Med Law Blog : Pennsylvania Health Care Lawyers & Attorneys : Tucker Arensberg Law Firm : Employee Benefits, HIPAA & HIT in Pittsburgh, PA

PEER REVIEW LITIGATION REQUIRES PRIOR

EXHAUSTION OF ADMINISTRATIVE REMEDIES 

The Colorado Supreme Court decided that physicians must exhaust administrative remedies before seeking injunctive relief or monetary damages in court; in the case of Crow vs. Penrose-St. Francis Health Care System, the Court stated:

“Because the governing board has yet to reach its final decision on the physician’s peer review, the physician has not exhausted his administrative remedies and his case was not ripe for judicial review. Therefore, the Supreme Court orders the District Court to grant the hospital’s motion to dismiss the physician’s claims.”

Dr. Crow was summarily suspended by St. Francis Health Care System. The Court reviewed the hospital’s bylaws and concluded that it had a five-step peer review process:

1.         An ad hoc peer review committee investigates complaints and makes recommendations to the credentials committee;

2.         The credentials committee reviews the issue and makes a recommendation to the medical executive committee;

3.         The medical executive committee reviews the issue and makes a recommendation to the governing board of the hospital;

4.         The physician has the right to a medical staff hearing regarding any adverse recommendation; and

5.         The physician has an appellate hearing to an appeals committee following an adverse decision of the medical staff committee.

The Court further determined that the first three steps of the peer review process had been completed promptly, but that the hospital had attempted on eleven separate occasions to schedule the medical staff hearing but all of those had been rejected by the physician, while the physician asserted that he had a right to require the hospital to produce the medical records that were the subject of the hearing in order to properly defend himself. With respect to the last issue, the Court concluded that the physician had ample opportunity to review the medical records at the hospital at anytime.

The Colorado Supreme Court’s conclusion was based upon both specific Colorado statute and general common law. The Court concluded that a peer review process was an administrative proceeding under Colorado law and that exhaustion of administrative remedies was specifically required as a condition precedent to litigation. The Court also concluded that the general rule among the states required exhaustion of administrative remedies.

The Court also concluded that it need not decide the issue of peer review immunity pursuant to the Health Care Quality Improvement Act because that issue was not ripe for decision in the context of this case. The full text of the opinion is at the following link:

http://www.courts.state.co.us/supct/opinions/2006/06SA323.pdf

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Can Medicare Premiums for the Account Holder's 65 Year Old Spouse be Reimbursed from an HSA?

By: Joni Landy, Esq.  

In general, the law prohibits distributions from an HSA for health insurance premiums. There are several exceptions. The only exception that can apply to Medicare premiums is the exception that allows for payment of health insurance (other than a Medicare supplemental policy) in the case of an account holder who has reached age 65 (the "65 Exception").  

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The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has issued its fiscal year 2008 Work Plan, identifying investigation projects for the coming fiscal year relating to the Medicare and Medicaid programs. Following is a copy of pages 3 through 13 of the 2008 OIG Work Plan, which identify the investigation projects for hospitals and physicians.

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Tucker Arensberg is proud to announce that immigration attorneys, Kenneth M. Ventresca and Lisa M. Ventresca have joined the firm as Of Counsel Attorneys to assist our health care, corporate, technology and higher education clients with a full range of immigration issues.

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ORLANDO SENTINEL REPORTS

HOSPITALS HIRING MORE PHYSICIANS

The Orlando Sentinel  published a recent article indicating that hospitals are increasing their direct employment of physicians, citing statistics from national physician recruiters about the increase in recruiting arrangements, and opining that one of the biggest reasons for this national trend is that “physicians are sick of the business of medicine.” The entire article is available at the link below:

http://www.orlandosentinel.com/business/orl-cfbcover15101507oct15,0,781815.story?coll=orl_tab01_layout

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MORE STARK III CHANGES:

PHYSICIAN RECRUITMENT

There have been a number of definitional or technical changes to the physician recruitment exception.

·        The definition of the hospital’s geographic service area, which was previously the area composed of these contiguous zip codes from which the hospital drew 75% of its inpatients, has been tweaked to exclude from that definition any zip code from which the hospital draws no inpatients so long as that zip code is totally surrounded by zip codes from which the hospital does draw patients.

·        If the hospital does not draw 75% of its patients from contiguous zip codes, then the service area will be composed of the contiguous zip codes from which the hospital does draw its patients, meaning that zip codes that are not contiguous but from which the hospital draws its patients will be available as relocation areas for recruited physicians.

·        There is also an optional definition for rural hospitals to allow them to use the contiguous zip codes from which they draw at least 90% of their patients, and to allow the hospital to include non-contiguous zip codes to their service area in decreasing order of the percentage of patients within those zip codes to be added.

·        The definition of physician as been defined to exclude residents and physicians who have been in practice for less than a year as long as those physicians establish a practice within the hospital service area. I assume the term residents will be interpreted broadly enough to include fellows.

·        The definition of allowable incremental costs that can be passed through in situations in which physicians have been recruited and are joining an existing rural practice has been broadened to include costs that are either the lower of actual, per capital, or 20% of the total costs.

·        Finally, hospitals may recruit physicians to prohibited rural areas with the approval of the Secretary.

