MDNews - Greater Kansas

June/July 2012

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+++++++++++++++ + + +++++++++++++++ LEGAL RX +++ +++ Credentialing ECONOMIC O By Mary E. Christopher, J.D. Goodell, Stratton, Edmonds & Palmer, LLP1 VER THE PAST dec ade, the Amer ican Medica l As sociat ion and other national organizations have decried the inclusion of economic and/or loyalty considerations within credential- ing. "Economic credentialing" refers to the practice of basing medical staff credentialing decisions on economic factors such as a physician's affiliation with a competing entity, exclusive contracts or utilization. Several lawsuits have been initiated against hospitals that refused to grant medical staff privileges to physicians who (1) have a direct or indirect financial interest with compet- ing health care entities; (2) refer patients to competing health care entities; and/or (3) fail to admit a specified percentage of their patients to the hospital. Some jurisdictions have statutes in place that would, in one way or another, restrict a hospital's ability to enact credentialing decisions based upon economic factors.2 however, do not. And a handful of states3 Many states, , including Kansas, have enacted statutes that recognize hospitals' abilities to establish credentialing criteria beyond the traditional areas of competence and conduct.4 Kansas law does not provide an appli- cant an inherent right to medical staff membership at a private hospital. The Kansas Healing Arts Act states: "Boards of trustees or directors of facilities licensed pursuant to the provisions of this act shall have the right, in accordance with law, to select the professional staff members of such facilities and to select and employ interns, nurses and other per- sonnel, and no rules and regulations or standards of the licensing agency shall be valid which, if enforced, would interfere in such selection or employment." In the Kansas Supreme Court case Foote v. Community Hospital of Beloit, the court stated that under K.S.A. 65-431, "the board of directors of a hospital is given plenary power to select its profes- sional staff." In effect, the holding means that membership to the medical staff of a hospital is a privilege granted by the board of directors and not a right derived from law. Hospitals and physicians traditionally The Office of the Inspector General has suggested that a categorical refusal to credential physicians with significant conflicts of interest does not bring the anti-kickback statute into play. However, economic credentialing practices that permit a hospital to either approve or deny privileges for physicians with conflicts of interest may violate the statute, since the exercise of discretion could be volume-sensitive. 18 | Greater Kansas MD NEWS ■ MDNEWS.COM stand on opposite sides of the fence in regard to the imposition of loyalty policies and credentialing criteria based on eco- nomic considerations. Most physicians simply want to practice medicine and view any economic credentialing criteria as an unacceptable barrier to providing quality patient care. By contrast, for hospitals, one of the most pressing concerns is their economic viability. The continued economic well-being of many hospitals is threatened when physician groups become direct competitors by venturing beyond the customary realm of physician services to provide what are viewed as traditional hospital services, e.g., physician-owned ambulatory surgi- cal centers. Hospitals fear physicians will direct the high-reimbursement patients to physician-owned facilities while sending low-reimbursement and nonpaying patients their way. However, the traditional viewpoint of physicians in regard to economic credentialing may begin to change in the event accountable care organiza- tions (ACOs) gain viability. In order to maximize shared savings, it will be necessary for ACOs to optimize the provision of medical care. Under these circumstances, participating physicians may begin to view economic credential- ing as a means to assure that their peers practice proficiently and do not compete against the ACO. This article is limited and merely provides a brief overview. For legal advice on specific cases, contact Goodell, Stratton, Edmonds & Palmer, LLP at (785) 233-0593. ■ 1 The author's primary areas of practice include health care law, civil litigation and appellate practice. She may be reached by e-mail at mchristopher@gseplaw.com. 2 California, Colorado, the District of Columbia, Idaho, Illinois, Louisiana, Massachusetts, Rhode Island, Texas, Tennessee and Virginia 3 Maryland, New York and North Carolina 4 Georgia, Florida, Indiana, Iowa, Kansas, See K.S.A. 65-431(b) ADVERTISERS' INDEX Coram ..........................................................15 Goodell, Stratton, Edmonds & Palmer ..................... Inside Back Cover Keurig ...........................................................13 MMIC ..........................................Back Cover Via Christi Health .... Inside Front Cover Wichita Nephrology Group P.A. ..........9

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