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MACRA: Rolled Out and Still Rolling

MACRA: Rolled Out and Still Rolling

Most physicians have, by this point, gained some familiarity with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The name of this law has appeared frequently in commentary over the past several years, and the changes it imposes are well on their way. However, many of the details concerning MACRA’s implementation—how it affects physicians on the ground and what they need to do on a practical and technical level in order to comply with its requirements—deserve additional attention. It is, after all, a law that changes much about the Medicare payment landscape, and new guidance from the government continues to appear.

This article will discuss three recent releases from the Centers for Medicare & Medicaid Services (CMS) that concern MACRA, dating from the end of 2017 through the beginning of 2018. There is obviously much more that physicians should note about MACRA as we head further into 2018, but hopefully, this very brief article can serve as a springboard into the many features of this multifaceted new legal scheme.

  1. Starting with the most recent news release, on Jan. 3, 2018, of this year CMS announced that it had launched a new system for clinicians in the Quality Payment Program to submit their 2017 performance data. This system is located on the Quality Payment Program website, and because it replaces an array of former systems on multiple websites, it should make such data submission easier. For most clinicians, the 2017 submission period runs from Jan. 2, 2018, to March 31, 2018. Therefore, exploring this website’s new system for submission — including developing familiarity with the log-in and submission procedures — sooner rather than later is advisable. There are multiple data submission options embedded in the website, and thus having some advance knowledge of the preferred method should benefit a clinician. Eligible clinicians will see in real time the initial scoring, which may later change, for each of the Merit-based Incentive Payment System (MIPS) performance categories as they submit their data. CMS’ news release included a link to a fact sheet on this new system, which can be accessed here.
  2. On Dec. 19, 2017, CMS published the “2018 Medicare Electronic Health Record (EHR) Incentive Program Payment Adjustment Fact Sheet for Eligible Clinicians.” The referenced Payment Adjustment relates to the reduced Medicare payments for clinicians who do not demonstrate that they are meaningful users of Certified Electronic Health Record (EHR) Technology. This year is the final year of meaningful-use payment adjustments under the Medicare EHR Incentive Program, but the need to meet EHR standards is not going away: MACRA combines certain aspects of this Medicare EHR Incentive Program with other programs into MIPS, and the basic requirements that established meaningful use will still factor in as a percentage of a clinician’s MIPS score. The MIPS payment adjustments will be applied to Medicare Part B payments in 2019 for the 2017 performance period. CMS’ news release containing additional details can be accessed here.
  3. On Nov. 2, 2017, CMS issued a rule containing updates to the payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule for this year. This is not a MACRA-specific rule; instead, it demonstrates how MACRA has already become incorporated into the Medicare payment landscape as a whole. For example, MACRA helped determine the overall update to payments under the Fee Schedule, which is +0.41 percent for this year; the rule discusses the replacement of the Physician Quality Reporting System by MIPS; the rule also discusses the patient relationship code categories required under MACRA. In short, MACRA’s impact on the payment landscape is varied and pervasive. The time for getting up to speed on the practical implementation of this law has certainly arrived.

As noted above, MACRA is here among us, and it touches upon many facets of a physician’s practice. In order to avoid the various causes of decreased reimbursement, it benefits physicians to proactively seek to understand the ongoing requirements ushered in by the law.

Article contributed by Chris Thompson, an attorney at Burr & Forman LLP practicing within the firm’s Health Care Industry Group. Burr & Forman LLP is an official partner with the Medical Association.

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The New Department of Justice Initiative: Aggressively Investigating and Prosecuting Opioid-Related Cases

The New Department of Justice Initiative: Aggressively Investigating and Prosecuting Opioid-Related Cases

Before joining Burr & Forman, LLP, I was a federal prosecutor for a little over a decade specializing in health care fraud and general white collar matters. In that role, I was the member of a prosecution team that secured guilty verdicts earlier this year against two pain management doctors in Mobile, Ala., following a protracted jury trial. The doctors were convicted of a litany of federal crimes arising from their operation of a pain management clinic, including, among others, violations of the Controlled Substances Act and the Anti-Kickback Statute. The doctors received substantial prison sentences of 20 and 21 years, respectively, and forfeited virtually all of their assets (including bank accounts, houses and cars) to the government.

The doctors in this case were convicted of running what the government calls a “pill mill,” a pain management clinic that allegedly prescribes narcotics for illegitimate purposes. Pain management professionals should be aware this is just one example of what will likely be an onslaught of “pill mill” and other opioid-related prosecutions by the Department of Justice (DOJ) during the current administration. In fact, just a few months after the convictions in the Mobile case, Attorney General Jeff Sessions announced a nationwide takedown of 120 doctors, pharmacists and nurses – dubbed “Operation Pilluted” – who were charged with various federal crimes related to their alleged “unlawful distribution of opioids and other prescription narcotics.” In announcing the takedown, Sessions noted the DOJ would continue to “aggressively pursue corrupt medical professionals,” and “the Department’s work is not finished. In fact, it is just beginning.”

On the heels of that announcement, in August of this year, Sessions heralded a new DOJ pilot program called the “Opioid Fraud and Abuse Detection Unit.” According to Sessions, the unit “will focus specifically on opioid-related health care fraud using data to identify and prosecute individuals that are contributing to the opioid epidemic.” Sessions warned, “If you are a doctor illegally prescribing opioids or a pharmacist letting these pills walk out the door and onto our streets based on prescriptions you know were obtained under false pretenses, we are coming after you.” Sessions explained the DOJ would be appointing a special federal prosecutor in 12 select districts across the country whose sole purpose will be to prosecute “pill mill” and other opioid-related cases.

One of the districts, which has received one of the special “pill mill” prosecutors, is the Northern District of Alabama, in Birmingham. The U.S. Attorney for that district, Jay Town, separately confirmed the new prosecutor will spend “100 percent of their time working these types of cases…What we’re going after is the medical providers who are operating outside the boundaries of the law and the medical practice.” Echoing the Attorney General’s statements, Town vowed, “We’re going to rid the Northern District of these pill mills.”

Note “pill mills” are not the only opioid-related cases on the DOJ’s radar. In fact, it is also concentrating on the “diversion” of opioids in hospital settings. Such “diversion” schemes include, for instance, the theft of opioids from a hospital “Pxyis” machine (a device hospitals utilize to regulate the dispensing of controlled substances) by nurses, or the forgery or fraudulent creation of opioid prescriptions by hospital personnel.

In sum, the DOJ has fired a warning shot that physicians, pharmacists and other medical professionals involved in the treatment of patients will be under intense scrutiny for the foreseeable future. This is especially true for physicians who operate pain management clinics. These doctors should, in general, prescribe opioids reasonably and carefully in the context of each patient’s presentation and thoroughly document their treatment.

