Steven M. Harris

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH

Receiving notice from a payor that you are being audited can be alarming. Questions will inevitably run through your mind, such as, Why? How? How much will this cost?

Understanding the types of payor audits and how to navigate the process can make answering those questions easier. In addition, advanced preparation and knowing when to engage legal counsel can be critical to a successful audit outcome.

Audit Types

There are three general types of audits that providers face: Medicare audits, Medicaid audits, and private payor audits.

Medicare audits: The agency responsible for Medicare audits is the Centers for Medicare & Medicaid Services (CMS). There are three types of Medicare audits. Comprehensive Error Rate Testing (CERT) audits focus on providers who deliver high-cost items or services, have high volume, and/or have atypical billing or coding practices. Private contractors perform Recovery Audit Contractor (RAC) program audits; these contractors are paid a percentage of the amount of any improper payment discovered. Finally, Zone Program Integrity Contractor (ZPIC) audits are the most serious of the three audit types. ZPIC audits are performed by CMS contractors who mine the provider’s data for compliance with Medicare coverage and coding policies, investigate fraud, and may prepare cases for civil or criminal referral to CMS or law enforcement agencies.

Medicaid audits: Medicaid audits evaluate compliance with both CMS and applicable state regulations and investigate fraud. Evidence of fraud will be reported to the state attorney general for further review and prosecution.

Private payor audits: Private payor audits consist of informal reviews and formal audits. These audits can be triggered by actual allegations or evidence of noncompliance, or they can be random, in which general compliance is assessed. Audit procedures are typically determined by contract or the payor’s provider handbook and in accordance with applicable state law. The process can consist of prepayment reviews, in which the sufficiency of a claim and its supporting documentation is determined before payment is made to the provider, or post-payment reviews, during which claims are analyzed after the provider has been paid to determine if an overpayment was made and the amount of such overpayment. In the event an overpayment is discovered, a recoupment will be sought from the provider.

Focus

Consistent billing by a provider of high volumes of certain high-level services, high volumes of evaluation and management services, or consistently referring patients for certain testing can create suspicion in mayors.

In recent years, the primary focus of audits has been medical necessity due to payor concerns about specific fraud and abuse issues. Documentation of medical necessity is required during an audit. However, proving medical necessity can be difficult as the definition of “medical necessity” can vary by payor and within a payor depending on the underlying plan. In addition, private payors often have arbitrary and vague guidelines for defining and determining medical necessity, particularly when dealing with physicians or ordering clinicians. For this reason, it is critical that providers read their payor contracts and manuals carefully. If those materials are unclear, it is best to confirm requirements with the payor.

Regardless of the definition, medical necessity is a precondition to coverage for all payors. Proof is required that the services were reasonable and necessary to diagnosis or treat a patient’s medical condition. To satisfy this standard, providers should document the diagnosis for all procedures performed and all diagnostic tests ordered. In the case of repeat procedures, providers should clearly note the outcome of the previous procedure and the basis for reordering.

Responding to an Audit Request

All audit requests must be taken very seriously. Payors tend to copy what other payors are doing, and a problematic audit with one payor can cause other payors to initiate their own audits. Therefore, it is critical to respond appropriately to each audit request. Also, auditors often only check a few billing records. If errors are found, they will then extrapolate those findings, and the provider may be penalized.

Upon receipt of an audit request, it is important to immediately engage legal counsel well-versed in handling payor audits. Having an attorney who understands the audit process and has experience responding to audit requests can help ensure the best possible audit outcome. A negative outcome could result in recovery of overpayments, civil and/or criminal penalties, and exclusion from government programs.

Providers should work with such legal counsel to review the audit request and supply everything reasonably requested. A concerted effort should be made to submit all information to the auditor at one time. If information is missing, the auditor may determine that a significant error rate exists, which could cause the auditor to review all CPT codes to calculate the overpayment made to the provider. If it is not possible to gather the requested material before the auditor’s deadline, an extension should be requested. Any extensions granted should be documented.

It is important that an audit response and supporting documentation be thorough, clear, and concise. It should be submitted in a manner that allows the auditor to quickly review the information and understand the provider’s arguments. It should clearly state what measures the provider has already taken to terminate existing problems and prevent future issues. Competent legal counsel will be able to address procedural, legal, or factual flaws in the auditor’s position.

Advanced Preparation

The best way to ensure compliance and audit readiness is to develop and implement a compliance plan well in advance of any audit. Experienced legal counsel should play a pivotal role in development of such plan. As always, periodic self-audits or independent audits are necessary to proactively identify compliance issues and mitigate their impact.

Finally, regular and periodic training and education should be conducted regarding audit response obligations and responsibilities. Performing these tasks will help ensure a smooth audit experience with minimal infractions and penalties. TH

It is inevitable that, at some point in your career, you will need to hire a healthcare attorney. Proper representation is the best way to ensure a positive outcome in any situation.

Physicians often consider tackling certain issues on their own to reduce costs and avoid complicating matters. However, there are at least five situations in which you must retain an experienced healthcare attorney, or you could end up underpaid, subject to overreaching restrictive covenants, severely fined, or responsible for a large settlement.

1. Negotiating an Employment Contract

Whether you are considering a position as an employee of a physician group, hospital, or health system, it is critical that you understand the employment agreement presented to you so you can be sure it is fair and represents your best interests. The agreement itself defines the scope and conditions of your employment and consequently impacts your personal and professional satisfaction. It usually contains confusing legal terminology, such as noncompetition and nonsolicitation clauses. If you do not understand these terms, problems may arise in the future regarding your rights and capabilities upon termination of employment.

For these reasons, it is critical to engage a healthcare attorney who is well-versed in physician employment agreements. At a minimum, an attorney can confirm whether the compensation offered is comparable to that of physicians with similar experience and skills in your geographical area. The attorney can decipher confusing bonus compensation and may be able to negotiate more favorable terms. The same is true of understanding the benefits offered and establishing your call coverage.

An attorney will be able to advise you when it is appropriate to push back and request additional benefits or propose more favorable changes to your call coverage. Most important, the attorney will clarify the term of the employment agreement, the corresponding termination provisions, and any restrictions on your ability to practice upon termination of the agreement. Although the ultimate decision to accept the employment offer rests solely with you, an experienced healthcare attorney can help you understand the agreement and give you confidence in that decision.

2. Leaving a Practice for New Opportunities or Retirement

Whether you decide to leave a practice to pursue a new opportunity or because you are retiring, it is critical that you engage a healthcare attorney to help you navigate this road. If you are leaving to pursue new opportunities, an attorney can help you understand any restrictive covenants that may apply upon your departure and who retains ownership of the medical records of patients you treated while employed by the practice. In addition, you’ll be assisted in drafting any required notifications to patients alerting them of your departure.

If you are leaving the practice due to retirement, there are additional concerns. If you own the practice, you will need to decide whether to sell the practice or wind it down. If you decide to sell, an attorney can help you negotiate a favorable merger agreement and file any required change of ownership forms. If you choose to wind down your practice, your employee agreements and service and vendor contracts, including managed care participation agreements, will need to be reviewed for specific termination and notice requirements.

As with departure from a practice, there are certain notifications that must be issued to your patients detailing the closure of your practice and addressing patient options for continuity of care. An attorney can draft such notifications for you and, in addition, will be able to assist with notifying your malpractice carrier of your retirement and ensuring you have proper continuing coverage.

Finally, an attorney can arrange custody of your medical records in accordance with applicable state record retention requirements, help wind down your financial matters, and terminate your practice’s professional entity.

3. Practice Mergers

Engaging a healthcare transaction attorney protects your investment in your practice and in the practice with which you decide to merge. Healthcare mergers, due to the complex rules and regulations governing the industry, are uniquely complicated. A traditional business lawyer with merger experience likely will not understand regulations that solely impact healthcare mergers, which can lead to regulatory fines and penalties.

Therefore, if you are considering merging your practice, it is critical that you engage an attorney who is highly experienced in the legal implications of healthcare transactions and who has a deep understanding of the Anti-Kickback Statute, Stark Law, and other applicable regulations. Doing so is the only way to ensure compliance with healthcare rules and regulations.

4. Payor Audits

The number of payor audits is increasing dramatically. Payor audits can involve Medicare, Medicaid, or third-party payors. When an audit notice is received, there often is a limited time period to respond. Therefore, it is imperative that you engage an experienced healthcare attorney upon receipt of such a notice to draft a professional response to the audit request and help you gather the requested documents in accordance with the time frames specified in the notice.

In addition, an attorney can address procedural, legal, or factual flaws in the auditor’s position, which can prevent repayment of significant monetary penalties and suspension or revocation of billing privileges.

5. Malpractice Allegations

Without question, if you are subject to a medical malpractice lawsuit, you absolutely must retain an experienced healthcare attorney. Your insurance company will usually hire one for you, but that is not always the case.

Medical malpractice cases are extremely complicated. To prevail, you need an attorney who not only understands the law but also the practice of medicine. A healthcare attorney will not only know what litigation filings are required but will be able to arrange expert witnesses to help prove that you acted in accordance with professional standards.

In Sum

It is critical that an experienced healthcare attorney be hired to help manage these situations and many more. There is no better way to protect the professional and personal interests you have worked so hard to build. TH

It is inevitable that, at some point in your career, you will need to hire a healthcare attorney. Proper representation is the best way to ensure a positive outcome in any situation.

Physicians often consider tackling certain issues on their own to reduce costs and avoid complicating matters. However, there are at least five situations in which you must retain an experienced healthcare attorney, or you could end up underpaid, subject to overreaching restrictive covenants, severely fined, or responsible for a large settlement.

1. Negotiating an Employment Contract

Whether you are considering a position as an employee of a physician group, hospital, or health system, it is critical that you understand the employment agreement presented to you so you can be sure it is fair and represents your best interests. The agreement itself defines the scope and conditions of your employment and consequently impacts your personal and professional satisfaction. It usually contains confusing legal terminology, such as noncompetition and nonsolicitation clauses. If you do not understand these terms, problems may arise in the future regarding your rights and capabilities upon termination of employment.

For these reasons, it is critical to engage a healthcare attorney who is well-versed in physician employment agreements. At a minimum, an attorney can confirm whether the compensation offered is comparable to that of physicians with similar experience and skills in your geographical area. The attorney can decipher confusing bonus compensation and may be able to negotiate more favorable terms. The same is true of understanding the benefits offered and establishing your call coverage.

An attorney will be able to advise you when it is appropriate to push back and request additional benefits or propose more favorable changes to your call coverage. Most important, the attorney will clarify the term of the employment agreement, the corresponding termination provisions, and any restrictions on your ability to practice upon termination of the agreement. Although the ultimate decision to accept the employment offer rests solely with you, an experienced healthcare attorney can help you understand the agreement and give you confidence in that decision.

2. Leaving a Practice for New Opportunities or Retirement

Whether you decide to leave a practice to pursue a new opportunity or because you are retiring, it is critical that you engage a healthcare attorney to help you navigate this road. If you are leaving to pursue new opportunities, an attorney can help you understand any restrictive covenants that may apply upon your departure and who retains ownership of the medical records of patients you treated while employed by the practice. In addition, you’ll be assisted in drafting any required notifications to patients alerting them of your departure.

If you are leaving the practice due to retirement, there are additional concerns. If you own the practice, you will need to decide whether to sell the practice or wind it down. If you decide to sell, an attorney can help you negotiate a favorable merger agreement and file any required change of ownership forms. If you choose to wind down your practice, your employee agreements and service and vendor contracts, including managed care participation agreements, will need to be reviewed for specific termination and notice requirements.

As with departure from a practice, there are certain notifications that must be issued to your patients detailing the closure of your practice and addressing patient options for continuity of care. An attorney can draft such notifications for you and, in addition, will be able to assist with notifying your malpractice carrier of your retirement and ensuring you have proper continuing coverage.

Finally, an attorney can arrange custody of your medical records in accordance with applicable state record retention requirements, help wind down your financial matters, and terminate your practice’s professional entity.

3. Practice Mergers

Engaging a healthcare transaction attorney protects your investment in your practice and in the practice with which you decide to merge. Healthcare mergers, due to the complex rules and regulations governing the industry, are uniquely complicated. A traditional business lawyer with merger experience likely will not understand regulations that solely impact healthcare mergers, which can lead to regulatory fines and penalties.

Therefore, if you are considering merging your practice, it is critical that you engage an attorney who is highly experienced in the legal implications of healthcare transactions and who has a deep understanding of the Anti-Kickback Statute, Stark Law, and other applicable regulations. Doing so is the only way to ensure compliance with healthcare rules and regulations.

4. Payor Audits

The number of payor audits is increasing dramatically. Payor audits can involve Medicare, Medicaid, or third-party payors. When an audit notice is received, there often is a limited time period to respond. Therefore, it is imperative that you engage an experienced healthcare attorney upon receipt of such a notice to draft a professional response to the audit request and help you gather the requested documents in accordance with the time frames specified in the notice.

In addition, an attorney can address procedural, legal, or factual flaws in the auditor’s position, which can prevent repayment of significant monetary penalties and suspension or revocation of billing privileges.

5. Malpractice Allegations

Without question, if you are subject to a medical malpractice lawsuit, you absolutely must retain an experienced healthcare attorney. Your insurance company will usually hire one for you, but that is not always the case.

Medical malpractice cases are extremely complicated. To prevail, you need an attorney who not only understands the law but also the practice of medicine. A healthcare attorney will not only know what litigation filings are required but will be able to arrange expert witnesses to help prove that you acted in accordance with professional standards.

In Sum

It is critical that an experienced healthcare attorney be hired to help manage these situations and many more. There is no better way to protect the professional and personal interests you have worked so hard to build. TH

It is inevitable that, at some point in your career, you will need to hire a healthcare attorney. Proper representation is the best way to ensure a positive outcome in any situation.

Physicians often consider tackling certain issues on their own to reduce costs and avoid complicating matters. However, there are at least five situations in which you must retain an experienced healthcare attorney, or you could end up underpaid, subject to overreaching restrictive covenants, severely fined, or responsible for a large settlement.

1. Negotiating an Employment Contract

Whether you are considering a position as an employee of a physician group, hospital, or health system, it is critical that you understand the employment agreement presented to you so you can be sure it is fair and represents your best interests. The agreement itself defines the scope and conditions of your employment and consequently impacts your personal and professional satisfaction. It usually contains confusing legal terminology, such as noncompetition and nonsolicitation clauses. If you do not understand these terms, problems may arise in the future regarding your rights and capabilities upon termination of employment.

For these reasons, it is critical to engage a healthcare attorney who is well-versed in physician employment agreements. At a minimum, an attorney can confirm whether the compensation offered is comparable to that of physicians with similar experience and skills in your geographical area. The attorney can decipher confusing bonus compensation and may be able to negotiate more favorable terms. The same is true of understanding the benefits offered and establishing your call coverage.

An attorney will be able to advise you when it is appropriate to push back and request additional benefits or propose more favorable changes to your call coverage. Most important, the attorney will clarify the term of the employment agreement, the corresponding termination provisions, and any restrictions on your ability to practice upon termination of the agreement. Although the ultimate decision to accept the employment offer rests solely with you, an experienced healthcare attorney can help you understand the agreement and give you confidence in that decision.

2. Leaving a Practice for New Opportunities or Retirement

Whether you decide to leave a practice to pursue a new opportunity or because you are retiring, it is critical that you engage a healthcare attorney to help you navigate this road. If you are leaving to pursue new opportunities, an attorney can help you understand any restrictive covenants that may apply upon your departure and who retains ownership of the medical records of patients you treated while employed by the practice. In addition, you’ll be assisted in drafting any required notifications to patients alerting them of your departure.

If you are leaving the practice due to retirement, there are additional concerns. If you own the practice, you will need to decide whether to sell the practice or wind it down. If you decide to sell, an attorney can help you negotiate a favorable merger agreement and file any required change of ownership forms. If you choose to wind down your practice, your employee agreements and service and vendor contracts, including managed care participation agreements, will need to be reviewed for specific termination and notice requirements.

As with departure from a practice, there are certain notifications that must be issued to your patients detailing the closure of your practice and addressing patient options for continuity of care. An attorney can draft such notifications for you and, in addition, will be able to assist with notifying your malpractice carrier of your retirement and ensuring you have proper continuing coverage.

Finally, an attorney can arrange custody of your medical records in accordance with applicable state record retention requirements, help wind down your financial matters, and terminate your practice’s professional entity.

