Physician Contract Strategy

5 Hospital and Contract Characteristics That Influence Contract Rates

Negotiating a new physician contract payment rate or even renewing an existing contract can be challenging. While there are benchmarks available to help you determine FMV, it can be difficult to decide what market range is most appropriate for a particular service and facility. Many factors affect physician contract rates. While some factors may be fairly straightforward and discretely measurable, others may be more nuanced and require closer evaluation.

Particular Hospital and Contract Characteristics

Drawing from the MD Ranger database of over 14,000 contracts in 2014, we analyzed the effect of discrete hospital characteristics on payment rates. Trauma status, hospital average daily census (ADC), the number of facilities the contract covers, if the hospital is independent, and whether the physician is restricted while on call all have a statistically significant impact on payment rates.

Trauma Status
When it comes to call coverage per diems, being a trauma center costs more. Trauma center certification requires more restrictive call coverage and quicker response times than non-trauma centers, and the burden of call is typically higher. On average, trauma centers paid 32% more than non-trauma centers for call coverage per diems.

Call Coverage Per Diems Trauma 2

Restricted Call
When a physician's activities are restricted while on call, they agree not to perform other clinical duties. This restriction may result in an economic hardship if clinical revenues suffer. A general surgeon who is on a restricted call coverage shift may not schedule and perform procedures, missing out on valuable income opportunities. A typical restricted call coverage contract pays 50-100% more than a non-restricted contract.

Hospital Size
Size matters when it comes to both coverage and administrative contracts. Higher emergency room volume results in higher call burdens. Additionally, a larger facility likely indicates more work for medical directors which often requires more hours and higher pay. For every 100 additional beds in a hospital's ADC, expect to pay 25% more for call coverage and 14% more for medical direction.

ADC Total Annual Payments 2

Independent Hospitals
Independent, stand-alone facilities typically pay a premium for call coverage. On average, MD Ranger found that independent hospitals pay 26% more for call coverage contracts than hospitals owned by health systems. Some theories as to why health systems pay less are that they benefit from economies of scale as well as they may have more favorable market conditions or better bargaining position.

Multi-facility Arrangements
For health systems, replacing single-facility physician contracts with multi-facility arrangements can have positive, measurable impacts. We have found that adding a second campus to one coverage position increases the cost of a single-facility agreement by only 26%. For example, if two hospitals are each paying $100 for coverage by two physicians and they decide to only have one physician cover both campuses, the estimated rate would fall to $126, a 37% savings per campus.

Multi-facility medical directorship and administrative agreements also trim costs. A single physician contract for the same service across two campuses typically costs just 37% more than a comparable position for each campus.

A Note on US Regional Geography
Our subscribers frequently ask about the impact of regional geography on payment rates. After extensive testing of a variety of geographic clusters defined by Metropolitan Service Areas (MSAs) MSAs and combinations of MSAs, along with urban/rural distinctions, MD Ranger's data scientists have not found that region significantly influences rates.

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In conclusion, there are a lot of variables that go into negotiating a fair rate for a physician contract. After weighing the many factors involved in determining a rate, it is essential to document the decision and the rationale behind it, including all pertinent benchmarks and relevant information about the specific contract.

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Alternatives to Call Coverage Per Diems

Before more stringent regulations around emergency coverage were passed in the 1980s (like EMTALA and other state laws), it was common for physicians to voluntarily take call as a requirement for hospital privileges and as a means of growing their private practices. With the growth of hospitalists and large multispecialty medical groups, the benefit of ED coverage has diminished. Additionally, physicians are acutely aware of the increasing numbers of Medicaid and uninsured patients in emergency rooms. This has contributed to fewer physicians being willing to take voluntary call, leaving hospitals no other choice but to pay physicians for coverage to meet regulatory requirements and patient needs.

Over the past decade, spending for physician expenditures as a percent of total hospital operating expenditures has grown over 40% according to OSHPD data. Our data show that the typical hospital spends more than two and a half million dollars per year on coverage. Costs will escalate when a hospital starts to compensate one specialty, which will create a domino effect with others.

Increasing Cost of California Physician Expenditures Graph

It is not uncommon for hospitals to experience a cascade effect once they start compensating for call coverage. However, it is generally not commercially reasonable to pay for all services. For example, 75% of hospitals report paying for general surgery while only 3% of hospitals report paying for podiatry call coverage. Just because a physician asks to be paid, does not mean it is commercially reasonable or necessary to pay. Navigating these negotiations can be difficult if the relationships are highly political or tenuous.

Percent Paying for Call Coverage Graph

Despite the increasing pressure to pay for emergency coverage across multiple specialties, it is possible to find middle ground with physicians on this issue that addresses the physicians' need to be recognized for the time and service and the hospital's need for coverage. Here are some suggestions to consider for your organization.

Ensure the Payment is Commercially Reasonable
Before you make any physician payment, whether it is a per diem or one of the alternatives below, determine whether paying for the service is commercially reasonable. A commercially reasonable agreement means that it is a common business practice for an organization to pay for that particular specialty and service. Establishing what's common generally takes market data, research, or a valuation. Despite the lack of a bright line, determining commercial reasonableness is an important first step before a payment rate is considered. If it's not reasonable to pay a per diem for a particular service but some sort of compensation is needed, you should consider alternatives.

Check back next week for another alternative payment method for call coverage. In the meantime, if you have any questions about what call coverage alternative might be best for your facility, email our team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Apply Market Data to Find Appropriate Physician Payment Ranges

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Apply the market data to find an appropriate payment range.

Once you have determined that it is commercially reasonable to pay a physician and you have found the most appropriate benchmark, you can proceed with using market data to find a range for the rate. Straightforward call coverage, administration, and medical direction payment rates can be determined using market data in most cases. For more sophisticated hospital-based agreements, market data is a great place to start for budgeting and planning. A more robust analysis could be required for these complex arrangements.

