Question: Our organization employs an internist, whose contract is set to expire in two months.  We are planning on not renewing the contract per the terms of the agreement because of a long history of problems with the physician’s medical record0keeping, prescribing patterns, and compliance with employment policies. The physician uses a cane for mobility because of a disability, but this has nothing to do with our reasons for not renewing his contract.  Under the circumstances, are we protected from a lawsuit?

Answer: Unfortunately, nothing can stop someone from suing you.  In Ball v. Einstein Cmty. Health Assocs. Inc., an employed physician with a history of similar problems sued his employer claiming that his contract was not renewed in violation of the ADA and ADEA (the physician was 73 years old).  Ultimately, the court found in favor of the employer because the reasons it offered for not renewing the contract were not considered “pretextual,” or a cover for a real discriminatory reason.

However, the interesting aspect of this case is that the court seemed to equate not renewing the physician’s contract with an “adverse event.”  Under many federal laws prohibiting discrimination (including the ADA and ADEA), the employee has to show that he or she suffered an adverse event related to the employment, such as termination or demotion.

This is not the first time we have seen a court treating the non-renewal of a contract as an adverse event.  In another recent case, Skeete v. North American Partners in Anesthesia, LLP, a physician’s race discrimination suit made it all the way to the summary judgment stage before being dismissed, even though the agreement she had with the employer allowed the employer to terminate her agreement without cause or to not renew the agreement (which the employer did).

These early stages of litigation can be expensive and emotionally taxing.  Some of the time, there is simply no way to avoid a lawsuit.  Nonetheless, if you are sued, your best defense is a strong record outlining the legitimate (and legal) reasons you decided not to renew a contract.  This allows you to demonstrate that there was a legitimate, nondiscriminatory reason for the challenged action.  For more information on how to develop that record and other interesting topics related to employed physicians, join Henry Casale, Rachel Remaley, and Charles Chulack on October 3-5, 2013 in Chicago for the Institute on Employed Physicians and Their Impact on the Medical Staff.

Question: We have been working long and hard on our peer review process at the hospital and are pretty proud of the process we have established.   Then, we realized that as more care is provided on an outpatient basis, there is no peer review of that care.  Can we piggyback on our inpatient peer review process for care provided on an outpatient basis?

Answer:  As hospitals and health care systems mature, many are reaching the same realization – that it would be helpful to have some kind of peer review for care provided on an outpatient basis.  Assuming you are happy with the peer review process at the hospital, we think it is a great idea to start with that as a framework.  You will want to build on the principles of fairness, confidentiality, and collegiality that are part of the existing peer review process.

You may even involve some of the same individuals in the process.  That will help reduce the learning curve.

Obviously, the biggest difference will be the indicators that will trigger a review and the standards or benchmarks you use.   Don’t think you have to start from scratch.   There are a number of organizations that have already established indicators.

One thing to keep in mind is that while peer review information receives substantial protection under most state laws, some statutes limit the protection to peer review conducted in a hospital or other licensed entity.  You will want to know in advance if the documents you create for your outpatient peer review process will be protected from discovery and if the participants in that process will be entitled to immunity.

And don’t think the idea of outpatient peer review is limited to hospital-affiliated groups.  The same rationale for engaging in peer review applies for any group practice.

For more information about peer review for outpatient settings, join Susan Lapenta and Phil Zarone for the audio conference “Safety and Quality Across the Continuum” on March 5, 2013.

Question: At last week’s Credentialing Clinic, there was a great discussion on the importance (and difficulty) of identifying gaps in an applicant’s hospital affiliation history.  Part of that discussion focused on the new NAMSS PASS^TM tool from the National Association Medical Staff Services (“NAMSS”).  So, what is NAMSS PASS^TM?

Answer: We know from our experience in working with clients on reviewing “red flags” on applications that it can be difficult to verify and confirm an applicant’s affiliation history.  Especially when that applicant has a history of jumping from facility to facility.  NAMSS PASS^TM (which stands for “Practitioner Affiliation Sharing Source”) seeks to tackle this problem by offering medical staff professionals an on-line database of practitioners’ affiliation histories with hospitals, surgery centers, health plans, group medical practices, and other entities for the entirety of the practitioners’ careers.

