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CAH Contracting for Emergency Call Services

on Wednesday, 6 June 2018 in Health Law Alert: Erin E. Busch, Editor

Medicare Part A provides cost reimbursement to critical access hospitals (CAHs) for the reasonable costs of compensating emergency room physicians, physician assistants, nurse practitioners, and clinical nurse specialists who are on call, as long as they are not otherwise furnishing medical services and are not on call at any other provider or facility.

In order to maximize Medicare reimbursement under these regulatory provisions, some CAHs, particularly the smaller ones, have written their practitioner emergency coverage contracts (employment or independent contractor agreements) requiring the licensed health care professionals to provide emergency coverage during weekday business hours without compensation by the CAH when they are in their medical clinics nearby. If the practitioners are compensated while scheduled for clinic services, that compensation is not Medicare cost reimbursable because the practitioners are “otherwise furnishing medical services.”

Over time, some CAHs have changed their approach because the on-call practitioners may feel that they are being taken advantage of by being required to provide this weekday coverage without compensation. Some CAHs have elected to pay for the coverage while the on-call practitioner is scheduled in the medical clinic, even though this compensation will not be cost reimbursed. CAHs with high daytime emergency department volume have in some cases hired advance practice providers (PAs and NPs) to staff the emergency department on-site on weekdays so that the employed practitioners scheduled in their medical clinics do not have to be interrupted to respond to the emergency department. This approach eliminates the need for uncompensated weekday business hour coverage.

Another challenge has been valuation of the on-call responsibilities for purposes of cost reimbursement. Most CAH-employed physicians and advance practice providers are expected to provide a specified number of weeknight and weekend emergency coverage shifts as a duty of employment. If the employed practitioner accepts CAH requests for emergency coverage in excess of the contractually required number of emergency shifts, he or she is paid an additional fee set out in the employment agreement. The dilemma is that, if the contractually required shifts are compensated as a part of the practitioner’s base salary, it is not clear which portion of that base salary is attributable to emergency coverage of the required shifts, and thus eligible for cost reimbursement. To the extent that the excess shifts are separately compensated (and thus valued), that provides a basis for extrapolating the portion of the base salary attributable to the required emergency call shifts. However, Medicare regulations and Manual provisions make it clear that the compensation must be reasonable, and on desk audit, WPS and other Medicare contractors regularly question CAHs’ calculations. For these reasons, it makes sense to include CAH cost report preparers in the discussion of contract provisions relating to compensation for emergency call services.

Importantly, CRNAs are not included in the list of licensed health care professionals for whose services Part A cost reimbursement is available for emergency coverage of a CAH. To some extent, this may suggest that the issues identified above with regard to compensation for emergency coverage by physicians, PAs, NPs and clinical nurse specialists are not relevant to CRNA contracting for emergency coverage. However, CAHs that have had 800 or fewer surgical procedures in the prior year are eligible to make an annual election to receive reasonable cost-based payment for CRNA services. This pass-through reimbursement is subject to some of the same analysis as described above in terms of reasonableness of emergency call compensation. Increasingly, WPS is reviewing CRNA employment and personal service agreements to consider the reasonableness of emergency coverage compensation. If the CRNA is paid on a base salary, without any apportionment for emergency call duties, it is possible that the Medicare contractor will compare the CRNA’s compensation and duties to those of other CAHs receiving pass-through reimbursement for CRNA services, to determine reasonableness. For affected CAHs, it may be appropriate to include cost report preparers in CRNA contract preparation as it relates to compensation for emergency coverage.

Barbara E. Person

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500

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