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October 13, 2013 Brandy Schnautz Mann Jackson Walker L.L.P. bmann@jw.com. TEACHING HOSPITALS OF TEXAS 2013 HEALTH LAW SEMINAR Physician Employment: Peer Review and Other Concerns for Hospitals. Corporate Practice of Medicine. Corporate practice of medicine prohibition

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October 13, 2013

Brandy Schnautz Mann

Jackson Walker L.L.P.

bmann@jw.com

TEACHING HOSPITALS OF TEXAS

2013 HEALTH LAW SEMINARPhysician Employment: Peer Review and Other Concerns for Hospitals

corporate practice of medicine
Corporate Practice of Medicine
  • Corporate practice of medicine prohibition
    • Prohibits practice of medicine by unlicensed persons – including entities such as corporations
    • Effectively prohibits direct employment of physicians by non-physicians
      • Includes lay individuals and entities
      • Applies to governmental entities unless excepted from the rule
corporate practice of medicine1
Corporate Practice of Medicine
    • Unlike some states, Texas does not exempt hospitals or other licensed health care entities from the prohibition*
  • Today, however, more hospitals in Texas than ever before can directly employ physicians
physician employment
Physician Employment
  • Hospital direct employment of physicians*
  • Statutes for particular hospital districts
    • e.g., Dallas County Hospital District, Maverick County Hospital District
  • Repeated legislative attempts in the last decade to exempt certain classes of hospitals
physician employment1
Physician Employment
  • Hospital direct employment of physicians
  • Since 2011, critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer can employ physicians*
    • Health & Safety Code Chapter 311, Subchapter E for hospitals listed above
physician employment2
Physician Employment
  • Hospital direct employment of physicians
  • Other bills passed in 2011 for larger hospital districts
    • Harris, Bexar, El Paso, and Tarrant County Hospital Districts and Scottish Rite Hospital in Dallas
  • New requirements for 501(a) corporations to ensure physician independence
employment limitations
Employment Limitations*
  • Even with exemptions, hospital employment is limited
  • Governing body of hospital not authorized to supervise or control the practice of medicine
employment limitations1
Employment Limitations
  • Chief Medical Officer (CMO)*
  • Policies to ensure independent medical judgment*
  • No discrimination between employed and not employed physicians with respect to privileges
  • Physician involvement in liability issues*
  • Non-competes limited*
chief medical officer
Chief Medical Officer
  • The CMO is the hospital’s designated contact with the Texas Medical Board
    • Must report that hospital is hiring physicians
    • Must report any action or event CMO reasonably believes in good faith compromises independent medical judgment of a physician
employment policies
Employment Policies
  • Written policies must cover:
    • Credentialing and privileges
    • Quality assurance
    • Utilization review
    • Peer review and due process*
    • Medical decision-making
    • Complaint mechanism to process and resolve complaints regarding interference with medical judgment
peer review laws
Peer Review Laws
  • Chapter 161 of the Health & Safety Code
  • Chapters 151 and 160 of the Occupations Code (Medical Practice Act)
  • Federal Health Care Quality Improvement Act of 1986 (HCQIA)
  • Intended to work in concert, but they are distinct laws*
peer review laws1
Peer Review Laws
  • “Medical peer review committee” or “professional review body” defined in the Occupations Code
  • “Medical committee” defined in the Health and Safety Code
  • “Professional review body” defined in HCQIA
peer review purposes
Peer Review Purposes
  • Quality assurance/utilization review
  • Review of medical staff applications and requests for reappointment
  • Disciplinary actions involving physicians
peer review purposes1
Peer Review Purposes
  • Considerations for public hospitals, hospital authorities, and hospital districts
    • Contracts with health care facilities*
    • Applicability of Public Information and Open Meetings Acts
    • Immunity
due process for physicians
Due Process for Physicians*
  • Triggered by adverse review action
    • Notice and hearing
    • Right to counsel
    • Recording
    • Witnesses
    • Statement
    • Review of written decision
confidentiality
Confidentiality
  • Intended to encourage discourse and candor among participants
  • Protects records and proceedings from
    • Discovery
    • Subpoenas (civil litigation v. TMB)*
    • Public Information Act (open records requests)
    • Open Meetings Act*
confidentiality1
Confidentiality
  • Limitations
    • Does not apply to records made or maintained in the regular course of business
    • May be waived
    • Permissive disclosures*
    • Defense of committee or members*
    • Some reporting is required and does not constitute a waiver*
immunity
Immunity
  • Participants in the peer review process are protected from civil liability and discipline or discrimination
    • Committee members and employees
    • Witnesses
    • Reporting parties
immunity1
Immunity
  • Limitations
    • Good faith
    • Without malice or knowledge of falsity
    • Reasonable belief that action or recommendation is warranted by the facts
    • Does not apply to some actions
      • Civil rights suits or actions by the United States or a state’s attorney general
reporting requirements
Reporting Requirements
  • To the TMB
    • Certain adverse actions taken by the committee*
    • Physician posing a continuing threat to the public welfare through the practice of medicine
  • TMB reports to the Data Bank*
  • Duty may not be nullified through contract*
slide21

October 13, 2013

Brandy Schnautz Mann

Jackson Walker L.L.P.

bmann@jw.com

TEACHING HOSPITALS OF TEXAS

2013 HEALTH LAW SEMINARPhysician Employment: Peer Review and Other Concerns for Hospitals