NAMSS PASS^TM is currently accepting data from hospitals and other health care entities, but estimates that it will take approximately one to two years for a comprehensive database to be achieved.  Once the initial data is provided to NAMSS PASS^TM, contributing entities will be required to provide periodic electronic updates of practitioner affiliation information so that the information in the database remains current.  A date stamp documenting and verifying the exact date when the data was last updated by the contributing health care entity will be provided on all queries.

Check out the NAMSS website to learn more about NAMSS PASS^TM and the benefits it can provide.

Question: We are considering an arrangement in which independent physicians on the medical staff would be paid a performance bonus for implementing certain patient service, quality and cost-saving measures on hospital patients.  Is there any guidance on such an arrangement?

Answer: Yes.  On December 31, 2012, the OIG issued Advisory Opinion 12-22, in which the OIG gave a thumbs-up to a proposed transaction in which a hospital would compensate a group of cardiologists a “co-management” fee comprised of two components:  a fixed fee and a potential annual performance-based payment.

In the fixed-fee portion of the arrangement, the physicians were compensated for providing certain specified services.  It was fairly standard.  However, the performance-based payment was most instructive.

The OIG permitted the hospital to pay the group a performance bonus the amount of which depended on whether the group exceeded the base line developed by the hospital for each component of the bonus.  The components of this bonus were:  a hospital employee satisfaction component; a patient satisfaction component; a component for improved quality of care; and a cost-saving component.

As with any OIG Advisory Opinion, the OIG required the hospital to show how it determined that the compensation paid to the physician was fair market value but does not describe how that compensation was valued.  There were also a number of features that the OIG required be included in the program.  So, as with any transaction described in an OIG Advisory Opinion, the devil is in the details.  However, this advisory opinion provides valuable guidance on the elements of a quality-based compensation arrangement that the OIG will permit a hospital to use to compensate physicians to improve care to the hospital’s patients.

Want more details on this and other hospital-physician arrangements?  Join Henry Casale and Dan Mulholland in Las Vegas, March 7-9 for our seminar on Hospital-Physician Contracts:  Survival Strategies.

Question: New HIPAA privacy regulations were published last week.  I understand they include some changes that affect business associates.  Do we need to send new business associate agreements to all of our business associates?  Should we put a moratorium on any business associate agreements that are currently in production, to give us a chance to first make amendments?

Answer: The new HIPAA privacy regulations do, in fact, make some changes regarding business associates.  They add subcontractors of business associates to the definition of “business associate” (though they do not require covered entities to enter into business associate agreements with subcontractors).  The rule also expands the definition of business associate so that “health information organizations” and those that provide data transmission services with respect to PHI (if routine access to PHI will be required) and those that offer personal health records on behalf of covered entities will be covered.  The rule also clarifies that those that maintain (rather than transmit) PHI on behalf of a covered entity are business associates, regardless of whether they have routine access to the PHI in their possession.  Accordingly, since the rule provides some changes and clarification to the definition of “business associate,” it may require you to send out business associate agreements to current and new business partners who were previously not identified as business associates.  It is not as clear whether covered entities will need to revise the substance of their business associate agreements, but that largely depends on whether you have been diligent in amending your business associate agreements to comply with changes to the HIPAA rules over the past several years (for example, as the HITECH Act was passed).

Though slightly unrelated, you should be aware that the new rule requires some changes to your Notice of Privacy Practices (NPP), which means that once those changes are made, you will need to replace all of the NPPs posted in your facilities and on your website and make copies of the new NPP available to patients who request them.  Likewise, the new Notice will need to be distributed to new patients.

 

Question: Our hospital has a clinic located near a military base and we would like to approach the military physicians that are stationed at the base hospital to “moonlight” at the clinic.  Can the military physicians “moonlight” at the clinic?

