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.

QUESTION:    One of our older surgeons had several very bad cases right in a row. Medical Staff and Hospital leadership were very concerned and, after a lot of discussion, we decided we could not let the surgeon practice until we had completed a focused review. We asked the surgeon to “agree to refrain from exercising her clinical privileges” while we completed the focused review, but she refused. We then imposed a precautionary suspension. A week later, the surgeon resigned. We had not commenced an investigation so we weren’t sure if we had to report the resignation to the National Practitioner Data Bank (“NPDB”).

 ANSWER:     You are correct in thinking about whether an investigation was started with respect to your reporting obligation to the NPDB. The Health Care Quality Improvement Act (“HCQIA”) imposes an obligation on hospitals to report professional review actions that adversely affect the clinical privileges of a physician for a period of longer than 30 days. The HCQIA also requires a hospital to file a report if it accepts the surrender of clinical privileges “while the physician is being investigated…relating to possible incompetence or improper professional conduct or…in return for not conducting such an investigation.” So, clearly, if the physician had resigned during an investigating or in return for not conducting an investigation, the resignation would have been reportable to the NPDB.

In your situation, even though there was no investigation, the physician’s clinical privileges had been precautionarily suspended. The NPDB Guidebook specifically addresses the reportability of resignations that occur during a suspension. According to E-20 of the Guidebook: “If the physician, dentist, or other health care practitioner surrenders his or her clinical privileges during a summary suspension, that action must be reported to the NPDB.” Therefore, even though the surgeon did not resign during or in lieu of an investigation, the surgeon’s resignation while under a precautionary suspension must be reported to the NPDB. It is also important for you to check state law. You may have a separate obligation to report the resignation under state law.

QUESTION:    Sovaldi is a new Hepatitis-C drug that is remarkably effective with a 90% cure rate. In comparison, existing medications have roughly a 50% effective rate. The problem is that Sovaldi is also remarkably expensive, $1,000 a pill with a typical 12-week, 84-pill course. As a hospital, should we add Sovaldi to our approved medications list?

ANSWER:     Whether it’s called appropriate use of resources, having to put limits on health care spending, or health care rationing, this is an issue that can’t be avoided, and it will come up with expensive medications yet to come. And, no, it is not fair when some people can afford Sovaldi or the platinum health insurance that will pay for it, while others cannot. Of course, there are ethical issues involved. In some ways, this is an issue to be addressed by a hospital’s ethics committee as much as a pharmacology committee or a committee that addresses purchases of medical devices, drugs and inventory (and so their costs).

A recent article in Modern Healthcare stated that the drugs Sovaldi and Olyio are projected to cost Medicare up to $5.8 billion in 2015. The Illinois Department of Health Care and Family Services (DOH) went on record as to its own decision-making concerning Sovaldi and its Medicaid coverage. As per the DOH, in 2013, Illinois spent $6.7 million for all of its Hep-C therapies. In the first six months of 2014, Illinois spent more than $16 million on Sovaldi.

The DOH established 25 criteria that have to be met in order for Illinois to fund the use of Sovaldi. As described by the DOH Medical Director: “I am torn. On the one hand, I recognize that everybody should be able to get reasonable medical services without thinking of cost when they are sick. Life is much more precious than that. On the other hand, if we decide that the cost does not matter because someone else is paying for it, then we’ve become irresponsible and irrational.”

Interestingly, a similar debate arose earlier this year when Zaltrap, a new cancer drug, was recently approved by the FDA. Zaltrap is much more expensive than the other medications used. Memorial Sloan?Kettering Cancer Center decided not to carry the drug because of its cost and its effectiveness as compared to other existing, less expensive medications. MSK went on record with an editorial in The New York Times to explain its position.

These questions are never going to go away. But that doesn’t mean the answers are easy to come by, either.

QUESTION:    We can find an e-mail exchange between our hospital and a referring physician that discussed a personal services agreement that satisfies all of the requirements of the Stark Law except for the requirement that the agreement is to be signed by both parties. The e-mail exchange shows that the parties agreed on the terms of the Agreement. Can the e-mails be used to satisfy the Stark signature requirement?

ANSWER:    The personal services and fair market compensation exceptions to the Stark Law state that an agreement must be in writing and signed by both parties. That is usually accomplished by using a hard copy of a written agreement that is physically executed by both the hospital and the physician. However, while there is little precedent on the application of the federal Uniform Electronic Transaction Act (“UETA”) to the Stark Law, 73 PS §2260.303, the UETA appears to provide a solution to your dilemma.

Section 2260.303(a) of the UETA states that “a record or signature may not be denied legal effect or enforceability solely because of its electronic form.” Subsection (c) then states: “If a law requires a signature, an electronic signature satisfies the law.”

The “editor’s notes” attached to the UETA define a number of terms that are used in the UETA. The editor’s notes on the definition of an agreement state: “whether the parties have reached an agreement is determined by their express language and all surrounding circumstances.”