To that end, doctors should, among other things: maintain a thorough intake procedure, which requires the patient to give a detailed medical history and provide previous diagnostic studies; have the patient sign, if applicable, an “opioid treatment agreement” requiring the patient to abide by certain opioid use guidelines; perform exhaustive physical examinations during the initial visit and at regular intervals during the patient’s treatment (which should be carefully documented); consider alternatives to opioid treatment, such as non-narcotics drugs, physical therapy and surgery (and, where applicable, carefully document why alternative treatments would be ineffective); prescribe the lowest dosage and quantity of opioids possible to treat the patient’s condition; closely monitor for signs of diversion and addiction by regularly ordering urine drug screens and reviewing the patient’s prescription drug monitoring data; and have regular independent audits conducted by a billing consultant or another pain management specialist to ensure compliance with all regulations and laws. Implementing these practices should help doctors avoid government scrutiny as part of the DOJ’s new initiative to crack down on alleged “pill mill” operations.

Adam Overstreet is counsel at Burr & Forman, LLP. Prior to joining Burr, Adam practiced with the U.S. Attorney’s office and gained extensive experience with health care fraud matters. Burr & Forman, LLP, is a partner with the Medical Association. Please read other articles from Burr & Forman, LLP, here.

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Before You Lock the Door and Turn Out the Lights . . .

Before You Lock the Door and Turn Out the Lights . . .

Necessary Steps When Closing a Physician Practice

The Gilberto Sanchez Story [1]

Shortly after a group of DEA agents and other law enforcement personnel sporting tactical gear arrived in the parking lot with search and arrest warrants on a Tuesday early in August, Dr. Gilberto Sanchez was hauled away from his medical practice in the 4100 block of Atlanta Highway in Montgomery, Ala. Dr. Sanchez had been indicted for operating a medical clinic that dispensed controlled substances inappropriately, unlawfully, and for non-medical reasons. Since his arrest, Sanchez has pled not guilty and been released on bond.

The unfortunate saga of Dr. Sanchez highlights a difficult issue for both physicians and patients — who takes care of a physician’s patients when his or her practice closes shop, whether voluntarily or otherwise? Montgomery news sources reported on a patient of Dr. Sanchez who encountered this exact struggle. After Sanchez was arrested, the patient and his wife (also a patient of Sanchez) began the arduous search for another physician. They also encountered trouble getting their medical records from Sanchez’s office, reporting that they received no answers beyond a voicemail box too full to receive additional messages.

Dr. Sanchez’s story is unique in many regards, but it highlights the need for an effective transition plan upon the closing of a physician practice. Doctors sell practices, retire, die, seek the protection of the United States bankruptcy laws, and generally quit practicing medicine all the time. Whether you’re packing up to hit the links or being packed up and hauled to jail like Dr. Sanchez (let’s hope it’s not the latter), here are a few things to think about in order to wind up your practice’s affairs in accordance with applicable legal and ethical considerations.

A Few Things Before You Leave

A number of factors come into play when you decide to close your practice. Below we consider legal and ethical requirements regarding continuity of patient care and access to records from the Alabama Board of Medical Examiners (“BME”) and the American Medical Association (“AMA”), notification requirements for various government and third-party payors, and miscellaneous corporate formalities that must be undertaken when dissolving a business.

Board of Medical Examiners Requirements and AMA Ethical Considerations

Perhaps the most important part of closing down your practice (maybe for you, but certainly for your patients) is making sure that your patients have adequate notice and opportunity to find a new doctor, as well as access to their medical records. These notice and access considerations are addressed on the state level by the BME in accordance with ethical opinions issued by the AMA.

Consider the following items when closing your practice. Take note of whether each is a suggested best practice or a mandatory requirement.[2]

  1. Notify the BME. You need to advise the BME of any change in your status (closing practice, retiring, etc.) and of your new address, if applicable, and you are required to notify the Medical Licensure Commission within 15 days of a change in your address.[3] You may also submit a request for the removal and disposal of unused medications, especially controlled substances.
  2. Notify Your Patients. To ensure continuity of care for your patients, they have to receive a reasonable notification that your practice is closing and an opportunity to arrange for the transfer of their medical records.[4] The BME recommends that (i) each active patient of the practice receive a direct mail notification of the practice’s closing at their last known address and that (ii) the practice issue a public advertisement (e.g. in the local newspaper) about the closing of the practice to notify the public more generally. All notices (public or direct notice to active patients) should indicate the expected date the practice will close, and the direct notice to active patients should specifically identify instructions for how patients can access or transfer their medical records, and, if the medical practice is being assumed by another physician or practice, the name, address, and telephone number of that physician or practice.[5]
  3. Notify the Drug Enforcement Administration (“DEA”). Notify the DEA of the closing of your practice. This notification can be especially important as you plan for the appropriate disposition of unused medications, including controlled substances.
  4. Post a Written Notice at the Practice. After you actually close your practice, you should consider posting a written notice of its closing on the door or other visible areas of the office/building where your practice is located. The notice should contain instructions for patients to transfer or obtain copies of their medical records, as well as the current location of such records. These instructions must be made available to leasing agents, new tenants, or new owners of the building where the practice is located.
  5. Records Management. As mentioned briefly in the description of notices above, you have to maintain and provide access to patient medical records for a period of time after you close your practice. The BME generally recommends maintaining such records for a period of 10 years after your practice closes. However, some types of medical records (e.g., pediatric records and immunization records) may have different retention requirements, and records associated with anticipated litigation should be kept until the litigation is resolved, even if such resolution does not occur until after the regular record retention period. In addition, BME regulations and AMA ethics opinions require that you make records available to a patient’s succeeding physician, to third parties as requested by your patients or their authorized representatives, and as otherwise required by law.[6]

These record maintenance practices serve multiple purposes: (i) you can satisfy your ethical obligation to provide access to medical records for your patients so they can obtain copies or transfer copies of their medical records to their new physician; and (ii) you fulfill applicable recordkeeping requirements for government and other third party payors in the event of an audit.

  1. Provide Access to Patient Records.  Your patients have a right to access their medical records, or at least a copy of them. This right extends to any person who has a properly executed authorization from the patient to access such records.[7] According to state law and regulations, when providing copies of patient records, you may charge up to $1.00 per page for the first 25 pages, up to $.50 for each page after that, and up to $5.00 as a search fee.[8] The costs of mailing the medical records to the requestor or their designee may also be included in the copying charges. However, state regulations (and in some cases HIPAA) require physicians to consider the needs of their patients and waive the fees where appropriate.[9]

Notify Government and Third Party Payors

There are several parties in addition to your patients who want to know if you close your practice. Medicare, Medicaid, and private insurers will want to know when you close your practice in order to terminate your provider agreement. There are likely requirements in your provider agreement with each payor regarding what you should do when closing your practice. However, generally you need to take the following steps for each payor below:

  1. Medicare. File a form 855B within 30 days of a change of ownership or practice location and within 90 days of other changes in enrollment, as required by 42 CFR § 424.516.
  2. Medicaid. There are no general requirements for closing a physician practice in the Medicaid Administrative Code or the Medicaid Provider Billing Manual. However, providers should notify HPE/DXC (Medicaid’s fiscal agent) on the provider disenrollment form.[10]
  3. Private Insurers. Frequently, insurance payors require notices prior to termination. For private insurers, such as Blue Cross Blue Shield of Alabama, check your provider agreement for the applicable notice requirements, if any.