MD Ranger provides benchmarks for many facility characteristics – including hospital size, trauma/non-trauma, urban/rural, average daily census, Medicare disproportionate share, and payer mix. MD Ranger also offers specific benchmarks for a broad range of administrative positions, call coverage, and medical staff officer positions, as well as meeting attendance and ad hoc services such as IT/EHR and quality initiatives. These data slices allow you to precisely match your contracts with market data, to get insight into your payment levels and to provide reliable FMV documentation.

Check back next week for the fifth step.  If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Calculating Opportunity Cost in Physician Contracts

Should a physician contractor be paid based on market benchmarks or on foregone clinical income, also called ‘opportunity cost’? How influential should opportunity cost be when considering payment rates? Are there risks to opportunity-based payments? Should you pay a neurosurgeon the same as a pediatrician for the same work?

We’ve seen hospital administrators struggle to determine what is appropriate for their organization. The truth is that opportunity cost can be difficult to measure and document.

Defining Opportunity Cost

Opportunity cost is a determination of value based on the value of an alternate use of the same resources, which for our purposes is a physician’s time. For physicians contracting with a hospital to take emergency coverage shifts or to spend hours a month on administrative tasks, the opportunity cost is generally considered to be the income lost from their private practice while on call or performing non-clinical duties.

When to Use Opportunity Cost

For call coverage and administrative services contracts, opportunity cost may be appropriate to consider if a physician’s activities are restricted during a coverage shift or administrative duties are required during a time when she would typically be able to see patients. The physician’s opportunity cost would be the net professional fees billed less the cost of overhead for the amount of time performing the contracted duties.

Opportunity cost shouldn’t be factored into every situation—even if the physician’s specialty is generally higher paid. A physician who has slowed down her practice because she is close to retirement should not get a higher hourly rate to serve as a medical director simply because she’s a neurosurgeon.

Additionally, specialty may not be important for some administrative positions, such as directors of EMR implementation, quality initiatives, utilization review, or chief of staff. For these types of positions, opportunity cost generally isn’t factored into contract rates because it’s not necessary to have a physician of a high cost specialty in the role.

Potential Risks

The Office of the Inspector General advises in Opinion 07-10 to use caution when considering the opportunity cost:

Moreover, depending on the circumstances, problematic compensation structures that might disguise kickback payments could include, by way of example: (i) ‘lost opportunity’ or similarly designed payments that do not reflect bona fide lost income…

As with other physician contracts, it is important to document the fair market value parameters used when opportunity cost has been factored. Include the calculations used to determine the value as well as why opportunity cost is important to the particular situation. Although the OIG opinion cited was written about an emergency call agreement in question, the OIG’s guidelines can be reasonably applied to other types of physician contracts.

Despite the risks, it doesn’t mean that you shouldn’t consider opportunity cost when there is valid justification. However, exercise caution and don’t forget to document all the steps taken in your decision-making process.

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Check the Scope of Services in Physician Contracts

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Determine if the scope of services match the scope of services described by the benchmark rates.

Everyone knows that if you’ve seen one physician compensation agreement, you’ve seen one physician compensation agreement. Though no physician contract is alike, it is important to compare positions to like positions. Seemingly small differences between positions could have an impact on rates. A good example is comparing a physician who is restricted while they are on call to a benchmark that includes both restricted and unrestricted positions (i.e. restricted from doing surgery while on call). The burden of taking call that is restricted is typically higher, and often results in higher payment rates.

Likewise, if the duties for a medical directorship require more hours than benchmarks suggest, carefully document the basis for the additional hours through historical time records or schedules for meeting requirements, training, etc. Certain types of administrative roles have broad ranges of required hours depending on their scope. For example, a quality initiatives or EHR champion may require more hours than the committee chair for a single quality initiative, particularly during an implementation period.

If you find that the market data does not have a similar scope of service, you may want to consider a full-scale valuation to ensure the new contract is FMV.

Check back next week for the fourth step.  If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Consider Alternatives for Negotiation Conversations

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

Consider alternatives. Before entering a negotiation, prepare a list of alternatives, both for obtaining the service and paying for the service. Anticipating and responding to pushback will make a smoother negotiation process. Discussing alternative approaches can often yield savings or more efficient ways of achieving the same objectives, and provides an opportunity to discuss each party's objectives and challenges. The definition of fair market value includes the provision that "the price...between a willing buyer and a willing seller, neither being under a compulsion to buy or sell". A good fair market value evaluation will simulate what would result from an actual competitive process, even if there isn't one.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Consider the Economic Value of Exclusivity

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

If the agreement grants exclusivity, consider the privilege's economic value. It is well established that exclusivity—effectively a limited monopoly—has economic value. Not only is it a core principle of economics, federal regulators cite it specifically in the context of hospital physician contracting. There are two methods to estimate the value of exclusivity. One is to compare compensation between exclusive and non-exclusive agreements, which can be shown through market data. The other is to have a valuation expert measure cost reductions and economies of scale in a cost model of the practice of interest.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Consider the Scope of Services Provided

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

Consider the scope of the agreement, not just how much to pay. Hospitals and physicians often assume the scope of service should either be the same as the expiring agreement, or whatever the scope that the physician suggests. For example, a medical directorship contract might not carefully assess the number of hours of service, and instead focus negotiations on the hourly rate. Unsure what's appropriate for your service? Market data are available on the number of hours per year for more than 80 administrative and leadership positions, including ad hoc committees, quality initiatives, medical staff leadership and medical directorships. Providing your negotiating parties with objective information during negotiations helps to set expectations and ensure the final contract terms are within reason. If the situation legitimately warrants an exception, document your reasoning in the contract and keep track of hours for future audits.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Critical Care Agreements: Key Considerations

Critical Care agreements represent formally organized services staffed by intensivist physicians with special training (usually pulmonary and/or critical care) to manage acutely ill patients in a critical or intensive care unit. Physicians are contractually obligated to spend a portion of each day on-site in the ICU serving as the primary attending physician for patients receiving critical care in the hospital. Critical and intensive care coverage contracts are most common in larger hospitals. Many hospitals only pay for medical direction for critical care units, but some pay for coverage.

