State Legislation

1. Association of WashingtonPublic Hospital Districts“Hot Topics for Public Hospital Districts”Date: May 23, 2012Sleeping Lady ResortLeavenworth, WA

2. 2ESSB 1571 (adopted in 2011) changes election datesand filing requirements For the primary election date (the first Tuesday in August), election resolutions must be filed no later than the first Friday immediately before the first day of the regular candidate filing period (the Monday two weeks before Memorial Day). Prior to the effective date of this statutory change, the filing deadline was 84 days before the primary election date. State Legislation

3. For the general election date (the first Tuesday after the first Monday in November), election resolutions must be filed no later than the primary election day. Prior to the effective date of this statutory change, the filing deadline was 84 days before the general election date. For all other special election dates (the second Tuesday in February and, starting in 2013, the fourth Tuesday in April), the Legislature changed the election resolution filing deadline from 45 days to 46 days before the election date. Prior to 2013, the April special election date was the third Tuesday in April. State Legislation

4. The remaining 2012 and the 2013 election dates and deadlines for filing the election resolution are set forth below. Please Note: The county auditor is required to mail ballots to each voter at least 18 days prior to an election date. State Legislation

5. As a result of change in election dates and filing deadlines, the deadline for filing the election resolution for the November election is the day of the August primary. Therefore, if a measure fails at the August primary, it will not be possible to re-run the measure at the November general election, unless some form of alternative election resolution has been filed with the county auditor by the August primary date. State Legislation

6. SSB 5381 reduces voter approval requirement for “[t]he uninterrupted continuation of a six-year or ten-year levy” to 50%; no voter turn-out requirement SB 5355 requires the posting on website of notices for special meetings (unless certain exceptions apply) and posting at main entrance and meeting location HB 2582 requires provider-based clinics to provide special notices to their patients; also requires that special financial reports be filed with DOH State Legislation

7. HB 2308 permits the awarding of attorney’s fees in peer review litigation only if the non-prevailing party’s claims are frivolous or the non-prevailing party fails to exhaust administrative remedies SB 5978 establishes a state false claims act with respect to Medicaid, including qui tam provisions State Legislation

8. HB 2229 requires public reporting of executive compensation to the state for nonprofit hospitals and public hospital districts HB 2341 requires Section 501(c)(3) hospitals (including PHDs that have obtained Section 501(c)(3) status) to post on their website the community health needs assessment that they are required to file with the IRS State Legislation

9. Organizations exempt under Section 501(c)(3), including PHDs that have obtained Section 501(c)(3) status, are required to: Conduct a community needs assessment every three years Adopt a financial assistance policy Limit amount charged for ER or medically necessary care provided to patients who qualify under the financial assistance policy to amount charged to those who have insurance Limit billing and collection practices for those who qualify for financial assistance Compliance with Section 501(r)

10. The IRS has issued recent guidance that confirms that a PHD may seek a determination letter from the IRS terminating its Section 501(c)(3) status In considering a termination, a PHDs must consider the potential impact on any PHD retirement plans that may be dependent on Section 501(c)(3) status Termination of Section 501(c)(3) Status

11. Change in use compliance issues arising from affiliations and other changes in use of bond financed property Requested revisions to Revenue Procedure 97-13 to address new forms of payment Increasing importance of adopting post-issuance compliance policies Importance of complying with continuing disclosure requirements Tax-exempt Bonds

12. Washington Imaging Services LLC v. Department of Revenue, 171 Wn.2d 548 (2011), and St. Joseph General Hospital v. Department of Revenue, Cause No. 394871, Washington Court of Appeals (2011) Both cases conclude that double B&O tax applies when one party serves as billing agent of another party State B&O Tax Cases

13. Challenged authority to engage in marketing activities, including advertising and sponsorships to promote exercise, recreation and/or general good health (versus advertising specific health care services) Challenged authority to support education and training programs and facilities State Auditor Issues

14. Audits of self-insurance programs (medical, workers compensation, liability, etc.) for compliance with Chapter 43.09 RCW and focused on: Understanding the self-insurance programs, including internal policies Identifying which risks are insured and assessing whether they are properly covered State Auditor Issues

15. Determining if third-party administrators are adequately monitored Determining if the program has been approved by the Local Government Risk Pool Manager at the State Department of Enterprise Services (formerly a part of the Office of Financial Management) State Auditor Issues