The “Business” Side of Things

As if the steps listed above were not enough, you still have to think about what you want to do with the business entity from which you operated your practice. Unless you sold your practice, your name is probably still in a partnership, limited liability company, or professional corporation somewhere. To fully dissolve the business entity that formed your practice, you have to file articles of dissolution (or their comparable form for other types of business entities).[11] Be sure to file a copy of the articles of dissolution (or their comparable form) with the BME within 30 days of the effective date of dissolution.[12] In addition, you may be required to file notices with applicable federal and state taxing authorities, local governmental entities, and other agencies, as well as known creditors.

In addition to the above, there are several other nuances that must be explored when dissolving your practice. These nuances can be different based on the type of entity you chose to form your practice and may very well be different between two practices formed of the same type of entity. Consult counsel to look at the relevant provisions in the applicable statutes and the governing documents for your practice.

Lights Out, Lock the Door

As you can see, closing a physician practice is not as simple as turning off the lights and locking the door when you leave. There are a number of legal, ethical, and practical considerations you have to be aware of as you close or transition away from your practice. It may seem like a daunting task at first, but it has to be done in order to provide continuity of care for your patients and to provide for the orderly winding down of your practice’s affairs. To accomplish these objectives, be sure to plan ahead, consult counsel in the planning and implementation process, and don’t leave any stone unturned. It could be the one that trips you up unexpectedly.

For additional inquiries regarding this article or the steps to close a medical practice, please contact Christopher Richard or Gregg Everett at:

Christopher Richard, Esquire
Gilpin Givhan, PC
P.O. Drawer 4540 (36103-4540)
2660 EastChase Lane, Suite 300
Montgomery, Alabama  36117
Telephone: (334) 244-1111
Direct Dial: (334) 409-2233
Fax: (334) 244-1969
E-mail: crichard@GilpinGivhan.com

 

Gregg B. Everett, Esquire
Gilpin Givhan, PC
Lakeview Center, Suite 300
2660 EastChase Lane
Montgomery, Alabama  36117
Telephone: (334) 244-1111
Direct Dial: (334) 409-2228
Fax: (334) 244-1969
E-mail: geverett@GilpinGivhan.com

Article contributed by Christopher Richard, an attorney at Gilpin Givhan. Gilpin Givan is a Bronze Partner with the Medical Association.

 

REFERENCES

[1] Jennifer Horton, Alleged AL pill mill doc’s patients lined walls, sat on floor, U.S. attorney says, WSFA12 News (August 1, 2017), http://www.wsfa.com/story/36021670/alleged-al-pill-mill-docs-patients-lined-walls-sat-on-floor-us-attorney-says; Samantha Day, Patient of alleged Montgomery pill mill doctor speaks out, WSFA12 News (August 4, 2017), http://www.wsfa.com/story/36066718/patient-of-alleged-pill-mill-doctor-speaks-out.

[2] These action items come from a publication by the Alabama State Board of Medical Examiners, available on the BME website. Recommended Procedure in Closing/Discontinuing a Medical Practice, Alabama State Board of Medical Examiners, available at http://www.albme.org/closeprac.html (last visited September 5, 2017).

[3] Ala. Code § 32-24-338 (1975).

[4] Ala. Admin. Code r. 540-X-9-.10(3). See also AMA Code of Medical Ethics, Opinion 1.1.3: Patient Rights (stating the patient’s right to continuity of care, as well as sufficient notice and reasonable assistance in making alternative arrangements for care prior to a physician discontinuing care); AMA Code of Medical Ethics, Opinion 1.1.5: Terminating a Patient-Physician Relationship (requiring physicians to notify the patient or an authorized decision maker sufficiently in advance to permit the patient to secure another physician and to facilitate transfer of care where appropriate).

[5] Ala. Admin. Code r. 540-X-9-.10(3); AMA Code of Medical Ethics, Opinion 3.3.1: Management of Medical Records.

[6] Id. With regard to disclosure as required by law, check the record management requirements in your provider agreements with Medicare, Medicaid, and private third party payors, as applicable, to confirm the minimum length of time you should preserve records and make them available for inspection. However, in most cases, the 10 years recommended by the BME should suffice.

[7] See Ala. Admin. Code r. 540-X-9-.10(2); Ala. Admin. Code r. 545-X-4-.06 (including in the definition of “unprofessional conduct” any refusal to comply, within a reasonable time, with a request from another physician for medical records or information when such request is accompanied by a properly executed authorization from the patient).

[8] Ala. Code § 12-21-6.1 (1975); Ala. Admin. Code r. 540-X-9-.10(2).

[9] Ala. Admin. Code r. 540-X-9-.10(2); AMA Code of Medical Ethics, Opinion 3.3.1: Management of Medical Records(d)-(e).

[10] http://medicaid.alabama.gov/content/9.0_Resources/9.4_Forms_Library/9.4.16_Provider_Enrollment_Forms.aspx. The form contains additional instructions regarding the disenrollment process.

[11] As a practical matter, your business will be “dissolved” once the articles of dissolution are approved, but the entity will continue to exist for a period of time for purposes of winding down its affairs by paying off creditors and distributing remaining assets to the owners, among other things.

[12] Ala. Admin. Code r. 540-X-9-.01(5).

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Physicians Maintain High Standards

Physicians Maintain High Standards

By the time this article goes to print, a lot could change, so there’s no apparent use in guessing what will come of the next Repeal and Replace efforts or what’s happening at Main Justice. Nobody knows. The only certainties from Washington are that there will be change in the payment and insurance models, and that there will be more reports of arrests and prosecutions for alleged fraudulent schemes. Some practitioners express concern, but physician quality and innovation do not have to suffer because of these changes in law because physicians maintain high standards.

Neither Obamacare nor Ryancare nor Trumpcare nor the next iteration will actually change health care. Instead, they guide how health care services are paid. Payment certainly can influence quality, just as who pays for care can perhaps impact patient compliance. But quality care is neither guaranteed nor premised on any particular actual or proposed national structure. These laws do not provide anyone health care. You do, as physicians and nurses and hospitals. The Medical Association began with 30 physicians having a common goal of higher standards in an era with no insurance market at all, nor anesthesia like we know it today. It has always been appropriate for physician entrepreneurship to drive innovation and quality care with it, but there are limits.

The limits have always been there. Whether the changes of today will raise or lower the standard of care within any specialty, or chill entrepreneurship and innovation, is up to each provider. Understanding the legal bounds is often difficult for physicians, and sound legal advice is crucial to success because for every one announced prosecution or indictment there are untold stories of civil corporate misdeeds and aggressive strategies where specialized counsel could have maintained the high standard.

The Department of Justice under Attorney General Jeff Sessions announced in a July 13 news conference that 412 people were charged for participating in health care fraud amounting to more than $1.3 Billion. Pharmacists in Mississippi recently pleaded guilty to fraud charges, with one admitting” that he conspired with others to select compounded medication formulas based on profitability, rather than on effectiveness or patient need,” and that he dispensed medically unnecessary medications. The other pharmacist admitted to “soliciting physicians and other medical professionals to write prescriptions without seeing patients for medically unnecessary compounded medications dispensed by the pharmacy.”

