April 17, 2014


Our Health System has agreed to add an independent community hospital to the System.  If the Health System Parent Corporation (“HSPC”) becomes the new parent corporation for that hospital, would the HSPC assume the hospital’s liabilities and tax-exempt bond obligations?  Would there be a different answer if the HSPC and the hospital merged?


The Definitive Agreement between the HSPC and the hospital will describe whether the new parent corporation has taken on the hospital’s liabilities and bond obligations.  Simply becoming the new parent corporation in and of itself does not make the parent company liable for the hospital’s liabilities and debts.  That obligation has to be taken on in writing by the parent corporation – in the Definitive Agreement – and with at least one other signed document by which the HSPC agrees to be liable for the hospital’s tax-exempt bond obligations.

A merger of these two entities, however, produces a different story.  The hospital would merge with the HSPC, with the HSPC being the surviving corporation.  With that merger, the HSPC has taken on all of the liabilities, debts and obligations of the hospital which has now merged into it.  Can the HSPC do that merger?  One answer:  not if the HSPC’s own bond documents prohibit the HSPC from assuming the debt of the other hospital’s bond obligations.

To learn more about the ins and outs of hospital mergers and affiliations and the choices they raise, please join us for the HortySpringer workshop “Mergers, Acquisitions, Affiliations or Independence” on May 1-2, 2014 (afternoon session on May 1 and morning session on May 2) at the JW Marriott in Atlanta.

March 27, 2014

Question: How do hospitals and health systems handle the issue of board chair succession – that is, do they normally impose term limits for their board chairs and other officers or allow them to remain in office indefinitely?

Answer: Based on our experience, there is no standard mechanism used by hospitals or health systems to address this issue. A substantial minority provide for some automatic succession to the board chairmanship.  The most common mechanism is an informal process where officer terms are limited to two years and it is presumed (although not automatic) that the vice chair will become the chair at the conclusion of the chair’s current term.  On the other hand, some hospitals specifically do not provide for term limits for their officers, so that once a chair is selected, he or she will often remain in that position for several years until a decision is made to step down or the individual leaves the board.

There are some merits to not imposing term limits.  The board chair and the CEO can get more familiar with one another and there is less of a risk of losing continuity in leadership because of constant changes in the chair position. On the other hand, not providing for some change in the chair position can lead to a situation where “new blood” might be needed and it would be practically difficult to ask the chair to resign and move out of that position without creating some tension on the board. On balance, it probably makes sense to provide for automatic rotation through officer positions, but to allow officers, including the board chair, to serve two consecutive two-year terms, which would ensure a longer tenure although not an indefinite appointment.

March 13, 2014

Question: A physician on our medical staff, who has a history of disruptive behavior, just filed a complaint against our Chief of Staff.  According to the complaint, the Chief of Staff was “demeaning, condescending, and degrading” during a meeting that was supposed to be a collegial intervention.  He claims the Chief of Staff violated our Code of Conduct Policy and we need to take action, pronto.  It was just the two of them at the meeting, so it’s a classic “he said, she said.”  What do we do?

Answer: There are a couple of important lessons here.  Let’s start with the lesson that the collegial intervention should never be one-on-one when you are dealing with a physician who has a history of behavioral problems.  It was predictable that the physician would try to deflect attention away from himself and onto someone or something else.  Do yourself a favor, always have at least one other person present when you have a collegial intervention with a physician who has a history of engaging in “behavior that undermines a culture of safety” or, as my colleague likes to say, “behavior that an adolescent does.”  The opportunity to make up what happened, including accusations about inappropriate conduct on the part of the Chief of Staff, is greatly reduced when there is a witness.

The second lesson is that complaints or concerns raised by the physician cannot be ignored even if you think there is no substance to them.  Ignoring concerns will come back to bite you and it may be in the form of a whistleblower lawsuit.  (And we are seeing more and more whistleblower actions.)  At the heart of these actions is always an allegation that the physician raised concerns about quality or safety, that the physician was ignored and that the physician was subsequently disciplined for raising the concerns.

So even if you are confident the Chief of Staff would never act inappropriately, follow your Code of Conduct Policy in reviewing the complaint.  This means you should meet with the complaining physician and get as many details as possible and then meet with the Chief of Staff.  If there was an inappropriate interaction, address it.  If the complaint was fabricated, that should be considered a violation of the Code of Conduct.

And the final lesson is to make sure you document the collegial intervention.  Concurrent documentation that tells what you did, how you did it, and why you did it will go a long way if there is either an internal challenge or a legal challenge.  The documentation is your opportunity to tell your side of the story in a thoughtful, detailed, organized way.  It is amazing how often this piece of the puzzle is missing or deficient in court cases.

