Health Law Ticker : California Lawyers & Attorneys for Regulatory, Transactional & Litigation Representation for Healthcare Professionals in the US

In a previous musing we wondered whether California medical foundations would “hold”, given cited turbulence and possible over-reaches with the form. They seem to be hanging on just fine at mid-summer. Some developments:

1. A proposed piece of legislation (SB 364) would have required an intense investigation by the Attorney General’s Office and the preparation of a “patient impact report” or a “negative declaration” whenever a non-profit hospital proposed to establish a medical foundation.  The review regimen would have required public notices, hearings, comment periods, opportunities for challenges and the like. The measure was sponsored by the medical group that is locked in bitter litigation with the City of Hope Medical Center over the Center’s plans to establish a medical foundation, as referenced in the previous musing. A classical collateral assault maneuver to be sure: sue the ba*tards, regulate ‘em too.

But at a recent legislative hearing the bill was drastically reduced to a “study” bill on, inter alia, the governance structures of medical foundations – but the Task Force that would be set up must find the funds to carry out the study. The California Hospital Association suggests that the focus of the Task Force be shifted to studying options for clinical integration of care delivery, in light of the recent federal reforms.  Seasoned legislative veterans caution that counter-attack gambits by the City of Hope Medical Group may crop up in the waning days of the session.

• Email This
• Print
• Comments
• Trackbacks

We are pleased to include here the comments of colleague, Paul Quinn, a Partner in Nossaman's Washington DC office.

Two new final governmental rules implementing the “HITECH Act,” an aspect of the “Obama Stimulus Bill,” now provide financial incentives through Medicare and Medicaid for qualified hospitals and individual healthcare professionals who can demonstrate “meaningful use” of Electronic Health Records (EHR).

One rule, issued by the Centers for Medicare and Medicaid Services (CMS), defines the minimum requirements providers must meet in order to qualify for the payments and the other rule, issued by the Office of the National Coordinator for Health Information Technology (ONC), identifies the standards and certification criteria for the certification of EHR technology.

The amount of financial incentives for hospitals from Medicare and Medicaid is not specifically limited and may run into the millions of dollars. The amount for professionals is limited to $44,000 for Medicare and $63,750 for Medicaid.

• Email This
• Print
• Comments
• Trackbacks

For some time, the law regarding what a provider was required to do in the event of a Medicare or Medicaid overpayment was unclear. The government took the position a provider was required to disclose the overpayment to the Program and refund it. But there was no statute saying precisely that.

Now, as part of the new Patient Protection and Affordable Care Act (PPACA), i.e., the recent national healthcare reform legislation, Congress has indeed created the statute to say precisely that and to require providers to refund the overpayment within 60 days of the overpayment being identified.

There are many theoretical "angels dancing on top of pins" questions that could be asked about exactly when an overpayment is "identified" and many factual situations may become complicated, but the new law makes it crystal clear that a provider may not keep a known overpayment with the intent of "settling up later," nor may a provider "turn a blind eye" and decline to investigate the facts of a potential overpayment situation.

One dilemma providers face is whether to investigate a potential overpayment through its own staff or by bringing in outside experts such as attorneys and billing and coding experts. The advantage of using a provider's own staff typically is lower investigative costs and a faster completion of the investigation. Bringing in outside experts, although more expensive, generally offers a strong statement of objectivity that may convince the government to accept the refund without further investigation. Also, an outside investigation conducted at the direction of an attorney will be protected against disclosure by the attorney-client privilege and work product doctrine. There is no easy solution. As always, "it all depends on the specific facts."

• Email This
• Print
• Comments
• Trackbacks

Nearly two decades ago, the plucky Palo Alto Medical Clinic won legislation in California that enabled it to align more closely its interests and those of its practicing doctors.   It midwived the creation of  “medical foundations”, through the passage of what became Health & Safety Code Section 1206(l).    It is a terse, tightly packed one-sentence provision that exempts from state licensure as a “clinic”:

A clinic operated by a nonprofit corporation exempt from federal income taxation under paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code of 1954 ……that conducts medical research and health education and provides health care to its patients through a group of 40 or more physicians and surgeons, who are independent contractors representing not less than 10 board-certified specialties, and not less than two-thirds of whom practice on a full-time basis at the clinic.