3. Practice Mergers

Engaging a healthcare transaction attorney protects your investment in your practice and in the practice with which you decide to merge. Healthcare mergers, due to the complex rules and regulations governing the industry, are uniquely complicated. A traditional business lawyer with merger experience likely will not understand regulations that solely impact healthcare mergers, which can lead to regulatory fines and penalties.

Therefore, if you are considering merging your practice, it is critical that you engage an attorney who is highly experienced in the legal implications of healthcare transactions and who has a deep understanding of the Anti-Kickback Statute, Stark Law, and other applicable regulations. Doing so is the only way to ensure compliance with healthcare rules and regulations.

4. Payor Audits

The number of payor audits is increasing dramatically. Payor audits can involve Medicare, Medicaid, or third-party payors. When an audit notice is received, there often is a limited time period to respond. Therefore, it is imperative that you engage an experienced healthcare attorney upon receipt of such a notice to draft a professional response to the audit request and help you gather the requested documents in accordance with the time frames specified in the notice.

In addition, an attorney can address procedural, legal, or factual flaws in the auditor’s position, which can prevent repayment of significant monetary penalties and suspension or revocation of billing privileges.

5. Malpractice Allegations

Without question, if you are subject to a medical malpractice lawsuit, you absolutely must retain an experienced healthcare attorney. Your insurance company will usually hire one for you, but that is not always the case.

Medical malpractice cases are extremely complicated. To prevail, you need an attorney who not only understands the law but also the practice of medicine. A healthcare attorney will not only know what litigation filings are required but will be able to arrange expert witnesses to help prove that you acted in accordance with professional standards.

In Sum

It is critical that an experienced healthcare attorney be hired to help manage these situations and many more. There is no better way to protect the professional and personal interests you have worked so hard to build. TH

As the practice of medicine continues to transition to performance-based payment systems, the number of mergers of hospitalists and specialists has surged. Payment models that focus on clinical outcomes and best practices link payment to the ability of physicians to provide efficient, quality healthcare and improve patient outcomes. These payment systems are changing the way healthcare services are delivered by demanding better patient care at a lower cost. The result is increasing pressure on physicians to meet operational and quality goals, or receive less reimbursement for their services.

Studies have shown that the effective use of hospitalists can improve standardized patient care for surgical patients. Hospitalists also provide value to specialists by freeing up time so they can focus on their area of expertise. As a result, co-management arrangements between hospitalists and specialists have become a popular tool to define working relationships and improve the quality of care patients receive.

Hospitalist Evolution

When hospitalists first debuted, they were seen as a threat to primary care physicians and specialists. Over time, they were criticized for performing routine work for specialized physicians. To overcome these negative connotations and prove their worth, hospitalists began co-managing patients for surgical specialists, who soon realized the significant value hospitalist services provided. Not only do they share in the responsibility of care provided to patients, but they also reduce readmissions and costs associated with providing healthcare.

Now there are even specialty hospitalists who specialize in a particular field, such as orthopedics or obstetrics.

Why Co-Management?

Hospitalists add value by helping to alleviate the burden on specialists—providing ED coverage, assisting in the operating room, and rounding on patients. They evaluate surgical patients for medical issues, reconcile medications across the spectrum of a patient’s care, and standardize the patient discharge and communication processes.

Providing these services frees specialists from rounding and allows them to concentrate on their specialty. Hospitalists do not have office-based practices, which allows them to spend their time in the hospital caring for admitted, pre-operative, and post-operative patients.

It is in the pre-operative and post-operative environments where hospitalists have established their extreme value to specialists. Under co-management arrangements, hospitalists are able to ensure that all pre-operative tests are conducted, reports are dictated, and the patient’s medical history is available. Pre-operative evaluations allow the hospitalist to develop a post-operative plan of care and proactively address many medical concerns. Also, the hospitalist is available to see patients immediately after surgery, allowing immediate evaluation and treatment for high blood pressure, diabetic issues, or other medical issues.

In sum, the hospitalist is responsible for the medical care of the specialist’s patients, and the specialist is able to focus on the specialty services he or she provides. Providing these services gives hospitalists the opportunity to anticipate problems and overcome issues, which results in more efficient care, shorter lengths of stay in the hospital, and improved patient satisfaction. Such results make hospitalists critical to success in performance-based payment systems.

Successful Co-Management Arrangements

A key to success in establishing a co-management arrangement between a hospitalist and a specialist is setting forth the parameters of the relationship in a written agreement. It is particularly important that the relationship foster equality among the parties, regardless of who is the attending physician of record. The parties should be jointly responsible for patient care, with the hospitalist treating the patient’s general medical concerns and the specialist focusing on techniques within his specialty to improve the patient’s issues.

The agreement should clearly state the responsibilities of each party, including delineating the party responsible for decisions such as admission and discharge. It should address resources and set forth the standardized processes and protocols to be used when treating patients.

Specialists can vary in their treatment of patients, so it is best to document their expectations at the onset of the relationship. Also, successful co-management is contingent upon regular communication between the hospitalist and the specialist. It is important to establish those boundaries in advance to prevent miscommunication down the road.

In particular, the agreement should explicitly describe the lines of authority and how conflicts will be addressed.

Final Thoughts

Co-management is a growing trend that can provide an opportunity for hospitalists to expand their practice and reinforce their value to both specialists and the hospital. The improved quality of care and patient satisfaction that is associated with hospitalist services can be crucial to maximizing reimbursement under a value-based reimbursement system. TH

As the practice of medicine continues to transition to performance-based payment systems, the number of mergers of hospitalists and specialists has surged. Payment models that focus on clinical outcomes and best practices link payment to the ability of physicians to provide efficient, quality healthcare and improve patient outcomes. These payment systems are changing the way healthcare services are delivered by demanding better patient care at a lower cost. The result is increasing pressure on physicians to meet operational and quality goals, or receive less reimbursement for their services.

Studies have shown that the effective use of hospitalists can improve standardized patient care for surgical patients. Hospitalists also provide value to specialists by freeing up time so they can focus on their area of expertise. As a result, co-management arrangements between hospitalists and specialists have become a popular tool to define working relationships and improve the quality of care patients receive.

Hospitalist Evolution

When hospitalists first debuted, they were seen as a threat to primary care physicians and specialists. Over time, they were criticized for performing routine work for specialized physicians. To overcome these negative connotations and prove their worth, hospitalists began co-managing patients for surgical specialists, who soon realized the significant value hospitalist services provided. Not only do they share in the responsibility of care provided to patients, but they also reduce readmissions and costs associated with providing healthcare.

Now there are even specialty hospitalists who specialize in a particular field, such as orthopedics or obstetrics.

Why Co-Management?

Hospitalists add value by helping to alleviate the burden on specialists—providing ED coverage, assisting in the operating room, and rounding on patients. They evaluate surgical patients for medical issues, reconcile medications across the spectrum of a patient’s care, and standardize the patient discharge and communication processes.

Providing these services frees specialists from rounding and allows them to concentrate on their specialty. Hospitalists do not have office-based practices, which allows them to spend their time in the hospital caring for admitted, pre-operative, and post-operative patients.

It is in the pre-operative and post-operative environments where hospitalists have established their extreme value to specialists. Under co-management arrangements, hospitalists are able to ensure that all pre-operative tests are conducted, reports are dictated, and the patient’s medical history is available. Pre-operative evaluations allow the hospitalist to develop a post-operative plan of care and proactively address many medical concerns. Also, the hospitalist is available to see patients immediately after surgery, allowing immediate evaluation and treatment for high blood pressure, diabetic issues, or other medical issues.

In sum, the hospitalist is responsible for the medical care of the specialist’s patients, and the specialist is able to focus on the specialty services he or she provides. Providing these services gives hospitalists the opportunity to anticipate problems and overcome issues, which results in more efficient care, shorter lengths of stay in the hospital, and improved patient satisfaction. Such results make hospitalists critical to success in performance-based payment systems.

Successful Co-Management Arrangements

A key to success in establishing a co-management arrangement between a hospitalist and a specialist is setting forth the parameters of the relationship in a written agreement. It is particularly important that the relationship foster equality among the parties, regardless of who is the attending physician of record. The parties should be jointly responsible for patient care, with the hospitalist treating the patient’s general medical concerns and the specialist focusing on techniques within his specialty to improve the patient’s issues.

The agreement should clearly state the responsibilities of each party, including delineating the party responsible for decisions such as admission and discharge. It should address resources and set forth the standardized processes and protocols to be used when treating patients.

Specialists can vary in their treatment of patients, so it is best to document their expectations at the onset of the relationship. Also, successful co-management is contingent upon regular communication between the hospitalist and the specialist. It is important to establish those boundaries in advance to prevent miscommunication down the road.

In particular, the agreement should explicitly describe the lines of authority and how conflicts will be addressed.

Final Thoughts

Co-management is a growing trend that can provide an opportunity for hospitalists to expand their practice and reinforce their value to both specialists and the hospital. The improved quality of care and patient satisfaction that is associated with hospitalist services can be crucial to maximizing reimbursement under a value-based reimbursement system. TH

As the practice of medicine continues to transition to performance-based payment systems, the number of mergers of hospitalists and specialists has surged. Payment models that focus on clinical outcomes and best practices link payment to the ability of physicians to provide efficient, quality healthcare and improve patient outcomes. These payment systems are changing the way healthcare services are delivered by demanding better patient care at a lower cost. The result is increasing pressure on physicians to meet operational and quality goals, or receive less reimbursement for their services.

Studies have shown that the effective use of hospitalists can improve standardized patient care for surgical patients. Hospitalists also provide value to specialists by freeing up time so they can focus on their area of expertise. As a result, co-management arrangements between hospitalists and specialists have become a popular tool to define working relationships and improve the quality of care patients receive.

Hospitalist Evolution

When hospitalists first debuted, they were seen as a threat to primary care physicians and specialists. Over time, they were criticized for performing routine work for specialized physicians. To overcome these negative connotations and prove their worth, hospitalists began co-managing patients for surgical specialists, who soon realized the significant value hospitalist services provided. Not only do they share in the responsibility of care provided to patients, but they also reduce readmissions and costs associated with providing healthcare.

Now there are even specialty hospitalists who specialize in a particular field, such as orthopedics or obstetrics.

Why Co-Management?

Hospitalists add value by helping to alleviate the burden on specialists—providing ED coverage, assisting in the operating room, and rounding on patients. They evaluate surgical patients for medical issues, reconcile medications across the spectrum of a patient’s care, and standardize the patient discharge and communication processes.

Providing these services frees specialists from rounding and allows them to concentrate on their specialty. Hospitalists do not have office-based practices, which allows them to spend their time in the hospital caring for admitted, pre-operative, and post-operative patients.

It is in the pre-operative and post-operative environments where hospitalists have established their extreme value to specialists. Under co-management arrangements, hospitalists are able to ensure that all pre-operative tests are conducted, reports are dictated, and the patient’s medical history is available. Pre-operative evaluations allow the hospitalist to develop a post-operative plan of care and proactively address many medical concerns. Also, the hospitalist is available to see patients immediately after surgery, allowing immediate evaluation and treatment for high blood pressure, diabetic issues, or other medical issues.

In sum, the hospitalist is responsible for the medical care of the specialist’s patients, and the specialist is able to focus on the specialty services he or she provides. Providing these services gives hospitalists the opportunity to anticipate problems and overcome issues, which results in more efficient care, shorter lengths of stay in the hospital, and improved patient satisfaction. Such results make hospitalists critical to success in performance-based payment systems.

Successful Co-Management Arrangements

A key to success in establishing a co-management arrangement between a hospitalist and a specialist is setting forth the parameters of the relationship in a written agreement. It is particularly important that the relationship foster equality among the parties, regardless of who is the attending physician of record. The parties should be jointly responsible for patient care, with the hospitalist treating the patient’s general medical concerns and the specialist focusing on techniques within his specialty to improve the patient’s issues.

The agreement should clearly state the responsibilities of each party, including delineating the party responsible for decisions such as admission and discharge. It should address resources and set forth the standardized processes and protocols to be used when treating patients.

Specialists can vary in their treatment of patients, so it is best to document their expectations at the onset of the relationship. Also, successful co-management is contingent upon regular communication between the hospitalist and the specialist. It is important to establish those boundaries in advance to prevent miscommunication down the road.

In particular, the agreement should explicitly describe the lines of authority and how conflicts will be addressed.

Final Thoughts

Co-management is a growing trend that can provide an opportunity for hospitalists to expand their practice and reinforce their value to both specialists and the hospital. The improved quality of care and patient satisfaction that is associated with hospitalist services can be crucial to maximizing reimbursement under a value-based reimbursement system. TH

Editor’s note: Second in a two-part series on hospitalists as expert witnesses.

You have officially decided to take the plunge and become an expert witness, but you have never seen the inside of a courtroom, sat for a deposition, or prepared an expert report. This article serves as a primer for all of those things, as well as testifying at trial.

Given the tremendous advantage to be gained by having the expert available to advise the attorney in preparing discovery and responding to the opposing attorney’s discovery, hopefully you have been actively involved in the litigation process and are not trying to get up to speed just weeks or even days before your deposition or the deadline for your expert report.

Steps you can take to become an indispensable expert witness, above and beyond your expert report, deposition, and trial testimony, include:

• Familiarizing yourself with all relevant aspects of the case so that you understand where your opinion fits in;
• Advising the attorney of both favorable and unfavorable facts;
• Identifying key documents that must be obtained;
• Spotting false or weak assumptions and inadequate work by the opposing expert; and/or
• Providing peer-reviewed journal articles and other literature, which decipher complex subjects for the attorney.

Expert Reports

Now that you have become an indispensable expert, what needs to be included in your expert report? If the matter is in state court, the content of the expert report will depend on state court rules that vary by jurisdiction and the judge’s own preferences. In federal court, the mandatory signed expert report must contain at least the following six things:

• A complete statement of all opinions the witness will express and the basis and reasons for these opinions;
• The facts or data considered by the witness in forming them;
• Any exhibits that will be used to summarize or support them;
• The witness’s qualifications, including a list of all publications authored in the previous 10 years;
• A list of all other cases in which, during the previous four years, the witness testified as an expert at trial or by deposition; and
• A statement of the compensation to be paid for the study and testimony in the case.

The report is due at least 90 days before the case is set for trial. The expert then has the opportunity to submit a rebuttal report 30 days after receipt of the opposing expert’s report “solely to contradict or rebut” that report.

In preparing the expert report, it is important to remember that, in essence, everything the expert touches is discoverable by the other side. So before you decide to jot down a note to yourself, consider the fact that that note may need to be produced to the other side. Be especially careful not to jot down editorial comments on documents, particularly deposition transcripts. Imagine the cross-examiner’s delight at finding the penned-in words “problem area” or “smoking gun” or “discuss issue with attorney” next to some unfavorable fact regarding the client. The rule of thumb is “the more unnecessary notes, the longer the deposition.” On the other hand, it may be essential to preserve notes containing calculations, formulas, measurements, and similar documentation to support your opinions.

Additionally, any communications with your attorney and drafts of the report are not privileged. So you need to make sure that it is you—and you alone—who is writing the report.

Depositions

As mentioned in the first article, testifying under oath, whether in a deposition or trial setting, can be a grueling experience. This is especially true if the deposition is videotaped or the trial is a high-profile case for which media might be present in the courtroom.

Although it may not be granted, you should request a convenient day, time, and place, including your office if you prefer, for your deposition. Some hospitalists prefer to have the deposition at their office because it minimizes the time they are unable to engage in patient care. Other hospitalists prefer to be in a more private setting, such as the opposing counsel’s law firm office, so that their patients are not aware of their expert witness activities.

Typically, the deposition takes place at an attorney’s office, with the attorneys for the parties, the parties themselves, and a court reporter present. The deposition begins with the court reporter swearing in the expert witness so that all of the expert’s answers are under oath.

At the deposition, it is the expert’s job to tell the truth briefly. Telling the truth briefly means providing accurate answers to questions after they are understood—and clarified if necessary—and stating those accurate answers in as short a way as possible without unnecessary adverbs, adjectives, parentheticals, footnotes, asides, qualifications, and other unrequested information. The rule of thumb is that the more information an expert volunteers, the longer the deposition and ability to cross-examine will be.