Join us for The Complete Course for Medical Staff Leaders for a more in-depth review of collegial intervention and tips on how to deal with physicians who engage in disruptive behavior.

February 27, 2014

Question: Our hospital wants to provide premium assistance for uninsured patients who seek treatment at our hospital (but are not eligible for Medicaid in our state) to purchase a qualified health plan (“QHP”) on the health insurance exchanges.  Are we allowed to offer this type of premium assistance?

Answer:  Before doing so, your hospital would have to take into account a number of federal laws, such as the Anti-Kickback Statute, to be sure that the premium assistance does not violate those laws.  For example, the question of whether premium assistance for QHPs violates the Anti-Kickback Statute depends on whether QHPs are federal health care programs.  These questions have suffered from less than clear guidance in the latter part of 2013.  The issue first gained attention when Congressman Jim McDermott sent a letter to Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (“HHS”), asking “whether ‘qualified health plans’ represent ‘federal health care programs’ for purposes of participating in the federally-facilitated exchanges and the state-based exchanges….”  Congressman McDermott’s question was based on some individuals being eligible to receive premium tax credits and cost?sharing subsidies to enable them to purchase health insurance on the exchanges.  According to Congressman McDermott, the question of whether these government contributions qualify the exchanges and/or QHPs as federal health care programs has not been answered by HHS. 

In a reply letter dated October 30, 2013 from Secretary Sebelius to Congressman McDermott, the Secretary wrote that:

The Department of Health and Human Services does not consider QHPs, other programs related to the Federally-facilitated Marketplace, and other programs under Title I of the Affordable Care Act to be federal health care programs.  This includes the State-based and Federally-facilitated Marketplaces, the cost?sharing reductions and advance payments of the premium tax credit; Navigators for the Federally-facilitated Marketplaces and other federally funded consumer assistance programs; consumer?oriented and operated health insurance plans; and the risk adjustment, reinsurance, and risk corridors programs.

As such, Secretary Sebelius’s response indicates that premium assistance would not violate the Anti-Kickback Statute, because the plans purchased on the exchanges are not considered “federal health programs.”  However, her response does not fully address other federal laws that this type of premium assistance may implicate.

On November 4, 2013, HHS Centers for Medicare & Medicaid Services (“CMS”) posted a Q&A on its website.  The question asked whether hospitals, other health providers, and other entities were “permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals.”  HHS answered as follows:

[HHS] has broad authority to regulate the Federal and State Marketplaces (e.g., section 1321(a) of the Affordable Care Act).  It has been suggested that hospitals, other health providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces.  HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces.  HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.

It should be noted that CMS’s Q&A is not the law and if CMS wanted to enforce its opinion expressed in the Q&A, it would have to go through the rulemaking process by first issuing proposed regulations that solicit feedback from the public and then finalizing the regulations after considering the feedback.

Nonetheless, some hospitals are trying to minimize the risk of “self-dealing” by using independent third parties to provide premium assistance.  For example, the University of Wisconsin Hospital and Clinics donated $2 million to a local charity to provide assistance in purchasing QHPs on the health insurance exchanges rather than providing the money directly to individuals in need of such assistance.

January 2, 2014


Under the Affordable Care Act (“ACA”), individuals who sign up on the health insurance exchanges by December 24 will be covered on January 1. 2014.  Does January 1, 2014 have any other significance under the ACA?


Yes, but first, a little background.  The ACA created the CMS Innovation Center to test service and delivery models.  The Innovation Center developed the Bundled Payments for Care Improvement initiative (“BPCI”), which includes Models 1, 2, 3 and 4.  The Models link payments for services beneficiaries receive during an episode of care.

Model 1 (participants provide a discount to Medicare from the usual Part A hospital inpatient payments) began for the first set of participants in April 2013, and for the second set of participants on January 1, 2014.

Models 2 and 3 participants (retrospective bundled payment arrangements in which actual expenditures on beneficiaries are reconciled against a “target price” for an episode of care – if a participant is under the target price for a beneficiary, it keeps the difference, but if over the target price, pays the difference to CMS) as well Model 4 participants (a prospective bundled payment arrangement in which a lump sum payment is made to a provider for the entire episode of care) began Phase 2, which is the risk-bearing period, on either October 1, 2013 or January 1, 2014.

Therefore, as of January 1, 2014, all participants in Models 1, 2, 3 and 4 are “live” and in the risk?bearing period.

