Year: 2017

October 5, 2017

Posted on by hortyspringer

QUESTION:        Can credentials and peer review information about a practitioner be shared with a sister hospital if the sister hospital has the same Board, but each has its own separate Medical Staff?  Should they?

ANSWER:            Hospitals that are affiliated under the same Board, in a system, can exchange information, although we recommend several steps to maximize legal protection. We generally recommend including a provision in each hospital’s Medical Staff bylaws or credentials policy, as well as a statement on the application form, that the applicant understands that information will be shared among entities in the system and that the sharing of this information is not intended to be a waiver of the state peer review protection statute.  It is also a good idea to have a formal information?sharing agreement among the hospitals which clearly defines what information will be shared, when it will be shared, and to whom it will be forwarded.

As for whether the hospitals should share information, the answer is yes. Two hospitals under one Board would be considered one corporate entity.  Each individual hospital (or clinic, health plan, ambulatory surgery center and any other related facility) is part of that one entity.  Important to the Medical Staff leaders responsible for helping to maintain high standards of care through careful and thorough credentialing of physicians is the fact that because it is one entity, credentialers may be “deemed” to be making recommendations as to whether a specific practitioner is qualified and competent based on the collective knowledge of the entity as a whole, rather than the knowledge contained within an individual hospital.  The standard in the law — when it comes to doling out liability — is that the credentialers “knew or should have known” the relevant information that came from the sister facility.

September 28, 2017

Posted on by hortyspringer

QUESTION:        It has been several years since we have negotiated a new exclusive agreement.  I seem to recall that the IRS had rules that required a pretty specific term and termination provision.  I also understand there has been a change in those rules that have eliminated those requirements but now require the hospital to monitor how much the exclusive provider can charge our patients for their professional services.  Is this accurate?

 

ANSWER:             Yes, tax-exempt hospitals should be aware that Revenue Procedure (Rev. Proc.) 2017-13 has superseded and replaced the old IRS rules that specified a specific term and termination provision.  Rev. Proc. 2017-13 also added a new rule that requires the hospital to exercise a certain amount of control over the professional fees that are charged by the exclusive provider.  Even if Rev. Proc. 2017-13 does not apply to your hospital, you are well advised to follow it.

First, what old rules no longer apply?  IRS Revenue Procedure (Rev. Proc.) 97-13 used to require tax-exempt hospitals to satisfy a safe harbor in the Rev. Proc. that was based on the term of the exclusive agreement and the manner in which the exclusive agreement could be terminated.

The safe harbor that applied to most exclusive agreements limited the term of the agreement to three years and required that the exclusive agreement must be able to be terminated without cause or penalty after two years.  The IRS first modified Rev. Proc. 97-13 in 2014 and then in 2016, and more recently in 2017, has superseded and replaced Rev. Proc. 97-13 with Rev. Proc. 2017-13.

Rev. Proc. 2017-13 applies to exclusive agreements that are entered into after January 17, 2017.  Rev. Proc. 2017-13 has completely superseded Rev. Proc. 97-13 and no longer requires the term and termination provisions that had been set forth in Rev. Proc. 97-13.  However, among the new requirements imposed on tax-exempt hospitals by Rev. Proc. 2017-13 is that the hospital must either approve the rates charged by the exclusive provider, or at least require that the exclusive provider “charge rates that are reasonable and customary as specifically determined by or negotiated with, an independent third party (such as a medical insurance company).”  In order to further the hospital’s charitable mission, the exclusive provider should also agree to provide the professional services that are subject to the exclusive agreement to all hospital patients regardless of insurance status or ability to pay and agree that when billing for their professional services, the exclusive provider will follow the hospital’s charity care policy.

In addition, it is vital to a hospital’s ability to execute an agreement with any third-party reimbursement program, that an exclusive agreement provide the hospital with the ability to require the exclusive provider to be bound to any third-party reimbursement program that the hospital directs.  Given the current market conditions in which most hospitals must operate, being able to provide the hospital’s services to the patients of any third-party reimbursement program is an important pro-competitive element relating to the cost, quality and accessibility of services that justify granting an exclusive franchise to one group of individuals who provide a vital, hospital-based service.  We recommend that hospitals include this term in all exclusive agreements, regardless of whether Rev. Proc. 2017-13 applies to the hospital.

That is not to say that there are no legal restrictions on the term of a hospital-physician exclusive agreement.  All exclusive agreements have both pro-competitive and anti-competitive aspects and will be lawful so long as the pro-competitive aspects outweigh the anti-competitive ones.  The term is an important factor in this pro-competitive analysis.

