Frequency of Call Coverage Holiday Rates

Happy holidays from MD Ranger! This holiday season MD Ranger wanted to see if the market supports different call coverage rates for holiday shifts. We sometimes see differential payment rates for weekend and weekday coverage shifts. Are holidays any different? We found a measurable difference in payment rates when differential rates are paid for weekends and holidays with an important caveat: if the weekend or holiday rates are higher, then the weekday rates are lower than rates paid by hospitals that only have one per diem payment for all days of the year.

It turns out that very few hospitals pay differential rates.

Holidaygraph1

MD Ranger’s comprehensive survey of physician contract rates shows that higher weekend and holidays rates are generally accompanied by decreased weekday rates.

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What are the Rate Differentials?

When contracts have a weekend or holiday rate as part of the agreement, the weekday rate drops a different amount based on how the contract is set up.

On average, we found the following rate relationships:

  • Weekday and Weekend
    • Original rate drops 20% to create the new weekday rate.
    • Weekend rates pay 41% more for the weekend shift compared to weekday rates
  • Weekday and Holiday
    • Original rate drops 12% to create the new weekday rate
    • Holiday rates pay 52% more for the holiday shift compared to weekday rates
  • Weekday, Weekend, and Holiday
    • Original rate drops 17.5% to create the new weekday rate
    • The weekend rate is 24% higher than the weekday rate
    • The holiday rate is 57% higher than the weekday rate and 26% higher than the weekend rate

On a weighted basis, the average rate paid is approximately the same as rates paid for a single rate for all days. In other words, be careful to consider the appropriate payment rates for each type of day when negotiating a differential payment structure for call coverage.

The MD Ranger benchmark blends the reported rates to show the average per diem paid by a hospital over 365 days. The median across all specialties for the different payment types results in the following comparison:

Holidaygraph2

How To Calculate Differential Rates

One example may be a general surgery contract which currently pays $500 per day every day of the year. In negotiations the physicians ask for higher compensation on weekends or holidays. The new rates can be calculated by lowering the old rate by 20% to find the new weekday rate. In this case, the new weekday rate is $400. There are three ways to add a weekend and or holiday rate: just a weekend rate, just a holiday rate, or both a weekend and a holiday rate.

There are two steps to calculating the new rates and it depends what type of contract has been negotiated.

  • Weekday and Weekend Rate
    • To find the weekday rate, take the original rate, and take off 20%. The new weekday rate would be $400.
    • The weekend rate will be about 41% above the weekday rate of $400, or $564.
  • Weekday and Holiday Rate
    • The new weekday rate will be 12% lower than the original rate, or $440
    • If only a holiday rate is negotiated, the holiday rate will be about 52% above the weekday rate, or $669.
  • Weekday, Weekend, and Holiday Rates
    • The new weekday rate will be 17.5% lower than the original rate, or in this case $412
    • If both a weekend and holiday rate are needed, the weekend rate should be 24% above the weekday rate, and the holiday rate 26% above the weekend rate. In this case, the weekend rate would be $512 and the holiday rate would be $644.

The total annual expenditure by the hospital for each option would be:

$500 every day $182,500 annually
$400 weekdays and $564 weekends $163,104 annually
$440 weekdays and $669 holidays $163,119 annually
$412 weekdays, $512 weekends, $644 holidays $163,046 annually

Over the course of a year, the least expensive option would be to pay the holiday premium rate only - saving your hospital 11%, assuming you can get your physicians to agree to the reduction in payment for the other days of the year. If that’s not possible, then use the MD Ranger benchmarks to compare the average per diem payment over the course of the year to ensure your differential rates don’t result in payments in excess of market ranges.

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Perform Annual Contract Audits to Remain in Compliance

Though physician contract audits can be labor-intensive, they are extremely important to staying in compliance.

In progressive organizations, physician contract audits are built into compliance programs and a part of everyday processes. However, they are extremely labor intensive and much of the work cannot be automated. Furthermore, these types of audits typically involve several parts of the organization and collaboration between the two.

In order to ensure that payments to physicians were in accordance with their agreement, auditors must work with finance, legal, and compliance. Despite all the time committed to these audits, they are worth it. Discovering that physicians are being paid more than their contract stipulates, or that FMV documentation for a contract doesn’t exist means that you can correct the error quickly instead of years down the road.

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Best Practices to Avoid Stacking

Stacking can be a huge compliance risk for healthcare organizations and physicians. Here are some quick tips to avoid stacking in the first place.

  1. Develop a policy and review process regarding physicians who hold more than one position or perform more than one service with the hospital or affiliated organizations.
  2. 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.
  3. Ask physicians for time documentation that delineates activities for each role. Time tracking should be standard for all physician administrative positions.
  4. As much you can, automate time tracking and coordinate effectively between all parties: physicians, finance, and administration.
  5. Don’t pay a physician to take call for two services at the same time. 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
  6. Ask the physician to sign a statement to certify that his or her private practice cannot be rearranged to avoid lost income. Another way is to monitor physicians’ OR utilization to compare elective volume with and without on-call coverage.

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Catching Hidden Overpayments in Physician Agreements: Stacking Risks

Thankfully there are ways to catch most overpayments in physician agreements, particularly if the contracts are straightforward and benchmarking is available. Risks for overpayments are things like paying above FMV, or paying for too many hours per administrative deal are straightforward to discover with careful review and analysis of contracts.

But, there are overpayments that are a lot harder to catch—particularly when reasonable looking payments are spread across multiple agreements and turn out not to be commercially reasonable when considered in aggregate. We call these problematic payment structures “stacking” and the compliance risks associated with the issue are significant.

So, what does the OIG tell us about problematic physician compensation structures? Advisory Opinion 07-10 from 2007 talks about three areas to pay particularly close attention to that could result in compliance issues.

  • “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”

So how does stacking commonly happen? Let’s talk about some scenarios. The most common and rather difficult to catch is that a physician or physician group has two or more agreements with a hospital for coverage or administrative/medical direction services and payments for both haven’t been considered in aggregate. Though it’s certainly possible that the physician can coordinate his or her time to fulfill both responsibilities within a time frame generally understood as required to fulfill each agreement separately, the payments for both may go beyond what is commercially reasonable (particularly in the context of the physician’s clinical practice).

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