Often it is helpful to engage in role playing with the attorney to explore likely initial and follow-up questions from opposing counsel. Typically, the format of these questions will include who, what, when, where, why, how, tell us, describe, or explain. You should also review important documents, so that you have a familiarity and comfort with the documents considered part of your analysis and are prepared to interpret them and explain their significance.

At the deposition, you will likely be asked if you reviewed any documents in preparation and, specifically, which ones you examined.

Just as you would in a trial situation, you should pause after a question is asked, to allow your attorney to make an appropriate objection to the question.

It should be noted that the top six answers to most deposition questions are:

• Yes;
• No;
• I don’t know;
• I don’t remember;
• I don’t understand the question; and
• I need a break.

Don’t be afraid to answer “yes” or “no” to a yes or no question or to use “I don’t know” when it’s the most accurate answer. The last piece of advice for depositions is to remember at all times that the deposing attorney is not your friend.

Trial Testimony

Getting ready for trial will be much the same as preparing for the deposition; you want to ensure that your testimony is consistent and protect yourself from potential impeachment. The focus, however, is a different audience; you are educating the judge and jury in a way that will make your testimony understandable and consistent with the jury’s common sense.

You will again be sworn in during both direct and cross-examination. If there is an objection to the form of the question or to your testimony, you should again stop and wait for the judge to instruct whether or not to answer the question and in what manner. Direct examination is likely to include questions based upon your qualifications, methodology, basis or assumptions, and anticipated cross. In responding, remember to look directly at counsel while the question is being asked and then at the jury in explaining the answer.

There is no question that serving as an expert witness is challenging and rewarding work. Are you ready for the challenge?

Editor’s note: Second in a two-part series on hospitalists as expert witnesses.

You have officially decided to take the plunge and become an expert witness, but you have never seen the inside of a courtroom, sat for a deposition, or prepared an expert report. This article serves as a primer for all of those things, as well as testifying at trial.

Given the tremendous advantage to be gained by having the expert available to advise the attorney in preparing discovery and responding to the opposing attorney’s discovery, hopefully you have been actively involved in the litigation process and are not trying to get up to speed just weeks or even days before your deposition or the deadline for your expert report.

Steps you can take to become an indispensable expert witness, above and beyond your expert report, deposition, and trial testimony, include:

• Familiarizing yourself with all relevant aspects of the case so that you understand where your opinion fits in;
• Advising the attorney of both favorable and unfavorable facts;
• Identifying key documents that must be obtained;
• Spotting false or weak assumptions and inadequate work by the opposing expert; and/or
• Providing peer-reviewed journal articles and other literature, which decipher complex subjects for the attorney.

Expert Reports

Now that you have become an indispensable expert, what needs to be included in your expert report? If the matter is in state court, the content of the expert report will depend on state court rules that vary by jurisdiction and the judge’s own preferences. In federal court, the mandatory signed expert report must contain at least the following six things:

• A complete statement of all opinions the witness will express and the basis and reasons for these opinions;
• The facts or data considered by the witness in forming them;
• Any exhibits that will be used to summarize or support them;
• The witness’s qualifications, including a list of all publications authored in the previous 10 years;
• A list of all other cases in which, during the previous four years, the witness testified as an expert at trial or by deposition; and
• A statement of the compensation to be paid for the study and testimony in the case.

The report is due at least 90 days before the case is set for trial. The expert then has the opportunity to submit a rebuttal report 30 days after receipt of the opposing expert’s report “solely to contradict or rebut” that report.

In preparing the expert report, it is important to remember that, in essence, everything the expert touches is discoverable by the other side. So before you decide to jot down a note to yourself, consider the fact that that note may need to be produced to the other side. Be especially careful not to jot down editorial comments on documents, particularly deposition transcripts. Imagine the cross-examiner’s delight at finding the penned-in words “problem area” or “smoking gun” or “discuss issue with attorney” next to some unfavorable fact regarding the client. The rule of thumb is “the more unnecessary notes, the longer the deposition.” On the other hand, it may be essential to preserve notes containing calculations, formulas, measurements, and similar documentation to support your opinions.

Additionally, any communications with your attorney and drafts of the report are not privileged. So you need to make sure that it is you—and you alone—who is writing the report.

Depositions

As mentioned in the first article, testifying under oath, whether in a deposition or trial setting, can be a grueling experience. This is especially true if the deposition is videotaped or the trial is a high-profile case for which media might be present in the courtroom.

Although it may not be granted, you should request a convenient day, time, and place, including your office if you prefer, for your deposition. Some hospitalists prefer to have the deposition at their office because it minimizes the time they are unable to engage in patient care. Other hospitalists prefer to be in a more private setting, such as the opposing counsel’s law firm office, so that their patients are not aware of their expert witness activities.

Typically, the deposition takes place at an attorney’s office, with the attorneys for the parties, the parties themselves, and a court reporter present. The deposition begins with the court reporter swearing in the expert witness so that all of the expert’s answers are under oath.

At the deposition, it is the expert’s job to tell the truth briefly. Telling the truth briefly means providing accurate answers to questions after they are understood—and clarified if necessary—and stating those accurate answers in as short a way as possible without unnecessary adverbs, adjectives, parentheticals, footnotes, asides, qualifications, and other unrequested information. The rule of thumb is that the more information an expert volunteers, the longer the deposition and ability to cross-examine will be.

Often it is helpful to engage in role playing with the attorney to explore likely initial and follow-up questions from opposing counsel. Typically, the format of these questions will include who, what, when, where, why, how, tell us, describe, or explain. You should also review important documents, so that you have a familiarity and comfort with the documents considered part of your analysis and are prepared to interpret them and explain their significance.

At the deposition, you will likely be asked if you reviewed any documents in preparation and, specifically, which ones you examined.

Just as you would in a trial situation, you should pause after a question is asked, to allow your attorney to make an appropriate objection to the question.

It should be noted that the top six answers to most deposition questions are:

• Yes;
• No;
• I don’t know;
• I don’t remember;
• I don’t understand the question; and
• I need a break.

Don’t be afraid to answer “yes” or “no” to a yes or no question or to use “I don’t know” when it’s the most accurate answer. The last piece of advice for depositions is to remember at all times that the deposing attorney is not your friend.

Trial Testimony

Getting ready for trial will be much the same as preparing for the deposition; you want to ensure that your testimony is consistent and protect yourself from potential impeachment. The focus, however, is a different audience; you are educating the judge and jury in a way that will make your testimony understandable and consistent with the jury’s common sense.

You will again be sworn in during both direct and cross-examination. If there is an objection to the form of the question or to your testimony, you should again stop and wait for the judge to instruct whether or not to answer the question and in what manner. Direct examination is likely to include questions based upon your qualifications, methodology, basis or assumptions, and anticipated cross. In responding, remember to look directly at counsel while the question is being asked and then at the jury in explaining the answer.

There is no question that serving as an expert witness is challenging and rewarding work. Are you ready for the challenge?

Editor’s note: Second in a two-part series on hospitalists as expert witnesses.

You have officially decided to take the plunge and become an expert witness, but you have never seen the inside of a courtroom, sat for a deposition, or prepared an expert report. This article serves as a primer for all of those things, as well as testifying at trial.

Given the tremendous advantage to be gained by having the expert available to advise the attorney in preparing discovery and responding to the opposing attorney’s discovery, hopefully you have been actively involved in the litigation process and are not trying to get up to speed just weeks or even days before your deposition or the deadline for your expert report.

Steps you can take to become an indispensable expert witness, above and beyond your expert report, deposition, and trial testimony, include:

• Familiarizing yourself with all relevant aspects of the case so that you understand where your opinion fits in;
• Advising the attorney of both favorable and unfavorable facts;
• Identifying key documents that must be obtained;
• Spotting false or weak assumptions and inadequate work by the opposing expert; and/or
• Providing peer-reviewed journal articles and other literature, which decipher complex subjects for the attorney.

Expert Reports

Now that you have become an indispensable expert, what needs to be included in your expert report? If the matter is in state court, the content of the expert report will depend on state court rules that vary by jurisdiction and the judge’s own preferences. In federal court, the mandatory signed expert report must contain at least the following six things:

• A complete statement of all opinions the witness will express and the basis and reasons for these opinions;
• The facts or data considered by the witness in forming them;
• Any exhibits that will be used to summarize or support them;
• The witness’s qualifications, including a list of all publications authored in the previous 10 years;
• A list of all other cases in which, during the previous four years, the witness testified as an expert at trial or by deposition; and
• A statement of the compensation to be paid for the study and testimony in the case.

The report is due at least 90 days before the case is set for trial. The expert then has the opportunity to submit a rebuttal report 30 days after receipt of the opposing expert’s report “solely to contradict or rebut” that report.

In preparing the expert report, it is important to remember that, in essence, everything the expert touches is discoverable by the other side. So before you decide to jot down a note to yourself, consider the fact that that note may need to be produced to the other side. Be especially careful not to jot down editorial comments on documents, particularly deposition transcripts. Imagine the cross-examiner’s delight at finding the penned-in words “problem area” or “smoking gun” or “discuss issue with attorney” next to some unfavorable fact regarding the client. The rule of thumb is “the more unnecessary notes, the longer the deposition.” On the other hand, it may be essential to preserve notes containing calculations, formulas, measurements, and similar documentation to support your opinions.

Additionally, any communications with your attorney and drafts of the report are not privileged. So you need to make sure that it is you—and you alone—who is writing the report.

Depositions

As mentioned in the first article, testifying under oath, whether in a deposition or trial setting, can be a grueling experience. This is especially true if the deposition is videotaped or the trial is a high-profile case for which media might be present in the courtroom.

Although it may not be granted, you should request a convenient day, time, and place, including your office if you prefer, for your deposition. Some hospitalists prefer to have the deposition at their office because it minimizes the time they are unable to engage in patient care. Other hospitalists prefer to be in a more private setting, such as the opposing counsel’s law firm office, so that their patients are not aware of their expert witness activities.

Typically, the deposition takes place at an attorney’s office, with the attorneys for the parties, the parties themselves, and a court reporter present. The deposition begins with the court reporter swearing in the expert witness so that all of the expert’s answers are under oath.

At the deposition, it is the expert’s job to tell the truth briefly. Telling the truth briefly means providing accurate answers to questions after they are understood—and clarified if necessary—and stating those accurate answers in as short a way as possible without unnecessary adverbs, adjectives, parentheticals, footnotes, asides, qualifications, and other unrequested information. The rule of thumb is that the more information an expert volunteers, the longer the deposition and ability to cross-examine will be.

Often it is helpful to engage in role playing with the attorney to explore likely initial and follow-up questions from opposing counsel. Typically, the format of these questions will include who, what, when, where, why, how, tell us, describe, or explain. You should also review important documents, so that you have a familiarity and comfort with the documents considered part of your analysis and are prepared to interpret them and explain their significance.

At the deposition, you will likely be asked if you reviewed any documents in preparation and, specifically, which ones you examined.

Just as you would in a trial situation, you should pause after a question is asked, to allow your attorney to make an appropriate objection to the question.

It should be noted that the top six answers to most deposition questions are:

• Yes;
• No;
• I don’t know;
• I don’t remember;
• I don’t understand the question; and
• I need a break.

Don’t be afraid to answer “yes” or “no” to a yes or no question or to use “I don’t know” when it’s the most accurate answer. The last piece of advice for depositions is to remember at all times that the deposing attorney is not your friend.

Trial Testimony

Getting ready for trial will be much the same as preparing for the deposition; you want to ensure that your testimony is consistent and protect yourself from potential impeachment. The focus, however, is a different audience; you are educating the judge and jury in a way that will make your testimony understandable and consistent with the jury’s common sense.

You will again be sworn in during both direct and cross-examination. If there is an objection to the form of the question or to your testimony, you should again stop and wait for the judge to instruct whether or not to answer the question and in what manner. Direct examination is likely to include questions based upon your qualifications, methodology, basis or assumptions, and anticipated cross. In responding, remember to look directly at counsel while the question is being asked and then at the jury in explaining the answer.

There is no question that serving as an expert witness is challenging and rewarding work. Are you ready for the challenge?

Editor’s note: First in a two-part series on hospitalists as expert witnesses.

Recently, you have found yourself pondering whether you want to be an expert witness for the prosecution on behalf of one of your patients or for the defense on behalf of one of your fellow colleagues. You enjoy tackling confrontational questions head on, are intellectually curious, and are articulate both orally and in writing. You like to look at complex fact patterns and simplify them, and “Law and Order” is your favorite television show. But, seriously, are you ready to be an expert witness?

The expert witness plays an essential role in determining medical negligence under the United States system of jurisprudence. Generally, expert witnesses are asked to testify regarding the standards of care relevant to the given case, identify any deviations from those standards, and render an opinion as to whether those breaches are the most likely cause of the injury. Without the expert’s explanation of the range of acceptable treatments within the standard of care and interpretation of medical facts, juries would not have the technical expertise needed to determine whether or not malpractice occurred.

This article, the first in a two-part series on hospitalists as expert witnesses, addresses the nuts and bolts of serving as an expert witness, including the role of the expert witness, time commitments, compensation, privacy or lack thereof, and the ever-present internal struggle about whether or not to choose to participate actively in our legal system.

Hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise.

The Role of the Expert Witness

First, let’s take a small step back, as the hospitalist’s role as an expert witness is largely dependent on how the expert witness is going to be used by the attorney. An expert witness is someone who has been qualified as an authority to assist others—namely, the attorneys, judge, and jury—in understanding complicated technical subjects that are beyond the understanding of the average lay person.

Thus, attorneys retain expert witnesses for a whole host of reasons, including:

• Evaluating their client’s claim initially to determine if the patient has a valid claim;
• Writing an expert report to be used for settlement, mediation, arbitration, or as an exhibit to a motion for summary judgment;
• Consulting with the attorney in order to form an opinion in the case, which will be used to shape the prosecution or defense, including in a response to the complaint, in discovery, or at trial (“Confidential, Non-testifying Consultant Only Expert”); or
• Testifying at a deposition and/or in court at trial (“Disclosed, Nothing the Expert Touches is Confidential, Testifying Expert”).

The first thing you need to do, therefore, is make sure your role and the scope of your area of expertise are clearly defined and that you are comfortable performing the tasks that are described in more detail below in a timely manner. As you will soon learn, testifying under oath can be a grueling experience.

Time Commitment

Is it worth the time commitment? Here, again, a lot depends on not only the expert witness’s role but also where in the course of the litigation the expert is brought on board the trial team. Is it ninety days before trial, before the lawsuit has even been filed, or somewhere in between? Have court deadlines already been issued that require the rescheduling of patient obligations?

Assuming you have been brought onboard as an expert before the complaint has been filed, you should expect to encounter the following noninclusive time constraints:

• Preparing litigation budgets and bills;
• Preparing a current curriculum vitae;
• Reviewing the entire file of paper;
• Assisting in drafting or responding to the complaint;
• Assisting in drafting and/or responding to discovery;
• Preparing an expert report;
• Preparing a rebuttal expert report;
• Preparing for your deposition;
• Attending your deposition;
• Assisting in the deposition of the other side’s expert witness;
• Assisting in preparing for trial;
• Preparing to take the stand at trial;
• Attending trial; and/or
• Assisting in identifying or responding to any post-trial appealable issues.

Although you should be compensated for each of these tasks, these tasks take away time you could be engaging in patient care.

Compensation

It should be a no brainer, but make sure you get paid. The expert witness business is built upon reputation, integrity, credibility, and expertise. Consequently, hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise. In the absence of substantial experience, expert witness rates are dependent on the location of the case, the dollar amount at stake, and the novelty of the legal disputes at issue.

You should immediately request a written agreement that states exactly who is responsible for paying your bills, when those bills will be paid, and, in addition to your hourly rate and what services that rate covers, the specific out-of-pocket expenses that will be paid, including those that are needed to cover postage, copies, travel, lodging, and any other incidentals.

Privacy, or Lack Thereof

Thanks to the Internet, unless a protective order is in place, and even that is likely to be narrowly tailored, opposing counsels can easily pull copies of all of your past deposition and trial transcripts, divorce records, past curriculum vitae, and articles you may have written in medical school or in practice. They can also use the Internet to identify who you usually testify for, whether your testimony has ever been refused by the judge, where you live, and even whether you own any property.

In essence, any and all public dirt on your private life can be extracted and used as fodder at the next trial. Are you prepared to become an overnight public figure?