The FTC has long taken the position that three years is a reasonable term for an exclusive agreement.  We continue to recommend that hospitals follow this advice and that for antitrust and for a number of practical reasons, the term of an exclusive agreement should be limited to three years, and should never exceed five years.

While no longer required by the IRS, the ability of either party to terminate the exclusive agreement at any time without cause is a very good idea.  A termination without cause provision allows either party to terminate the exclusive agreement when the agreement is no longer in that party’s best interest.  A no-cause termination clause also allows both parties the time needed for a smooth transition from one exclusive provider to the next.

What about a “for-cause” termination provision?  In our experience, it is extremely difficult to define cause to terminate an exclusive agreement.  This is true even if the exclusive agreement includes specific performance standards (which are often difficult to negotiate).  If a party is in material breach of an exclusive agreement, you do not want that party to continue to be present providing an important hospital service.  Therefore, the cure period in a for-cause termination provision is usually very short (30-45 days).  However, such a short period of time presents several practical problems.  First, you don’t know if the party in material breach will cure that breach until after the cure period has ended.  More importantly, a short cure period also does not allow a sufficient period of time to locate a new exclusive provider let alone provide that new exclusive provider with the time needed to obtain billing numbers.

Of greater concern is the practical reality that terminating an exclusive agreement “for cause” seldom allows for a smooth transition from one exclusive provider to the next.  A for-cause termination can also result in a legal challenge if a party disagrees that cause exists to terminate the exclusive agreement.  Whether a party had legal cause to terminate the exclusive agreement is an issue of fact that will require years of litigation and a jury to resolve.  Years of litigation, an uncertain result, and a messy transition from one exclusive provider to the next is not what a hospital bargains for when it enters into an exclusive agreement.

For more information on the latest legal issues affecting hospital-physician contracts, join Dan and Henry in Austin, Texas on March 1-3 at our Physician-Hospital Contracts Clinic.

September 21, 2017

Posted on by hortyspringer

QUESTION:        We’re trying to create a standardized job description for surgical assistants.  Are there any uniform standards or best practices we should follow?

ANSWER:            The most important thing to keep in mind is that surgical assistants may differ dramatically in terms of their education and skill set.  Even the term “surgical assistant” can cover a wide range of different practitioners.

In almost all cases, you will need to grant clinical privileges to surgical assistants.  The Centers for Medicare & Medicaid Services (“CMS”) mandates that hospitals delineate privileges for all practitioners who perform surgical tasks.  This includes practitioners who perform surgical tasks under the supervision of an M.D. or D.O.  (If you are Joint Commission-accredited, you will also need to conduct appropriate professional practice evaluations to confirm competence.)  You will also need to check your state law.  In most states, the surgical assistant profession is not directly regulated.  Others, like Texas, have instituted a licensure process for surgical assistants.

When you are dealing with new applicants for the surgical assistant position, it’s advisable to do some research on their education and training.  Some surgical assistant training programs can be completed within four months.  Others last for two years.  In some programs, almost all of the coursework is taught online and then supplemented by a brief period of hands-on training.  Other programs subject students to an extensive clinical training phase that lasts nearly a year.

If your hospital’s policies and culture allow surgical assistants to play a significant role and to perform significant surgical tasks, it’s advisable to set a high bar in your credentialing and privileging process.  Look for experienced candidates from high-quality programs with extensive, hands-on clinical training.  If the person is certified, inquire about the general requirements for certification.

If you have the resources, consider appointing a task force of interested individuals.  The task force can do research on different educational programs, different kinds of program accreditation, and different types of surgical assistant certification.  The information can then be assembled into a chart for easy comparison.  We also recommend that you seek input from surgeons at neighboring institutions to see whether they have any preferences, recommendations, or cautionary tales to share.  The task force would eventually make a report to your Credentials Committee, Allied Health Professionals Committee, or Committee on Interdisciplinary Practice (as appropriate).

Ultimately, it is important to err on the side of caution.  Although surgical assistants will be supervised by the surgeon, it is important to build in additional safeguards to catch problem applicants before they see a patient.  Strong credentialing and privileging standards will help your surgeons build a team of assistants that they can rely on, and will further strengthen the quality of care at your institution.

September 14, 2017

Posted on by HSMAdmin

QUESTION:        We just discovered that several leases between the hospital and physicians who are active members of our medical staff expired several years ago without being renewed in writing.  We understand that the Stark Law requires a written lease.  Do we have any alternative other than a self-disclosure?

