September 14, 2017

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).

August 3, 2017

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.

June 8, 2017

QUESTION:        Last week we had a 37-week pregnant patient present to our emergency department in active labor.  Her obstetrician was not on our medical staff and the on-call obstetrician was contacted to come in.  In the course of the phone call between the ED physician and the on-call obstetrician, the obstetrician realized that she knew this patient, and she informed the ED physician that she had treated her in the past but had terminated that physician-patient relationship the previous year because the patient had been noncompliant in connection with her previous pregnancy and related complications.  The on-call physician didn’t want to come in to treat the patient because she had gone through a formal process of sending the patient a letter, with the required advance notice, and didn’t want to reestablish that relationship.  Does the on-call physician really have to see a patient in this situation?  It seems unfair.

ANSWER:           Unfortunately, yes.  While it’s not a popular answer and it does seem unfair from the perspective of the obstetrician in your situation who likely did everything required of her to formally terminate that physician-patient relationship – a process that usually requires written notification with at least 30 days’ advance notice (and sometimes longer in the case of a pregnant patient) – the Emergency Medical Treatment and Active Labor Act (“EMTALA”) requirements trump the fact that the obstetrician terminated the physician-patient relationship.  In this case, the obstetrician is responding to the ED as the on-call physician, and she has to respond.

In the absence of a statute like that in effect in Virginia, which specifically provides that a physician-patient relationship created by a response to the ED by an on-call physician is “deemed terminated” upon the discharge of the patient from the ED or, if the patient is admitted, upon the patient’s discharge from the hospital and the completion of any follow-up care prescribed by the on-call physician, the obstetrician will likely have to go through the advance notice and termination process again.

The situation would be different if this patient presented to the ED and told the ED that the obstetrician was her treating physician.  In that case, when the ED contacted the obstetrician to inform her that one of her patients was in the ED, the obstetrician would have been able to inform the ED that she had terminated the physician-patient relationship, and the ED would then have resorted to contacting the on-call obstetrician.

April 13, 2017

QUESTION:        We are about to begin a medical staff hearing requested by a medical staff member after he was informed that the Medical Executive Committee made a recommendation to the Board that his clinical privileges be revoked for a number of significant clinical concerns.  The physician who requested the hearing is objecting to physicians employed by the hospital’s affiliated group sitting as members of the hearing panel.  Should we grant his objection?

ANSWER:            By itself, employment by the Hospital (or an affiliate of the Hospital) does not preclude an individual from serving on a medical staff hearing panel.  Your medical staff bylaws or credentials policy should explicitly state this.  To maintain eligibility for immunity under the Health Care Quality Improvement Act, a hearing must be held “before a panel of individuals who are not in direct economic competition with the physician involved.”  There may be situations in which an employed physician is in direct economic competition with the physician who requested the hearing, but it is the direct competition that is the disqualifying factor, not the potential hearing panel member’s employment.

That being said, when selecting a hearing panel, the process in your current Medical Staff Bylaws or other applicable policy should be followed.  Ideally, each member of the panel will be selected primarily on the potential member’s ability to be fair and objective.  Any potential conflicts of interest should be managed carefully.  Objections about the composition of the hearing panel should be raised prior to the commencement of the hearing and directed to an appointed presiding officer.  Finally, it is helpful for your policies and procedures to require the resolution of any of the subject physician’s objections, including objections to hearing panel members, during a pre-hearing conference.

For more information on medical staff hearings and appeals, join Susan Lapenta and Charlie Chulack on May 2, 2017 for Horty, Springer & Mattern’s Grand Rounds Audio Conference Series, Medical Staff Bylaws – Hearings, Appeals and Litigation.

November 6, 2014

QUESTION:   A current staff member wants to bring in another physician to his practice, in a specialty we really need. However, this candidate was terminated from the medical staff of another hospital and is suing that hospital. His attorney assures him that he will win. We have asked for more information, but that hospital won’t provide any documents in light of the litigation. What can we do?

ANSWER:     This application should be held incomplete until you have full information. The candidate has the burden of providing all information needed for an evaluation of qualifications. A hospital must exercise reasonable care in assessing the qualifications of all applicants. The candidate and his counsel can provide you with all documents they have, so at least you can assess the basis for the termination. Dire need is not the only consideration! And, the physician’s attorney’s assessment of the likelihood of prevailing is not something that you can rely on to satisfy your organization’s responsibility. This application should remain incomplete until you have sufficient information to determine whether this applicant should be appointed with conditions, or not appointed. If you don’t get everything you need, keep the application incomplete! At the very least, you can obtain the Complaint, Answer and any motions and briefs pending in court.


To help deal with such situations in the future, consider adding to your threshold eligibility criteria a requirement that applicants have no history of adverse actions at another hospital. Granting an occasional waiver to such a criterion when an applicant can show exceptional circumstances and equivalent qualifications is a better option than spending valuable time and energy assessing the circumstances that led another organization to terminate. A termination is rare and is a major red flag.