Answer: It depends.  There is a federal law, 10 U.S.C. §1094(d) which in general states that a military physician is authorized to practice in any facility, civilian or military, located in any state, territory or possession of the United States, as long as the military physician (1) has a current license to practice from any state, and (2) is performing duties authorized by the Department of Defense.  Therefore, the key is for a hospital to enter into an agreement with the federal government and for the physicians to have orders issued that authorize them to perform duties at the clinic.

Question: Our state government has directed that when a Medicaid mental health patient arrives at our Emergency Department, we are to immediately send that individual to a hospital with which the state has contracted for screening and care of this patient population.  Now I understand that following that state direction could get us in trouble under the Emergency Medical Treatment and Active Labor Act.  Is that true?  And if there’s a conflict between state law and the federal EMTALA law, which wins?

Answer:  Unfortunately, the answer is yes.  As described in CMS’s EMTALA Interpretive Guidelines:

Hospitals are not relieved of their EMTALA obligation to screen, provide stabilizing treatment and/or an appropriate transfer to individuals because of prearranged community or State plans that have designated specific hospitals to care for selected individuals (e.g., Medicaid patients, psychiatric patients, pregnant women).  Hospitals located in those States which have State/local laws that require particular individuals, such as psychiatric or indigent individuals, to be evaluated and treated at designated facilities/hospitals may violate EMTALA if the hospital disregards the EMTALA requirements and does not conduct an MSE and provide stabilizing treatment or conduct an appropriate transfer prior to referring the individual to the State/local facility. If, after conducting the MSE and ruling out an EMC (or after stabilizing the EMC) the sending hospital needs to transfer an individual to another hospital for treatment, it may elect to transfer the individual to the hospital so designated by these State or local laws.  Hospitals are also prohibited from discharging individuals who have not been screened or who have an emergency medical condition to non-hospital facilities for imposes of compliance with State law.  The existence of a State law requiring transfer of certain individuals to certain facilities is not a defense to an EMTALA violation for failure to provide an MSE or failure to stabilize an EMC therefore hospitals must meet the federal EMTALA requirements or risk violating EMTALA.

This means that the hospital has to fulfill its own EMTALA obligations, even if the state has designated another facility to screen and treat the patient.  And as you likely suspect, EMTALA wins in a fight with state law.  Federal law – EMTALA – trumps state law and state contracts.

Question: Should our hospital adopt a policy on physician relationships with medical devices companies and, if so, what should it say?

Answer: While not required, it is a very good idea to adopt such a policy.  Physician-owned device companies, or PODs as they are sometimes called, have been in the crosshairs of the federal government for a number of years.  While not illegal, the concern is that physician financial relationships with medical device companies or other vendors can lead to unnecessary utilization and higher costs.  On the other hand, an outright ban on such arrangements could stifle innovation and possibly adversely impact patient care.  Still, the patient should know about the potential conflict. Therefore, any hospital policy should focus on disclosure of such relationships to the hospital and to patients.  Here are some of the basic things that should be in such a policy:

• Any physician on the hospital’s medical staff who has a financial relationship with a medical device company shall disclose that financial relationship to the hospital.

• Physicians who have a financial relationship with any medical device company must disclose the relationship to the patient when they are ordering a medical device sold by the company for the patient.

• The hospital should pay only fair market value for medical devices obtained from companies with which physicians on its medical staff have a financial relationship pursuant to its normal purchasing policies.

• Cost, quality and clinical effectiveness should determine hospital purchases of medical devices.

Question: A JC surveyor told us that it is inappropriate for our Chief of Surgery, who is an anesthesiologist, to perform the initial FPPE to confirm competence for a general surgeon.  The surveyor indicated that FPPE should be performed by a physician in the same specialty.  He also stated that initial FPPE must be performed at our hospital and cannot be accepted from another facility.   How are smaller hospitals addressing FPPE when they have a limited number of physicians in a specialty that can perform the evaluation?

