April, 2000 Newsletter
In a surprise turn of events, the Department of Health
(DHS) has begun to enforce Welfare and Institution Code Section 14087.28. In
those hospitals with Medicaid contracts, this section limits the hospital’s
ability to deny medical staff membership or clinical privileges due to exclusive
contracts. The only exclusive contracts allowed are Radiology, Pathology, and
Anesthesiology. The Emergency room
is deemed to be open since any member of the medical staff may see patients
there. There may not be exclusive
contracts at these hospitals for any other services such as Cardiac Surgery or
NICU. The challenge came from a
group of pediatricians that were excluded from a NICU and therefore from seeing
their managed care patients by an exclusive contract. They complained to the DHS and the agency agreed.
This seems to take precedence in Medicaid contracting institutions over
past case law that allowed unfettered exclusive contracting.
A new law (SB817) has been proposed to add Cardiac Surgeons to the list
of specialties that may have exclusive contracts.
This was defeated in committee.
Hospitals have tried to limit the scope of the exclusive
contracts to only Medicaid patients. This
has not been successful. The law
does not limit the exclusive contracts to only the Medicaid patient but to all
patients within those hospitals that contract with Medicaid.
Hospitals have some choices: (1) drop Medicaid contracts (2) drop all
non-exempt exclusive contracts or (3) open up the non-exempt exclusive contracts
to all who will fulfill the obligations of the contracts.
There also must be input and possible agreement of the Medical Staff or
MEC to the use of exclusive contracts for presumed hospital efficiency.
Be prepared for significant challenges and expenditures of
hospital funds that could be used for better medical uses if your hospital has a
Medicaid contract, uses non-exempt exclusive contracts and wishes to fight.
The DHS in letters of January 3, and January 5, and January 21, 2000
reaffirmed its position.
There have been some new protections but also some erosions
of the peer review process under Evidence Code 1157. The California Supreme Court on March 16, 2000 in Fox
decided that peer review protection holds in a malpractice case when the State
has reviewed the peer review files and makes recommendations based on that
review. The reviewer can not be subpoenaed and neither can the peer review
records or the draft recommendations he/she used to make the recommendations.
This continues to allow honest frank discussions in the peer review
process without fear of being called to court to testify.
There is no peer review protection if a medical staff member voluntarily
gives up the records or wishes to testify.
Since the Emergency Medical Treatment and Active Labor Act
(EMTALA) is a Federal law, California Evidence Code 1157 does not apply.
All peer review records are subpoenable if the suit is filed in Federal
Court under EMTALA.
At the time of this newsletter the California Supreme Court
has heard oral argument and is considering the verdict in Potvin v. Metropolitan Life. In
that case an HMO deselected Dr. Potvin for at first no cause and was given no
hearing. When the HMO was pushed
they stated it was due to his malpractice history. The malpractice cases were
reviewed and found not to be more in number or severity from the norm for an
obstetrical practice. He was deselected anyway. The legal question is whether an HMO may deselect a physician
without a hearing under the termination at will provision or does the physician
have a right to a hearing due to the significant economic implications.
While this is being decided, the Sixth Appellate District in a 3-0
opinion ruled that an IPA may not deselect a provider without notice and a
hearing for these same economic reasons. In
Castellanos v. Coastal Providers of San
Luis Obispo, the court stated that Dr. Castellanos had approximately 1/3 of
his income and patients via this IPA. He
had a significant economic interest that under public policy needed to be
protected by fair procedure rights. This
decision relied on the same arguments and results in Delta
Dental Plan v Banasky, an Appellate Court Decision and Ambrosino v. Metropolitan Life, a Federal District Court
discrimination case. Ambrosino had
only approximately 15% of his patients via Metropolitan.
Even if the Supreme Court votes in favor of the insurance company the
question will remain whether this also holds in an IPA or is an IPA to be
distinguished from an HMO. All physicians that are deselected should demand a
fair procedure hearing and at present it may be prudent for all IPAs to give
notice and hearing rights to all physicians who they target for deselection.
It is becoming more important (OIG Special Advisory
Bulletin September 28, 1999) to query the OIG excluded provider list on a
monthly basis. If one of your staff
or ordering non-staff physicians comes on this list and you do not find out
until their next reappointment (this should be on your questionnaire) no service
for any Medicare or Medicaid patient will be paid if ordered either directly or
indirectly by the excluded provider. Your HR department should also be checking
for all employees and all those with which the hospital contracts for any
Also the Medical Board of California has ruled that Oral
Surgeons that hold only DDS degrees can not legally perform cosmetic surgery.
There is no problem with those with both a MD and DDS.
UNIFORM HEALTH CARE DECISIONS ACT
Please make sure your Ethics Committee is aware of this new
state law. The new law repeals the
Durable Power of Attorney under the Power of Attorney Law, repeals the Natural
Death Act and replaces them into this new law that goes into effect July 2000.
The new Act does not affect those advance directives valid under prior law.
In respect to physicians it does not authorize a physician or institution
to do anything contrary to accepted health care standards, no matter what the
person or the designee desire. Providers
may decline to comply with wishes to terminate care for conscientious reasons
and must continue to care for the patient while assisting in the transfer of
care to another physician or institution that will comply with those wishes. As
long as the physician or institution is acting in good faith there will be no
liability. On the other hand if a
physician or institution intentionally violates this new law there is a
provision for a $2500 fine or actual damages, whichever is greater, plus
attorney’s fees. If one alters or forges a written directive or willfully
conceals knowledge of an advance directive causing a withholding or withdrawing
of life support contrary to the patient’s wishes is subject to prosecution for
homicide. The new law also prioritizes those who may make health care decisions
for the patient if there is no express designation or the express designee is
not available. The significant
other, as defined as a competent adult who is now or has been recently in a
long- term relationship with the patient, comes after a spouse but above anyone
I have been asked to write future articles on peer review,
privileging and EMTALA. These
subjects will be addressed in the next several newsletters
Again, I hope this newsletter is helpful to you and your
medical staff. If I may be of help to either please contact me. If
you are no longer the Chief of Staff, please forward this newsletter to that
individual. I would appreciate if
you would ask your Medical Staff Office to send me the correct name of the new
Chief of Staff. It continues to be my desire to see all medical staffs
have the opportunity to be represented by counsel independent from the hospital.
DISCLAIMER: Although this article is updated periodically, it reflects the
author's point of view at the time of publication. Nothing in this article
constitutes legal advice. Readers should consult with their own legal counsel
before acting on any of the information presented.