In Virginia, “[a] medical doctor and entrepreneur was sentenced to [10 years] in prison . . . for defrauding his former company’s shareholders and for failing to account for and failing to pay employment taxes.” Ohio-based companies and their executives recently “agreed to pay approximately $19.5 million to resolve allegations pertaining to the submission of false claims for medically unnecessary rehabilitation therapy and hospice services to Medicare,” not that the therapy wasn’t performed or quality care – just that it was excessive and driven by profit over patients. Louisiana clinical psychologists were sentenced for a $25.2 million Medicare fraud scheme involving both unnecessary therapy and therapies never performed. A Florida physician pleaded guilty for his role in pain pill diversion and Medicare fraud scheme. An Alabama federal court enjoined a pharmacy from “distributing adulterated, misbranded and unapproved new drugs in violation of the federal Food, Drug, and Cosmetic Act.” A Tennessee physician settled false claims allegations of distributing and billing Medicare for drugs that had not been FDA-approved. This is all according to the Department of Justice in just the last month. Expect more, whether it’s from General Sessions or a successor.

These headlines should educate rather than frighten the physician entrepreneur with high standards. Each case can educate an intelligent professional that while billing guidelines and corporate laws may have positive or negative impacts on quality, usually indirectly, your standard of care owed to your patient and your business partners does not have to regress. These providers who fell into trouble with the Department of Justice may truly be outliers.

The Virginia “physician and entrepreneur” sentenced in July abused his investors’ trust, stole their money, and provided fraudulent financial statements. That’s an extreme case, perhaps, but consider the same case but where the physician and his investors lost trust in each other purely because of a lack of communication after a series of misunderstandings, and maybe some ego or fear. Perhaps the misunderstandings were fueled by further misunderstandings of medicine by the investors and misunderstandings of business by the physician. But I speculate on a hypothetical ripped from these DOJ headlines. Further, though, consider where the physician did not intend to steal anything but made blindly ignorant mistakes because he failed to ask for help or just maintained business as usual despite corporate changes. Consider the same story but where the financials were not intentionally fraudulent but in error or premised on aggressive billing practices, or an unwillingness to fully engage accountants for their services to pinch pennies. These seemingly more benign circumstances could be all too common, aggravated further by ego and competing visions or interests, and if unchecked and don’t make the DOJ alert then they could also lead to civil lawsuits.

A health care lawyer can answer questions and guide physicians to maintain high standards. The honest physician in need of compounded pharmaceuticals for patients could unwittingly become a co-conspirator like the Mississippi physician. The honest clinician is being driven to cut costs and increase revenue. The honest physician is brought into seemingly prudent arrangements that can turn sour. When a physician goes beyond medicine and into business, retaining legal counsel is critical to maintaining the same high business standards as physician strives for high standards in caring for patients. Specialists and trained sub-specialists are available.

Tom Wood is a partner in the Health Care Practice Group at Burr & Forman LLP and represents health care providers in regulatory and litigation matters. Buff & Forman LLP is a partner with the Medical Association.

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Have You Properly Obtained Informed Consent?

Have You Properly Obtained Informed Consent?

In June, the Pennsylvania Supreme Court issued a controversial opinion holding that a physician had to have face-to-face interaction with the patient to effectively obtain informed consent. This has raised heightened awareness of a physician’s obligations to obtain informed consent from their patients and caused many to evaluate their own practice of obtaining informed consent.

In Shinol v. Toms, a patient brought a medical malpractice case against a neurosurgeon alleging he failed to obtain informed consent. (2017 WL 2655387). The record and testimony at trial established that the physician met with the patient on two occasions prior to surgery to discuss potential complications. The physician testified that he explained the different approaches and options for surgery. The patient also had a telephone conversation with a certified physician assistant (“PA”) who worked for the physician, and just before surgery, the patient met with the PA who obtained her medical history, conducted a physical examination and obtained an executed informed consent form. The form gave the physician permission to perform “‘a resection of recurrent craniopharyngioma.” The patient’s signature acknowledged that she had discussed the advantages and disadvantages of alternative treatments, that the form had been fully explained to her, that she had an opportunity to ask questions, and that she had sufficient information to give her informed consent.

Despite her signature on the consent form, the patient alleged in the lawsuit that she was not fully informed of her options (total versus subtotal resection of a non-malignant brain tumor). According to the patient, if she had been given the option of a subtotal resection, she would have chosen the less aggressive form of surgery.

After the physician received a jury verdict in his favor, the state supreme court declared a mistrial based on an improper jury instruction related to informed consent. The jury had been instructed that it could consider any relevant information it found was communicated to the patient by “any qualified person acting as an assistant to the physician.” In granting a new trial, the Pennsylvania Supreme Court held that the surgeon himself had to have face-to-face conversations with the patient about the risks of surgery in order for him to have properly obtained informed consent from his patient. In other words, evidence of the discussions with the PA could not be considered by the jury in their deliberations of whether informed consent was properly obtained. The court’s opinion was an extension of a previous opinion that held informed consent could not be delegated to a hospital; the physician was responsible for obtaining it.

Similar to Pennsylvania, Alabama courts have found that a hospital and its staff do not have an independent obligation to obtain informed consent from a patient.  Wells v. Storey, 792 So. 2d 1034 (Ala. 1999). However, this does not necessarily equate to the ruling in Shinol. Based on Shinol’s strict interpretation and possible increased scrutiny as a result of the holding, a review of Alabama law on informed consent is warranted.

It is the duty of the physician to inform the patient of the risks and obtain their consent, and if the physician fails to get informed consent, a patient has a cause of action under the Alabama Medical Liability Act (“AMLA”). Historically, the cause of action for a failure to obtain informed consent evolved through the legal theory of battery. The reason being that a person has the “‘right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient’s consent commits an assault for which he is liable in damages.'” See Fain v. Smith, 479 So. 2d 1150 (Ala. 1985) (quoting Schloendorff v. Society of New York Hospital, 105 N.E. 92, 93 (1914)).

The elements of the claim are:

  1. the physician’s failure to inform the patient of all material risks associated with the procedure, and
  2. a showing that a reasonably prudent patient, with all the characteristics of the plaintiff and in the position of the plaintiff, would have declined the procedure had the patient been properly informed by the physician.

The test for determining whether the physician has disclosed all material risks to the patient is “a professional one, i.e. whether the physician had disclosed all the risks which a medical doctor practicing in the same field and in the same community would have disclosed. Expert testimony is required to establish what the practice is in the general community.” Giles v. Brookwood Health Services, 5 So. 3d 533 (Ala. 2008).

In one Alabama case, the physician entered into evidence an informed consent form signed by the patient. Although the patient stated she did not give consent, the court found the forms alone sufficient to dismiss the patient’s claims for assault and battery. There was no discussion in the court’s opinion as to how the form was presented to the patient or whether there was detailed discussion between the patient and the physician.