The Internal Struggle

Finally, there is no question that the decision of whether to serve as an expert witness in a malpractice case is one of the most difficult, yet most important, nonpatient care decisions a physician can make. Expert testimony is essential to medical malpractice litigation, however. Many hospitalists may find themselves balancing their duty to patients who should have access to the courts and fair compensation from injuries caused by physicians who are impaired or who deviated from the standard of care against the professional and social pressure not to testify against colleagues and not to participate in a legal system that many hospitalists feel victimizes members of their profession.

The legal system, nonetheless, relies on competent medical expertise that is just and fair and relies on medical professionals to provide that expertise. Are you ready for the challenge? If you are, the second article in this two-part series will serve as a primer for your expert report, deposition, and testimony at trial.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Editor’s note: First in a two-part series on hospitalists as expert witnesses.

Recently, you have found yourself pondering whether you want to be an expert witness for the prosecution on behalf of one of your patients or for the defense on behalf of one of your fellow colleagues. You enjoy tackling confrontational questions head on, are intellectually curious, and are articulate both orally and in writing. You like to look at complex fact patterns and simplify them, and “Law and Order” is your favorite television show. But, seriously, are you ready to be an expert witness?

The expert witness plays an essential role in determining medical negligence under the United States system of jurisprudence. Generally, expert witnesses are asked to testify regarding the standards of care relevant to the given case, identify any deviations from those standards, and render an opinion as to whether those breaches are the most likely cause of the injury. Without the expert’s explanation of the range of acceptable treatments within the standard of care and interpretation of medical facts, juries would not have the technical expertise needed to determine whether or not malpractice occurred.

This article, the first in a two-part series on hospitalists as expert witnesses, addresses the nuts and bolts of serving as an expert witness, including the role of the expert witness, time commitments, compensation, privacy or lack thereof, and the ever-present internal struggle about whether or not to choose to participate actively in our legal system.

Hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise.

The Role of the Expert Witness

First, let’s take a small step back, as the hospitalist’s role as an expert witness is largely dependent on how the expert witness is going to be used by the attorney. An expert witness is someone who has been qualified as an authority to assist others—namely, the attorneys, judge, and jury—in understanding complicated technical subjects that are beyond the understanding of the average lay person.

Thus, attorneys retain expert witnesses for a whole host of reasons, including:

• Evaluating their client’s claim initially to determine if the patient has a valid claim;
• Writing an expert report to be used for settlement, mediation, arbitration, or as an exhibit to a motion for summary judgment;
• Consulting with the attorney in order to form an opinion in the case, which will be used to shape the prosecution or defense, including in a response to the complaint, in discovery, or at trial (“Confidential, Non-testifying Consultant Only Expert”); or
• Testifying at a deposition and/or in court at trial (“Disclosed, Nothing the Expert Touches is Confidential, Testifying Expert”).

The first thing you need to do, therefore, is make sure your role and the scope of your area of expertise are clearly defined and that you are comfortable performing the tasks that are described in more detail below in a timely manner. As you will soon learn, testifying under oath can be a grueling experience.

Time Commitment

Is it worth the time commitment? Here, again, a lot depends on not only the expert witness’s role but also where in the course of the litigation the expert is brought on board the trial team. Is it ninety days before trial, before the lawsuit has even been filed, or somewhere in between? Have court deadlines already been issued that require the rescheduling of patient obligations?

Assuming you have been brought onboard as an expert before the complaint has been filed, you should expect to encounter the following noninclusive time constraints:

• Preparing litigation budgets and bills;
• Preparing a current curriculum vitae;
• Reviewing the entire file of paper;
• Assisting in drafting or responding to the complaint;
• Assisting in drafting and/or responding to discovery;
• Preparing an expert report;
• Preparing a rebuttal expert report;
• Preparing for your deposition;
• Attending your deposition;
• Assisting in the deposition of the other side’s expert witness;
• Assisting in preparing for trial;
• Preparing to take the stand at trial;
• Attending trial; and/or
• Assisting in identifying or responding to any post-trial appealable issues.

Although you should be compensated for each of these tasks, these tasks take away time you could be engaging in patient care.

Compensation

It should be a no brainer, but make sure you get paid. The expert witness business is built upon reputation, integrity, credibility, and expertise. Consequently, hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise. In the absence of substantial experience, expert witness rates are dependent on the location of the case, the dollar amount at stake, and the novelty of the legal disputes at issue.

You should immediately request a written agreement that states exactly who is responsible for paying your bills, when those bills will be paid, and, in addition to your hourly rate and what services that rate covers, the specific out-of-pocket expenses that will be paid, including those that are needed to cover postage, copies, travel, lodging, and any other incidentals.

Privacy, or Lack Thereof

Thanks to the Internet, unless a protective order is in place, and even that is likely to be narrowly tailored, opposing counsels can easily pull copies of all of your past deposition and trial transcripts, divorce records, past curriculum vitae, and articles you may have written in medical school or in practice. They can also use the Internet to identify who you usually testify for, whether your testimony has ever been refused by the judge, where you live, and even whether you own any property.

In essence, any and all public dirt on your private life can be extracted and used as fodder at the next trial. Are you prepared to become an overnight public figure?

The Internal Struggle

Finally, there is no question that the decision of whether to serve as an expert witness in a malpractice case is one of the most difficult, yet most important, nonpatient care decisions a physician can make. Expert testimony is essential to medical malpractice litigation, however. Many hospitalists may find themselves balancing their duty to patients who should have access to the courts and fair compensation from injuries caused by physicians who are impaired or who deviated from the standard of care against the professional and social pressure not to testify against colleagues and not to participate in a legal system that many hospitalists feel victimizes members of their profession.

The legal system, nonetheless, relies on competent medical expertise that is just and fair and relies on medical professionals to provide that expertise. Are you ready for the challenge? If you are, the second article in this two-part series will serve as a primer for your expert report, deposition, and testimony at trial.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Editor’s note: First in a two-part series on hospitalists as expert witnesses.

Recently, you have found yourself pondering whether you want to be an expert witness for the prosecution on behalf of one of your patients or for the defense on behalf of one of your fellow colleagues. You enjoy tackling confrontational questions head on, are intellectually curious, and are articulate both orally and in writing. You like to look at complex fact patterns and simplify them, and “Law and Order” is your favorite television show. But, seriously, are you ready to be an expert witness?

The expert witness plays an essential role in determining medical negligence under the United States system of jurisprudence. Generally, expert witnesses are asked to testify regarding the standards of care relevant to the given case, identify any deviations from those standards, and render an opinion as to whether those breaches are the most likely cause of the injury. Without the expert’s explanation of the range of acceptable treatments within the standard of care and interpretation of medical facts, juries would not have the technical expertise needed to determine whether or not malpractice occurred.

This article, the first in a two-part series on hospitalists as expert witnesses, addresses the nuts and bolts of serving as an expert witness, including the role of the expert witness, time commitments, compensation, privacy or lack thereof, and the ever-present internal struggle about whether or not to choose to participate actively in our legal system.

Hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise.

The Role of the Expert Witness

First, let’s take a small step back, as the hospitalist’s role as an expert witness is largely dependent on how the expert witness is going to be used by the attorney. An expert witness is someone who has been qualified as an authority to assist others—namely, the attorneys, judge, and jury—in understanding complicated technical subjects that are beyond the understanding of the average lay person.

Thus, attorneys retain expert witnesses for a whole host of reasons, including:

• Evaluating their client’s claim initially to determine if the patient has a valid claim;
• Writing an expert report to be used for settlement, mediation, arbitration, or as an exhibit to a motion for summary judgment;
• Consulting with the attorney in order to form an opinion in the case, which will be used to shape the prosecution or defense, including in a response to the complaint, in discovery, or at trial (“Confidential, Non-testifying Consultant Only Expert”); or
• Testifying at a deposition and/or in court at trial (“Disclosed, Nothing the Expert Touches is Confidential, Testifying Expert”).

The first thing you need to do, therefore, is make sure your role and the scope of your area of expertise are clearly defined and that you are comfortable performing the tasks that are described in more detail below in a timely manner. As you will soon learn, testifying under oath can be a grueling experience.

Time Commitment

Is it worth the time commitment? Here, again, a lot depends on not only the expert witness’s role but also where in the course of the litigation the expert is brought on board the trial team. Is it ninety days before trial, before the lawsuit has even been filed, or somewhere in between? Have court deadlines already been issued that require the rescheduling of patient obligations?

Assuming you have been brought onboard as an expert before the complaint has been filed, you should expect to encounter the following noninclusive time constraints:

• Preparing litigation budgets and bills;
• Preparing a current curriculum vitae;
• Reviewing the entire file of paper;
• Assisting in drafting or responding to the complaint;
• Assisting in drafting and/or responding to discovery;
• Preparing an expert report;
• Preparing a rebuttal expert report;
• Preparing for your deposition;
• Attending your deposition;
• Assisting in the deposition of the other side’s expert witness;
• Assisting in preparing for trial;
• Preparing to take the stand at trial;
• Attending trial; and/or
• Assisting in identifying or responding to any post-trial appealable issues.

Although you should be compensated for each of these tasks, these tasks take away time you could be engaging in patient care.

Compensation

It should be a no brainer, but make sure you get paid. The expert witness business is built upon reputation, integrity, credibility, and expertise. Consequently, hospitalists who have developed a niche in a small area of expertise in which they can dominate a certain market, or those who have developed a national reputation, can charge a significant amount of money depending on their area of expertise. In the absence of substantial experience, expert witness rates are dependent on the location of the case, the dollar amount at stake, and the novelty of the legal disputes at issue.

You should immediately request a written agreement that states exactly who is responsible for paying your bills, when those bills will be paid, and, in addition to your hourly rate and what services that rate covers, the specific out-of-pocket expenses that will be paid, including those that are needed to cover postage, copies, travel, lodging, and any other incidentals.

Privacy, or Lack Thereof

Thanks to the Internet, unless a protective order is in place, and even that is likely to be narrowly tailored, opposing counsels can easily pull copies of all of your past deposition and trial transcripts, divorce records, past curriculum vitae, and articles you may have written in medical school or in practice. They can also use the Internet to identify who you usually testify for, whether your testimony has ever been refused by the judge, where you live, and even whether you own any property.

In essence, any and all public dirt on your private life can be extracted and used as fodder at the next trial. Are you prepared to become an overnight public figure?

The Internal Struggle

Finally, there is no question that the decision of whether to serve as an expert witness in a malpractice case is one of the most difficult, yet most important, nonpatient care decisions a physician can make. Expert testimony is essential to medical malpractice litigation, however. Many hospitalists may find themselves balancing their duty to patients who should have access to the courts and fair compensation from injuries caused by physicians who are impaired or who deviated from the standard of care against the professional and social pressure not to testify against colleagues and not to participate in a legal system that many hospitalists feel victimizes members of their profession.

The legal system, nonetheless, relies on competent medical expertise that is just and fair and relies on medical professionals to provide that expertise. Are you ready for the challenge? If you are, the second article in this two-part series will serve as a primer for your expert report, deposition, and testimony at trial.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

The movement toward greater transparency of financial information in healthcare is providing patients with access to data that might affect their healthcare decisions. Not all of this information is provided in ways that give patients the full picture, and they may turn to you for some added clarity.

Financial Relationships

The Physician Payments Sunshine Act (“Sunshine Act’) was passed as a part of the Affordable Care Act and requires the public disclosure of financial relationships between physicians and the manufacturers of pharmaceuticals, devices, and supplies, as well as group purchasing organizations. The first wave of financial information was publicly disclosed in 2014 on the federal Open Payments website. When it went live, the website disclosed approximately $3.5 billion in payments made by manufacturers to physicians and teaching hospitals during the last five months of 2013. These payments include research grants, consulting fees, speaking fees, travel, and other expenses. In the future, the payments reported will span an entire year, further increasing the total dollar amount paid by industry.

The Sunshine Act is intended to expose potential conflicts of interest in healthcare so that patients are more informed consumers of healthcare services. The relationships between healthcare providers and industry have been scrutinized much more heavily over the past decade. The concern is that physicians with a financial interest, whether through a consultancy relationship with industry or through the development of new technology, might be biased in treating patients because of these relationships. On the other hand, the majority of relationships between healthcare providers and industry can be beneficial. The relationships provide education to other providers, encourage the development of new treatment options, and improve the effectiveness of existing treatments.

The Centers for Medicare and Medicaid Services (CMS) explains on its website that the disclosed financial ties are not necessarily indicators of any wrongdoing, and that the intent of publishing the information is to promote transparency and discourage inappropriate relationships. Without the proper context, these relationships could be viewed as improper by patients and the general public. Therefore, providers should be prepared to answer patients’ questions and possibly even proactively provide details, such as the scope of any relationship with industry. Many providers begin to consult with a pharmaceutical or device manufacturer because of their experience using a particular product, rather than using a particular product after forming that financial relationship. This context could shift patients’ views of what it means for their providers to have this type of connection with industry.

Providers also need to be aware that government agencies, insurers, and attorneys can track this data. Although it is still too early to know the full scope of the potential uses of this information in government investigations, insurance carrier decisions, malpractice, or other legal actions, it does provide further reason to ensure that the information posted is accurate.

During the initial launch of the Open Payments website, some data was temporarily removed due to inaccuracies, including payments linked incorrectly to physicians with the same first and last names. While these issues are being reviewed by CMS, their existence proves how important it is for all physicians (even those not affiliated with the industry) to review the data reported in order to ensure the accuracy of their information.

Procedure Costs

Another transparency requirement in the Affordable Care Act was implemented on Oct. 1, 2014, as part of the inpatient prospective payment system final rule. Hospitals are now required to make their prices for procedures public and update the list annually. The final rule is not explicit with respect to the manner of the disclosure, except that either a price list or the policy for obtaining access must be made public. Some complain that the rule is difficult to comply with because it is vague, while others point out that this fact gives hospitals necessary flexibility in the method of reporting. It is at the hospital’s discretion whether to post the information online or in a physical location.

It is important to note that patients with private payer insurance coverage have distinct rates that are set through agreements between their health plans and the hospitals, so information on the public list very likely will not be applicable to those patients and could be a source of confusion.

As patients have more access to information about the costs for procedures, providers need to be aware of where within the facility they should refer patients with questions or concerns, including information on a hospital’s financial assistance programs.

There are so many sources of information that patients and their families can obtain before ever setting foot in the hospital. An open dialogue with patients that emphasizes the context of any financial relationships with industry, including the benefits, can help to minimize the potential that the information will be treated as suspect by your patients.

Further, as patients bear more of the costs of healthcare, questions surrounding the costs of procedures relative to published data may be encountered more frequently at the bedside and in office visits. This information may have an impact on patients’ decisions about their care.

The movement toward greater transparency of financial information in healthcare is providing patients with access to data that might affect their healthcare decisions. Not all of this information is provided in ways that give patients the full picture, and they may turn to you for some added clarity.

Financial Relationships

The Physician Payments Sunshine Act (“Sunshine Act’) was passed as a part of the Affordable Care Act and requires the public disclosure of financial relationships between physicians and the manufacturers of pharmaceuticals, devices, and supplies, as well as group purchasing organizations. The first wave of financial information was publicly disclosed in 2014 on the federal Open Payments website. When it went live, the website disclosed approximately $3.5 billion in payments made by manufacturers to physicians and teaching hospitals during the last five months of 2013. These payments include research grants, consulting fees, speaking fees, travel, and other expenses. In the future, the payments reported will span an entire year, further increasing the total dollar amount paid by industry.

The Sunshine Act is intended to expose potential conflicts of interest in healthcare so that patients are more informed consumers of healthcare services. The relationships between healthcare providers and industry have been scrutinized much more heavily over the past decade. The concern is that physicians with a financial interest, whether through a consultancy relationship with industry or through the development of new technology, might be biased in treating patients because of these relationships. On the other hand, the majority of relationships between healthcare providers and industry can be beneficial. The relationships provide education to other providers, encourage the development of new treatment options, and improve the effectiveness of existing treatments.

The Centers for Medicare and Medicaid Services (CMS) explains on its website that the disclosed financial ties are not necessarily indicators of any wrongdoing, and that the intent of publishing the information is to promote transparency and discourage inappropriate relationships. Without the proper context, these relationships could be viewed as improper by patients and the general public. Therefore, providers should be prepared to answer patients’ questions and possibly even proactively provide details, such as the scope of any relationship with industry. Many providers begin to consult with a pharmaceutical or device manufacturer because of their experience using a particular product, rather than using a particular product after forming that financial relationship. This context could shift patients’ views of what it means for their providers to have this type of connection with industry.