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As published on the U.S. Department of State web site, Applications for the 2009 Diversity Visa (DV) Lottery will be accepted between noon Eastern Daylight Time (EDT) (GMT-4), Wednesday, October 3, 2007 and noon Eastern Standard Time (EST) (GMT-5) Sunday, December 2, 2007.

Click on U.S. Department of State to learn more about the program.

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CMS ISSUES STARK ADVISORY OPINION PROHIBITING

 AMENDMENT OF RECRUITMENT AGREEMENT

On October 3, 2007, the Centers for Medicare and Medicaid Services (CMS) issued Advisory Opinion CMS - AO - 2007 - 01 denying permission to the hospital and physician to revise a physician recruitment agreement. The proposed amendment would have deleted and “excess receipts provision, which is a standard provision providing that physician or practice receipts in excess of the amount necessary to cover the expenses and compensation guarantee would be paid to the hospital to reduce the debt recreated by the arrangement.

The hospital, physician and medical practice entered into a recruitment agreement in 2004. That  recruitment agreement was later amended to comply with Stark II, which added a requirement that recruitment agreements could guarantee or reimburse physicians and medical practices only for the actual incremental expenses associated with the recruitment. The parties then sought to amend the existing agreement to eliminate the excess receipts provision. 

CMS concluded as follows:

“The purpose of the physician recruitment exception is to permit certain compensation arrangements to induce a physician to relocate his or her medical practice to the geographic area served by a hospital in order to become a member of the hospital’s medical staff. We do not believe that the parties should now be able to amend the arrangement to provide for additional (or potentially additional) compensation to the physician. Because the physician has already relocated his practice, the additional compensation is not for the purpose of inducing relocation and may directly or indirectly reflect the volume of value of the recruited physicians actual or potential referrals.”

The complete text of the Advisory Opinion is available at the link below. Note that this is a CMS/Stark Advisory Opinion, of which only five have been issued since 1998, rather than an OIG Advisory Opinion on the fraud and abuse safe harbors, which are issued on a much more frequent basis.

http://www.cms.hhs.gov/PhysicianSelfReferral/07_advisory_opinions.asp

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The new Joint Commission Medical Staff standards (MS.1.20) are creating significant turmoil within the healthcare industry.  Below is a BNA Report regarding the American Health Lawyers Association teleconference on the issue, in which Mike Cassidy, one of Tucker's Pennsylvania healthcare attorneys, was a presenter:

Revised Joint Commission Standards for Medical Staff Operations Roil Industry

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OIG ADVISORY OPINION 07-10 APPROVES CALL PAY

On September 27, 2007, the Office of the Inspector General of the Department of Health and Human Services posted OIG Advisory Opinion No. 07-10 which approves a tax exempt hospital proposal for compensating physicians for on call coverage. While acknowledging that on call compensation potentially creates considerable risk that physicians may demand compensation as a condition of practicing and referring patients to a hospital, the OIG nevertheless concluded that, even though the personal service safe harbor may not apply because the compensation is not set in advance in accordance with those requirements, the arrangement nevertheless "presented a low risk of fraud and abuse". 

The hospital designed a call coverage program requiring basic physician obligations as part of a two (2) year service contract available to all physicians on the medical staff. The basic obligations and the arrangement include the following:

1. Participation in a monthly call rotation established on a monthly basis by the appropriate department or division chief or chair.

2. Continuing in-patient care and consultation obligations for patients seen in the emergency department and then later admitted to the hospital. 

3. Timely response requirements for emergency calls. 

4. Cooperation with risk management and quality assurance initiatives within the hospital.

5. Appropriate medical record completion. 

The hospital established per diem compensation rates for each day dedicated to on call coverage excluding the 1 ½ days that each physician was required to contribute monthly as a medical staff obligation, which per diem rates differed among specialties based on the following factors: 

1. Severity of illness typically encountered by that specialty in treating a patient presenting the Emergency Department;

2. Likelihood of having to respond when on call at the Emergency Department;

3. Likelihood of having to respond to a request for inpatient consultative services for an uninsured patient when on call;

4. Degree of inpatient care typically required of the specialty for patients that initially present to the Emergency Department.

The OIG noted in its opinion that the hospital had certified its belief that the compensation was legitimate or fair market value compensation and that a third party consultant had concluded that the compensation was within the fair market value range for services to be provided, although the OIG specifically caveated that it offered no opinion as to the legitimacy of the fair market valuation. You can access the text of the opinion at the link below to the OIG resource reading room.

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STARK III REGULATIONS TEXT

CMS issued the revised Stark III Regulations to be effective as of December 4, 2007. The text of the regulations is accessible at the link below, and the Med Law Blog will publish a number of short posts over the next two months highlighting certain changes prior to that effective date.

The subject of today’s post is the fair market value exception for compensation. CMS has eliminated the compensation survey provision for fair market value compensation. The use of national studies and attempts to define the fair market value compensation for relevant local market proved to be overly burdensome.

Future posts will deal with the changes for the definition of a physician group for the ancillary services exception, warnings regarding the use of shared facilities, and the allowable physician practice restrictions for recruiting arrangements.

http://www.medlawblog.com/Stark%20III.pdf

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