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Hospital Credentialing in the 21st Century:

New Risks and New Rewards

Presented by:

Michael D. Neubert and

Gregory J. Pepe

Neubert, Pepe & Monteith, P.C.

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INTRODUCTION

According to the Office of the Inspector General (OIG) and Joint Commission for Accreditation of Healthcare Organizations (JCAHO), Hospitals’ credentialing practices will come under increased scrutiny. As a result, Hospitals will need to be able to demonstrate and document an effective evaluation process of individual requests for privileges and the criteria used for granting these privileges.

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I. Historical Perspective

A. Traditional credentialing and re-credentialing process

credentialing has been the core of the quality process for hospitals for decades

focus on physician’s competency and professional behavior

However the process and criteria was often ill defined and investigations superficial and affected by

personal relationships and medical politics

the most dramatic change in the concept of credentialing is the idea that privileges are temporal

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before the 1990’s, if the privileges were initially granted; they were renewed almost automatically leading to a sense of entitlement among physicians on staff at hospitals

today privileges are “loaned” to the applicant for a period of time

Article 2.A.3. No Entitlement to Appointment Norwalk Hospital Credentialing Policy

• Important that this policy be strictly followed

historically, the risks of deficient credentialing and re-credentialing process were not significant as they are today

the trend, however, has been one increasing legal risks since 1965

now more than ever, poor credentialing practices equate to poor business practice as well

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B. Evolution of the theory of Corporate Negligence

Credentialing Practices have carried significant civil exposure from private litigants since the 1960’s

Patients who allege that credentialing system failed to protect them from a bad physician

Darling v. Charleston Community Memorial Hospital

Johnson V. Miseriocordia Community Hospital

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Darling v. Charleston Community Memorial Hospital

The doctrine of corporate negligence was introduced in 1965 when the Illinois Supreme Court upheld a jury verdict against a hospital for injuries to an eighteen year college football player as a result of treatment for a broken leg by an on-call non employee emergency room physician. The court ruled that the doctrine of charitable immunity no longer applied and that the standards for hospital accreditation, the state licensing regulations and the hospital’s bylaws demonstrated that the medical profession and other responsible medical authorities regarded it as both desirable and feasible that a hospital assume certain direct responsibilities for the care of patients

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Johnson v. Miseriocordia Community Hospital

In 1980 the Supreme Court of Wisconsin held that the failure of a hospital to investigate a surgeon’s qualifications for the privileges requested gives rise to a foreseeable risk of unreasonable harm and therefore, the hospital has a duty to exercise due care in selection of its medical staff

surgeon unsuccessfully attempted to remove a pin fragment from Johnson’s right hip damaging patient’s common femoral nerve and artery resulting in a permanent paralytic condition of his right thigh muscles

Hospital admitted to failing to contact any of the surgeon’s references or check alleged credentials

Hospital records were devoid of any information concerning the procedure used to approve surgeons appointment

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The court stated that the Hospital was required to “solicit information from applicant’s peers, including those not

referenced in his application, who are knowledgeable about his education, training, experience, health, competence, and ethical character.”

In addition, the hospital will be charged with gaining and evaluating the knowledge that would have been acquired had it exercised ordinary care in investigating its medical staff applicants and its failure to do is negligence

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Physicians who believe they were victimized by a credentialing system driven by anti-competitive agenda

Polmer v. Presbyterian Hospital of Dallas

$366 million jury verdict in favor of a cardiologist and against a Hospital Chair of Internal Medicine, Chief of Cardiology and Director of Cath Lab who summarily suspended his privileges to perform certain cardiac procedures for six months

Expanded exposure under the Doctrine of Apparent Agency or Ostensible Agency

Kafri V. Greenwich Hospital (2000)

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Kafri V. Greenwich Hospital (U.S. District Court for CT)

Judge Nevas denied Greenwich Hospital’s Motion for Summary Judgment who had been sued for the alleged negligence of Greenwich Radiology, an independent contractor, on the theory of apparent agency. Judge Nevas stated:

“…the Court finds several reasons for applying the doctrine of apparent agency to a hospital. No reasonable patient in the position of the plaintiff would assume anything else but that the medical staff physicians were employees of the hospital. Indeed, a patient has the right to rely on the reputation of the hospital when she agrees to have a medical procedure performed at the hospital. As such, it is reasonable for the public to assume that a hospital to which it goes for treatment exercises medical supervision over, and is responsible for the negligence of, medical personnel providing services whether they are independent contractors or not.”

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As a result of court decisions like Kafri, hospitals are at increased risk of becoming secondary insurers, in affect, for radiology, anesthesiology and other contracted service groups regardless of their status as “independent contractor”

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II. New Risks facing Hospitals (i.e. the stick)

Hospitals and medical staff physicians are “at risk” for acts and omissions of individual physicians in areas other than clinical competency and professional behavior

all indications point to an unyielding

continuation of this trend

Physicians’ acts and/or omissions have exposed hospitals to legal claims of breach of fiduciary duty, fraud, deceit, corporate negligence, anti-trust and False Claims Act violations

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A. Legal and Regulatory Backdrop

Past five years – intense and growing focus on issues of patient safety and quality in health care industry

Both state and federal regulators are scrutinizing as never before the effectiveness of the systems the hospitals have put in place to protect and promote patient safety – i.e. credentialing and peer review.