Providers also need to be aware that government agencies, insurers, and attorneys can track this data. Although it is still too early to know the full scope of the potential uses of this information in government investigations, insurance carrier decisions, malpractice, or other legal actions, it does provide further reason to ensure that the information posted is accurate.

During the initial launch of the Open Payments website, some data was temporarily removed due to inaccuracies, including payments linked incorrectly to physicians with the same first and last names. While these issues are being reviewed by CMS, their existence proves how important it is for all physicians (even those not affiliated with the industry) to review the data reported in order to ensure the accuracy of their information.

Procedure Costs

Another transparency requirement in the Affordable Care Act was implemented on Oct. 1, 2014, as part of the inpatient prospective payment system final rule. Hospitals are now required to make their prices for procedures public and update the list annually. The final rule is not explicit with respect to the manner of the disclosure, except that either a price list or the policy for obtaining access must be made public. Some complain that the rule is difficult to comply with because it is vague, while others point out that this fact gives hospitals necessary flexibility in the method of reporting. It is at the hospital’s discretion whether to post the information online or in a physical location.

It is important to note that patients with private payer insurance coverage have distinct rates that are set through agreements between their health plans and the hospitals, so information on the public list very likely will not be applicable to those patients and could be a source of confusion.

As patients have more access to information about the costs for procedures, providers need to be aware of where within the facility they should refer patients with questions or concerns, including information on a hospital’s financial assistance programs.

There are so many sources of information that patients and their families can obtain before ever setting foot in the hospital. An open dialogue with patients that emphasizes the context of any financial relationships with industry, including the benefits, can help to minimize the potential that the information will be treated as suspect by your patients.

Further, as patients bear more of the costs of healthcare, questions surrounding the costs of procedures relative to published data may be encountered more frequently at the bedside and in office visits. This information may have an impact on patients’ decisions about their care.

The movement toward greater transparency of financial information in healthcare is providing patients with access to data that might affect their healthcare decisions. Not all of this information is provided in ways that give patients the full picture, and they may turn to you for some added clarity.

Financial Relationships

The Physician Payments Sunshine Act (“Sunshine Act’) was passed as a part of the Affordable Care Act and requires the public disclosure of financial relationships between physicians and the manufacturers of pharmaceuticals, devices, and supplies, as well as group purchasing organizations. The first wave of financial information was publicly disclosed in 2014 on the federal Open Payments website. When it went live, the website disclosed approximately $3.5 billion in payments made by manufacturers to physicians and teaching hospitals during the last five months of 2013. These payments include research grants, consulting fees, speaking fees, travel, and other expenses. In the future, the payments reported will span an entire year, further increasing the total dollar amount paid by industry.

The Sunshine Act is intended to expose potential conflicts of interest in healthcare so that patients are more informed consumers of healthcare services. The relationships between healthcare providers and industry have been scrutinized much more heavily over the past decade. The concern is that physicians with a financial interest, whether through a consultancy relationship with industry or through the development of new technology, might be biased in treating patients because of these relationships. On the other hand, the majority of relationships between healthcare providers and industry can be beneficial. The relationships provide education to other providers, encourage the development of new treatment options, and improve the effectiveness of existing treatments.

The Centers for Medicare and Medicaid Services (CMS) explains on its website that the disclosed financial ties are not necessarily indicators of any wrongdoing, and that the intent of publishing the information is to promote transparency and discourage inappropriate relationships. Without the proper context, these relationships could be viewed as improper by patients and the general public. Therefore, providers should be prepared to answer patients’ questions and possibly even proactively provide details, such as the scope of any relationship with industry. Many providers begin to consult with a pharmaceutical or device manufacturer because of their experience using a particular product, rather than using a particular product after forming that financial relationship. This context could shift patients’ views of what it means for their providers to have this type of connection with industry.

Providers also need to be aware that government agencies, insurers, and attorneys can track this data. Although it is still too early to know the full scope of the potential uses of this information in government investigations, insurance carrier decisions, malpractice, or other legal actions, it does provide further reason to ensure that the information posted is accurate.

During the initial launch of the Open Payments website, some data was temporarily removed due to inaccuracies, including payments linked incorrectly to physicians with the same first and last names. While these issues are being reviewed by CMS, their existence proves how important it is for all physicians (even those not affiliated with the industry) to review the data reported in order to ensure the accuracy of their information.

Procedure Costs

Another transparency requirement in the Affordable Care Act was implemented on Oct. 1, 2014, as part of the inpatient prospective payment system final rule. Hospitals are now required to make their prices for procedures public and update the list annually. The final rule is not explicit with respect to the manner of the disclosure, except that either a price list or the policy for obtaining access must be made public. Some complain that the rule is difficult to comply with because it is vague, while others point out that this fact gives hospitals necessary flexibility in the method of reporting. It is at the hospital’s discretion whether to post the information online or in a physical location.

It is important to note that patients with private payer insurance coverage have distinct rates that are set through agreements between their health plans and the hospitals, so information on the public list very likely will not be applicable to those patients and could be a source of confusion.

As patients have more access to information about the costs for procedures, providers need to be aware of where within the facility they should refer patients with questions or concerns, including information on a hospital’s financial assistance programs.

There are so many sources of information that patients and their families can obtain before ever setting foot in the hospital. An open dialogue with patients that emphasizes the context of any financial relationships with industry, including the benefits, can help to minimize the potential that the information will be treated as suspect by your patients.

Further, as patients bear more of the costs of healthcare, questions surrounding the costs of procedures relative to published data may be encountered more frequently at the bedside and in office visits. This information may have an impact on patients’ decisions about their care.

Facebook, Twitter, Instagram, Snapchat, YouTube, blogs, webpages, Google+, LinkedIn. What do all of these social media outlets have in common? Each can get physicians in trouble under the Health Insurance Portability and Accountability Act (HIPAA), state privacy laws, and state medical laws, to name a few. It seems that all too often, news outlets are reporting data breaches generated in the medical community, many of which arise out of physicians’ use of social media, and most of which could have been avoided.

Physicians should be aware of the intersection of social media—both for personal and professional use—and HIPAA and state laws. Even an inadvertent, seemingly innocuous disclosure of a patient’s protected health information (PHI) through social media can be problematic.

PHI is defined under HIPAA, in part, as health information that (i) is created or received by a physician, (ii) relates to the health or condition of an individual, (iii) identifies the individual (or with respect to which there is a reasonable basis to believe the information can be used to identify the individual), and (iv) is transmitted by or maintained in electronic media, or transmitted or maintained in another form or medium. Under HIPAA, a physician may use and disclose PHI for “treatment, payment, or healthcare operations.” Generally, using or disclosing PHI through social media does not qualify as treatment, payment, or healthcare operations. If a physician were to use or disclose a patient’s PHI without permission, this would be a violation of HIPAA—and likely state law as well.

In order to use or disclose a patient’s PHI without obtaining the patient’s consent, a physician must de-identify the information so that the information does not identify the patient and there is no reasonable basis to believe that the information can be used to identify the patient. One option under HIPAA is to retain an expert to determine “that the risk is very small that the information could be used, alone or in combination with other reasonably available information, by an anticipated recipient to identify an individual who is the subject of the information.” Alternatively, and more commonly, a physician seeking to use or disclose patient PHI can remove the following identifiers from the PHI:

1. Names;
2. Geographic information;
3. Dates (e.g. birth date, admission date, discharge date, date of death);
4. Telephone numbers;
5. Fax numbers;
6. E-mail addresses;
7. Social Security numbers;
8. Medical record numbers;
9. Health plan beneficiary numbers;
10. Account numbers;
11. Certificate/license numbers;
12. Vehicle identifiers and serial numbers, including license plate numbers;
13. Device identifiers and serial numbers;
14. URLs;
15. IP address numbers;
16. Biometric identifiers (e.g. finger and voice prints);
17. Full-face photographic images and any comparable images; and
18. Other unique identifying numbers, characteristics, or codes.

Identifier #18 is the most difficult to comply with in light of the significant amount of personal information available on the Internet, particularly through search engines like Google. Inputting even a small amount of information into a search engine will generate relevant “hits” that make it increasingly difficult to comply with the de-identification standards under HIPAA. Even if the first 17 identifiers are carefully removed, the broadness of #18 can turn a seemingly harmless post on social media into a patient privacy violation.

Do not let the following examples be you:

Example 1: An ED physician in Rhode Island was fired, lost her hospital medical staff privileges, and was reprimanded by the Rhode Island Board of Medical Licensure and Discipline for posting information about a trauma patient on her personal Facebook page. According to the Rhode Island Board of Medical Licensure and Discipline, “[She] did not use patient names and had no intention to reveal any confidential patient information. However, because of the nature of one person’s injury … the patient was identified by unauthorized third parties. As soon as it was brought to [her] attention that this had occurred, [she] deleted her Facebook account.” Despite the physician leaving out all information she thought might make the patient identifiable, she apparently did not omit enough.

Example 2: An OB-GYN in St. Louis took to Facebook to complain about her frustration with a patient: “So I have a patient who has chosen to either no-show or be late (sometimes hours) for all of her prenatal visits, ultrasounds, and NSTs. She is now 3 hours late for her induction. May I show up late to her delivery?” Another physician then commented on this post: “If it’s elective, it’d be canceled!” The OB-GYN at issue then responded: “Here is the explanation why I have put up with it/not cancelled induction: prior stillbirth.”

Although the OB-GYN did not reveal the patient’s name, controversy erupted after someone posted a screenshot of the post and response comments to the hospital’s Facebook page. The hospital issued a statement indicating that its privacy compliance staff did not find the posting to be a breach of privacy, but the hospital added it would use this opportunity to educate its staff about the appropriate use of social media. Many believe this physician got off too easy.

The penalties for patient privacy violations (or even alleged patient privacy violations) are multifaceted. Not only can the federal government impose civil and criminal sanctions under HIPAA on the physician and his/her affiliated parties (e.g. physician’s employer), but states can also impose penalties. State-imposed penalties for patient privacy violations vary from state to state. Additionally, the patient may sue the violating physician and his/her affiliated parties for privacy violations. Although HIPAA does not afford patients the right to bring a private cause of action against a physician, state law often does grant patients such a right. Also, state medical boards often have the right to impose penalties, monetary and non-monetary, on a physician for privacy violations. These can include suspension or termination of medical licensure.

Recent reports indicate that people who “like,” “share,” “re-tweet,” or comment on inappropriate social media posts are also getting reprimanded. Finally, the reputational harm associated with an inappropriate post on social media is immeasurable, especially in light of the availability of information on the Internet. Unfortunately, when the physicians described above enter their names in a search engine, they do not see their professional accomplishments and prestigious educations; instead, their top hits are news articles reporting on their inappropriate posts.

Post with caution.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Facebook, Twitter, Instagram, Snapchat, YouTube, blogs, webpages, Google+, LinkedIn. What do all of these social media outlets have in common? Each can get physicians in trouble under the Health Insurance Portability and Accountability Act (HIPAA), state privacy laws, and state medical laws, to name a few. It seems that all too often, news outlets are reporting data breaches generated in the medical community, many of which arise out of physicians’ use of social media, and most of which could have been avoided.

Physicians should be aware of the intersection of social media—both for personal and professional use—and HIPAA and state laws. Even an inadvertent, seemingly innocuous disclosure of a patient’s protected health information (PHI) through social media can be problematic.

PHI is defined under HIPAA, in part, as health information that (i) is created or received by a physician, (ii) relates to the health or condition of an individual, (iii) identifies the individual (or with respect to which there is a reasonable basis to believe the information can be used to identify the individual), and (iv) is transmitted by or maintained in electronic media, or transmitted or maintained in another form or medium. Under HIPAA, a physician may use and disclose PHI for “treatment, payment, or healthcare operations.” Generally, using or disclosing PHI through social media does not qualify as treatment, payment, or healthcare operations. If a physician were to use or disclose a patient’s PHI without permission, this would be a violation of HIPAA—and likely state law as well.

In order to use or disclose a patient’s PHI without obtaining the patient’s consent, a physician must de-identify the information so that the information does not identify the patient and there is no reasonable basis to believe that the information can be used to identify the patient. One option under HIPAA is to retain an expert to determine “that the risk is very small that the information could be used, alone or in combination with other reasonably available information, by an anticipated recipient to identify an individual who is the subject of the information.” Alternatively, and more commonly, a physician seeking to use or disclose patient PHI can remove the following identifiers from the PHI:

1. Names;
2. Geographic information;
3. Dates (e.g. birth date, admission date, discharge date, date of death);
4. Telephone numbers;
5. Fax numbers;
6. E-mail addresses;
7. Social Security numbers;
8. Medical record numbers;
9. Health plan beneficiary numbers;
10. Account numbers;
11. Certificate/license numbers;
12. Vehicle identifiers and serial numbers, including license plate numbers;
13. Device identifiers and serial numbers;
14. URLs;
15. IP address numbers;
16. Biometric identifiers (e.g. finger and voice prints);
17. Full-face photographic images and any comparable images; and
18. Other unique identifying numbers, characteristics, or codes.

Identifier #18 is the most difficult to comply with in light of the significant amount of personal information available on the Internet, particularly through search engines like Google. Inputting even a small amount of information into a search engine will generate relevant “hits” that make it increasingly difficult to comply with the de-identification standards under HIPAA. Even if the first 17 identifiers are carefully removed, the broadness of #18 can turn a seemingly harmless post on social media into a patient privacy violation.

Do not let the following examples be you:

Example 1: An ED physician in Rhode Island was fired, lost her hospital medical staff privileges, and was reprimanded by the Rhode Island Board of Medical Licensure and Discipline for posting information about a trauma patient on her personal Facebook page. According to the Rhode Island Board of Medical Licensure and Discipline, “[She] did not use patient names and had no intention to reveal any confidential patient information. However, because of the nature of one person’s injury … the patient was identified by unauthorized third parties. As soon as it was brought to [her] attention that this had occurred, [she] deleted her Facebook account.” Despite the physician leaving out all information she thought might make the patient identifiable, she apparently did not omit enough.

Example 2: An OB-GYN in St. Louis took to Facebook to complain about her frustration with a patient: “So I have a patient who has chosen to either no-show or be late (sometimes hours) for all of her prenatal visits, ultrasounds, and NSTs. She is now 3 hours late for her induction. May I show up late to her delivery?” Another physician then commented on this post: “If it’s elective, it’d be canceled!” The OB-GYN at issue then responded: “Here is the explanation why I have put up with it/not cancelled induction: prior stillbirth.”

Although the OB-GYN did not reveal the patient’s name, controversy erupted after someone posted a screenshot of the post and response comments to the hospital’s Facebook page. The hospital issued a statement indicating that its privacy compliance staff did not find the posting to be a breach of privacy, but the hospital added it would use this opportunity to educate its staff about the appropriate use of social media. Many believe this physician got off too easy.

The penalties for patient privacy violations (or even alleged patient privacy violations) are multifaceted. Not only can the federal government impose civil and criminal sanctions under HIPAA on the physician and his/her affiliated parties (e.g. physician’s employer), but states can also impose penalties. State-imposed penalties for patient privacy violations vary from state to state. Additionally, the patient may sue the violating physician and his/her affiliated parties for privacy violations. Although HIPAA does not afford patients the right to bring a private cause of action against a physician, state law often does grant patients such a right. Also, state medical boards often have the right to impose penalties, monetary and non-monetary, on a physician for privacy violations. These can include suspension or termination of medical licensure.

Recent reports indicate that people who “like,” “share,” “re-tweet,” or comment on inappropriate social media posts are also getting reprimanded. Finally, the reputational harm associated with an inappropriate post on social media is immeasurable, especially in light of the availability of information on the Internet. Unfortunately, when the physicians described above enter their names in a search engine, they do not see their professional accomplishments and prestigious educations; instead, their top hits are news articles reporting on their inappropriate posts.

Post with caution.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Facebook, Twitter, Instagram, Snapchat, YouTube, blogs, webpages, Google+, LinkedIn. What do all of these social media outlets have in common? Each can get physicians in trouble under the Health Insurance Portability and Accountability Act (HIPAA), state privacy laws, and state medical laws, to name a few. It seems that all too often, news outlets are reporting data breaches generated in the medical community, many of which arise out of physicians’ use of social media, and most of which could have been avoided.

Physicians should be aware of the intersection of social media—both for personal and professional use—and HIPAA and state laws. Even an inadvertent, seemingly innocuous disclosure of a patient’s protected health information (PHI) through social media can be problematic.

