In a recent advisory opinion, the Office of the Inspector General (OIG) approved a hospital’s practice of compensating on-call physicians for providing services to uninsured patients. The OIG concluded that, although the arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute, it contained sufficient safeguards to reduce the risk of violation of the Anti-Kickback Statute. The requesting hospital is a non-profit acute care hospital, which is the sole provider of acute care, inpatient hospital services in its county.

The hospital experienced a declining willingness of physicians to provide on-call coverage without compensation. Accordingly, the hospital proposed an amendment to its bylaws to allow for payment to physicians for services rendered to uninsured patients. The OIG noted that on-call coverage compensation potentially creates a risk that physicians may demand such compensation as a condition of doing business at a hospital, even when neither the services provided nor any external market factor support such compensation.

The OIG focused on whether the compensation is: (1) fair market value in an arm’s-length transaction for actual and necessary items or services; and (2) not determined in any manner that takes into account the volume or value of referrals or other business generated between the parties.

OIG noted that the arrangement does not fit squarely within the safe harbor for personal services and management contracts, 42 C.F.R. § 1001.952(d), because the compensation is not set in advance. However, the OIG concluded that the arrangement presents a low risk of fraud and abuse based on the totality of facts and circumstances.

In support of its finding, OIG explained that the hospital (a) certified that the compensation would be fair market value; (b) has a legitimate rationale for revising its on-call coverage policy; and (c) will offer compensation uniformly to all physicians and will impose tangible responsibilities on them.