Key Factors to Consider in Contract Analysis:

  • What is the average daily census of patients covered by the service and what fraction of the hospital’s total ICU census is attended or covered by the contracted physicians?
  • For those patients not attended by contracted physicians, is there a payment arrangement with the hospital?
  • Are the contracted physicians required to be board-certified in critical care, pulmonary critical care, or surgical critical care?
  • Is there an electronic ICU (eICU) service that provides back-up or after-hours coverage?
  • Is the in-house coverage requirement for less than 6 hours per day or 42 hours per week?
  • Is the proportion of Medicaid, Medicare, or unsponsored patients extremely high or low?

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Document FMV Compliance

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Document compliance.

Benchmarking a contract for FMV documentation isn’t the end of the process. Your organization needs a systematic approach for the archives and audits. Organizations often approach compliance documentation differently. As long as a consistent process is in place and is followed methodically for every new contract, you can avoid costly and time consuming challenges in the event of an audit. MD Ranger subscribers develop a system which integrates predetermined distribution ranges and MD Ranger’s online reporting functionality to show proof of adherence to regulations. These reports outline critical information from the physician contract, most importantly the rate and proof that the rate is within FMV. Usually, a responsible executive signs off on these documents for the organization’s records.

If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Document Your Process for Physician Contracting Compliance

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

Document your process for compliance. Documenting compliance is essential for your compliance program; however, fair market value rate documentation can also facilitate negotiations. By demonstrating that you take compliance very seriously and that these efforts are protecting all parties, you will be well on your way to earning the respect of your colleagues across the table. You can find more information on how to document compliance here.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Establish Objectives for Physician Contracting and Possible Compromises

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

Establish objectives and define how you can compromise. After you have a sense of contract payment rates and ranges, define the scope of work and expectations of the position and determine what you are willing to negotiate. Your negotiation objectives should be consistent with fair market value, as well as your hospital's overall financial commitments for physician services. Data are now available to allow a hospital to see how the cost of each contract fits into its overall physician costs, which can be particularly helpful for overall physician strategy.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Exclusivity in Hospital-Based Contracts

Many if not most hospital-based agreements grant exclusivity. The OIG confirms that exclusivity has economic value in the following case study from the OIG:

"We are aware that hospitals have long provided for the delivery of certain hospital-based physician services through the grant of an exclusive contract to a physician or physician group, which includes management, staffing, and other administrative functions, and in some cases limited clinical duties. These exclusive arrangements affect the cash and non-cash value of the overall arrangement to the respective parties. Depending on the circumstances, an exclusive contract can have substantial value to the hospital-based physician or group, as well as to the hospital, that may well have nothing to do with the value or volume of business flowing between the hospital and the physicians. By way of example only, an exclusive arrangement may reduce the costs a physician or group would otherwise incur for business development and may eliminate administrative costs otherwise incurred by the hospital. In an appropriate context, an exclusive arrangement that requires a hospital-based physician or physician group to perform reasonable administrative or limited clinical duties directly related to the hospital-based professional services at no or a reduced charge would not violate the anti-kickback statute, provided that the overall arrangement is consistent with fair market value in an arm's length transaction, taking into account the value attributable to the exclusivity. Depending on the circumstances, examples of directly-related administrative or clinical duties include, without limitation: participation on hospital committees, tumor boards, or similar hospital entities; participation in on-call rotation; and performance of quality assurance and oversight activities. Notwithstanding, whether the scope and volume of the required services in a particular arrangement reasonably reflect the value of the exclusivity will depend on the facts and circumstances of the arrangement. "

The important bit to note is the bold sentence. So, now that we know that exclusivity has an economic value and the OIG cares about it, is there a generally accepted way to quantify the economic value? Unfortunately, no. However, here are three good approaches to handling the economic value of exclusivity:

  1. Have the FMV documentation (internal documentation or valuation opinion by consulting expert) recognize the exclusivity and that this has value
  2. Seek to negotiate a compensation level at discount or lower point in the FMV range— than would otherwise be the case
    1. Most ranges from the market approach will already include the discount for exclusivity
    2. Most ranges from the cost approach will not include the discount
  3. Include a discount in the range of 5% to 10% to reflect value of exclusivity

If you have questions about hospital-based contracts or exclusivity, email our team of experts at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Executive Oversight for Physician Contracting

Designating an executive to have accountability for physician contracts is an essential step to ensure that your contracts are competitive, fair, and align to the organization’s overall clinical and financial goals.

Small organizations may designate the CEO or CFO to lead or hire an outside consultant; organizations with more resources may choose to place physician contracting under the compliance officer or general counsel.  Regardless of who oversees the process, it’s important to have an individual who understands what risks and challenges that physician contracting brings.  The executive should also either craft or oversee the creation of the compliance and documentation process. Minimally, the executive signs off on the organization’s physician contracting compliance program. In the unfortunate event of an audit, this executive should be very familiar, comfortable, and confident with the physician contracting process that she oversees.

Additionally, formal compliance committees are crucial to a health system’s overall physician compliance programs. Talk to your organization’s committee to determine if an annual review of physician-­‐specific contracts makes sense. Organizations that choose to review physician contracts have increased opportunity to catch undocumented arrangements, find opportunities to reduce costs, and identify any potential compliance risks. Committees don’t need to be large or unduly sophisticated; just ensure that the members are educated on Stark Law and they have access to high quality market data or valuation expertise.