Pretty pithy stuff, but it has been the font of that distinctly California phenomenon, the medical foundation.  Foundations have gradually emerged over the ensuing years as a robust alternative for some hospitals, health systems and medical groups seeking a closer and more interdependent modus vivendi in the environment of California’s prohibition on the “corporate practice of medicine” (Business & Professions Code Sections 2052, 2400).  Simplistically put, in a typical structure a hospital or medical center is the sole corporate “member” of the foundation, which in turn contracts with one or more medical groups to provide services at the hospital, sometimes even acquiring the assets of the medical group(s).   Operationalizing this construct is of course enormously challenging, but it can be an effective mechanism for the delivery of quality, cost-contained care.

Such prestigious non-profit entities as the Sutter Health System, Cedars Sinai Medical Center, Catholic Healthcare West, Children’s Hospital Oakland, Scripps Health and others have established or collaborated with foundations as their approach to the integrated “delivery” of healthcare.  The foundation movement has generally been institution-specific or geographically limited.   

The California Medical Association (CMA), focused on individual doctors, has long groused from the sidelines that foundations are merely a gimmick to evade the California prohibition on the corporate practice of medicine, a charge it has leveled for years also against HMO’s.   The California Association of Practice Groups (CAPG), representing doctors in groups, has been more benign towards foundations.

• Email This
• Print
• Comments
• Trackbacks

Doctors, lawyers, and other professional licensees beware, a recent court of appeal decision creates a low burden of proof for revoking the license of a professional on probation.

A licensed health care provider has a fundamental vested right to her license (Bixby v. Pierno (1971) 4 Cal. 3d 130). Therefore, efforts to deprive her of her license require the licensing authority to prove its case by clear and convincing evidence. (Ettinger v. Board of Medical Quality Assurance (1982) 135 Cal. App. 3d 853, 856.) The Ettinger court clearly explained why it was adopting this heightened standard of proof: “It seems only logical to require a higher standard of proof when dealing with revocation or discipline of a professional licensee as opposed to mere termination of state employment.”

But most disciplinary cases settle, and the standards for settlement are well understood and have even been published: so many years of probation depending on the offense; good behavior; law compliance; regular reports; payment of prosecution costs, etc. But the format of a probationary settlement is also cast in stone: the stipulation will recite that the license is revoked but that the revocation is stayed during the term of probation; and if the licensee successfully completes the probation, the charges will then be dismissed. In other words, the provider’s license – physician, dentist, nurse, whoever – is theoretically revoked, but the revocation is not in force.

It will not be surprising that some licensees will continue to have compliance problems while on probation: all persons may have such problems at one time or another; and most often, people will settle their cases by accepting probation because something in their conduct wasn’t quite right. And people who were in trouble once may have a proclivity for more trouble. So, if there is another charge against a licensee already on probation, more discipline can be expected.

But what will be the standard for proving that new violation? Will it be the same requirement of “clear and convincing evidence,” which the courts have held to be necessary because “a fundamental vested right” is in danger of being lost?

• Email This
• Print
• Comments (1)
• Trackbacks

I recently had the pleasure of hearing Atul Gawande, M.D. speak about his views on health care reform, including his simple but profound message that the yeoman’s share of healthcare reform work needs to be done at the community level, rather than at the national or corporate level. I have also recently been interviewing physicians, nurses and technicians who are witnesses in a peer review hearing about the quality of services being provided by one of their colleagues.

Because these physicians’ compensation amounts are determined, to some degree, by the physician’s ability to cut costs, rather than the more traditional fee-for-service model, there is little concern that the physician who is the subject of the peer review matter can allege competition or “turf” battles as a cause of witness bias. Further, to Dr. Gawande’s point, it is clear that this “community” of interventional radiologists, vascular surgeons, neurosurgeons and cardiologists, does a terrific job of deciding amongst them who can provide the most effective and economical care, in large part because they do not compete for those dollars.

This struck me as another example to illustrate Dr. Gawande’s conclusion that local communities and physicians are the ones to determine cost control and healthcare improvement, as he discusses in a recent New Yorker article.