October 16, 2014

QUESTION:  While conducting routine verification of an application for appointment, we learned that the physician applicant may have been involved in a couple of behavioral incidents at another hospital. We asked the physician to obtain that hospital’s peer review file so that we can consider it as part of our credentialing process. Stating that its file is confidential and privileged, the hospital has refused to release a copy and will not provide any information other than a statement that the physician is “in good standing, with no pending adverse actions.” Since this matter is outside of the physician’s control, should we just accept the physician’s version of the behavioral incidents and move forward with the credentialing process? What choice do we have?

ANSWER:     The situation that you describe is, unfortunately, not too uncommon. Many hospitals are so averse to litigation that they are unwilling to be forthcoming with references and/or information from practitioners’ peer review files. This is unfortunate, since that information is necessary for credentialing by other organizations.

First and foremost, what you need to know is that applicants have the burden of demonstrating that they are qualified in all regards for Medical Staff appointment and the clinical privileges they are requesting – and you do not need to continue processing the application until you receive whatever information is necessary to resolve any concerns that have been raised about the applicant. (Of course, we recommend that you have good bylaws language that outlines all of these principles and that clearly delineates when an application is “complete” and ready to be processed.)

Understanding that the burden is on the applicant, many credentialers make the mistake of believing that their hands are tied in a situation such as this and that they cannot process the application without obtaining the full credentials and peer review files. This is not the case. Leaders have the discretion to determine, based on the facts at hand, the information that is necessary to resolve a concern. In some cases, that may mean obtaining the full peer review file. In other cases, it may suffice to resolve the concern through other means.

For example, consider asking the physician applicant about the incidents. He or she may be able to offer an explanation that would satisfy your concerns (for example, the applicant might admit that the incidents occurred and provide a believable explanation of the steps the physician has taken to prevent a recurrence). If the applicant provides an explanation of the behavior incidents that is either unbelievable or contrary to other information you have received, then, of course, his or her explanation would not suffice and you would want to look for other information to resolve the concern.

You may also choose to speak with others who might have information about the incident.

Or, if the incidents raise specific concerns about the physician’s behavior (for example, the ability to get along with nurses), you might speak with others who have general knowledge of the physician’s behavior (in this case, nurses or nurse supervisors).

In some cases, you may not be able to use alternate sources of information to resolve concerns about an applicant. It may be that the alleged incidents are simply too grievous to be resolved through anything less than the full peer review file of those incidents.

Further, you may need to see the actual peer review file for verification of the facts if the applicant’s veracity is called into question (for example, he or she has been “caught” making omissions or misrepresentations during the application process).

As you can see, credentialing is not black and white. Join us at The Credentialing Clinic this fall to learn more about exercising your leadership discretion in a responsible way as you wade through the sometimes gray credentialing process.

August 7, 2014

QUESTION:   Our hospital is currently using a pre-application process for individuals interested in applying for clinical privileges and medical staff membership at the hospital. We also conduct interviews with these individuals, with the interview occurring before a decision is made on whether the individual satisfies the threshold eligibility criteria included in the pre-application. Is this acceptable?

ANSWER:    There are no legal prohibitions on conducting an interview with an individual who is interested in applying for medical staff appointment and clinical privileges before a determination is made about whether the individual satisfies the threshold eligibility criteria listed on a pre-application form. However, to reduce the chance of confusion about the reasons behind the interview, it would be best to make it clear to the individual that the interview is only being conducted in conjunction with the pre-application form and to make a determination about whether the individual satisfies threshold eligibility criteria. If the individual is deemed ineligible to apply because of information provided on the pre-application form and during the interview, there should be no reason for the individual to believe that he or she is entitled to a medical staff hearing or appeal under the Bylaws since there has not been a denial of the individual’s application.

A good way to achieve this clarity is by adding a paragraph to your pre-application form (or use a cover letter with the pre-application form) that informs the applicant that he or she is required to complete the enclosed pre-application form and that upon receipt of a complete pre-application and after an interview is conducted, a determination will be made as to whether the applicant is eligible to receive a full application for medical staff appointment and clinical privileges. You may also want to reinforce this process by spelling it out in the Medical Staff Bylaws or Credentials Policy.

Pre-application interviews can be tricky because they often, if not always, elicit a subjective response in the person conducting the interview. Nonetheless, we recommend that any interview that occurs before a decision is made on whether to extend an application form to an individual be conducted only to determine whether threshold eligibility criteria (i.e., information requested on the pre-application form) are satisfied.   If that decision is based on more subjective information, the greater the risk – especially if the individual is in a protected class because of race, gender, disability, age, etc.

If the decision is based on objective criteria only and the individual seeks a specific reason why he or she was deemed to be ineligible to apply for appointment, the reason will be much easier to articulate in any follow-up communication.

July 31, 2014

QUESTION:    Can our lab bill Medicare for specimen collection fees for lab specimens collected by phlebotomists who are independent contractors rather than employees?