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Factors to Consider in Determining Commercial Reasonableness

We always say that before you ask yourself what to pay for a contract, you should determine if it is appropriate to be paying in the first place.  This notion is called commercial reasonableness.  Many of our subscribers struggle with how to document commercial reasonableness.  While CMS and Stark law provide their thoughts on commercial reasonableness, the IRS provides a list of factors to consider in determining whether it is commercially reasonable to pay:

  1. “The nature of the employee’s duties;
  2. The employee’s background and experience;
  3. The employee’s knowledge of the business;
  4. The size of the business;
  5. The employee’s contribution to the profit making;
  6. The time devoted by the employee to the business;
  7. The economic conditions in general and locally;
  8. The character and amount of responsibility of the employee;
  9. The time of year when compensation is determined;
  10. The relationship of shareholder-officer’s compensation to stock holdings;
  11. Whether alleged compensation is in reality, in whole or in part, payment for a business or assets acquired; and
  12. The amount paid by similar size business in the same area to equally qualified employees for similar services.”

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Factors to Consider in Emergency Contract Negotiation

Emergency medicine contracts are for the professional staffing and physician oversight of hospital emergency departments. High volume and high census hospitals and more likely than lower volume hospital to pay for medical directorship services. Many emergency medicine contracts include not just emergency room call coverage, but also urgent care and employee health services.

Key factors to consider in negotiating your next emergency medicine hospital-based contract:

  • What is the annual volume of visits?
  • Is this a designated trauma center?
  • What are the collections per required full-time equivalent physician? How do collections compare with industry benchmarks for collections and compensation per FTE physician?
  • What is the average wait time for patients?
  • How many physicians are required to be in-house at any given time?
  • Are physician extenders used for supplemental staffing?
  • Is the proportion of Medicaid, Medicare, or unsponsored patients extremely high or low?
  • Does the scope of service include multiple sites or multiple levels of care, such as urgent care or occupational health?

Have questions about your facility’s emergency medicine contracts?  Email our team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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From AHLA’s 2015 Annual Meeting: Complex Fair Market Value/Commercial Reasonableness Compensation Issues

Speakers: Robert Wade, Partner at Krieg DeVault, Rud Blumentritt, Partner at Horne LLP

While most of us understand the risks associated with the Stark Law and the Anti-Kickback Statute, and if you don’t, we have your back. There are always cases that are in the grey areas or are just downright complicated.

While at the American Health Lawyers Association Annual Meeting, I attended a session geared toward just the problem of handling complex fair market value and commercial reasonableness issues.

There are three different perspectives to looking at fair market value:

  • The bystander approach
  • The professional appraiser approach
  • The legal and regulatory approach

With any approach, it is important to consider the specific market conditions in your area for the specific specialty in question. For example, it may be necessary, and reasonable, for your organization to pay at the higher end of the market range for anesthesiology based on the localized supply of physicians, however that does not mean that it is necessarily reasonable to pay at the higher end of the market range for gastroenterology.

When documenting FMV, it is also a best practice to document the commercial reasonableness of paying for the position in the first place. MD Ranger helps our subscribers get an idea for whether is is commercially reasonable to pay for a service through our Percent of Subscribers Who Report Paying for a Service and Paid Administrative Position Count tables. While commercial reasonableness is subjective, having benchmarks to inform your decision can help to justify paying, or not paying.

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If the Situation with a Physician is Complex, Document It

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

If the situation is complex, acknowledge it. Situational details (such as intensity of workload, payer mix, trauma status, etc.) may distinguish a contract from most other contracts within the same service. If that's the case and if these factors haven't been considered in the payment rate, you might be under or over paying. Agreements like these carry compliance risks—particularly if the service has a comparatively lower workload than the average contract in the market, or if your contract results in significantly more professional revenue. Not even the very best market data survey can cover all situations. Also, if it is an exclusive contract, such as for a hospital-based service, there are special considerations for the value of the franchise. Experience and judgment are important to assessing risk and knowing when to bring in an internal or external consultant to document compliance.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

allison

Key Considerations for Anesthesia Contracts

Anesthesiology agreements typically cover all sites within a facility that require anesthesia. These include inpatient operating rooms, outpatient operating and procedure rooms, and obstetrical services.  They typically include coverage for a defined number of ORs for specified hours and days of the week.  This is to ensure the availability of an anesthesiologist for both scheduled and unscheduled cases.  Emergency services may be provided by an in-house or on-call physicians.  At minimum, coverage is for general anesthesiology services but may also include subspecialists like cardiac, pediatric, obstetrics, and pain management.  Often, anesthesia contracts can be the largest, most complex physician agreements that a hospital will negotiate.

When analyzing an anesthesia contract for renewal or to create a new agreement, here are the most important factors to consider:

  • What are the total number of surgical cases, births, operating rooms, covered sites, and hours of on-site coverage required? Make sure you know the entire scope of the agreement so that the negotiated rate makes sense.
  • Is in-house coverage required after 7pm and on weekends?  Restricted call rates are typically higher, as is weekend/holiday coverage.
  • Does the contract require anesthesiologists with specialized training and certification in fields such as cardiac or pediatric anesthesiology?  If so, this might impact rates.
  • Is the proportion of Medicare, Medicaid, or unsponsored patients extraordinarily high or low?  Some contracts include payments for uncompensated care.
  • What are the average number of cases per day, per year, per room, and per physician, and how do they compare to industry benchmarks?
  • For contracts based on collections or unit value guarantees, are the annual per physician compensation amounts or unit values based on fair market value assumptions for those values?
  • Are both the aggregate and the per physician per diem payments reasonable?  Have you compared them to industry benchmarks?

allison

Key Considerations for Pathology Contracts

Pathology agreements with hospitals are for professional staffing and physician oversight of both anatomic pathology and clinical laboratory services. The clinical laboratory service may include “outreach” laboratory services as well.  Note that outreach services often compete with commercial laboratory firms, providing services to physicians’ offices, industry, long-term care facilities or other entities thus encompassing a broader scope of service than a hospital-only service.

MD Ranger collects information on volume-related benchmarks that include total annual net payments excluding medical direction in ratio to the total number of anatomic pathology cases. We note that a large proportion of MD Ranger pathology contracts pay for medical direction services only.  Payment of stipends, and the amount of stipends, appears to increase with a higher percentage of government payers.