December 19, 2013


Two of our hospital employees have recently separated and the wife, “Sharon,” has filed for divorce.  They don’t work in the same department, so we are not worried too much about the potential for awkward daily encounters, and neither is the supervisor of the other.  But Sharon recently came to HR to file a complaint about her soon-to-be ex?husband, saying that he is harassing her at work in an attempt to reconcile.  Specifically, he appeared in her unit one day to ask for forgiveness on bended knee, sent flowers to her unit (delivered by singing telegram), and posted a flyer on the employee bulletin board, with their wedding picture and the message, “Sharon – you are the love of my life.  You complete me.  Happy Anniversary.”  Marriage seems like a private matter.  Do we need to do anything – or can we let this thing play itself out?


You need to do something.  The sort of conduct about which Sharon has complained could constitute sexual harassment if it persists and is unwanted (which it seems to be).

While there is nothing inherently wrong with offering a compliment or asking for a date in the workplace, repeated advances by an individual who has been clearly rejected or told to stop can constitute harassment and result in a hostile working environment for the subject of the advances.  In the situation you face, the unwanted advances are not excused simply because Sharon is still married to the man making the advances.  Once she has made it clear that the advances must stop – and has complained to the hospital – any continuance of that behavior could result in hostile work environment liability for the hospital.

For that reason, it is important to take remedial action aimed at discontinuing the conduct perceived as harassing.  This could be as simple as meeting with Sharon’s husband, explaining the hospital’s sexual harassment policy, reviewing his conduct that violates that policy, and obtaining his written agreement not to engage in any such behavior again in the future.  He should also be cautioned that any retaliation (including confronting his wife about the complaint) would be deemed to constitute additional harassing conduct on his part and is strictly prohibited.

November 21, 2013

Question: We are reviewing and revising our Hospital’s Medical Staff Rules and Regulations and were concerned about medical staff members’ compliance with the section that requires all verbal orders to be authenticated by the ordering practitioner within 48 hours of the order being given.  Can we revise this requirement to give the ordering practitioner more time to authenticate the verbal order?


It depends.  The Centers for Medicare & Medicaid Services (“CMS”) revised the Hospital Conditions of Participation (“CoPs”) in 2012.  The revised CoPs now permit verbal orders to be dated, timed and authenticated by the prescribing practitioner or another practitioner responsible for the care of the patient and who is authorized by hospital policy in accordance with state law to write a specific order (even if the order did not originate with him or her).  Thus, the 48-hour time frame for authentication has been removed and CMS is now deferring to state law and hospital policy.  Nonetheless, CMS continues to emphasize that hospitals should “keep the use of such orders to a minimum” and have policies in place to ensure accuracy, such as requirements for “read-back and verify.”  In addition, some states have their own time requirements for the authentication of verbal orders.  So, even though CMS has eliminated the 48?hour requirement for authentication of verbal orders, you will have to consult your state law and regulations before revising your Medical Staff Rules and Regulations.

Even if your state does not have a time requirement for the authentication of verbal orders, there are policy reasons underlying time requirements for authentication of verbal orders.  Verbal orders are prone to errors because of the risk of the practitioner accepting the order mishearing the order that is given.  While much of this risk is minimized by keeping the use of verbal orders to a minimum and with read-back and verify requirements, time-limited authentication requirements serve to identify and correct errors in a short period of time.  Accordingly, a 48?hour authentication requirement helps to further minimize the risk of errors with verbal orders.

Lastly, if there are concerns about the medical staff complying with a 48-hour requirement for authentication, CMS now, explicitly, allows not only the ordering practitioner but also other practitioners caring for the patient and acting within their scope of practice to authenticate verbal orders.  Thus, if a verbal order is given on a Friday night, the physician giving the verbal order would not have to come into the hospital by Sunday night to authenticate the verbal order if the Rules and Regulations include a 48-hour authentication requirement.  Another practitioner caring for the patient could authenticate the order.  However, and once again, you will have to consult state law and regulations to confirm that those sources impose no barriers to this practice.

October 10, 2013


An adult patient recently requested a copy of her birth records. She was adopted as an infant and her birth records, while still maintained by the hospital, include information about her birth mother.  Should we release the records?  If so, should we redact information about the birth mother?


The federal Health Insurance Portability and Accountability Act (“HIPAA”) privacy regulations require covered entities (including hospitals) to provide patients with access to their protected health information in a designated record set.  45 C.F.R. §164.524(a).  This includes a copy of any medical record that is used to record and make decisions about the patient’s care.  In the case of an infant, the birth record would be included.