ANSWER:     Yes. Section 60.1 of Chapter 16 of the Medicare Claims Processing Manual states: “This fee will not be paid to anyone who has not extracted the specimen.” The Manual provision in question is silent about the employment or contractor status of the phlebotomists who work for the lab. Therefore, this provision does not prohibit the laboratory from billing the collection fee, regardless of whether the specimen is collected by employees or independent contractors, since in either case it is the lab which collects the specimens through these individuals. No other interpretation makes sense. If the Manual provision stating that the fee will not be paid to “anyone” who has not extracted the specimen was read in a way to allow only the individual who personally extracted the specimen from the patient to be paid the fee, then only individual phlebotomists – rather than labs that employ or contract with them – could receive the payment. However, this is not the case since labs do get paid when their employees extract specimens. There is no express or implied prohibition against labs using independent contractors to actually extract the specimen and be paid the fee. The statement in question was likely inserted to prohibit the collection fee to be channeled to doctors’ offices, nursing homes or other places where a lab extracted a specimen as a disguised kickback or referral fee, not to prohibit labs from independently contracting with phlebotomists.

June 5, 2014

Question:        How many people would be ideal to participate in a collegial intervention and do you recommend that an administrative staff person sit in to take notes in order to prepare the follow-up paperwork?

ANSWER:        While there is no hard and fast rule, it generally is a good idea to have more than one person.  Two or three are usually best.  If there are more than three, it can put the person who is being “intervened upon” in a very defensive posture and is likely not to be helpful.

The same applies to having a person sit in to take notes.  When the whole tenor of the conversation is that this is a confidential discussion among colleagues, it can seem disingenuous and be disconcerting to have someone sit in to take notes.  However, often the support person has more experience in participating in collegial interventions than the leaders do because they rotate in and out of leadership positions, so sometimes it may be helpful.

It is not always possible, but we recommend drafting the follow-up letter that will be sent after the collegial intervention BEFORE the intervention takes place.  The process of writing the letter can help leaders plan for the intervention, determine their talking points and outline the changes in practice or behavior they would like to see going forward.  Of course, the letter should be modified to reflect the actual conversation before it is sent.

If you missed our webinar, Collegial Intervention:  Awkward and Uncomfortable – but Effective!, you can still obtain a recording of the webinar and all of its supporting documents, including:

  • Collegial intervention checklist to track the major issues that must be addressed in any effective collegial intervention, from planning to follow-up;
  •  Template follow-up letter to collegial intervention that ensures the meeting is documented in a way that helps the physician under review, facilitates future interventions if they are necessary, and also protects the physician leader if the need arises;
  • Policy on Practitioner Access to Confidential Files that grants Medical Staff members access to the various different types of information about them in their files – but in an appropriate manner;
  • Confidentiality and Non-Retaliation Agreement that helps to preserve the peer review privilege for confidential information and files – and prevent retaliation against individuals who may have reported a concern; and
  • Slides used during the webinar.

April 24, 2014

QUESTION:    Over the last several months, one of our surgeons has had three cases where patients had very bad outcomes.  It looks like a combination of bad judgment and poor technique.  Our Chief of Staff and Chief Medical Officer suspended the physician’s privileges and decided to send the three cases out for an external review.  We are a little unclear about whether the suspension automatically triggers an investigation or whether the investigation should take place after we get the report back from the external expert.

ANSWER:    It is important to keep in mind that precautionary (or summary) suspensions can be tricky and should be imposed only when absolutely necessary to protect patients from potential imminent danger.  Before imposing a precautionary suspension, whenever possible, we strongly recommend that the leaders meet with the physician, explain to the physician the basis for the concerns, and give the physician an opportunity to respond.

At this meeting, the leaders can also offer the physician an opportunity to voluntarily and temporarily agree to refrain from exercising clinical privileges in lieu of the suspension.  This option will ensure patient safety and at the same time it is a bit of a face-saving way out for the physician.  In fact, this option is so important that it should be built right into your bylaws.   Even if your bylaws don’t provide for this option and even if the suspension has already been imposed, it is not too late to revisit this alternative.  Your Chief of Staff and CMO could convert the suspension to a voluntary agreement not to practice if the physician is willing to do so.

Remember, too, whether there is a voluntary agreement not to practice or a suspension, the agreement or the suspension should be limited to the clinical privileges about which the leaders have a concern.   If there are no concerns about the physician’s consultative or medical privileges, there is no reason to limit or restrict those privileges.

Now onto the question that you asked, the imposition of a precautionary suspension does not automatically trigger an investigation.  While there is almost always a need for additional fact?finding after a precautionary suspension has been imposed, that fact-finding can be done without the need to commence an investigation.

If the results of the external review confirm your concerns about bad judgment and poor technique, then an investigation may be in order.  The results of the review can be used in the investigation, but don’t forget that as part of the investigation other relevant documents should be reviewed and individuals with relevant information should be interviewed.

Precautionary suspensions are an important tool to protect patients, and others, but they must be used carefully, following the appropriate procedure and as a last resort.  Join Susan Lapenta and Lauren Massucci for Precautionary Suspensions: Follow Your Bylaws and Proceed with Caution.  The audio conference will be held on June 10, 2014 from 1:00 to 2:30 p.m. Eastern Time.