Key Factors to Consider in Contract Analysis

  • Is the number of surgical cases below 2,500 per year?
  • Is there an outreach laboratory, and if so, do the tests from that service represent more than 30% of total tests?

allison

Key Considerations for Radiology Contracts

These contracts provide for professional staffing and administrative oversight of imaging services for both inpatient and outpatient services. Some agreements include interventional radiology, mammography, and freestanding imaging centers. Volume-related benchmarks include total net annual payments excluding medical direction in ratio to the total number of imaging procedures at the associated facility.

About thirty percent of contracts include payment only for medical direction. Payment of stipends, and the amount of stipends, appears to increase for smaller facilities or those with low average daily census.

Key factors to consider in radiology contract analysis:

  • Is the proportion of Medicaid, Medicare, and unsponsored patients extremely high or low?
  • What are the collections per required full-time-equivalent physician? How do collections compare to industry benchmarks for collections and compensation per FTE physician?
  • Is there a 24-hour emergency interventional radiology requirement?
  • Is in-house staffing required for more than 8 hours per day or 40 hours per week?
  • Is there a teleradiology service, and who pays for it?

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Know What Reasonable Physician Contract Rates Are

Preparing for a physician contract negotiation? As you've likely discovered, these conversations take time and effort, and often go differently than anticipated. Discussing compensation, no matter how positive the business relationship may be, can present challenges.

Whether you are a hospital administrator negotiating with a key multi-specialty group, or an independent physician asking for increased call coverage pay, care preparation can help you achieve your desired outcomes.

Research. Know the reasonable payment rates for the specialty and the service. High quality market data is particularly helpful with this initial step. While you should be familiar with the entire range, MD Ranger recommends focusing your targeted rates between the 25th and 75th percentiles of market data. It is important to remember, while not everyone can get paid at the 90th percentile, statistically someone must be above the 90th percentile and someone must be below the 25th. You should enter the negotiation with quantitative evidence of the range you can support, as well as how your institution and the particular physician(s) compare to the 'typical' provider. Factors such as hospital size and trauma status can make a difference in the appropriate payment rate, as can national reputation and the credentials of a particular physician.

Want to discuss your organization's contract negotiation process with an expert? Email the team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Knowing When to Pay Physicians

Before compensating a physician for taking call or serving in a leadership position, it’s important to ask if it’s reasonable to pay in the first place. Though more and more hospitals are compensating doctors for these types of services, it’s still not a given that coverage will be compensated. It’s common for hospital executives to scratch their heads when approached by a physician asking for additional compensation, especially since this information is not widely available.

MD Ranger addresses this challenge by analyzing contracts not in our database. Though at first it might seem counterintuitive, the idea is straightforward: because we collect data on our hospital partners’ physician contracts holistically, we can determine if there are services the hospital provides that do not have a contract in place (or have a contract that doesn’t compensate the physician).  From this, we calculate what percentage of our subscribers pay for a given service in the first place.

Here are the five most common positions that hospitals report paying physicians to perform:

  1. General Surgery
  2. Orthopedic Surgery
  3. Neurology
  4. Neurosurgery
  5. Otolaryngology

Curious about what percentage of our subscribers pay for these above services? Email me at This email address is being protected from spambots. You need JavaScript enabled to view it. and I’ll send you more info.

allison

Make Physician Contracting Efficient: Create or Review Your Compliance Process

Physician contracting and documenting FMV doesn’t have to be an expensive headache. 

Create or review your physician contracting process.

If you are starting from scratch and want to create a functioning physician contract compliance process, the new year is an excellent time to do so.  As you assemble your team and your organization’s contracts, define how your organization will determine and document fair market value.   Do you employ external consultants?  Does your team produce internal FMV documentation?  Whatever method your organization decides, document it and stick to a consistent method. If using market data, or a product like  MD Ranger, decide when outside help is needed and define those circumstances as best you can.  Depending on your resources, there are many methods for lowering FMV costs.

Click on the image below to see how MD Ranger provides easy contract by contract analysis.

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Make Physician Contracting Efficient: Empower Your Staff

Physician contracting and documenting FMV doesn’t have to be an expensive headache. 

Empower a member of your staff to manage the process day-to-day, and designate an executive responsible for strategic leadership decisions.

Given the complexities of physician contracting, designating someone on your team to handle data, contract management, and documentation of FMV is a solid investment. Without staff involvement, it is easy for contracts to slip through the cracks, creating a situation that could bring major compliance issues to your organization. While this person might not handle physician contracts full time, she should have access to internal contract data, benchmarks, or market data to support decision­-making, a tool to help her view and organize contracts, as well as a process to document FMV and compliance.  She should have a reporting relationship with the director or executive responsible for physician contracting at a senior level. Having an executive in charge of all physician contracts who annually reviews costs and renewals will provide greater control over this major cost category.

MD Ranger provides the tools and executive reports that make periodic facility-wide reviews simple; click on the image below to see more.

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Smaller organizations may designate the CEO or CFO to lead; organizations with more resources may choose to place physician contracting under compliance or legal. Whomever your organization chooses, it is critical that the executive be aware of federal regulations and penalties for non-­compliance. They should also oversee the compliance and documentation process. If an audit occurs, an executive will need to be very familiar, comfortable, and confident with the compliance process.

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Make Physician Contracting Efficient: Organize Your Contracts

Physician contracting and documenting FMV doesn’t have to be an expensive headache. 

Make sure your physician contracts are all in one place, organized by expiration date.

When hospitals have dozens of physician contracts that renew throughout the year, keeping organized is critical for successful and timely renegotiations. If your hospital or facility doesn’t have a contract management system that allows easy retrieval, review, and analysis of physician contracts, consider getting one. This can help to automate the renewal process quickly.  Using your contract management system to analyze your data will help you understand the scope of physician services you’re currently paying for, as well as identify potential gaps or duplicative services.  MD Ranger provides comprehensive and summary reports and hospital-specific benchmarks to allow you to see contracts and costs across the entire organization.