There are exceptions to patients’ right of access under HIPAA.  One of those exceptions applies when the information to be disclosed could harm the person mentioned in the record. Specifically, the HIPAA regulations provide:

Reviewable grounds for denial.  A covered entity may deny an individual access, provided that the individual is given a right to have such denials reviewed, as required by paragraph (a)(4) of this section, in the following circumstances:


(ii) The protected health information makes reference to another person (unless such other person is a health care provider) and a licensed health care professional has determined, in the exercise of professional judgment, that the access requested is reasonably likely to cause substantial harm to such other person;

45 C.F.R. §164.524(a)(3).

In the case of parents who relinquish custody of an infant for adoption purposes, it is well within a licensed health care professional’s (e.g., social workers, CMOs, nursing supervisors) discretion to determine that access by the now-grown infant is reasonably likely to cause harm (e.g., mental anguish, anxiety) to the relinquishing parents.  In reaching that conclusion, the health care professional could point to the state’s adoption procedures.  Most states have detailed statutes and regulations that outline the procedures that courts and adoption agencies must follow when managing adoption records.  The obvious intent of those laws is to protect adopted children and relinquishing parents from discovering each other’s identities without mutual consent.

Note that if access to the birth records is denied by the hospital pursuant to the HIPAA regulations’ exception at 45 C.F.R. §164.524(a)(3), the hospital must:

  • Give the adopted individual a copy of any information in the record that is not likely to harm the birth parents (probably, a copy of the entire record with all identifying information about the parents removed).  45 C.F.R. 164.524(d)(1).
  • Provide a timely, written denial to the individual, including the basis for the denial, a statement of the individual’s right to request review, an explanation of how the individual can exercise that right, and a description of how the individual can complain to the hospital (including the name or title and telephone number of the contact person) or to the Secretary of the Department of Health and Human Services. 45 C.F.R. 164.524(d)(2).
  • If the patient appeals the denial, the hospital must appoint a licensed health care professional who was not involved in the original decision to deny access to review the request for access.  The hospital must then promptly inform the patient of the reviewing professional’s decision and take other action as required to carry out the reviewing professional’s decision.  45 C.F.R. 164.524(d)(4).

Finally, though it is not legally required, if you intend to deny access to a birth record, consider referring the requestor to the local courts or child welfare agency to obtain more information about lawfully obtaining the identity of the birth parents.  Many states have amended their adoption procedures in recent years to provide a process for adoptees or birth parents to seek each other’s consent to share their identities and contact information.

August 8, 2013

Question: Should our Medical Staff have a policy that governs the use of Medical Staff funds?

Answer: Many Medical Staffs have policies that outline guidelines for permissible expenditures of Medical Staff funds.  All expenditures must comply with the Stark rules, the Medicare/Medicaid anti-kickback law, and (if applicable) IRS tax exemption rules.  Some examples of expenditures that we have seen in such policies include sending flowers to a funeral or contributions towards a preferred charity in cases of death within a Staff member’s family, plant/fruit baskets to Staff members who are hospitalized and similar reasonable activities when consistent with the hospital’s tax-exempt status, Stark and anti-kickback laws.  There are other appropriate uses of funds Medical Staff leaders can address in such policies.  Having such a policy would help protect everyone in the event of a whistleblower claim or government investigation.

To learn more about how to appropriately manage Medical Staff funds, join HortySpringer attorneys Henry Casale and Alan Steinberg for an audio conference on September 3, 2013, entitled “Medical Staff Funds – Dues and Don’ts.”

July 18, 2013

Question: We just put a new peer review process in place and want to be sure that we have adequate clinical staff (R.N.s) to support the process.  There are approximately 350 physicians on our Medical Staff.  Do you have any benchmarks that you could share?

Answer: As we work with hospitals and Medical Staffs around the country to revamp their peer review processes to make them more effective and efficient, questions like yours come  up over and over.  For a long time, we didn’t have good answers.

So, we began to survey registrants at our Peer Review Clinic to try to get data on that, and other, peer review questions.  While our sample size is still relatively small, our survey results reveal the following regarding your question:

Medical   Staff Size

FTE   Clinical Support Staff

Cases   Reviewed/Month


80%       1-3 Support Staff

17%       4-6 Support Staff

47.1%                  1-10

29.4%                  11-25

17.6%                  26-50

5.9%                    Over 50

We invite you to complete our peer review survey online by going to:  http://www.surveymonkey.com/s/PeerReviewClinicSurvey

Obviously, the larger our sample size, the more reliable the data will be.
We will share the results in future Questions of the Week.

And, plan to join us for The Peer Review Clinic this fall. It will be offered in October in Chicago and in November in New York.