Answer: Taking the latter issue first  –  the Joint Commission has been very clear from the inception of the OPPE and FPPE Standards in 2008 that the purpose of FPPE for initially-granted privileges (new applicants or existing members requesting new privileges) is to confirm the competence of the practitioner to exercise those privileges.  No matter how sophisticated a hospital’s initial credentialing and privileging may be, initial determinations to grant privileges are based on the applicant’s paper credentials.  The objective of initial FPPE is to confirm the competence suggested by those paper credentials.  Therefore, we agree with the surveyor that obtaining additional paper credentials from other facilities where the applicant practices does not meet that objective or the Joint Commission Standards.

But that is where our agreement with the surveyor ends.  The surveyor’s other statement – that FPPE must be performed by a physician in the same specialty – is surprising.  While proceeding in that manner is obviously optimal when it is possible to do so, we do not believe it is required.

We reviewed the FPPE Standard (MS.08.01.01) and the Elements of Performance under it, as well as FAQs about FPPE published by the Joint Commission on October 13, 2008.  None of those sources state that FPPE must be conducted by a physician in the same specialty as the physician whose competence is being evaluated.

In addition, both the glossary and the Elements of Performance under MS.07.01.03 (which pertain to peer recommendations that must be considered in the credentialing process) define a peer recommendation as “information submitted by a practitioner(s) in the same professional discipline as an applicant.”  Professional discipline is not defined in the glossary but is commonly understood to mean physician, dentist, advanced practice nurse, etc., not specialty.

Indeed, “peer” recommendations have traditionally been sought from department chairs at other hospitals where an applicant has practiced and department chairs play a primary role in the reappraisal of a physician’s competence to exercise clinical privileges at reappointment.   Department chairs may or may not practice the same specialty as the applicant for initial appointment or reappointment.  We are unaware of the Joint Commission ever taking the position that such peer recommendations are inadequate if the department chair does not practice in the same specialty as the applicant.

In fact, The Standards BoosterPak for Focused Professional Practice Evaluation/Ongoing Professional Practice Evaluation (FPPE/OPPE) published by the Joint Commission in 2011 states, in its implementation suggestions regarding FPPE, “Department chair (or whoever is evaluating the data) makes the determination to assign a period of focused evaluation.”  That certainly does not require (or even suggest) that the person who evaluates the data collected through FPPE must be in the same specialty as the person being reviewed.

So the bottom line is that there does not appear to be anything in the Standards or other materials published by the Joint Commission that supports the surveyor’s statement that FPPE must be performed by a physician in the same specialty as the physician being evaluated.

A detailed process for FPPE for initial privileges is just one of many topics presented at The Peer Review Clinic.  Join Paul Verardi and Phil Zarone for this intense, interactive program.

 

Question:  We have an applicant for appointment.  The department chair at his last hospital and the CEO at the hospital prior to that have mentioned issues about his getting along with staff he considers to be “beneath him.”  So, we asked him to provide the names and contact numbers for two nurses, technologists, or medical assistants who we could contact to inquire further about his professional conduct.  He refuses and claims we have no right to speak to non-physician practitioners, since they are not “peers” and cannot provide peer references.  Is he right?

Answer:   No, he is not correct.  During the credentialing process, the hospital and its leaders may speak to anyone who has information that could be relevant to the applicant’s qualifications, including clinical skill, judgment, professional conduct, and reputation.  While the credentialing process should include “peer” references, that does not mean it should exclude all other information.  “Peers” are valuable to the credentialing process because they provide the clinical expertise that is necessary to evaluate whether the individual is qualified to exercise the clinical privileges he or she is requesting.  But other individuals can have information that is just as valuable – as in this case, where the unresolved issue is whether the applicant is able to cooperate with other members of the health care team and promote a harmonious work environment.

How you respond to the applicant depends, of course, on what your medical staff bylaws and related documents state.  Provided you have appropriate language, however, the best approach would be to deem the application incomplete – and ineligible to be processed – until the requested information is provided by the applicant and any concerns about his conduct are resolved.