Click on the image below to take a closer look at MD Ranger’s physician contract management system.

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Make Physician Contracting Efficient: Prepare in Advance and Use Market Data

Physician contracting and documenting FMV doesn’t have to be an expensive headache. 

Prepare for negotiations at least three to six months in advance.

Knowing the timing of negotiations across the year is essential to keeping your physician contracting process running smoothly.  If your staff proactively manages upcoming contract renewals, you will have the upper hand in negotiating more advantageous contracts.  If you know the scope of payments across your organization in advance, you can prioritize contracts, set budget goals, and conduct informed negotiations.

Use market data and tools to quickly segment contracts and document FMV.

The most efficient organizations use high-­quality market data to identify market ranges for physician contract rates, saving consultants for complex or unique situations.  If you segment your contracts in advance, you can plan and budget for ad hoc FMV while using market data for straightforward agreements.  Systems can gain even greater value by setting standards and processes for contract rates.  Some benchmark systems, such as MD Ranger, provide contract-specific reports that summarize a specific contract to the appropriate benchmarks for use in review and documentation processes.  Do your research, and feel confident that your method will support good decision-­making.

Click on the image below to see how MD Ranger can provide specific contract documentation.

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MD Ranger’s 2014 Reports: Incentives Growing?

Last week, we released our 2014 Reports.  One observation we made is that the number of hospital-based contracts with incentive components grew from 10% in 2013 to 21% in 2014.  We wondered in October of 2013 if incentives were a growing trend in physician contracts.  We thought it might be a good time to revisit this question with fresh data.

Of the contracts with incentives, the number with quality components of incentives are down compared to 2013 (62% in 2014 versus 86% in 2013) and have been edged out by other components (66% in 2014 versus 48% in 2013) as the most common metric in determining incentive payments.  Cost components of incentives remain unchanged (31%) while patient satisfaction components were down slightly (60% in 2013 to 52% in 2014).

Blog-graph-6.3.2014

Do you need help benchmarking your hospital-based agreements?  Email me at This email address is being protected from spambots. You need JavaScript enabled to view it. and I’d be happy to assist.

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MD Ranger’s 2014 Reports: Total Hospital Spending

Because of MD Ranger’s unique holistic approach to collecting a hospital’s contract data, we can report the total amount that hospitals are spending on physician compensation contracts.  While we recognize that every hospital is unique, these benchmarks allow you to identify if your facility is spending in the same ballpark as other similar hospitals.

There was only slight decrease from 2013 to 2014 in terms of the median payments across all hospitals for call coverage.  In 2013 call coverage spending represented 66.7% of spending on contracted physician spending whereas in 2014 it represented 63.3%.  Even with this decrease, we can agree that $2.4 million for call coverage contracts is no small number.

The percentage of spending on hospital-based contracts increased slightly from 11.4% in 2013 to 14.6% in 2014 while direction and administration contracts held steady at about 11%.

Blog-Grpah-6.17.2014

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Multi-Campus Physician Call and Administrative Contracts: Impact on Payment Rates and Time Requirements

MD Ranger data strongly suggests the benefits of multi-facility physician contracts as an important strategy for controlling costs. Although payments to physicians whose duties span multiple facilities are higher than single facility contracts, they are less costly than separate, individual facility arrangements when the duties are assigned to a single physician.

The frequency of multi-campus arrangements with a single physician or medical group appears to be growing. In 2014, approximately 8% of multi-facility call coverage and 10% multi-facility administrative contracts among MD Ranger subscriber contracts covered more than one facility

When two facilities in the same health system are physically nearby and when the emergency department volume is such that the call burden for one physician is not overwhelming, it is possible to have one physician covering both facilities. After analyzing the MD Ranger database, we have found that adding a second campus to one coverage position increases the cost of a single agreement by 26%.

MD Ranger analysis found that although there is no significant difference in the hourly rates of pay for physicians with multi-facility administrative/medical directorship positions, there is a significant difference in the number of hours required for multi-campus arrangements and in the annual payments. These findings apply to hospitals with more than one campus, whether as a distinct licensed facility or a single consolidated license with emergency departments on different campuses. We have found that, on average, a single physician contract for the same services across two campuses costs 37% more than a single campus position. Each additional campus commands an average 10.7% increase in the number of hours up to five or more campuses.

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Must-Read Tips for Physician Contract Negotiations

Are you preparing for what may be a difficult negotiation with a medical group or physician for either a new service or a renewal of an existing agreement? Here are some quick tips to help things move along smoothly:

 

1.      Establish a negotiating objective.  Know the market range that is applicable to the service of interest.  Consider the entire market range, in particular the range between the 25th and 75th percentile.  Remember: “Not everyone can get paid at the 75th percentile.”  Enter the negotiation with a quantitative negotiating objective in mind.  The objective should be consistent with fair market value, as well as your hospital’s overall financial resources.  Data are now available to allow a hospital to see how the cost of each contract fits into its overall physician costs, which are a part of MD Ranger’s Total Hospital Spending Benchmark Reports.

2.      Take care to avoid relying on market data alone when the situation is complex.  The metrics of the service (such as intensity of workload, payer mix and professional revenue, etc.) may distinguish the contract in question from the contracts reflected in the market data.  If that’s the case, unbeknownst to you, could result in an “apples and oranges” comparison.  This could cause compliance risks—particularly if your contract has significantly less intense workload than the contracts in the market benchmarks or if your contract results in significantly more professional revenue than are in the contracts in the market benchmarks.  Not even the very best market data survey can cover all situations.  Care and experience are required to avoid this risk and to know when to undertake a different approach  with the help of a valuation consultant or an internal expert.