OIG’s Supplemental Compliance Program Guidance for Hospitals (January , 2005):

“Hospitals must also take an active part in monitoring the quality of medical services provided by appropriately overseeing the credentialing and peer review of their medical

staffs”

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High profile criminal and civil cases brought by DOJ against Hospitals based allegations of negligent or reckless credentialing process

Redding Medical Center, Tenet Health Care Corp.

$350 million settlement arising out of negligent credentialing of its Chief of Cardiology and

Chair of Cardiovascular Surgery relative to their alleged performance of unnecessary cardiac procedures

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False Claims Act – U.S. v. Tremoglie

In 1997, a Pennsylvania HMO, Keystone Health Plan East, learned that an individual named David Tremoglie fraudulently presented himself has a psychiatrist and was employed by a behavioral health organization to treat Keystone patients. The Government took the position that all claims for reimbursement based on Tremoglie’s work violated the False Claims Act.

Wire Fraud – U.S. v. United Memorial Hospital

In 2003, United Memorial Hospital signed a federal guilty plea agreement in which it admitted to fraud in connection with the alleged over utilization of pain management surgical procedures, one of which resulted in the death of a patient. The Hospital also admitted to inadequate credentialing of the chair of Anesthesia and agreed to pay $750,000.

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III. The Solution

A. General Considerations

Credentialing is a truly peer based process

Individuals being considered for privileges must be reviewed with the information and detail necessary to answer the core question. “Will this individual deliver high quality care to the first and every subsequent patient?”

No longer acceptable to use the question “Can we prove the individual is awful enough to not approve or re-approve privileges?” Instead organizations should be answering the question “Do we have sufficient information to prove that the individual continues to be as good as we require?”

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Privileges that were once deemed “lifetime entitlements” are not granted as true privileges. Candidates must continuously prove themselves to be worthy of trust

Credentialing combines a thorough initial evaluation of an individual’s qualifications and an ongoing monitoring process

Core components of competency are judgment, technical performance and outcome

Article 5.B incorporates these components as factors in the procedure for reappointment

Judgment refers to the decisions made during the course of care

• selecting the right clinical protocol• the correct medication• appropriate tests• requesting necessary consultations

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Technical Performance focuses on execution of

professional skills used• surgical technique• history and physical exam• interpretation of laboratory values• adequacy of communications with other professionals

Outcomes have always been the public’s ultimate measure

of professional success• “The operation was a success but the patient died” sums up

the ultimate negative outcome• in addition to case specific outcomes, outcomes now include

cost of case, customer satisfaction and the time it takes to achieve improvement

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Conclusion: Difficult decisions are now expected to arise regularly (e.g. whether or not to grant privileges to an applicant who only uses a more costly and dangerous procedures. Even if the applicant’s outcomes have been acceptable, the Credentialing Committee is expected to consider the costs and risks incurred in exposing patients to outdated procedures.)

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B. Core Credentialing Over the past 3 decades privileging concepts have progressed

along a continuum from detailing each privilege offered in a “laundry list” to granting a large block of ill-defined privileges based on specialty training

Presently these concepts have been effectively combined through the concept of core privileges.

Concept of core privileges is meant to simplify the privileging decisions by taking into account the competence acquired throughout a full residency training program and demonstrated by board certification

Candidates can be granted all privileges for which their education and training qualifies them without needing

special consideration

Core competency can only be assumed for individuals who completed training after the privileges were accepted as

mainstream medicine

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Others, even if board certified, should be asked to provide specific evidence of competency

Problems with Core Privileging

Over time training programs delete specific skills and training. (Example – Before 1990 all pathologists received training to perform bone marrow

aspirations. After 1995 this was dropped as a core element of training.)

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Use of Board Certification as a basis for core privileging (Example – Board Certified gynecologist being granted privileges to perform hysterectomies without further

documentation. However, a pelvic exenteration may still require documentation of specific training since it is

complex in nature and infrequent, even in residency program.)

• the fact that Board Certification may be a basis for granting privileges in certain basic , common procedures does mean that a physician is competent to perform more complex and less common procedures

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When using core privileging do not overlook the need to completely evaluate the candidate.

Completion of a residency and passing a test may not fully assure competent performance.