In another Alabama case involving the scope of consent, the physician obtained an executed form from the patient consenting to a specific procedure but also stating that the physician was authorized to perform “such additional operations/procedures during the course of the above as are considered therapeutically necessary or advisable in the exercise of professional judgment.” The patient alleged that the consent form did not give the physician “carte blanche” to perform any procedure. In this case, the physician had mistakenly removed an ectopic kidney the physician thought was a tumor. The Alabama Supreme Court overturned the lower court’s ruling in favor of the patient on the issue of informed consent and stated that there must be expert testimony as to whether the procedure performed by the physician was reasonable in light of the findings during the surgery.

Although the cases and elements mentioned above require the physician to inform the patient, there are no cases in Alabama that specifically require a face-to-face meeting/encounter with the patient to give informed consent (although this is definitely best practice) and certainly nothing in our case law that says a PA or other qualified health care professional may not explain the risks associated with a procedure. The law requires a physician to exercise that level of reasonable care, skill and diligence as a similarly situated physician and this rule should be followed when it comes to informed consent. It would also be wise to review consent forms to ensure they are not too limited in the grant of consent and ensure you are documenting all discussions with patients about the risks of procedures.

Angie Cameron Smith is a partner at Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman LLP is a partner with the Medical Association.

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Emergency Physicians: Georgia BCBS Policy Violates Federal Law

Emergency Physicians: Georgia BCBS Policy Violates Federal Law

WASHINGTON, DC – The American College of Emergency Physicians and its Georgia Chapter recently announced a policy that Blue Cross/Blue Shield of Georgia plans to implement in July, making subscribers pay for any emergency department visit that turns out not to be an emergency, violates the “prudent layperson” standard, which is codified in federal law, including the Affordable Care Act. It’s also the law in more than 30 states.

The “prudent layperson” standard requires that insurance coverage be based on a patient’s symptoms, not their final diagnosis. Anyone who seeks emergency care suffering from symptoms that appear to be an emergency, such as chest pain, cannot be denied coverage even if the final diagnosis does not turn out to be an emergency. It also prohibits insurance companies from requiring patients to get prior authorization before seeking emergency care.

“This new policy will mean that patients experiencing emergencies will not go to the ER because of fear of a bill, and could die as a result,” said Rebecca Parker, MD, FACEP, president of ACEP. “Health plans have a long history of not paying for emergency care.  Now, they are trying to roll over federal law that emergency physicians fought for to protect patients from this ‘profits first, people last’ behavior by insurers.”

In the new policy, final diagnoses that BCBS considers to be “non-urgent” would not be covered if the patient goes to the emergency department, leaving patients to decide whether they are experiencing an emergency. A 2013 study in JAMA found a nearly 90 percent overlap in symptoms between emergencies and non-emergencies.

“This policy threatens the safety of all Georgians,” said Matt Lyon, MD, FACEP, president of Georgia’s ACEP Chapter. “We treat patients every day with identical symptoms – some get to go home and some go to surgery. There is no way for patients to know which symptoms are life-threatening and which ones are not. Only a full medical work-up can determine that.”

Dr. Lyon adds that this action will be especially bad for Georgia’s rural population, where citizens are often limited in their options for medical care.

“If patients think they have the symptoms of a medical emergency, they should seek emergency care immediately,” said Dr. Parker. “The vast majority of emergency patients seek care appropriately, according to the CDC.  Patients cannot be expected to self-diagnose their medical conditions, which is why the prudent layperson standard must continue to be included in any replacement legislation of the Affordable Care Act.”

ACEP is the national medical specialty society representing emergency medicine. ACEP is committed to advancing emergency care through continuing education, research and public education. Headquartered in Dallas, Texas, ACEP has 53 chapters representing each state, as well as Puerto Rico and the District of Columbia. A Government Services Chapter represents emergency physicians employed by military branches and other government agencies.

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A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part III)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part III)

Editor’s Note: The following is the final installment of a three-part series discussing important provisions in physician employment agreements.

When a physician leaves a medical practice, especially if the physician stays in the area to compete against his/her former employer, the situation can become stressful and acrimonious. During the final weeks of employment, the departing physician can start to focus more on his/her new practice to the detriment of the current employer, and disputes often arise regarding access to medical records, soliciting patients and employees and when to schedule procedures – before or after termination. We have seen both medical practices and departing physicians engage in questionable conduct in order to keep as many patients as possible. Lawyers are often engaged in negotiating the terms of separation or, in a worse-case scenario, filing or defending a lawsuit.

Over the years, we have counseled hundreds of physician practices on how to successfully navigate the various issues that arise when a physician departs, regardless of whether the physician is an employee or an owner. Careful planning on the front end through a comprehensive employment agreement is the most important element in an amicable and fair separation. More often than not, we have found that disputes and subsequent litigation can arise when the employment agreement is not properly drafted or does not adequately address the specific terms of separation.

This three-part series provides a summary of the key provisions (with sample language) that can be incorporated into a physician employment agreement to help mitigate problems when a physician leaves your practice. Since each medical practice is unique, please consult with your own attorney before using any of the provided sample provisions in a physician employment agreement.

Protecting the Practice’s Confidential Information. Especially if the departing physician will continue to practice in the same service area as the medical practice, it is very important that the practice protects its sensitive and confidential information, including medical records, charge masters and policies and procedures. As such, the employment agreement should address the confidentiality of such items. Failure to do so will make it more difficult for the medical practice to protect its sensitive information.

Physician agrees that all data and information which he/she receives from Employer, whether directly or indirectly, in connection with this Employment Agreement or Physician’s employment with Employer shall be considered confidential and proprietary information belonging solely to Employer (the “Confidential Information”). Without limiting the foregoing, “Confidential Information” shall mean any written or oral information of Employer, including, without limitation, all business or management studies, patient lists and records, financial information, Employer documents, forms, business or management methods, marketing data, fee schedules, employee and operating manuals, trade secrets as defined by the Alabama Trade Secret Act, as amended from time to time, accounting information, and any other information treated by Employer as being confidential or labeled “Confidential” by Employer. Physician shall hold such Confidential Information in strictest confidence and shall not make use of such Confidential Information except in the performance of his/her services for Employer. Physician shall not disclose, distribute or otherwise divulge such Confidential Information to any other third-party without the prior written consent of Employer, except in the performance of his/her services for Employer. Notwithstanding anything contained in this Section to the contrary, the obligations of Physician under this Section shall not apply to information or property which Physician can demonstrate is: (a) now in the public domain or later publicly available through no fault of Physician, (b) has been or is in the future rightfully obtained without restriction by Physician from other sources not subject to a confidentiality agreement, or (c) independently developed without use of Employer’s Confidential Information. Upon request of Employer and upon termination of this Employment Agreement, Physician shall immediately return to Employer all Confidential Information which Physician received from Employer or any Confidential Information within Physician’s possession. The terms of this Section shall survive termination of the Employment Agreement.