ANSWER:           Yes.  On November 16, 2015, CMS provided some much needed relief from technical violations of the Stark Law such as the one that you have described.

The first thing that you must determine is that a lack of a writing is the only problem that you have.  Therefore, you need to document that each lease complied with the other requirements of the Stark rental of office space exception, especially that at all times the rent that was paid by each physician constituted fair market value, commercially reasonable rent that did not take into account or vary based on any referrals or other business generated by the physicians.

If so, then you should be aware that in the November 16, 2015 Federal Register, CMS stated that it has received numerous submissions similar to your question that related to potential violations caused by the writing requirement, including the “…failure to renew an arrangement that expired on its own terms after at least 1 year.”  80 FR 71314.

CMS then clarified the writing requirement, provided policy guidance, and also provided illustrative examples of the writing requirement, including “checks issued for items, services or rent” (80 FR 71316).  (Emphasis added.)  In all likelihood, each month each physician paid the physician’s rent with a check that was in writing and signed by each physician, and each month the hospital endorsed and deposited those checks.  If the rent was deposited electronically, then the Uniform Electronic Transaction Act will give an electronic transfer of funds the same force and effect as a written check.

Those rent checks/electronic transfers of rent will be found to constitute “contemporaneous documents (that is, documents that are contemporaneous with the arrangement) [that] would permit a reasonable person to verify compliance with the applicable exception at the time that a referral is made” (80 FR 71315) and, as such, satisfied the writing requirement set forth in 42 C.F.R. §411.357(a).

Since this is a policy clarification and not a new regulation, the fact that the leases expired prior to the date of the CMS guidance does not prohibit you from applying this guidance to your situation, even if those expired leases predate that guidance.

If the leases expired after January 1, 2016, then you can take advantage of a change to the Stark Rental of Office Space exception that went into effect on January 1, 2016, which provides that the lease will continue to comply with the Stark exception so long as the lease continues to satisfy the other requirements of the exception.  (See 42 C.F.R. §411.357(a)(7).

September 7, 2017

Posted on by hortyspringer

QUESTION:        I heard that CMS is planning to cancel its upcoming episode payment models.  Is this true?

ANSWER:            Yes.  In mid-August, CMS issued a proposed rule that would cancel its upcoming episode payment models (“EPMs”) and cardiac rehabilitation incentive payment model.  The rule also proposed revisions to the existing Comprehensive Care for Joint Replacement model (“CJR program”).  This proposal marks a significant change of course for the agency’s regulatory agenda, given that CMS had previously expressed an intent only to delay these models, not cancel them outright.

The upcoming EPMs would have affected Medicare beneficiaries undergoing services related to acute myocardial infarctions, coronary artery bypass grafts, and surgical hip/femur fracture treatment.  The rule has not been finalized, so the ultimate fate of these payment models remains uncertain.  CMS will continue to accept comments (as part of the standard notice and comment rulemaking process) on this proposal until October 16, 2017.

If the proposed rule is finalized, it will also give hospitals participating in the CJR program a one-time opportunity to exit the program.  This is likely the beginning of a future trend away from mandatory payment models (such as the CJR program) in favor of voluntary value-based payment programs.

We continue to recommend that you build flexibility into your planning processes to account for this uncertainty in CMS’s rulemaking activities.

The proposed rule is available here.

August 31, 2017

Posted on by hortyspringer

QUESTION:        Is there any way we can help hospitals and their employees who have been affected by Hurricane Harvey?

ANSWER:           Thanks for caring.  The Texas Hospital Association has established the THA Hospital Employee Assistance Fund to assist hospital employees who experienced significant property loss or damage during Hurricane Harvey.

August 24, 2017

Posted on by hortyspringer

QUESTION:        Our hospital-affiliated group has identified a new candidate that they are very interested in employing.  The candidate disclosed that she had a problem in the past that has been resolved.  It turns out that, three years ago, the physician was arrested and charged with second degree cruelty to children, a felony.  The charges were filed after the physician brought her infant daughter to the ED with a fractured femur.  According to the affidavit filed in support of the arrest, the injury, along with others suffered by the child, raised a concern about child abuse.  The charges were subsequently dismissed.

Our group knows about the charges, but says all of her references are outstanding.  They are willing to give her a chance.  What do we do?

ANSWER:            Whenever there is an issue or a concern with an applicant, we recommend you pause and remember to keep “the burden on the applicant.” The applicant has the burden to address and resolve any questions that are raised during the initial appointment process.