16. Neighborhood Alliance v. Spokane County, 172 Wn.2d 702 (2011) Court held that public agencies are required to conduct an “adequate search” to locate records in response to records request Court adopts FOIA “standards of reasonableness.” The focus is on whether the search itself was adequate, not whether responsive documents exist A search must be “reasonably calculated to uncover all relevant documents” Public Records Compliance

17. CMS made several changes to the Hospital Conditions of Participation and a few changes to the Critical Access Hospital Conditions of Participation. These changes go into effect July 16, 2012 and are intended to help reduce the administrative burden on hospitals. The following represents a summary of some of the more significant changes: Provisions Applicable to non-CAH Hospitals One governing body may oversee multiple hospitals in a multi-hospital system Changes to Medicare Conditions of Participation

18. A member or members of the hospital’s medical staff must be included on the Hospital’s governing body. The medical staff member of the board must be a voting member. This standard does not apply when state law mandates how board members are appointed; for example, commissioners of public hospital districts. Changes to Medicare Conditions of Participation

19. The definition of “medical staff” has been broadened to allow hospitals the flexibility to include other nonphysician practitioners (such as advanced practice nurses, physician assistants, etc.) as eligible candidates for medical staff membership in accordance with state law. Hospitals will now have the option of having either a stand-alone nursing care plan or a single interdisciplinary care plan that addresses nursing and other disciplines. Changes to Medicare Conditions of Participation

20. Patients may be allowed to self-administer drugs in the hospital (both hospital-issued and the patient’s own drugs). Drugs and biologicals may now be prepared and administered on the orders of a practitioner other than a physician in accordance with hospital policy and state law. Hospitals may use written and electronic standing orders, order sets and protocols approved by the medical staff, nursing staff, and pharmacy. Orders and protocols must be based on nationally recognized and evidence-based guidelines and recommendations. Changes to Medicare Conditions of Participation

21. Orders may be authenticated by another practitioner who is authorized to issue the orders and is part of the care team. The requirement of authentication of verbal orders within 48 hours has been eliminated. Instead, CMS will defer to applicable state law to establish authentication time frames. The previous temporary requirement, which specified that all orders, including verbal orders, must be dated, timed and authenticated by either the ordering practitioner or another practitioner who is responsible for the care of the patient and who is authorized to write orders by hospital policy in accordance with state law, is made permanent. Changes to Medicare Conditions of Participation

22. Drug administration errors, adverse drug reactions, and incompatibilities must be immediately reported to the attending physician and, if appropriate, to the hospital’s quality improvement program. Hospitals are no longer required to notify CMS of a patient’s death when a patient dies when no seclusion has been used and the only restraints used on the patient were soft, non-rigid, cloth-like materials, which were applied exclusively to the patient’s wrists. Reporting will also be eliminated for patients who died within 24 hours of having been removed from such restraints. Changes to Medicare Conditions of Participation

23. Hospitals will no longer be required to maintain an infection control log and instead may choose how to best document infection control issues. Hospitals will also no longer be required to maintain a single director of outpatient services position that oversees all outpatient departments in the hospital. Changes to Medicare Conditions of Participation

24. Provisions Applicable to Critical Access Hospitals Eliminates the requirement that certain services be provided only by employees and not through contractual arrangements with entities such as community physicians, laboratories, or radiology services thus allowing CAHs to partner with other providers so they can be more efficient, and at the same time ensure the safe and timely delivery of care to their patients. Governing body will remain responsible for such services. Clarifies that CAHs are not required to provide surgical services. Changes to Medicare Conditions of Participation

25. Proposed rule implements the provisions of the PPACA that require that Medicaid payment for primary physicians in CY 2013 and 2014 be at rates not less than the Medicare rates in effect in those same calendar years Applies to physicians practicing family medicine, general internal medicine and pediatrics Also applies to services paid through Medicaid managed care plans Proposed Rules Increasing Medicaid Payment for Primary Care Physicians

26. The False Claims Act makes it illegal to submit false or fraudulent claims for payment to the federal government False Claims Act

27. Essential Elements to FCA: a person or entity must “knowingly” submit or cause to be submitted a “claim” for payment to the U.S. Government that is false or fraudulent False Claims Act (cont’d.)

28. Returning Overpayments FCA now requires prompt refund of overpayments Explicitly defines “overpayment” Must report and return overpaymentwithin 60 days Retaining an overpayment is defined as an “obligation” under the FCA and failure to discharge an obligation violates the FCA False Claims Act (cont’d.)