Protecting the Practice from Future Liabilities. When a physician leaves a medical practice it is still possible for the practice to face liability stemming from the physician’s past conduct. For example, federal payers, such as Medicare and Medicaid, as well as commercial payers, can audit medical practices for professional services rendered several years prior to the date of the audit.  Further, HIPAA violations, malpractice issues and other misconduct may not surface until after a physician leaves a medical practice. Unless the employment agreement continues to hold the departing physician responsible after termination for his/her conduct during employment the medical practice may have insufficient remedies in the event a problem arises.

Physician shall hold harmless, indemnify and defend Employer, and its members, partners, officers, directors, employees, successors, representatives and assigns, from and against any and all liabilities, costs, damages, suits, judgments, fines, losses, demands or expenses of any kind whatsoever (including, but not limited to, court costs, arbitration fees, if applicable, and attorneys’ fees and expenses actually and reasonably incurred) from or attributable to: (a) any breach by Physician of this Employment Agreement, (b) any and all negligent or intentional acts and/or omissions of Physician, and/or (c) any overpayment, refunds, offsets or recoupments related to claims for medical services provided or ordered by the Physician, but only to the extent the Physician received compensation from the claims subject to the refund, offset or recoupment.  The terms of this Section shall survive termination of the Employment Agreement.

While it may take more work on the front-end, having a well-thought out and comprehensive physician employment agreement will save significant time, effort and potentially money when a physician leaves your medical practice.

Read the full series:

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part I)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

Howard Bogard is a Partner with Burr & Forman LLP and serves as the Chair of the firm’s Health Care Industry Group. Kelli Fleming is a Partner with Burr & Forman LLP practicing in the firm’s Health Care Industry Group.

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Texting and Emailing in the World of HIPAA

Texting and Emailing in the World of HIPAA

If you experience anxiety every time you consider texting and/or emailing in your health care setting, you are not alone. On one hand, the world that we live in necessitates that information is communicated in a quick and easy manner. The ability to text or email staff and patients has become a high priority for many health care entities. On the other hand, patient privacy and confidentiality is essential to meeting compliance standards. Though emailing and texting are convenient, it certainly does not come without the possibility of pitfalls. It is a complex issue that requires meeting several factors in order to be implemented properly.

But Everybody Is Doing It, Right?

The perception is that many health care entities are already taking advantage of emailing and texting capabilities.  That may be accurate.  But the bigger question is whether they are utilizing those tools in accordance with HIPAA Privacy and Security requirements.  Health care entities should consider the following:

A Risk Analysis is key.  An adequate Risk Analysis is required to be performed at the outset of the practice, prior to developing a HIPAA policy.  This Risk Analysis identifies the type of information that you maintain or access and the areas within your entity where protected health information (PHI) is vulnerable. The Risk Analysis should be reviewed, and amended if necessary, whenever there is a change in your information technology environment.  This includes adopting the use of email and text messaging. The entity will need to consider potential vulnerabilities and threats, then document their plan to ensure that health information stays secure.

Show me the policy.  The HIPAA Privacy and Security policy must document your entity’s use of these services and define how employees are to utilize them.  This includes specifying whether only business owned devices can be used or whether the entity allows employees to utilize their own personal device (BYOD). The policy should also be specific about any differences in procedure for emailing and texting internally, versus outside communication with patients and other health care providers.  The policy requirement should be followed by adequate training.

Encryption, encryption, encryption.  Many entities that utilize PHI in email communications secure the information via encryption.  Within health care entities, the information is often secured by firewalls.  Firewalls make it much easier to implement security measures, oversee procedures and secure information.  Some health care entities choose to transmit PHI via electronic health records and customized patient portals. However, using emails to properly transmit PHI outside the entity is a much more complicated process.  To properly transmit PHI via email, encryption must be utilized.  Encryption software will resolve security issues because the patient receives an email containing a link which requires a unique username and password to access the PHI. Some patients find the process of logging in and remembering required passwords to be cumbersome, but others appreciate knowing that their information is secure.

Less is moreWhen communicating with individuals outside of your entity about PHI, utilize the Minimum Necessary Rule.  The Minimum Necessary Rule requires health care entities to limit the PHI produced to the amount of information necessary for the recipient to carry out their function.  For example, if another provider requests a patient’s diabetes lab work, only provide the requested lab work and not the patient’s entire medical record.  Also, it is recommended that you not share sensitive information including, but not limited to, a patient’s mental health, communicable disease status, child or elder abuse, and substance abuse issues.  The entity’s policies/procedures should define and describe how sensitive information should be transmitted.

The patient gets their way. HIPAA requires entities to communicate with patients in the manner determined by the patient, so long as it is reasonable. An entity’s Notice of Privacy Practices will generally articulate methods of intended communication by the entity.  However, a patient may choose not to receive communications through a traditional method. An example would be a patient request not to use U.S. mail, but to use email instead.  That entity may find that they do not have encrypted email capabilities that would appropriately safeguard the information. In this scenario, the health care entity must still comply with the patient’s request; however, they should have the patient sign a form that memorializes the patient’s request to use email communication and documents the risks associated with this request.

The guidance above does not apply to patient initiated communications. Patients are not considered to be HIPAA covered entities and therefore, their actions are not HIPAA violations.  Thus, patients are free to initiate emails or text messages with health care providers at their pleasure. Health care entities should have a form on hand for the patient to sign prior to responding to an email or text message from the patient. This form documents that the patient is aware of the inherent risk of email or text message communications, but wishes to receive the communication in that form anyway. This will help to satisfy the patient’s preference while helping to shield the health care entity from liability if communications are intercepted beyond the entity’s control.

Texting Has Added Risks

Text messages are generally available to anyone who utilizes that person’s phone because there is generally not separate password security for access to the text messaging feature.  Additionally, because the text messages do not pass through the entity’s servers, it is difficult, if not impossible, for IT staff and Security Officers to audit the texts.  And if these communications are intended to be a part of the patient’s record to demonstrate communication, the patient loses the right to amend the communication if it is not readily available in the paper or electronic record. There are vendors who offer “secure texting” solutions. If a health care entity is considering a secure texting vendor, have your designated Security Officer review their system carefully and converse extensively with the vendor about whether their product is indeed secure. A BAA with the vendor is also required. Finally, the entity should revisit its written policy and retrain when necessary.

To ensure that your practice is in compliance, and for assistance with determining whether your entity should proceed with implementing text or email communications, please consult a health care compliance professional.

Samarria Dunson, J.D., CHC, CHPC is attorney/principal of Dunson Group, LLC, a health care compliance consulting and law firm in Montgomery, Alabama.  www.dunsongroup.com

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A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

Editor’s Note: The following is the second installment of a three-part series discussing important provisions in physician employment agreements.

When a physician leaves a medical practice, especially if the physician stays in the area to compete against his/her former employer, the situation can become stressful and acrimonious. During the final weeks of employment, the departing physician can start to focus more on his/her new practice to the detriment of the current employer, and disputes often arise regarding access to medical records, soliciting patients and employees and when to schedule procedures – before or after termination. We have seen both medical practices and departing physicians engage in questionable conduct in order to keep as many patients as possible. Lawyers are often engaged to try and negotiate the terms of separation or, in a worse-case scenario, to file or defend a lawsuit.