3.   Demonstrate and document that alternatives have been considered.  Even if you would much prefer to wrap up the negotiation quickly, advise your counterparty that you need to at least consider alternatives.  In only a fraction of agreements is there a RFP or other competitive process.  Remember that the definition of fair market value includes the provision that “the price …between a willing buyer and a willing seller, neither being under a compulsion to buy or sell…”[1]  A good fair market value evaluation will simulate what would result from an actual competitive process.

4.      Consider what scope of service you want to contract for, not just how much to pay.  Often, hospitals assume that the scope of service is either the same scope as in the expiring agreement or that it is the scope that the physician or group tells you should be provided.  In the case of a medical director position, for example, this could mean that the number of hours of service is not carefully assessed and the focus of the negotiations is on the hourly rate.  However, there are now market data available on the number of hour per year for most medical director positions.  This can provide you with objective basis to make sure the number of hours is unusually high—without a particular situation-specific exceptions.

5.      Document your process for assuring compliance.  Documenting compliance is essential for your compliance program, as our compliance materials (link to compliance page) at MD Ranger echo.  However, documentation of paying a fair market value rate can also come handy during negotiations.  By demonstrating to physicians that you take compliance very seriously and that these efforts are not only protecting your hospital but also protecting them, you will be well on your way to earning physicians’ respect (if you haven’t already).

6.      If the agreement grants exclusivity to the group, consider and estimate the economic value such a provision.  It is well established that exclusivity—effectively a limited monopoly—has economic value.  Not only is it a core principle of economics, federal regulators cite it specifically hospital physician contracting.  There are two methods to estimate the value of exclusivity.  One is to compare compensation between exclusive and non-exclusive agreements.  Data now exist to measure this, available through MD Ranger.   The second is to have a valuation expert measure cost reductions and economies of scale in a cost model of the practice of interest.

Need help before a tough negotiation?  Email me at This email address is being protected from spambots. You need JavaScript enabled to view it., and I can help.


[1] Estate Tax Reg. 20.2031.1-1(b); Revenue Ruling 59-60, 1959-1, C.B. 237

--Michael

Navigating Negotiations for Complex Physician Contracts

If the situation is complex, acknowledge it.

Situational details (such as intensity of workload, payer mix, trauma status, etc.) may distinguish a contract from most other contracts within the same service. If that’s the case and if these factors haven’t been factored in to the payment rate, you might be under or over paying. Agreements like these carry compliance risks—particularly if the service has a comparatively lower workload than the average contract in the market, or if your contract results in significantly more professional revenue. Not even the very best market data survey can cover all situations. Also, if it is an exclusive contract, such as for a hospital-based service, there are special considerations for the value of the franchise. Experience and judgment are important to assessing risk and knowing when to bring in an internal or external consultant to document compliance.

Want tips on a complex a contract from an expert? Call our office at (650) 692-8873.

allison

Paying for More Physician Administrative Positions Than You Think?

Because MD Ranger collect holistic data from hospitals, we are able to report the number of paid administrative positions by service.  While many services within a hospital necessitate only one paid administrative position, sometimes the hospital structure or the specific service dictate a need for more than one paid position.  If you don’t have justification for having multiple paid administrative positions, it may not be commercially reasonable to pay.  This could be a compliance red flag.

In the graph below, we can see that 45% of MD Ranger subscriber facilities pay just one administrative role for pathology while 32% have two paid positions, 18% pay three positions, 3% pay four positions, and 2% of facilities pay five or more positions.

Blog-7.8.2014-Graph

Where does your facility fall in this pie chart?

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Recent OIG Action Summary

The OIG actions of the past two years illustrate the risks of noncompliant contracts to healthcare organizations and individuals who do not have a comprehensive compliance program for review and documentation of physician contracts. Health systems under investigation or under consent decrees report that an OIG investigation looks for consistent review processes, regular monitoring, internal audits and defined compliance guidelines. How confident are you that your physician contracts are 100% compliant with documentation of FMV on file?

We urge our subscribers to perform annual physician contract audits in addition to using consistent guidelines and documentation procedures throughout the year. Take advantage of a new month and plan a physician contract audit.

Links to Excellent 2015 Articles on These Topics:

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Rural Hospital? Here Are Some Things to Consider for Your Unique Physician Contracting Situation

Being a rural hospital brings unique challenges and opportunities.  Most rural hospitals operate with limited resources, smaller budgets, and poor payer mixes.  CEO’s of these facilities tend to be shorter staffed than their urban or suburban peers, and often have physician recruiting, relationships, and contracting under their purview.  What should rural hospitals keep in mind while partnering with physicians?  Here are some thoughts from us:

  • Always establish that compensating for coverage is commercially reasonable.  This is particularly important when you are struggling to find a physician to take emergency call, and unfortunately many rural hospital executives find themselves in this position.
  • However, just because it’s difficult to recruit a physician or pull together a call panel doesn’t mean you can pay a doctor whatever they demand.  Unless you are entering an employment agreement with a physician, paying her fair market value for taking call still applies.  When trying to establish the best rate, consult market data that can be drilled down to rural/urban status.
  • Having high quality, objective market data at hand will strengthen your position when in negotiations.
  • Invest as much time as you can to create a straightforward and efficient way to handle physician contracts and document FMV.  Not only will it help your organization understand how much it is paying physicians for these types of services, it will also help in case of an audit.

Attending NRHA’s annual conference in Vegas this week?  Check out MD Ranger at Booth 332.  We want to learn more about your physician contracting challenges.

allison

Signs Your Physician Contracts are Risky

We’ve stumbled on organizations we suspect have major physician contract compliance issues.  What are the clues that give away these hospitals?  Here are some red flags that suggest your organization take a closer look at physician contracts.  

Always assuming youneedto pay physicians.

