care payments• Per episode payments• Combination payments

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Multi-facility call agreements = savings

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$100/day $100/day

$200/day$100/facility

$140/day

$200 * 70% = $140/day$70/facility

Need help setting call coverage payment rates and documenting FMV? Call us.

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Ø Do you feel confident in your organization’s physician contracting and FMV documentation process?

Ø Are you confused how much to pay physician leaders for their time?

Ø Do you feel like your organization has risky agreements?

We can help! Reach out: [email protected] or 650-692-8873

Healthcare

Best Practices for Physician Call Coverage Compensation