Over the years, we have counseled hundreds of physician practices on how to successfully navigate the various issues that arise when a physician departs, regardless of whether the physician is an employee or an owner. Careful planning on the front end through a comprehensive employment agreement is the most important element in an amicable and fair separation. More often than not, we have found that disputes and subsequent litigation can arise when the employment agreement is not properly drafted or does not adequately address the specific terms of separation.

This three-part series provides a summary of the key provisions (with sample language) that can be incorporated into a physician employment agreement to help mitigate problems when a physician leaves your practice. Since each medical practice is unique, please consult with your own attorney before using any of the provided sample provisions in a physician employment agreement.

Protecting Other Practice Employees. When a physician leaves a medical practice he/she may want to encourage other practice employees (i.e., nurses, technicians, receptionists, etc.) to leave and work for the physician. These employees are a valuable asset to the medical practice and oftentimes the medical practice has invested significant time and resources in training its employees. Under Alabama Code Section 8-1-1, which was amended Jan. 1, 2016, a medical practice can protect an employee from being hired by a departing physician; provided, however, that the practice can demonstrate that the employee is “uniquely essential” to the medical practice. The term “uniquely essential” has not been specifically interpreted by the courts, but appears to require that the medical practice demonstrate that the protected employee(s) is not easily replaced due to a unique skill set or training, and the loss of the employee(s) would be detrimental to the medical practice.

Physician agrees that, during the term of this Employment Agreement and for a period of one (1) year following termination of this Employment Agreement, regardless of the cause of such termination, Physician shall not, directly or indirectly, through any individual, person or entity, without the prior written consent of Employer: (a) solicit, induce or attempt to solicit or induce away, or aid, assist, or abet any other party or person in soliciting, inducing or attempting to solicit or induce away from employment or other association with Employer, any employee of Employer, or (b) employ, hire or contract for services with any employee of Employer, or any person who was an employee of Employer during the six (6) month period prior to termination of Physician’s employment with Employer. The Employer and Physician acknowledge that the restrictions contained in this Section are reasonable and necessary to protect the protectable interests of Employer which include, without limitation, Employer’s confidential information, Employer’s commercial relationships with its patients, patient goodwill associated with its business, and the unique training of its employees, which was and is provided by Employer at considerable expense.  Physician acknowledges and agrees that the Employer’s employees hold positions uniquely essential to the management, organization and service of the Employer.

Compensation.  When a physician leaves a medical practice he/she will be compensated through the date of termination. If, however, the employment agreement provides for some form of bonus compensation based on, for example, collections or other measures of productivity, the employment agreement should address whether the physician is eligible for a bonus, pro-rated through the date of termination, or if termination before the end of the bonus measurement period results in the physician forfeiting any bonus. In addition, if the physician is paid based on production (e.g., collections less allocated expenses), then the employment agreement should address whether accounts receivable generated by the physician which are collected after termination for some designated time period will be counted toward the physician’s final paycheck, or if only collections received through the date of termination will be allocated to the physician. With either a bonus or production compensation model, some employment agreements provide that the departing physician will not be eligible for a bonus or the allocation of any post-termination collections if the physician terminates the employment agreement without cause or if the medical practice terminates the employment agreement with cause. Regardless, it is very important to clearly delineate in the employment agreement how compensation will be addressed upon termination.

Continuing Malpractice Insurance.  When a physician leaves a medical practice it is critical that medical malpractice insurance is maintained which provides continuing insurance for the physician’s professional services if a claim arises after the date of termination. Payment of a reporting endorsement (sometimes referred to as “tail insurance”) is typically an item negotiated by the parties. Regardless of how the costs are allocated, it is important that the employment agreement require either the purchase of a reporting endorsement or that the departing physician be obligated to maintain his/her then current malpractice insurance without interruption for a period of at least four years (eight years if minor patients are involved) after termination of employment. The following sample provision obligates the departing physician to pay for tail insurance, but can be modified as appropriate to provide that the medical practice will cover the costs of such insurance.

Immediately upon termination of employment with Employer, Physician shall, at Physician’s sole expense: (a) purchase or obtain a professional liability insurance reporting endorsement (e.g., tail coverage) with the same base and excess coverage limits and annual aggregate as the professional liability policy made available by the Employer for the Physician (the “Professional Liability Insurance Policy”) in order to provide continuing insurance protection for Physician and Employer against claims for malpractice or negligence occasioned by the acts of Physician while he/she was an employee of Employer (hereinafter referred to as the “Reporting Endorsement”), or (b) make arrangements for the continuation of the Professional Liability Insurance Policy with the same professional liability insurance carrier and with the same base and excess coverage limits and annual aggregate as the Professional Liability Insurance Policy, and listing Employer as an additional insured on such policy (hereinafter referred to as the “Continuation Policy”).

To evidence compliance, Physician shall provide to Employer within ten (10) days following the date of termination of this Employment Agreement either: (a) a copy of the Reporting Endorsement, or (b) a copy of the Continuation Policy, a “Certificate of Insurance Holder,” evidencing the existence of the Continuation Policy and written confirmation from the insurance carrier that Employer is listed as an additional insured on the Continuation Policy. If Physician obtains the Continuation Policy, and within ____ (____) years after termination of employment with Employer, should the Continuation Policy lapse, terminate or be modified so as not to satisfy the definition of a “Continuation Policy” in this Employment Agreement, or should Physician ever change professional liability insurance carriers, Physician agrees that he/she shall immediately purchase the Reporting Endorsement and that he/she shall provide Employer with a copy of the Reporting Endorsement at that time. If Physician fails to purchase such coverage and/or provide Employer with a certificate of same in accordance with the above‑stated requirements, Employer shall have the right, as hereby acknowledged by Physician, but not the obligation, to purchase such coverage and notify Physician in writing of the total premium costs thereof. Physician hereby expressly acknowledges and agrees that the total premium cost for such coverage purchased by Employer under this Section (plus a ten percent (10%) administrative fee) shall be immediately due and payable by Physician to Employer upon Physician’s receipt of said notice and Employer shall have the right to offset Physician’s cost of insurance against any amounts due Physician, with Physician reimbursing Employer for any deficiency. The terms of this Section shall survive termination of the Employment Agreement.

While it may take more work on the front-end, having a well-thought out and comprehensive physician employment agreement will save significant time, effort and potentially money when a physician leaves your medical practice. Stay tuned for Part III of this three-part series which will discuss protecting confidential information and protection from future liabilities.

Read the full series:

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part I)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part III)

Howard Bogard is a Partner with Burr & Forman LLP and serves as the Chair of the firm’s Health Care Industry Group. Kelli Fleming is a Partner with Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman, LLP, is an official Bronze Partner with the Medical Association.

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Is a Physician Leaving Your Practice? Here are Your “Must Have” Employment Agreement Provisions (Part I)

Is a Physician Leaving Your Practice? Here are Your “Must Have” Employment Agreement Provisions (Part I)

The following is the first installment of a three-part series discussing important provisions in physician employment agreements.