JCAHO requires that “when the Medical Staff uses a system involving classification or categorization of privileges, the scope of each level of privileges must

be well defined and the standards to be met by the applicant stated clearly for each category” (MS.5.15.4)

It is important that the principals of core credentialing be consistent between practice areas

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C. Data Collection and Integration Privileging must be based on accurate information

Information must be verified

When possible it is best to use original sources (e.g. schools, training programs, licensing authorities)

Most commonly used objective date sources:

National Practitioner Data Bank (NPDB)

AMA physicians profile registry

Federated Board of State Medical Examiners

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It is in the hospital’s best interest to have an extremely detailed application.

should include meaningful questions which seek complete details of significant issues

undesirable candidates may actually choose not to complete the application

Norwalk Hospital’s Credentialing Policy states that an application shall be complete when all questions on the application have been answered and all supporting documentation have been supplied and all information verified

Good Policy and should be adhered to

“Forced decisions” without full information are better answered with a decision of “No”

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Many healthcare organizations prefer to avoid an initial conflict and having to face a lawsuit

better to have to defend a lawsuit centering on your decision to not grant privileges than to be a

party to a law suit by an injured patient claiming negligent credentialing

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The present Credentials Policy at Norwalk Hospital

JCAHO Compliant

Not a guarantee that credentialing will not become a problem unless strictly followed

Possible amendment to Economic Credentialing Requirement

Citizenship Criteria – seeks to select physicians who are willing to center their practices in the community and deny privileges to physicians who are seeking staff privileges for purpose of obtaining potential referrals

Conflicts Criteria – Hospital policies which prohibit conflicts of interest support government programs

to stop fraud and abuse. Indeed, many conflict policies may be viewed as extensions of ethics in Patient

Referral Act (STARK) to the private payor setting. OIG published the following in the Comments

of a Solicitation regarding the practice of economic credentialing:

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“Increasingly, Physicians invest in and own entities, such as ambulatory surgical centers, cardiac catheterization labs, and specialty hospitals, that compete with hospital services. These physicians may be in a position to steer profitable business or patients to their own competing businesses through their control of referrals. A credentialing policy that categorically refuses privileges to physicians with significant conflicts of interest would not appear to implicate that anti-kickback statute in most situations.

Moreover, the only issues which seem to concern the OIG were (1) policies that allow the hospital to have discretion as to when to apply the policy, and (2) situations where the hospital commands that the physician refer a specific number of patients to the facility.”

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B. Need for strict adherence to Credentials Policy

Commitment from Board, Senior Management and Medical Staff leaders

At many hospitals the VP of Medical Affairs who is employed by the hospital takes responsibility for enforcement of the credentialing policy

Credential Committee – an important tool in the process

It is important that the Credentialing Committee is an active empowered committee, they are the first line of defense in this process

Importance of Documentation.

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C. Re-credentialing Process Need to avoid rubber stamping reappointment applications

Article 5.B Factors For Evaluations (Norwalk Credentials Policy)

• current clinical competence, judgment and technical skill in the treatment of patients;

• current ability to safely and competently exercise the clinical privileges requested and perform the responsibilities of staff appointment;

• capacity to satisfactorily treat patients as indicated by the results of the Hospital’s performance improvement and professional and peer review activities; and

• information on any lawsuits initiated since last appointment which shall be made available to the Credentials Committee by the relevant department chair.

Honest objective assessments by Department Chairman

and Credentials Committee

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D. Clinical Privileges for New Procedures under Credentialing Policy - Article 4.A.2

Importance of communicating to medical staff the rules for obtaining clinical privileges for New Procedures and the need to follow them.

Need for strict enforcement of these rules and documentation of the process

Support for this process from the Board, Administration and Medical Staff Officers

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Medical Staff Issues for 2005 and Beyond

A. Confidentiality – HIPAA

Is the Medical Staff a “covered entity” within the meaning of HIPAA?

If yes, are appropriate measures in place to comply with HIPAA such as BAAs, procedures and policies re: Phl, etc?

If no, does it never-the-less make sense to behave as if the answer is yes

Appoint a “designated privacy official” for the Medical Staff

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Conflicts of Interest

New payment models from managed care entities are seeking to impose so-called “best practices” standards for disease management protocols on hospitals through the contracting process.

Are appropriate coordination measures in place to assure that MCO best practice mandates are not in conflict with Medical Staff best practice assumptions?

An effective working relationship between hospital contracting personnel and the Medical Staff is strongly suggested.

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C. Corporate Compliance

All compliance measures to be initiated at the hospital must permeate to the Medical Staff level. Most important among the current compliance issues are the following:

Personal Conflicts of interest

Review of all Contracts with Medical Staff Physicians who refer patients to the hospital (Stark II and Anti-Kickback)

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D. Credentialing

Programmatic Credentialing and Re-credentialing policies should be adopted to guard against recent attacks on the credentialing process by the plaintiff’s bar seeking to hold the Medical Staff/Hospital liable for negligent credentialing

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E. Pay-For-Performance (“P4P”) Initiatives

With two of Connecticut’s largest MCOs (Anthem and Aetna) launching P4P programs which pay higher reimbursements for demonstrable programs of clinical quality initiatives and physician interdependence, the Medical Staff should investigate the role it can play, together with the hospital, in the development of such clinical programs.

Medicare has started implementing P4P payments to physicians involved in Physician Group Practice (“PGP”) Demonstration projects around the country. Physicians at Middlesex Hospital are involved in the PGP program which seeks to identity quality measures in Diabetes, Congestive Heart Failure, Coronary Artery Disease and Preventive Care.

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The Medical Staff would be well advised to develop programs to anticipate this trend.