When an applicant has had a recent criminal arrest, especially for a felony, you will want to explore, with the applicant, issues surrounding the charges, including the resolution of the charges.  Make sure you check state law first to see if there is a prohibition against asking questions about criminal matters when the charges have been dismissed.  Consider asking the applicant about the charges, the ultimate disposition of the charges, and the conditions pursuant to which the charges were dismissed.

Also consider whether the charges might have triggered an obligation on the part of the physician to notify the state medical board or the hospital where the physician was practicing and ask the physician whether she provided the required notice.  If the physician did not provide notice, especially if required, this should be explored as well.  You might also inquire about steps the physician has taken to address underlying issues that contributed to the criminal charges.   Consider requiring the physician to provide the hospital with correspondence to and from the prosecuting attorney regarding the charges and the dismissal of the charges and any conditions that were imposed.

Minor criminal offenses, especially when the matter is old and there has been no repeat offense, may not derail an application or a favorable employment decision completely.  However, serious charges, especially when the charges are recent, go to the issue of a physician’s reputation, character, ethics and perhaps integrity and require careful review and consideration.

 

August 17, 2017

Posted on by hortyspringer

QUESTION:        The Chief of Staff recently implemented a precautionary suspension after a Medical Staff member engaged in some seriously unprofessional behavior that was thought to compromise patient safety.  The MEC met to review the matter and lifted the precautionary suspension after four days.  A formal investigation was commenced and that process is now complete and the MEC is considering suspending the practitioner for 30 days.  For purposes of reporting to the National Practitioner Data Bank (NPDB), will that suspension be added to the four-day suspension he already served — meaning that it will constitute a 34-day suspension and will, in turn, become reportable to the NPDB as a suspension lasting more than 30 days?

ANSWER:            Even though the precautionary suspension and the “regular” suspension are related to the same factual matter, they are separate professional review actions and, in turn, they do not “add up” for the sake of reporting.  Therefore, the four-day precautionary suspension was not reportable to the NPDB.  The same will be true of a 30-day suspension, if that action is finalized by the Board.  Be sure to check the applicable requirements of state law, however, as some states require hospitals to report all suspensions of clinical privileges, no matter how long they last.

August 10, 2017

Posted on by hortyspringer

QUESTION:        We have recently had two or three applicants who are returning to clinical practice after a gap of two to five years. What kind of policy or practices do you recommend for practitioners who are reentering practice after an extended time off?

ANSWER:            Practitioners may take an extended leave from practice for a variety of reasons, including family obligations, personal health, alternative careers, or retirement. Several resources for physicians returning to practice are available through the AMA and the Federation of State Medical Boards, among others.

From a Medical Staff perspective, one of the eligibility criteria we typically include in our Credentials Policy is that practitioners are not even eligible for privileges unless they can demonstrate clinical activity in their specialty in an acute care hospital setting in the past two years.  Any exception would be considered through the waiver process.

Another option is to adopt a Practitioner Re-Entry Policy that gives the Medical Staff leaders the authority to develop a Re-Entry Plan for any such applicant.  Depending on the circumstances surrounding the practitioner’s absence, such a Re-Entry Plan could include, among other things, a competency evaluation, a refresher course, and/or retraining in order to ensure that the individual’s general and specialty skills are up to date.

To make sure your Medical Staff leaders have the knowledge and tools that they need to manage difficult issues like practitioner re-entry, physician “burnout,” and other tough credentialing, peer review and policy issues, please join Barbara Blackmond and Ian Donaldson this November at The Complete Course for Medical Staff Leaders.

August 3, 2017

Posted on by HSMAdmin

QUESTION:        I know the general rule for preparing minutes is “the less detail the better.”  But, what about when a committee is making an adverse recommendation regarding a physician?  Should we include more detail in that situation?

ANSWER:           Absolutely!  There are always exceptions to the general rule.  If you face a situation where you will be making an adverse recommendation regarding a physician, such as a suspension of privileges, denial of appointment, etc., you should include more detail in the minutes, since including more detail can only help you in those situations!  You should include detail about why the committee reached that decision, although specifics about who said what are not necessary or appropriate.  The objective reasons for the decision should be clearly stated in the minutes, without recording too much detail.  When the MEC makes an adverse recommendation, it will be several months at least before a hearing is held.  When the time for the hearing arrives, it will be helpful to build a solid record for the hearing panel, or a record which can later be used to build a case if litigation follows.

Also, if you have a separate report, for example, from an outside reviewer, that may be something that you want to attach to the minutes.  If you don’t have such a report, then you will obviously want your minutes to be more thorough, in order to reflect the substance of the report.