When a physician leaves a medical practice, especially if the physician stays in the area to compete against his/her former employer, the situation can become stressful and acrimonious. During the final weeks of employment, the departing physician can start to focus more on his/her new practice to the detriment of the current employer, and disputes often arise regarding access to medical records, soliciting patients and employees and when to schedule procedures – before or after termination. We have seen both medical practices and departing physicians engage in questionable conduct in order to keep as many patients as possible. Lawyers are often engaged to negotiate the terms of separation or, in a worse-case scenario, to file or defend a lawsuit.

Over the years, we have counseled hundreds of physician practices on how to successfully navigate the various issues that arise when a physician departs, regardless of whether the physician is an employee or an owner. Careful planning on the front end through a comprehensive employment agreement is the most important element in an amicable and fair separation. More often than not, we have found that disputes and subsequent litigation can arise when the employment agreement is not properly drafted or does not adequately address the specific terms of separation.

This three-part series provides a summary of the key provisions (with sample language) that can be incorporated into a physician employment agreement to help mitigate problems when a physician leaves your practice. Since each medical practice is unique, please consult with your own attorney before using any of the provided sample provisions in a physician employment agreement.

Setting Expectations. Unless there is an immediate termination due to a breach of the employment agreement or other significant event, such as loss of license, oftentimes a physician’s employment is terminated by either party “without cause” upon thirty (30) to ninety (90) days prior written notice. In that situation, the physician continues to work for the medical practice during the notice period. This can be a very stressful time for both the practice and the departing physician, as the practice often feels that the physician’s loyalties have shifted. Even though the physician remains employed (and receives compensation), the physician may not be acting in the best interest of the soon-to-be former employer. As such, it is helpful to set expectations of conduct in the employment agreement during this transition period.

Following any notice of termination of Physician’s employment with the Employer which does not immediately terminate Physician’s employment, Physician shall continue to conduct himself/herself in accordance with the terms of this Employment Agreement, and specifically shall not: (a) copy (or instruct Employer personnel to copy) medical charts of patients for Physician’s use after termination of employment with the Employer, (b) compile (or instruct Employer personnel to compile) lists containing patient data, including patient names, addresses and/or telephone numbers of Employer’s patients for Physician’s use after termination of employment with the Employer, (c) schedule (or instruct Employer personnel to schedule) medical appointments, procedures and/or surgeries between Physician and Employer’s patients subsequent to the termination date of Physician’s employment with the Employer, (d) take vacation or continuing medical education time-off that is inconsistent with Physician’s normal vacation and continuing medical education time-off, or (e) otherwise diminish or lessen Physician’s services for the Employer.

In addition, upon termination of employment the departing physician should be required to complete certain obligations.

Notwithstanding the termination of Physician’s employment with Employer, Physician shall be required to: (a) cooperate with Employer on any malpractice or other actions or suits related to Physician, (b) immediately upon termination complete all medical records and return all property belonging to Employer, including, without limitation, patient and client lists, fee schedules, compensation information, medical records and all confidential information of the Employer, and (c) otherwise fulfill all responsibilities hereunder reasonably determined by Employer to relate to the services rendered by Physician prior to termination.

Patient Notices. One of the most contentious issues surrounding the departure of a physician involves notifying patients the physician is leaving. Under Alabama licensure law, the departing physician is obligated to notify his/her “Active” patients of the date the physician is leaving and his/her new contact information. The purpose behind the notification is to provide patients the freedom of choice to remain with the practice or follow the departing physician, and to minimize potential patient abandonment issues. The term “Active” patients is not defined under licensure law, but in our experience notice should be sent to those patients treated by the departing physician within the last twelve (12) months immediately prior to termination. Physicians who practice in a specialty that might require longer follow-up care, such as oncology or cardiology, would likely need to notify patients treated in the eighteen (18) to twenty-four (24) months immediately prior to termination.

Sometimes, the medical practice will provide the departing physician a list of his/her patients with addresses so the physician can send the required notice. Oftentimes, however, the medical practice does not want to provide a patient list and arguments arise over the proper way to notify patients and the timing of such notice. Specifying in the employment agreement the form of such notice, how costs are to be allocated and the timing of the notice will help avoid arguments.

Upon termination of this Employment Agreement, Physician shall not have any right to receive a list of patients treated by Physician while an employee of Employer. Any notice required by law to be sent to Physician’s patients upon Physician’s departure from the Employer shall be sent by the Employer on behalf of Physician and the parties hereby agree that such notice shall only be sent to those patients for whom the Physician served as the primary physician within _________ (_____) months immediately preceding the date of termination of this Employment Agreement (e.g., Active Patients). The Physician and Employer shall each pay one-half of the costs associated with the notice, to include applicable postage. The form of notice shall reference both Employer (and its physicians) and the Physician and shall be agreed upon by the parties in good faith.  The Physician and Employer will work together in good faith to send out the notice at least thirty (30) days prior to the Physician’s last day of employment, if feasible.

Medical Records. The patient medical records, whether paper or electronic, belong to the medical practice. However, certain situations may arise when the practice should make medical records available to the departing physician after termination, including, for example, to address medical malpractice claims or government investigations. Further, patients have the right of access to their records and can direct that the practice make copies of their records available to the departing physician. Oftentimes, we will include in the patient notice a HIPAA Authorization form for the patient to sign if he/she intends to continue under the care of the departing physician and wants the medical practice to send copies of records to the physician.

Physician shall prepare in a timely and complete manner medical records relating to his/her provision of professional services in such form and containing such information as customarily maintained by Physician and as required by applicable federal and state law, third-party payer agreements and Employer. All patient records, case histories, films, and personal and regular files concerning the patients consulted, interviewed, treated or cared for by Physician pursuant to this Employment Agreement shall belong to and remain the property of Employer. Upon termination of this Employment Agreement, Physician shall have the right, in accordance with state and federal law, including the Health Insurance Portability and Accountability Act of 1996, and its corresponding regulations, as may be amended from time to time, to obtain copies at Physician’s sole cost and expense of any patient record of Employer; provided, however, that Physician was involved in the applicable patient’s care and further that Physician’s right to copy such patient records shall be subject to: (a) Employer receiving a written authorization signed by the patient authorizing Employer to release such copies to Physician, (b) Physician requiring access to certain patient records to defend or prepare to defend any alleged or threatened professional liability claims relating to such patient records, or (c) Physician requiring access to certain patient records with respect to governmental or third party payer audits or reviews of claims for reimbursement relating to such patient records.

While it may take more work on the front-end, having a well-thought out and comprehensive physician employment agreement will save significant time, effort and potentially money when a physician leaves your medical practice. Stay tuned for Part II of this three-part series which will discuss protecting other employees, compensation, and continuing malpractice insurance.

Read the full series:

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part II)

A Physician is Leaving Your Practice – “Must Have” Employment Agreement Provisions (Part III)

Howard Bogard is a Partner with Burr & Forman LLP and serves as the Chair of the firm’s Health Care Industry Group. Kelli Fleming is a Partner with Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman, LLP, is an official Bronze Partner with the Medical Association.

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