29. Under proposed regulations, an overpayment is “identified” when a person (i) has actual knowledge of an overpayment or (ii) acts in reckless disregard or deliberate ignorance of the overpayment Proposed regulations propose a ten-year look back period rather than three to four-year period typically used Returning Overpayments

30. Civil monetary penalties of $5,500 to $11,000 per false claim Treble damages Penalties

31. PPACA mandated that CMS develop and implement a voluntary self disclosure program for Stark violations There have been 150 disclosures from 148 providers Only seven cases have been settled to date Settlements have ranged from $60 to $579,000 The public reports do not disclose the methodology used to determine the settlement amounts Stark Self-Disclosure Protocol

32. Most common violations include failure to comply with exceptions for personal service arrangements, nonmonetary compensation, rental of office space and recruitment agreements Particularly important to consider prior to affiliation discussions Stark Self-Disclosure Protocol

33. Washington has one of the most comprehensive peer review and quality improvement privileges in the country. Every Washington hospital is required to maintain a coordinated quality improvement program to improve the quality of health care services rendered to patients and to identify and prevent malpractice. Each hospital must establish a quality improvement committee with the responsibility to review the services rendered in the hospital to improve the quality of medical care provided to patients. Attacks Quality Improvement and Peer Review

34. Immunity from liability for individuals who participate on the committee or provide information to the committee in good faith. Documents gathered by or for the committee are not subject to discovery in any civil litigation, such as a malpractice case. There are a few exceptions. Similar protections for non-hospital health care entities that establish a Coordinated Quality Improvement Program. Attacks on Quality Improvement and Peer Review Protections

35. Washington law also grants immunity to participants and privilege from discovery for activities of a regularly constituted peer review committee. Requires peer to peer complaint. For example, a complaint by a physician against another physician. Not clear at this time if the privilege would apply to a complaint by a nurse about a physician. Information must be provided to regularly constituted committee. Attacks Quality Improvement and Peer Review

36. Traditionally, courts have not evaluated the content of any documents maintained by a quality improvement or peer review committee. Instead, they simply follow the statutory language to determine if the documents are in fact those of a quality improvement committee or regularly constituted peer review committee. When determining if a regularly constituted committee exists, the court will consider the standards and guidelines of The Joint Commission, the hospital’s bylaws and internal regulations and policies, and whether the committee’s function is one of current patient care or retrospective review. Attacks on Quality Improvement and Peer Review

37. More recently there have been concerted efforts by the plaintiff’s bar to weaken the scope of the privilege. Attacks have focused on the following: Privileges are to be read narrowly It is the burden of the hospital or party asserting the privilege to prove every element of the privilege Any failure to completely prove each element of the privilege has resulted in a refusal to protect the applicable documents and loss of any immunity for the conduct Attacks on Quality Improvement and Peer Review

38. Examples of successful attacks include: Documents related to investigation by Chief of Staff and CEO of nurse allegations of substance abuse by physician were not privileged. Plaintiff successfully argued that the complaint did not qualify as “peer review” and despite information in medical staff bylaws, which authorized the investigation, there was not appropriate documentation to show that the investigation would ultimately be reported to the hospital’s quality improvement committee. Information gathered by a Medical Staff credentialing committee was subject to discovery because the hospital did not prove that the credentialing committee ultimately reported to the hospital’s quality committee. All medical staff activities were instead reported through the MEC to the Board. Attacks on Quality Improvement and Peer Review

39. What can be done to help protect quality assurance documents and maintain immunity from liability? The biggest risk is disjointed internal documentation concerning the reporting structure. For example, the medical staff committees do not regularly report peer review or quality improvement activities to the quality improvement committee. Attacks on Quality Improvement and Peer Review

40. Review your corporate bylaws, medical staff bylaws, quality improvement committee charter and charters of subcommittees to help ensure that there is a documentation trail that is easy for the courts to follow and that shows that any investigation is being conducted by a group or committee that has been specifically authorized by the quality improvement committee or one of its subcommittees to conduct the investigation. Make sure that all medical staff quality and peer review activities are approved by and reported to the hospital’s quality improvement committee. This helps ensure that any quality activities that do not qualify as peer review are protected. Attacks on Quality Improvement and Peer Review

41. Have the quality improvement committee review an approve the charters and activities of all of its sub committees, including medical staff activities. Document the review in the quality improvement committee minutes. Ensure that reports to the quality improvement committee from subcommittees are well documented in the quality improvement committee minutes. Attacks on Quality Improvement and Peer Review

42. Questions?

43. Contact Information Brad BergTelephone: 206-447-8970Email: BergB@Foster.com Foster Pepper PLLC1111 Third Avenue, Suite 3400Seattle, WA 98101www.foster.com 43