PHI is defined under HIPAA, in part, as health information that (i) is created or received by a physician, (ii) relates to the health or condition of an individual, (iii) identifies the individual (or with respect to which there is a reasonable basis to believe the information can be used to identify the individual), and (iv) is transmitted by or maintained in electronic media, or transmitted or maintained in another form or medium. Under HIPAA, a physician may use and disclose PHI for “treatment, payment, or healthcare operations.” Generally, using or disclosing PHI through social media does not qualify as treatment, payment, or healthcare operations. If a physician were to use or disclose a patient’s PHI without permission, this would be a violation of HIPAA—and likely state law as well.

In order to use or disclose a patient’s PHI without obtaining the patient’s consent, a physician must de-identify the information so that the information does not identify the patient and there is no reasonable basis to believe that the information can be used to identify the patient. One option under HIPAA is to retain an expert to determine “that the risk is very small that the information could be used, alone or in combination with other reasonably available information, by an anticipated recipient to identify an individual who is the subject of the information.” Alternatively, and more commonly, a physician seeking to use or disclose patient PHI can remove the following identifiers from the PHI:

1. Names;
2. Geographic information;
3. Dates (e.g. birth date, admission date, discharge date, date of death);
4. Telephone numbers;
5. Fax numbers;
6. E-mail addresses;
7. Social Security numbers;
8. Medical record numbers;
9. Health plan beneficiary numbers;
10. Account numbers;
11. Certificate/license numbers;
12. Vehicle identifiers and serial numbers, including license plate numbers;
13. Device identifiers and serial numbers;
14. URLs;
15. IP address numbers;
16. Biometric identifiers (e.g. finger and voice prints);
17. Full-face photographic images and any comparable images; and
18. Other unique identifying numbers, characteristics, or codes.

Identifier #18 is the most difficult to comply with in light of the significant amount of personal information available on the Internet, particularly through search engines like Google. Inputting even a small amount of information into a search engine will generate relevant “hits” that make it increasingly difficult to comply with the de-identification standards under HIPAA. Even if the first 17 identifiers are carefully removed, the broadness of #18 can turn a seemingly harmless post on social media into a patient privacy violation.

Do not let the following examples be you:

Example 1: An ED physician in Rhode Island was fired, lost her hospital medical staff privileges, and was reprimanded by the Rhode Island Board of Medical Licensure and Discipline for posting information about a trauma patient on her personal Facebook page. According to the Rhode Island Board of Medical Licensure and Discipline, “[She] did not use patient names and had no intention to reveal any confidential patient information. However, because of the nature of one person’s injury … the patient was identified by unauthorized third parties. As soon as it was brought to [her] attention that this had occurred, [she] deleted her Facebook account.” Despite the physician leaving out all information she thought might make the patient identifiable, she apparently did not omit enough.

Example 2: An OB-GYN in St. Louis took to Facebook to complain about her frustration with a patient: “So I have a patient who has chosen to either no-show or be late (sometimes hours) for all of her prenatal visits, ultrasounds, and NSTs. She is now 3 hours late for her induction. May I show up late to her delivery?” Another physician then commented on this post: “If it’s elective, it’d be canceled!” The OB-GYN at issue then responded: “Here is the explanation why I have put up with it/not cancelled induction: prior stillbirth.”

Although the OB-GYN did not reveal the patient’s name, controversy erupted after someone posted a screenshot of the post and response comments to the hospital’s Facebook page. The hospital issued a statement indicating that its privacy compliance staff did not find the posting to be a breach of privacy, but the hospital added it would use this opportunity to educate its staff about the appropriate use of social media. Many believe this physician got off too easy.

The penalties for patient privacy violations (or even alleged patient privacy violations) are multifaceted. Not only can the federal government impose civil and criminal sanctions under HIPAA on the physician and his/her affiliated parties (e.g. physician’s employer), but states can also impose penalties. State-imposed penalties for patient privacy violations vary from state to state. Additionally, the patient may sue the violating physician and his/her affiliated parties for privacy violations. Although HIPAA does not afford patients the right to bring a private cause of action against a physician, state law often does grant patients such a right. Also, state medical boards often have the right to impose penalties, monetary and non-monetary, on a physician for privacy violations. These can include suspension or termination of medical licensure.

Recent reports indicate that people who “like,” “share,” “re-tweet,” or comment on inappropriate social media posts are also getting reprimanded. Finally, the reputational harm associated with an inappropriate post on social media is immeasurable, especially in light of the availability of information on the Internet. Unfortunately, when the physicians described above enter their names in a search engine, they do not see their professional accomplishments and prestigious educations; instead, their top hits are news articles reporting on their inappropriate posts.

Post with caution.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Physicians who join a hospitalist practice often have the opportunity to purchase an equity interest after some period of employment. The future possibility of the physician-employee becoming an owner of the practice is sometimes addressed in the physician’s employment agreement. The amount of detail in the employment agreement regarding potential ownership will vary depending on the practice and the negotiating power of the individual physician. Clearly, the more specificity found in the contract, the better the hospitalist is served.

Because the circumstances of the individual parties will govern the terms of the buy-in, there is no standard contract language universally used in physician employment agreements. Specific aspects exist in many buy-in provisions contained in physician employment agreements, however. Such issues include: (i) the opportunity to purchase an ownership interest; (ii) performance reviews; (iii) how the interest will be valued; and (iv) payment terms.

Ownership Interest

The employment agreement should specify whether and when the employee-physician will be eligible to acquire an interest in the practice. The idea of remaining an employee may be attractive to some physicians who prefer to have less involvement in the business and financial aspects of the hospitalist practice. Sometimes cost becomes a critical issue.

However, if the parties do intend for the physician to have the right to purchase an ownership interest, the timeframe and conditions for exercising that right should be specified in writing. The following is an example of a provision addressing the opportunity to purchase an equity interest:

“The parties agree that it is their intent that upon X years of continuous employment pursuant to the terms and conditions of this Agreement, Hospitalist shall be given the opportunity to purchase [a partnership interest or stock] in Practice.”

Performance Reviews

One condition precedent to the right to purchase an equity interest may be satisfactory performance reviews by senior physicians. Although these reviews frequently are based on subjective standards, the employee-physician should seek a contractual commitment describing the criteria to be evaluated in order to make the reviews as objective as possible. Standard criteria include statistical analysis (e.g. number of patients seen a day), the quality of patient care rendered, and contributions to the practice’s operations (e.g. marketing, community outreach).

In addition, the physician’s employment agreement should specify the frequency of performance reviews. Physician reviews commonly occur on an annual, and sometimes semi-annual, basis, especially during the initial years of employment. Regardless of how often the reviews are conducted, it is highly beneficial to both the practice and the physician-employee that the time periods for evaluations be strictly enforced. Consistent, formal performance reviews promote improvement and synergy between the physician and the practice.

Equity Interest

Typically, an employment agreement will either provide an exact purchase price or, more often, state the future method to be used for calculating the buy-in price. Ordinarily, the buy-in price will be a function of the valuation of the total equity of the practice and the percentage of that equity, which is represented by the interests to be acquired by the purchasing physician. While there are a few formulas for valuing the equity of a hospitalist practice, the most common method is discounted present value of net revenue stream.

The appropriate valuation method will depend on a number of factors unique to the individual practice. Therefore, the practice should seek the assistance of an accountant or practice valuation specialist when determining the value. Stating an agreed-upon valuation method in the employment agreement will limit surprises and “sticker shock” to the buy-in price when the ownership decision is made down the road.

Payment Terms

In the event that the physician-employee exercises the opportunity to buy in, the employment or purchase agreement should provide terms governing how the purchase price will be paid. Often, the practice will be flexible in negotiating payment terms that meet the physician’s individual financial needs; however, the parties frequently agree that the physician will either pay the owners in full up front or make installment payments over a specified number of years.

If the physician is required to pay the total purchase price up front, he or she will be personally responsible for obtaining the necessary funding through bank loans or other sources. If the purchasing physician is permitted to make installment payments, he or she will be required to sign a promissory note in which the payee is the practice and the note is secured by a security interest in the equity granted to the physician. There are important tax strategies that can be implemented when installment payments are agreed upon. In the event that the physician fails to make the installment payments, the practice may be able to recover the equity interest.

In Sum

Both parties should review and understand the terms and conditions of the buy-in so that all parties enter the employment relationship with the same expectations for future ownership.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Physicians who join a hospitalist practice often have the opportunity to purchase an equity interest after some period of employment. The future possibility of the physician-employee becoming an owner of the practice is sometimes addressed in the physician’s employment agreement. The amount of detail in the employment agreement regarding potential ownership will vary depending on the practice and the negotiating power of the individual physician. Clearly, the more specificity found in the contract, the better the hospitalist is served.

Because the circumstances of the individual parties will govern the terms of the buy-in, there is no standard contract language universally used in physician employment agreements. Specific aspects exist in many buy-in provisions contained in physician employment agreements, however. Such issues include: (i) the opportunity to purchase an ownership interest; (ii) performance reviews; (iii) how the interest will be valued; and (iv) payment terms.

Ownership Interest

The employment agreement should specify whether and when the employee-physician will be eligible to acquire an interest in the practice. The idea of remaining an employee may be attractive to some physicians who prefer to have less involvement in the business and financial aspects of the hospitalist practice. Sometimes cost becomes a critical issue.

However, if the parties do intend for the physician to have the right to purchase an ownership interest, the timeframe and conditions for exercising that right should be specified in writing. The following is an example of a provision addressing the opportunity to purchase an equity interest:

“The parties agree that it is their intent that upon X years of continuous employment pursuant to the terms and conditions of this Agreement, Hospitalist shall be given the opportunity to purchase [a partnership interest or stock] in Practice.”

Performance Reviews

One condition precedent to the right to purchase an equity interest may be satisfactory performance reviews by senior physicians. Although these reviews frequently are based on subjective standards, the employee-physician should seek a contractual commitment describing the criteria to be evaluated in order to make the reviews as objective as possible. Standard criteria include statistical analysis (e.g. number of patients seen a day), the quality of patient care rendered, and contributions to the practice’s operations (e.g. marketing, community outreach).

In addition, the physician’s employment agreement should specify the frequency of performance reviews. Physician reviews commonly occur on an annual, and sometimes semi-annual, basis, especially during the initial years of employment. Regardless of how often the reviews are conducted, it is highly beneficial to both the practice and the physician-employee that the time periods for evaluations be strictly enforced. Consistent, formal performance reviews promote improvement and synergy between the physician and the practice.

Equity Interest

Typically, an employment agreement will either provide an exact purchase price or, more often, state the future method to be used for calculating the buy-in price. Ordinarily, the buy-in price will be a function of the valuation of the total equity of the practice and the percentage of that equity, which is represented by the interests to be acquired by the purchasing physician. While there are a few formulas for valuing the equity of a hospitalist practice, the most common method is discounted present value of net revenue stream.

The appropriate valuation method will depend on a number of factors unique to the individual practice. Therefore, the practice should seek the assistance of an accountant or practice valuation specialist when determining the value. Stating an agreed-upon valuation method in the employment agreement will limit surprises and “sticker shock” to the buy-in price when the ownership decision is made down the road.

Payment Terms

In the event that the physician-employee exercises the opportunity to buy in, the employment or purchase agreement should provide terms governing how the purchase price will be paid. Often, the practice will be flexible in negotiating payment terms that meet the physician’s individual financial needs; however, the parties frequently agree that the physician will either pay the owners in full up front or make installment payments over a specified number of years.

If the physician is required to pay the total purchase price up front, he or she will be personally responsible for obtaining the necessary funding through bank loans or other sources. If the purchasing physician is permitted to make installment payments, he or she will be required to sign a promissory note in which the payee is the practice and the note is secured by a security interest in the equity granted to the physician. There are important tax strategies that can be implemented when installment payments are agreed upon. In the event that the physician fails to make the installment payments, the practice may be able to recover the equity interest.

In Sum

Both parties should review and understand the terms and conditions of the buy-in so that all parties enter the employment relationship with the same expectations for future ownership.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Physicians who join a hospitalist practice often have the opportunity to purchase an equity interest after some period of employment. The future possibility of the physician-employee becoming an owner of the practice is sometimes addressed in the physician’s employment agreement. The amount of detail in the employment agreement regarding potential ownership will vary depending on the practice and the negotiating power of the individual physician. Clearly, the more specificity found in the contract, the better the hospitalist is served.

Because the circumstances of the individual parties will govern the terms of the buy-in, there is no standard contract language universally used in physician employment agreements. Specific aspects exist in many buy-in provisions contained in physician employment agreements, however. Such issues include: (i) the opportunity to purchase an ownership interest; (ii) performance reviews; (iii) how the interest will be valued; and (iv) payment terms.

Ownership Interest

The employment agreement should specify whether and when the employee-physician will be eligible to acquire an interest in the practice. The idea of remaining an employee may be attractive to some physicians who prefer to have less involvement in the business and financial aspects of the hospitalist practice. Sometimes cost becomes a critical issue.

However, if the parties do intend for the physician to have the right to purchase an ownership interest, the timeframe and conditions for exercising that right should be specified in writing. The following is an example of a provision addressing the opportunity to purchase an equity interest:

“The parties agree that it is their intent that upon X years of continuous employment pursuant to the terms and conditions of this Agreement, Hospitalist shall be given the opportunity to purchase [a partnership interest or stock] in Practice.”

Performance Reviews

One condition precedent to the right to purchase an equity interest may be satisfactory performance reviews by senior physicians. Although these reviews frequently are based on subjective standards, the employee-physician should seek a contractual commitment describing the criteria to be evaluated in order to make the reviews as objective as possible. Standard criteria include statistical analysis (e.g. number of patients seen a day), the quality of patient care rendered, and contributions to the practice’s operations (e.g. marketing, community outreach).

In addition, the physician’s employment agreement should specify the frequency of performance reviews. Physician reviews commonly occur on an annual, and sometimes semi-annual, basis, especially during the initial years of employment. Regardless of how often the reviews are conducted, it is highly beneficial to both the practice and the physician-employee that the time periods for evaluations be strictly enforced. Consistent, formal performance reviews promote improvement and synergy between the physician and the practice.

Equity Interest

Typically, an employment agreement will either provide an exact purchase price or, more often, state the future method to be used for calculating the buy-in price. Ordinarily, the buy-in price will be a function of the valuation of the total equity of the practice and the percentage of that equity, which is represented by the interests to be acquired by the purchasing physician. While there are a few formulas for valuing the equity of a hospitalist practice, the most common method is discounted present value of net revenue stream.

The appropriate valuation method will depend on a number of factors unique to the individual practice. Therefore, the practice should seek the assistance of an accountant or practice valuation specialist when determining the value. Stating an agreed-upon valuation method in the employment agreement will limit surprises and “sticker shock” to the buy-in price when the ownership decision is made down the road.

Payment Terms

In the event that the physician-employee exercises the opportunity to buy in, the employment or purchase agreement should provide terms governing how the purchase price will be paid. Often, the practice will be flexible in negotiating payment terms that meet the physician’s individual financial needs; however, the parties frequently agree that the physician will either pay the owners in full up front or make installment payments over a specified number of years.

If the physician is required to pay the total purchase price up front, he or she will be personally responsible for obtaining the necessary funding through bank loans or other sources. If the purchasing physician is permitted to make installment payments, he or she will be required to sign a promissory note in which the payee is the practice and the note is secured by a security interest in the equity granted to the physician. There are important tax strategies that can be implemented when installment payments are agreed upon. In the event that the physician fails to make the installment payments, the practice may be able to recover the equity interest.

In Sum

Both parties should review and understand the terms and conditions of the buy-in so that all parties enter the employment relationship with the same expectations for future ownership.

Steven Harris is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Key Takeaways for Hospitalist Groups

• Covered entities and business associates should review their business associate agreements and determine whether the agreements qualify for grandfathered status and, if needed, enter into new business-associate agreements.
• Covered entities and business associates will need to review their policies and procedures so that they can implement all necessary changes in a timely manner.
• Notices of Privacy Practices will need to be revised, and appropriate training should be provided to personnel of covered entities and business associates.
• Any vendor or business that performs functions for a covered entity or another business associate involving the use or disclosure of PHI should determine whether it is a “business associate” and, if so, what needs to be done in order to comply with the Final Rule.