The editor’s notes that describe an electronic signature then state:

The idea of a signature is broad and not specifically defined. Whether any particular record is ‘signed’ is a question of fact. Proof of that fact must be made under other applicable law. This Act simply assures that the signature may be accomplished through electronic means. No specific technology need be used in order to create a valid signature. One’s voice on an answering machine may suffice if the requisite intention is present. Similarly, including one’s name as part of an electronic mail communication also may suffice, as may the firm name on a facsimile. (Emphasis added.)

When one also considers that the preamble to the Stark Phase 3 Regulations states: “Nothing in the regulations precludes execution of the agreement in counterparts” 72 FR 51051 (Sept. 5, 2007), then it is difficult to see any reason why, given the terms of the UETA, a hospital could not consider the e-mail exchange between the hospital and the physician to satisfy the Stark signature requirement.

QUESTION:    How should we handle potential HIPAA violations by medical staff members? It seems the Privacy Officer should be involved, given that person’s expertise and responsibility for privacy generally. At the same time, HIPAA violations often involve behavioral concerns that the medical staff leadership may want to address.

ANSWER:    There are good reasons for involving a hospital’s Privacy Officer in the review of HIPAA violations by medical staff members. First, HIPAA states “[a] covered entity must designate a privacy official who is responsible for the development and implementation of the policies and procedures of the entity.” 45 C.F.R. §164.530(a)(1)(i). Since the hospital’s Privacy Officer is responsible for “implement[ing]” the HIPAA policies of the hospital, the Privacy Officer should be involved in addressing privacy violations by medical staff members.

Also, Privacy Officers have significant experience investigating and responding to privacy violations. They will be familiar with HIPAA’s dense regulatory requirements and know how to find information that shows if health information was improperly accessed.

At the same time, there are good reasons for using the medical staff process to review HIPAA complaints involving physicians:

• Physicians may be more likely to listen to other physicians.

• Hospital licensing regulations generally require the medical staff to review the actions of its members.

• The medical staff process is protected by a statutory peer review privilege, which may help to prevent the records of a HIPAA investigation from being used in a lawsuit by a disgruntled patient.

• Violations of HIPAA (or any regulation) often include a behavioral component that will be of interest to the medical staff leadership.

Thus, a hybrid process seems ideally suited for reviewing HIPAA violations by medical staff members. Such a hybrid process could use the review process identified in the medical staff Professionalism Policy, but with the HIPAA Privacy Officer closely involved in the review. The Professionalism Policy and the document that describes the composition of the committee that reviews behavioral concerns (e.g., the Leadership Council) should specifically state that other hospital personnel (such as the Privacy Officer) may be involved in the review of behavioral matters.

It’s also important to define expectations for medical staff members. The medical staff Professionalism Policy should define “inappropriate conduct” to include “inappropriate access, use, disclosure, or release of confidential patient information.”

Finally, medical staff and hospital leaders must be willing to enforce policies dealing with patient privacy. In the past, HIPAA violations by medical staff members were often treated with a slap on the wrist. Given HHS’s more vigorous enforcement efforts in recent years, hospitals cannot treat medical staff members as if they are exempt from HIPAA.

For additional information about dealing with physician behavior concerns, please join us in San Francisco for:

The Peer Review Clinic

The Ritz-Carlton, San Francisco
October 23-25, 2014

 See you there!

QUESTION:    Our hospital and a neighboring hospital are planning to form a common parent company. Will we have to file anything with the Federal Trade Commission?

ANSWER:    If you are both nonprofit and the new parent is going to qualify as a 501(c)(3) organization, you should be eligible for an exemption from the Hart-Scott-Rodino pre-merger notification requirements.

FTC regulations, at 16 C.F.R. §802.40, state that: “The formation of an entity is exempt from the requirements of the Act if the entity will be not-for-profit within the meaning of sections 501(c)(1)-(4), (6)-(15), (17)-(20) or (d) of the Internal Revenue Code.” However, it would be a good idea to get confirmation of this from the FTC Pre-Merger Notification Office, which will issue informal interpretations.  See http://www.ftc.gov/enforcement/premerger-notification-program/informal-interpretations.

And don’t forget to talk to the Antitrust Division of your State Attorney General’s Office. They will likely be very interested in reviewing the transaction and are not bound by FTC rules.

QUESTION:      Our MEC has decided to completely revise our Medical Staff Bylaws, which have had only piecemeal amendments over the last decade. As Chief of Staff, I asked at the last staff meeting (and again by e-mail) for volunteers to serve on the Bylaws Committee. Only one physician offered to serve. What can I do?