Hospitals that never push back on physicians that ask for payment when it’s perhaps not warranted are at risk.  Just because a doctor demands payment for call coverage doesn’t mean she should receive it. You must ensure the request to compensate a physician is commercially reasonable, and back it up with data or a valuation.  Saying no to a physician is never easy, however, improper payments can expose your organizations to potential Stark or AKB violations.  Explore alternative ways to compensate beyond a “per diem” payment with physicians, if it’s a call pay issue.  Considering an unsponsored payment rate to make up for a poor payer mix.

Negotiating consistently high rates across all types of physician specialties and services.

As you audit your contracts, you may start to see trends.  A trend that you don’t want to see is consistently high rates.  There might be good reasons to have rates on the higher side, though never as a trend.  If you are in the beginning stages of a compliance program, review all your physician contract rates and determine where in the market data each one falls. Consistently high rates might need revision or a plan to lower rates.

allison

Test for Commercial Reasonableness

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Test for commercial reasonableness.

Before you consider using market data or an FMV opinion, decide if it is commercially reasonable to pay for the service in the first place. Market data can be used to help answer this question. MD Ranger collects comprehensive physician contract data from subscribing hospitals, making it possible to publish the Percentage of Subscribers Who Report Paying for a Service table. This table shows how common it is for a very large group of hospitals, representing thousands of physician contracts, to pay for specific services. For example, 75% of subscribers report paying for general surgery call coverage, making it one of the most common services to compensate for emergency coverage. Conversely, only 11% of hospitals report paying for infectious disease.

If your organization is considering paying for a service that’s commonly unpaid, you should determine why you need to pay and what is the appropriate method and amount of payment. A higher level of documentation of the negotiation process and reasons for payment should be included in your files. Reasons such as very limited panel size and adverse payer mix may dictate the need for payment, but it is important to document those reasons in case of an audit.

Check back next week for the second step.  If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Track All Physician Payments, Individually and in Aggregate

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Take into account all payments made to each physician, as well as your organization’s overall strategy for physician compensation.

If the physician you are considering compensating is already being paid several medical director stipends, reconsider whether all payments are necessary. Review his or her overall payments to ensure the total amount paid is reasonable. Additionally, MD Ranger recommends that organizations benchmark how much they spend on physician services in total and by specialty. Monitor increases in physician spending, particularly if your organization spends more than your peers, to help identify potential compliance issues. MD Ranger has aggregated data useful for this type of benchmarking. Its Total Facility Payments reports detail how much hospitals pay for physician services, broken down by attributes like service and hospital demographics. Also available through MD Ranger are summary tables on total number of positions reported by each hospital. This is particularly helpful when determining whether or not you have too many medical directors.

Check back next week for the third step.  If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Uncompensated Care Payments for Call Coverage

It is not uncommon for hospitals to experience a cascade effect once they start compensating for call coverage. However, it is generally not commercially reasonable to pay for all services. For example, 75% of hospitals report paying for general surgery while only 3% of hospitals report paying for podiatry call coverage. Just because a physician asks to be paid, does not mean it is commercially reasonable or necessary to pay. Navigating these negotiations can be difficult if the relationships are highly political or tenuous.

Despite the increasing pressure to pay for emergency coverage across multiple specialties, it is possible to find middle ground with physicians on this issue that addresses the physicians' need to be recognized for the time and service and the hospital's need for coverage. Here are some suggestions to consider for your organization.

Uncompensated Care Payments
Consider payment for uncompensated patients. Physicians are often concerned that the burden of carrying a beeper isn't worth the limited revenue associated with coverage. Emergency departments do have a disproportionate number of uninsured and Medicaid patients and in some areas, the burden is particularly high. At facilities where the payer mix is favorable, physicians are more likely to be paid for emergency patients. However, for hospitals where it is challenging to convince physicians to take call, paying for uncompensated care may be an alternative to paying a per diem rate. Hospitals who pay for uncompensated care reimburse physicians for services rendered to uninsured patients. Usually the payment rate is defined as a percentage of Medicare or Medicaid. This method assures physicians reimbursement for services rendered while taking emergency call coverage. MD Ranger subscribers have access to uncompensated care payment benchmarks that are published in our annual Call Coverage Report.

Check back next week for another alternative payment method for call coverage. In the meantime, if you have any questions about what call coverage alternative might be best for your facility, email our team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Use Market Data to Document FMV

Most organizations don’t need an expensive FMV opinion for every physician contract, but you still need FMV documentation. High-quality market data like MD Ranger can empower organizations to internally document FMV based on market data, in turn creating a more efficient, cost-effective system.

Use the market data to document FMV.

Your compliance team should develop a standardized process for determining what is considered a ‘safe’ benchmark for FMV documentation at your organization. Systems using MD Ranger often select a threshold payment benchmark, e.g. the 50th or 75th percentile, beyond which a request to a higher administrative or corporate review is required. We believe each organization should decide how to determine what system makes sense for their circumstances.

Organizations often adopt a ‘stepwise’ approach to FMV documentation, starting with the most basic ‘all hospital’ benchmarks for hours, hourly rates and annual compensation for directorships or per diem rates for call, and allowing further refinements by specific hospital characteristics when needed.

Check back next week for the sixth step.  If you have any questions email This email address is being protected from spambots. You need JavaScript enabled to view it..

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What Specialties are Least Likely to Be Paid for Call?

This month, we’ve discussed call coverage topics at length.  Given that physician contracting dollars are, on average, 4-6% of a hospital’s operating budget (excluding employed physicians), providing emergency coverage is a huge expense.

Hospital administrators must be very careful when it comes to coverage spending, because it adds up quite quickly across your medical staff. Deciding whether or not to pay at all could be the most important decision you make, not what per diem rate you’ll pay.

What specialties are the least likely to be compensated for call?  Check out the graph below, where we’ve outlined the top ten services that most commonly are not paid for emergency coverage they provide. Why is this important? Establishing commercial reasonableness is the critical first step in your physician contract compliance process, and the services below might not be commercially reasonable to pay (further analysis is suggested). Click on the graph below to see more details about the specialties.

Least-Likely-to-be-Paid-Graph

allison

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