On Jan. 17, 2013, the Office for Civil Rights (OCR) of the U.S. Department of Health and Human Services (HHS) issued an omnibus Final Rule implementing various provisions of the Health Information Technology for Economic and Clinical Health, or HITECH, Act. The Final Rule revises the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the interim final Breach Notification Rule.

The HITECH Act, which took effect as part of the American Recovery and Reinvestment Act of 2009, expanded the obligations of covered entities and business associates to protect the confidentiality and security of protected health information (PHI).

Under HIPAA, “covered entities” may disclose PHI to “business associates,” and permit business associates to create and receive PHI on behalf of the covered entity, subject to the terms of a business-associate agreement between the parties. A “covered entity” is defined as a health plan, healthcare clearinghouse, or healthcare provider (e.g. physician practice or hospital) that transmits health information electronically. In general, the HIPAA regulations have traditionally defined a “business associate” as a person (other than a member of the covered entity’s workforce) or entity who, on behalf of a covered entity, performs a function or activity involving the use or disclosure of PHI, such as the performance of financial, legal, actuarial, accounting, consulting, data aggregation, management, administrative, or accreditation services to or for a covered entity.

Prior to the HITECH Act, business associates were contractually obligated to maintain the privacy and security of PHI but could not be sanctioned for failing to comply with HIPAA. The HITECH Act expands those obligations and exposure of business associates by:

1. Applying many of the privacy and security standards to business associates;
2. Subjecting business associates to the breach-notification requirements; and
3. Imposing civil and criminal penalties on business associates for HIPAA violations.

In addition, the HITECH Act strengthened the penalties and enforcement mechanisms under HIPAA and required periodic audits to ensure that covered entities and business associates are compliant.

Expansion of Breach-Notification Requirements

The Final Rule expands the breach-notification obligations of covered entities and business associates by revising the definition of “breach” and the risk-assessment process for determining whether notification is required. A use or disclosure of unsecured PHI that is not permitted under the Privacy Rule is presumed to be a breach (and therefore requires notification to the individual, OCR, and possibly the media) unless the incident satisfies an exception, or the covered entity or business associate demonstrates a low probability that PHI has been compromised.1 This risk analysis is based on at least the following four factors:

1. The nature and extent of the PHI, including the types of identifiers and the likelihood of re-identification;
2. The unauthorized person who used or accessed the PHI;
3. Whether the PHI was actually acquired or viewed; and
4. The extent to which the risk is mitigated (e.g. by obtaining reliable assurances by a recipient of PHI that the information will be destroyed or will not be used or disclosed).

Expansion of Business-Associate Obligations

The Final Rule implements the HITECH Act’s expansion of business associates’ HIPAA obligations by applying the Privacy and Security Rules directly to business associates and by imposing civil and criminal penalties on business associates for HIPAA violations. It also extends obligations and potential penalties to subcontractors of business associates if a business associate delegates a function, activity, or service to the subcontractor, and the subcontractor creates, receives, maintains, or transmits PHI on behalf of the business associate. Any business associate that delegates a function involving the use or disclosure of PHI to a subcontractor will be required to enter into a business-associate agreement with the subcontractor.

Additional Provisions

The Final Rule addresses the following additional issues by:

• Requiring covered entities to modify their Notices of Privacy Practices;
• Allowing individuals to obtain a copy of PHI in an electronic format if the covered entity uses an electronic health record;
• Restricting marketing activities;
• Allowing covered entities to disclose relevant PHI of a deceased person to a family member, close friend, or other person designated by the deceased, unless the disclosure is inconsistent with the deceased person’s known prior expressed preference;
• Requiring covered entities to agree to an individual’s request to restrict disclosure of PHI to a health plan when the individual (or someone other than the health plan) pays for the healthcare item or service in full;
• Revising the definition of PHI to exclude information about a person who has been deceased for more than 50 years;
• Prohibiting the sale of PHI without authorization from the individual, and adding a requirement of authorization in order for a covered entity to receive remuneration for disclosing PHI;
• Clarifying OCR’s view that covered entities are allowed to send electronic PHI to individuals in unencrypted e-mails only after notifying the individual of the risk;
• Prohibiting health plans from using or disclosing genetic information for underwriting, as required by the Genetic Information Nondiscrimination Act of 2008 (GINA);
• Allowing disclosure of proof of immunization to schools if agreed by the parent, guardian, or individual;
• Permitting compound authorizations for clinical-research studies; and
• Revising the Enforcement Rule (which was previously revised in 2009 as an interim Final Rule), which:

  • Requires the secretary of HHS to investigate a HIPAA complaint if a preliminary investigation indicates a possible violation due to willful neglect;
  • Permits HHS to disclose PHI to other government agencies (including state attorneys general) for civil or criminal law-enforcement purposes; and
  • Revises standards for determining the levels of civil money penalties.

Effective Date, Compliance Date

Although most provisions of the Final Rule became effective on March 26, many provisions impacting covered entities and business associates (including subcontractors) required compliance by Sept. 23. However, if certain conditions are met, the Final Rule allows additional time to revise business associate agreements to make them compliant. In particular, transition provisions will allow covered entities and business associates to continue to operate under existing business-associate agreements for up to one year beyond the compliance date (until Sept. 22, 2014) if the business-associate agreement:

1. Is in writing;
2. Is in place prior to Jan. 25, 2013 (the publication date of the Final Rule);
3. Is compliant with the Privacy and Security Rules, in effect immediately prior to Jan. 25, 2013; and
4. Is not modified or renewed.

This additional time for grandfathered business-associate agreements applies only to the written-documentation requirement. Covered entities, business associates and subcontractors will be required to comply with all other HIPAA requirements beginning on the compliance date, even if the business-associate agreement qualifies for grandfathered status

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Footnote

The exceptions relate to (i) unintentional, good-faith access, acquisition or use by members of the covered entity’s or business associate’s workforce, (ii) inadvertent disclosure limited to persons with authorized access and not resulting in further unpermitted use or disclosure, and (iii) good-faith belief that the unauthorized recipient would be unable to retain the PHI.

Key Takeaways for Hospitalist Groups

• Covered entities and business associates should review their business associate agreements and determine whether the agreements qualify for grandfathered status and, if needed, enter into new business-associate agreements.
• Covered entities and business associates will need to review their policies and procedures so that they can implement all necessary changes in a timely manner.
• Notices of Privacy Practices will need to be revised, and appropriate training should be provided to personnel of covered entities and business associates.
• Any vendor or business that performs functions for a covered entity or another business associate involving the use or disclosure of PHI should determine whether it is a “business associate” and, if so, what needs to be done in order to comply with the Final Rule.

On Jan. 17, 2013, the Office for Civil Rights (OCR) of the U.S. Department of Health and Human Services (HHS) issued an omnibus Final Rule implementing various provisions of the Health Information Technology for Economic and Clinical Health, or HITECH, Act. The Final Rule revises the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the interim final Breach Notification Rule.

The HITECH Act, which took effect as part of the American Recovery and Reinvestment Act of 2009, expanded the obligations of covered entities and business associates to protect the confidentiality and security of protected health information (PHI).

Under HIPAA, “covered entities” may disclose PHI to “business associates,” and permit business associates to create and receive PHI on behalf of the covered entity, subject to the terms of a business-associate agreement between the parties. A “covered entity” is defined as a health plan, healthcare clearinghouse, or healthcare provider (e.g. physician practice or hospital) that transmits health information electronically. In general, the HIPAA regulations have traditionally defined a “business associate” as a person (other than a member of the covered entity’s workforce) or entity who, on behalf of a covered entity, performs a function or activity involving the use or disclosure of PHI, such as the performance of financial, legal, actuarial, accounting, consulting, data aggregation, management, administrative, or accreditation services to or for a covered entity.

Prior to the HITECH Act, business associates were contractually obligated to maintain the privacy and security of PHI but could not be sanctioned for failing to comply with HIPAA. The HITECH Act expands those obligations and exposure of business associates by:

1. Applying many of the privacy and security standards to business associates;
2. Subjecting business associates to the breach-notification requirements; and
3. Imposing civil and criminal penalties on business associates for HIPAA violations.

In addition, the HITECH Act strengthened the penalties and enforcement mechanisms under HIPAA and required periodic audits to ensure that covered entities and business associates are compliant.

Expansion of Breach-Notification Requirements

The Final Rule expands the breach-notification obligations of covered entities and business associates by revising the definition of “breach” and the risk-assessment process for determining whether notification is required. A use or disclosure of unsecured PHI that is not permitted under the Privacy Rule is presumed to be a breach (and therefore requires notification to the individual, OCR, and possibly the media) unless the incident satisfies an exception, or the covered entity or business associate demonstrates a low probability that PHI has been compromised.1 This risk analysis is based on at least the following four factors:

1. The nature and extent of the PHI, including the types of identifiers and the likelihood of re-identification;
2. The unauthorized person who used or accessed the PHI;
3. Whether the PHI was actually acquired or viewed; and
4. The extent to which the risk is mitigated (e.g. by obtaining reliable assurances by a recipient of PHI that the information will be destroyed or will not be used or disclosed).

Expansion of Business-Associate Obligations

The Final Rule implements the HITECH Act’s expansion of business associates’ HIPAA obligations by applying the Privacy and Security Rules directly to business associates and by imposing civil and criminal penalties on business associates for HIPAA violations. It also extends obligations and potential penalties to subcontractors of business associates if a business associate delegates a function, activity, or service to the subcontractor, and the subcontractor creates, receives, maintains, or transmits PHI on behalf of the business associate. Any business associate that delegates a function involving the use or disclosure of PHI to a subcontractor will be required to enter into a business-associate agreement with the subcontractor.

Additional Provisions

The Final Rule addresses the following additional issues by:

• Requiring covered entities to modify their Notices of Privacy Practices;
• Allowing individuals to obtain a copy of PHI in an electronic format if the covered entity uses an electronic health record;
• Restricting marketing activities;
• Allowing covered entities to disclose relevant PHI of a deceased person to a family member, close friend, or other person designated by the deceased, unless the disclosure is inconsistent with the deceased person’s known prior expressed preference;
• Requiring covered entities to agree to an individual’s request to restrict disclosure of PHI to a health plan when the individual (or someone other than the health plan) pays for the healthcare item or service in full;
• Revising the definition of PHI to exclude information about a person who has been deceased for more than 50 years;
• Prohibiting the sale of PHI without authorization from the individual, and adding a requirement of authorization in order for a covered entity to receive remuneration for disclosing PHI;
• Clarifying OCR’s view that covered entities are allowed to send electronic PHI to individuals in unencrypted e-mails only after notifying the individual of the risk;
• Prohibiting health plans from using or disclosing genetic information for underwriting, as required by the Genetic Information Nondiscrimination Act of 2008 (GINA);
• Allowing disclosure of proof of immunization to schools if agreed by the parent, guardian, or individual;
• Permitting compound authorizations for clinical-research studies; and
• Revising the Enforcement Rule (which was previously revised in 2009 as an interim Final Rule), which:

  • Requires the secretary of HHS to investigate a HIPAA complaint if a preliminary investigation indicates a possible violation due to willful neglect;
  • Permits HHS to disclose PHI to other government agencies (including state attorneys general) for civil or criminal law-enforcement purposes; and
  • Revises standards for determining the levels of civil money penalties.

Effective Date, Compliance Date

Although most provisions of the Final Rule became effective on March 26, many provisions impacting covered entities and business associates (including subcontractors) required compliance by Sept. 23. However, if certain conditions are met, the Final Rule allows additional time to revise business associate agreements to make them compliant. In particular, transition provisions will allow covered entities and business associates to continue to operate under existing business-associate agreements for up to one year beyond the compliance date (until Sept. 22, 2014) if the business-associate agreement:

1. Is in writing;
2. Is in place prior to Jan. 25, 2013 (the publication date of the Final Rule);
3. Is compliant with the Privacy and Security Rules, in effect immediately prior to Jan. 25, 2013; and
4. Is not modified or renewed.

This additional time for grandfathered business-associate agreements applies only to the written-documentation requirement. Covered entities, business associates and subcontractors will be required to comply with all other HIPAA requirements beginning on the compliance date, even if the business-associate agreement qualifies for grandfathered status

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Footnote

The exceptions relate to (i) unintentional, good-faith access, acquisition or use by members of the covered entity’s or business associate’s workforce, (ii) inadvertent disclosure limited to persons with authorized access and not resulting in further unpermitted use or disclosure, and (iii) good-faith belief that the unauthorized recipient would be unable to retain the PHI.

Key Takeaways for Hospitalist Groups

• Covered entities and business associates should review their business associate agreements and determine whether the agreements qualify for grandfathered status and, if needed, enter into new business-associate agreements.
• Covered entities and business associates will need to review their policies and procedures so that they can implement all necessary changes in a timely manner.
• Notices of Privacy Practices will need to be revised, and appropriate training should be provided to personnel of covered entities and business associates.
• Any vendor or business that performs functions for a covered entity or another business associate involving the use or disclosure of PHI should determine whether it is a “business associate” and, if so, what needs to be done in order to comply with the Final Rule.

On Jan. 17, 2013, the Office for Civil Rights (OCR) of the U.S. Department of Health and Human Services (HHS) issued an omnibus Final Rule implementing various provisions of the Health Information Technology for Economic and Clinical Health, or HITECH, Act. The Final Rule revises the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the interim final Breach Notification Rule.

The HITECH Act, which took effect as part of the American Recovery and Reinvestment Act of 2009, expanded the obligations of covered entities and business associates to protect the confidentiality and security of protected health information (PHI).

Under HIPAA, “covered entities” may disclose PHI to “business associates,” and permit business associates to create and receive PHI on behalf of the covered entity, subject to the terms of a business-associate agreement between the parties. A “covered entity” is defined as a health plan, healthcare clearinghouse, or healthcare provider (e.g. physician practice or hospital) that transmits health information electronically. In general, the HIPAA regulations have traditionally defined a “business associate” as a person (other than a member of the covered entity’s workforce) or entity who, on behalf of a covered entity, performs a function or activity involving the use or disclosure of PHI, such as the performance of financial, legal, actuarial, accounting, consulting, data aggregation, management, administrative, or accreditation services to or for a covered entity.

Prior to the HITECH Act, business associates were contractually obligated to maintain the privacy and security of PHI but could not be sanctioned for failing to comply with HIPAA. The HITECH Act expands those obligations and exposure of business associates by:

1. Applying many of the privacy and security standards to business associates;
2. Subjecting business associates to the breach-notification requirements; and
3. Imposing civil and criminal penalties on business associates for HIPAA violations.

In addition, the HITECH Act strengthened the penalties and enforcement mechanisms under HIPAA and required periodic audits to ensure that covered entities and business associates are compliant.

Expansion of Breach-Notification Requirements

The Final Rule expands the breach-notification obligations of covered entities and business associates by revising the definition of “breach” and the risk-assessment process for determining whether notification is required. A use or disclosure of unsecured PHI that is not permitted under the Privacy Rule is presumed to be a breach (and therefore requires notification to the individual, OCR, and possibly the media) unless the incident satisfies an exception, or the covered entity or business associate demonstrates a low probability that PHI has been compromised.1 This risk analysis is based on at least the following four factors:

1. The nature and extent of the PHI, including the types of identifiers and the likelihood of re-identification;
2. The unauthorized person who used or accessed the PHI;
3. Whether the PHI was actually acquired or viewed; and
4. The extent to which the risk is mitigated (e.g. by obtaining reliable assurances by a recipient of PHI that the information will be destroyed or will not be used or disclosed).

Expansion of Business-Associate Obligations

The Final Rule implements the HITECH Act’s expansion of business associates’ HIPAA obligations by applying the Privacy and Security Rules directly to business associates and by imposing civil and criminal penalties on business associates for HIPAA violations. It also extends obligations and potential penalties to subcontractors of business associates if a business associate delegates a function, activity, or service to the subcontractor, and the subcontractor creates, receives, maintains, or transmits PHI on behalf of the business associate. Any business associate that delegates a function involving the use or disclosure of PHI to a subcontractor will be required to enter into a business-associate agreement with the subcontractor.