ANSWER:      Unfortunately, apathy is an issue in many medical staffs. The pressures on practicing physicians today are considerable. Perhaps “Bylaws” simply doesn’t strike many as interesting. But Bylaws are so important to the culture of safety and collegiality! Those who have helped craft new Bylaws come away from that experience not only more engaged, but also with a good understanding of how good bylaws documents can help anticipate problems and help solve them. How about making personal calls to the physicians you (and the other key leaders, such as the current or immediate past officers and department chairs and the CMO) identify as being thoughtful, fair-minded and who relate well to colleagues? It’s good to have some experienced former leaders on a Bylaws Committee as well as some new blood – draw from physicians you are considering for the “leadership pool.” Current leaders should always be on the lookout for potential members to comprise an informal leadership pool. Experiences in the pool over the course of several years can give them some insight and know-how to prepare them to progress to other leadership roles. Not every staff member has the aptitude and willingness to serve in a leadership role. Those who have the potential but not all the fully developed skills can be nurtured along by current leaders. (Those of you who have attended our Complete Course for Medical Staff Leaders will recognize the “leadership pool” as a term coined by our colleague Dr. Randy Reid!) Today, waiting for volunteers may simply not be enough.

QUESTION:    Can we grant temporary privileges under the Joint Commission’s “important patient care need” standard so a physician on our staff can learn a new procedure?

ANSWER:    The Joint Commission has stated that temporary privileges may not be granted to a physician to allow that physician to learn a new procedure. The Joint Commission’s rationale is that the grant of clinical privileges signifies that an individual is competent to perform a procedure. Granting privileges to learn a procedure – even if those privileges are designated as “temporary” – would create confusion as to the meaning of clinical privileges.

The Joint Commission authorizes two types of temporary privileges:

(1)        “new applicant” temporary privileges, which may be granted when an applicant for initial appointment is awaiting approval by the Medical Executive Committee and Board of Directors; and

(2)        “important patient care need” temporary privileges, which are typically used for locum tenens physicians and similar purposes.

In either case, the physician requesting the privileges must be competent to perform them.

In 2007, the Joint Commission’s Standards Interpretation Group (“SIG”) stated that a physician coming to a hospital to learn a procedure “would not qualify as an important patient care need to justify the use of important patient care need temporary privileges.” The SIG went on to say that “[t]he only temporary privileges that could be granted would be full new applicant temporary privileges.” But if “new applicant” temporary privileges are to be used, the applicant must establish that he or she meets all applicable criteria for the privileges in question. In other words, there really is no way to use temporary privileges to allow a physician to learn a new procedure.

The Joint Commission has also pointed out that if a physician “will not be participating in any manner with the procedure,” but will only be doing “standby observation,” there would be no need to credential or privilege the physician. Of course, doing “standby observation” will generally not be sufficient to learn a new procedure.

QUESTION:      Our hospital has adopted a mandatory flu vaccine policy for all employees and our MEC thinks it makes sense to also require vaccines for all private practice providers who are credentialed at the hospital. What is the best way to do this?

ANSWER:     This question seems to be coming up often – another sad reminder that the summer season is transitioning to flu season! Many medical staff leaders see the value in addressing this issue consistently across all providers, regardless of whether they are employed or not.

The simplest solution would be to modify your eligibility criteria in the Medical Staff Bylaws or Credentials Policy so that every applicant and medical staff member would be required to provide evidence of an annual influenza vaccination. Of course, any exemptions in the hospital’s policy for employees could also be recognized (i.e., allowing providers to wear a mask whenever they are in the hospital if, for example, a medical condition would prohibit them from obtaining a vaccination).

Have other credentialing questions? Then join us this fall for The Credentialing Clinic at the New York Marriott Marquis where we will work through all of your toughest credentialing dilemmas, including how to modernize your eligibility criteria.

And if you can’t make it to the Big Apple, please contact us to have The Credentialing Clinic come to you!

QUESTION:    In a nutshell, how does deferred compensation personal services agreement for ED call coverage work?

ANSWER:    In a deferred compensation program, a hospital would enter into an individual personal services agreement with those physicians on the medical staff who wish to participate in the program. Those physicians would provide ED call coverage and assume other responsibilities in return for compensation pursuant to a deferred compensation plan.

In return for the physician’s services, the hospital would credit the account established for the physician pursuant to the deferred compensation plan each day that the physician is scheduled by the hospital for, and in fact provides, ED call coverage. The amounts credited are subject to distribution and investment vesting rights and forfeiture provisions as described in the plan (for example, being excluded or precluded from Medicare, Medicaid, or any other federal or state health care program; failure to remain on the active staff; and failure to maintain malpractice insurance coverage, among other things, would be subject to forfeiture).

The agreement would be in effect for a one-year term, automatically renewable for additional terms of one year unless either party serves written notice to the other of its intent not to renew. If the hospital serves notice of its intent not to renew, any payments or benefits of the physician that have been accrued under the deferred compensation plan shall become vested and payable to the physician as of the expiration of the then current term. If the physician serves notice of intent not to renew, any payments or benefits that have been accrued under the plan but not yet vested shall be forfeited by the physician.

The amounts credited to each physician’s account would not be presently available to the physician, but will vest in the future, and many physicians consider the amounts as part of their retirement packages.

Join Linda Haddad and Alan Steinberg for more information on this topic and other topics in their “EMTALA & ED Call – What’s Hot Now?” audio conference on September 2, 2014.