• Email This
• Print
• Comments
• Trackbacks

A  prosecuting attorney who represents professional licensing boards shared with me his view that the decision to file disciplinary charges (PDF) is determined largely by the licensee's past conduct, whereas the degree of discipline is significantly influenced by the remedial measures undertaken by the licensee since the events leading to the disciplinary action.

In my experience, this is true.  The sooner a health care professional can take a serious look at and begin to effectively address the issues leading to the board's action, the better off he or she will be.  This is appropriate even if the allegations are exaggerated, and even in some cases where the allegations are untrue.

What kinds of remedial measures are appropriate in a given case?  The best answer to this is to initiate whatever measures are necessary to assure the licensing board that patient safety will be protected.  The highest priority of any health care licensing board is to protect patient safety.  So, any problem (or allegation of a problem) that threatens patient safety must be addressed.

• Email This
• Print
• Comments
• Trackbacks

Even the most casual observer of the healthcare scene knows that “exchanges” are going to be an important element of the coverage system that is transforming because of the recent federal reform legislation.  There will presumably be a public exchange in each state -- an administered and serviced electronic marketplace through which groups, families and individuals will be able to sign up for healthcare coverage.  In certain instances this will be subsidized, including through tax credits. The state exchange will likely be the exclusive portal for subsidized programs.  It could over time become the dominant venue for purveyors and purchasers of healthcare coverage to interact and transact. If structured properly it could have a positive impact on the quality, cost, accessibility, effectiveness and creativity of healthcare.

An exchange will have multiple and operationally complex responsibilities. It will be linking people together with huge HMO’s, carriers and other kinds of delivery systems.  By as-yet undetermined mechanisms it must ensure that the on-going relationships are enrollee-friendly and productive. It must be the central “trusted information source” to help everyone, on all sides of the care equation, to understand and engage in the very new world of care coverage and delivery that is emerging.  There are already major, competing bills in the California Legislature to structure a State Exchange, even though the federal law sets January 2014 as the start-up date for state exchanges.

Critical up-front roles of a state exchange will be promoting its coverage opportunities and services to the public and facilitating participation in the exchange marketplace.  A state exchange will need all the help it can get with this. A public bureaucracy will not be able to do the job by itself. It must enlist the intimate collaboration of the private sector, of professionals who know and meet the challenges of explaining and enrolling the laity in healthcare coverage.  The skill and expertise of brokers need to be enlisted, so-called “navigators” who can get the word out and people in must be signed up.  Other entities that today serve as portals to coverage or as private exchanges need to be structured into the processes of the state exchanges as private sector partners in what will be a gargantuan undertaking.

A tattered page should be taken from California’s last experiment with a similar mechanism, the public small-group HIPC of the ‘90’s.  Such was the ideology of the day, brokers were banned from participating in its processes, even though the small group market is heavily dependent on their services. The result of so scorning the potential of the private sector was that the HIPC never realized its potential and eventually folded.  By contrast, a parallel undertaking of the same timeframe in the private sector, the California Choice Exchange, relied heavily on brokers to recruit and educate small groups and survives to this day.  Notably, 44% of the groups who receive their coverage through this exchange had not previously offered coverage to their employees. The private sector made it work then, it must be involved this time.

Much is at stake with the anticipated state exchange, and it better be set up right. A pivotal condition of success will be deploying the expertise of the private sector. 

• Email This
• Print
• Comments
• Trackbacks

How many of us recently read this or a similar headline: “Nine California hospitals fined for medical errors,” Los Angeles Times, May 21, 2010 and immediately searched the article to see which hospitals were involved? You may even be tempted to do it now to refresh your memory on the list of facilities included in the press release issued last month by the California Department of Public Health. The headlines are attention-grabbing for those who work in hospitals as well as the patients and families in the communities served by the hospitals.

Physicians have at least three good reasons to be concerned about the unwelcome attention.

• First and foremost is the concern that patients may have been harmed, and whether that harm may recur because of systemic problems in hospital operations. Who might be the next patient to suffer similarly?
• Second, the reputation of the physician caring for the patient may be damaged even if the physician was not directly responsible for the errors.
• Third, the reputation of all physicians on the Medical Staff of the hospital is impacted when the reputation of the hospital is tarnished.

There are a number of things physicians on the Medical Staff can do when they hear about quality of care problems (including events that don’t make it into news reports).

• Email This
• Print
• Comments
• Trackbacks