Additional Provisions

The Final Rule addresses the following additional issues by:

• Requiring covered entities to modify their Notices of Privacy Practices;
• Allowing individuals to obtain a copy of PHI in an electronic format if the covered entity uses an electronic health record;
• Restricting marketing activities;
• Allowing covered entities to disclose relevant PHI of a deceased person to a family member, close friend, or other person designated by the deceased, unless the disclosure is inconsistent with the deceased person’s known prior expressed preference;
• Requiring covered entities to agree to an individual’s request to restrict disclosure of PHI to a health plan when the individual (or someone other than the health plan) pays for the healthcare item or service in full;
• Revising the definition of PHI to exclude information about a person who has been deceased for more than 50 years;
• Prohibiting the sale of PHI without authorization from the individual, and adding a requirement of authorization in order for a covered entity to receive remuneration for disclosing PHI;
• Clarifying OCR’s view that covered entities are allowed to send electronic PHI to individuals in unencrypted e-mails only after notifying the individual of the risk;
• Prohibiting health plans from using or disclosing genetic information for underwriting, as required by the Genetic Information Nondiscrimination Act of 2008 (GINA);
• Allowing disclosure of proof of immunization to schools if agreed by the parent, guardian, or individual;
• Permitting compound authorizations for clinical-research studies; and
• Revising the Enforcement Rule (which was previously revised in 2009 as an interim Final Rule), which:

  • Requires the secretary of HHS to investigate a HIPAA complaint if a preliminary investigation indicates a possible violation due to willful neglect;
  • Permits HHS to disclose PHI to other government agencies (including state attorneys general) for civil or criminal law-enforcement purposes; and
  • Revises standards for determining the levels of civil money penalties.

Effective Date, Compliance Date

Although most provisions of the Final Rule became effective on March 26, many provisions impacting covered entities and business associates (including subcontractors) required compliance by Sept. 23. However, if certain conditions are met, the Final Rule allows additional time to revise business associate agreements to make them compliant. In particular, transition provisions will allow covered entities and business associates to continue to operate under existing business-associate agreements for up to one year beyond the compliance date (until Sept. 22, 2014) if the business-associate agreement:

1. Is in writing;
2. Is in place prior to Jan. 25, 2013 (the publication date of the Final Rule);
3. Is compliant with the Privacy and Security Rules, in effect immediately prior to Jan. 25, 2013; and
4. Is not modified or renewed.

This additional time for grandfathered business-associate agreements applies only to the written-documentation requirement. Covered entities, business associates and subcontractors will be required to comply with all other HIPAA requirements beginning on the compliance date, even if the business-associate agreement qualifies for grandfathered status

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Footnote

The exceptions relate to (i) unintentional, good-faith access, acquisition or use by members of the covered entity’s or business associate’s workforce, (ii) inadvertent disclosure limited to persons with authorized access and not resulting in further unpermitted use or disclosure, and (iii) good-faith belief that the unauthorized recipient would be unable to retain the PHI.

Leaving a job is never an easy decision, whether it is made voluntarily or not. A physician terminating a relationship with an employer may face emotionally charged conversations, difficult financial considerations, and long-term legal consequences. As you plan your exit strategy, it is critical for you to be aware of these issues and address them proactively with your employer. This can minimize hard feelings and surprises down the road for you, your former employer, and your colleagues.

In today’s competitive climate, a physician might work for several employers during the length of his or her career. With the tighter financial medical market and pressures from managed care mounting, employers are less likely to tolerate a nonproductive employee. Interoffice or personality conflicts may become intolerable for an unhappy or stressed physician. Physician turnover is a more common occurrence, and if not handled properly, it can be disruptive for all parties involved.

The following steps are meant for physicians contemplating leaving their place of employment or who may be asked to leave in the near future.

Step 1: Consider the Employment Agreement

Ideally, physician-separation matters are addressed preemptively when the physician enters the employer-employee relationship and signs an employment agreement. Thus, before contemplating a move, you should always start by reviewing the terms of your current employment agreement. A well-drafted employment agreement should specify the grounds for termination, both for cause (i.e. a specific set of reasons for immediate termination) and without cause (i.e. either party may terminate voluntarily). The agreement should specify the parties’ rights and obligations following a termination. These rights and obligations likely will vary depending on the basis for termination.

Typically, an employer will provide malpractice insurance for its physicians during the term of employment. However, physicians may be responsible for the cost of “tail coverage” upon the termination of employment. This is designed to protect the departing physician’s professional acts after leaving the employ of an employer with claims-made coverage. Because the coverage can be quite costly, a well-drafted employment agreement often will set forth which party is responsible for the procurement and payment of tail coverage. It is prudent for a departing physician to review the employment agreement to identify who has the affirmative obligation to provide the tail coverage, as it can be a costly surprise at termination.

The employment agreement also must be reviewed to determine the proper method to provide notice of termination (such as first-class mail, overnight courier, or hand delivery). Often, employment agreements will include a clause titled “Notice” that outlines the delivery method for proper notice to the employer.

Step 2: Consider a Termination/Separation Agreement

Entering into a termination agreement (sometimes referred to as a separation agreement) between the departing physician and the employer may address and resolve many of the outstanding issues that are not otherwise addressed in the employment agreement. A termination agreement may avoid unnecessary problems down the road and potentially acrimonious and costly litigation.

The termination agreement can fill in the gaps where the employment agreement is silent (or if an employment agreement does not exist). The key elements of a termination agreement often include:

• The effective date of the separation as well as what exactly is ending (e.g. employment, co-ownership, board membership, medical staff privileges);
• Payment and buyout terms;
• The physician’s removal from any management or administrative position (e.g. member of the governing board);
• Deferred compensation payments or severance pay that may need to be calculated and distributed;
• Employer obligations (if any) to provide the departing physician’s fringe benefits and business expenses, including retirement-plan contributions, health insurance, life insurance, medical dues, etc.; and
• Unused vacation days, bonuses, or expenses due.

If previously addressed in the employment agreement, the parties should reaffirm their respective rights and obligations regarding medical records, confidential information, noncompetition and nonsolicitation provisions. Otherwise, the termination agreement should identify the physician’s competitive and solicitation activities post-termination.

A noncompetition provision should include the geographic territory in which and the time period during which the departing physician cannot compete with the former employer. It is important to remember courts will render these provisions as unenforceable and invalid if improperly drafted or overly broad. It is common to see nondisparagement provisions, whereby each party agrees to refrain from making any negative or false statements regarding the other. Nondisclosure provisions are common as well with regards to what may be disclosed to third parties.

The separation agreement also should address the return of company property, including office key, credit card, computer, cell phone, and beeper. Patient records and charts should be completed and returned to the employer. Often, the departing physician will still be allowed reasonable access to patient records post-termination for certain authorized purposes (e.g. defending disciplinary actions, malpractice claims, and billing/payer claims and audits), usually at the physician’s own expense.

The termination agreement may also outline how patients will be notified about the physician’s departure. If a patient wishes to continue treatment with the departing physician, the former employer must be ready to transition the patient.

A well-written termination agreement will provide for mutual releases. However, there are often exclusions from the mutual releases, such as pre-termination date liabilities; medical malpractice claims resulting from the physician’s misconduct; or taxes, interests, and penalties covering the pre-termination date.

Step 3: Severance Pay

Depending on the circumstances surrounding the termination and employment agreements, a physician may be entitled to severance payments beginning on the date of termination and/or for a period of time post-termination. The departing physician should determine whether severance is appropriate and whether he or she is willing to forego severance payments in exchange for other benefits. Depending on the dollar amount and the physician’s career objectives, it may be worthwhile to sacrifice severance payments for a less onerous noncompete provision, for example.

Step 4: Take the High Road

Because you never know when your paths might cross with former coworkers or employers, it is always sensible to remain discreet and level-headed during this trying period. Although it is natural to discuss an impending move with others, a prudent physician will avoid water-cooler gossip.

In the event conflicts arise, limit the public disclosure of these disputes. Neither side wins the public relations battle, and often, both sides lose. This is a circumstance where experienced legal counsel can be invaluable as you navigate these potentially rocky waters. You would be well served to seek legal advice to discuss your intentions before making an actual move.

As always, remember conversations you have with counsel are typically protected by attorney-client privilege. It is always advisable to secure legal counsel to review the terms of an employment agreement, negotiate a fair termination/separation agreement, and serve as an advocate during this challenging career move.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Leaving a job is never an easy decision, whether it is made voluntarily or not. A physician terminating a relationship with an employer may face emotionally charged conversations, difficult financial considerations, and long-term legal consequences. As you plan your exit strategy, it is critical for you to be aware of these issues and address them proactively with your employer. This can minimize hard feelings and surprises down the road for you, your former employer, and your colleagues.

In today’s competitive climate, a physician might work for several employers during the length of his or her career. With the tighter financial medical market and pressures from managed care mounting, employers are less likely to tolerate a nonproductive employee. Interoffice or personality conflicts may become intolerable for an unhappy or stressed physician. Physician turnover is a more common occurrence, and if not handled properly, it can be disruptive for all parties involved.

The following steps are meant for physicians contemplating leaving their place of employment or who may be asked to leave in the near future.

Step 1: Consider the Employment Agreement

Ideally, physician-separation matters are addressed preemptively when the physician enters the employer-employee relationship and signs an employment agreement. Thus, before contemplating a move, you should always start by reviewing the terms of your current employment agreement. A well-drafted employment agreement should specify the grounds for termination, both for cause (i.e. a specific set of reasons for immediate termination) and without cause (i.e. either party may terminate voluntarily). The agreement should specify the parties’ rights and obligations following a termination. These rights and obligations likely will vary depending on the basis for termination.

Typically, an employer will provide malpractice insurance for its physicians during the term of employment. However, physicians may be responsible for the cost of “tail coverage” upon the termination of employment. This is designed to protect the departing physician’s professional acts after leaving the employ of an employer with claims-made coverage. Because the coverage can be quite costly, a well-drafted employment agreement often will set forth which party is responsible for the procurement and payment of tail coverage. It is prudent for a departing physician to review the employment agreement to identify who has the affirmative obligation to provide the tail coverage, as it can be a costly surprise at termination.

The employment agreement also must be reviewed to determine the proper method to provide notice of termination (such as first-class mail, overnight courier, or hand delivery). Often, employment agreements will include a clause titled “Notice” that outlines the delivery method for proper notice to the employer.

Step 2: Consider a Termination/Separation Agreement

Entering into a termination agreement (sometimes referred to as a separation agreement) between the departing physician and the employer may address and resolve many of the outstanding issues that are not otherwise addressed in the employment agreement. A termination agreement may avoid unnecessary problems down the road and potentially acrimonious and costly litigation.

The termination agreement can fill in the gaps where the employment agreement is silent (or if an employment agreement does not exist). The key elements of a termination agreement often include:

• The effective date of the separation as well as what exactly is ending (e.g. employment, co-ownership, board membership, medical staff privileges);
• Payment and buyout terms;
• The physician’s removal from any management or administrative position (e.g. member of the governing board);
• Deferred compensation payments or severance pay that may need to be calculated and distributed;
• Employer obligations (if any) to provide the departing physician’s fringe benefits and business expenses, including retirement-plan contributions, health insurance, life insurance, medical dues, etc.; and
• Unused vacation days, bonuses, or expenses due.

If previously addressed in the employment agreement, the parties should reaffirm their respective rights and obligations regarding medical records, confidential information, noncompetition and nonsolicitation provisions. Otherwise, the termination agreement should identify the physician’s competitive and solicitation activities post-termination.

A noncompetition provision should include the geographic territory in which and the time period during which the departing physician cannot compete with the former employer. It is important to remember courts will render these provisions as unenforceable and invalid if improperly drafted or overly broad. It is common to see nondisparagement provisions, whereby each party agrees to refrain from making any negative or false statements regarding the other. Nondisclosure provisions are common as well with regards to what may be disclosed to third parties.

The separation agreement also should address the return of company property, including office key, credit card, computer, cell phone, and beeper. Patient records and charts should be completed and returned to the employer. Often, the departing physician will still be allowed reasonable access to patient records post-termination for certain authorized purposes (e.g. defending disciplinary actions, malpractice claims, and billing/payer claims and audits), usually at the physician’s own expense.

The termination agreement may also outline how patients will be notified about the physician’s departure. If a patient wishes to continue treatment with the departing physician, the former employer must be ready to transition the patient.

A well-written termination agreement will provide for mutual releases. However, there are often exclusions from the mutual releases, such as pre-termination date liabilities; medical malpractice claims resulting from the physician’s misconduct; or taxes, interests, and penalties covering the pre-termination date.

Step 3: Severance Pay

Depending on the circumstances surrounding the termination and employment agreements, a physician may be entitled to severance payments beginning on the date of termination and/or for a period of time post-termination. The departing physician should determine whether severance is appropriate and whether he or she is willing to forego severance payments in exchange for other benefits. Depending on the dollar amount and the physician’s career objectives, it may be worthwhile to sacrifice severance payments for a less onerous noncompete provision, for example.

Step 4: Take the High Road

Because you never know when your paths might cross with former coworkers or employers, it is always sensible to remain discreet and level-headed during this trying period. Although it is natural to discuss an impending move with others, a prudent physician will avoid water-cooler gossip.

In the event conflicts arise, limit the public disclosure of these disputes. Neither side wins the public relations battle, and often, both sides lose. This is a circumstance where experienced legal counsel can be invaluable as you navigate these potentially rocky waters. You would be well served to seek legal advice to discuss your intentions before making an actual move.

As always, remember conversations you have with counsel are typically protected by attorney-client privilege. It is always advisable to secure legal counsel to review the terms of an employment agreement, negotiate a fair termination/separation agreement, and serve as an advocate during this challenging career move.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

Leaving a job is never an easy decision, whether it is made voluntarily or not. A physician terminating a relationship with an employer may face emotionally charged conversations, difficult financial considerations, and long-term legal consequences. As you plan your exit strategy, it is critical for you to be aware of these issues and address them proactively with your employer. This can minimize hard feelings and surprises down the road for you, your former employer, and your colleagues.

In today’s competitive climate, a physician might work for several employers during the length of his or her career. With the tighter financial medical market and pressures from managed care mounting, employers are less likely to tolerate a nonproductive employee. Interoffice or personality conflicts may become intolerable for an unhappy or stressed physician. Physician turnover is a more common occurrence, and if not handled properly, it can be disruptive for all parties involved.

The following steps are meant for physicians contemplating leaving their place of employment or who may be asked to leave in the near future.

Step 1: Consider the Employment Agreement

Ideally, physician-separation matters are addressed preemptively when the physician enters the employer-employee relationship and signs an employment agreement. Thus, before contemplating a move, you should always start by reviewing the terms of your current employment agreement. A well-drafted employment agreement should specify the grounds for termination, both for cause (i.e. a specific set of reasons for immediate termination) and without cause (i.e. either party may terminate voluntarily). The agreement should specify the parties’ rights and obligations following a termination. These rights and obligations likely will vary depending on the basis for termination.

Typically, an employer will provide malpractice insurance for its physicians during the term of employment. However, physicians may be responsible for the cost of “tail coverage” upon the termination of employment. This is designed to protect the departing physician’s professional acts after leaving the employ of an employer with claims-made coverage. Because the coverage can be quite costly, a well-drafted employment agreement often will set forth which party is responsible for the procurement and payment of tail coverage. It is prudent for a departing physician to review the employment agreement to identify who has the affirmative obligation to provide the tail coverage, as it can be a costly surprise at termination.

The employment agreement also must be reviewed to determine the proper method to provide notice of termination (such as first-class mail, overnight courier, or hand delivery). Often, employment agreements will include a clause titled “Notice” that outlines the delivery method for proper notice to the employer.

Step 2: Consider a Termination/Separation Agreement

Entering into a termination agreement (sometimes referred to as a separation agreement) between the departing physician and the employer may address and resolve many of the outstanding issues that are not otherwise addressed in the employment agreement. A termination agreement may avoid unnecessary problems down the road and potentially acrimonious and costly litigation.

The termination agreement can fill in the gaps where the employment agreement is silent (or if an employment agreement does not exist). The key elements of a termination agreement often include:

• The effective date of the separation as well as what exactly is ending (e.g. employment, co-ownership, board membership, medical staff privileges);
• Payment and buyout terms;
• The physician’s removal from any management or administrative position (e.g. member of the governing board);
• Deferred compensation payments or severance pay that may need to be calculated and distributed;
• Employer obligations (if any) to provide the departing physician’s fringe benefits and business expenses, including retirement-plan contributions, health insurance, life insurance, medical dues, etc.; and
• Unused vacation days, bonuses, or expenses due.

If previously addressed in the employment agreement, the parties should reaffirm their respective rights and obligations regarding medical records, confidential information, noncompetition and nonsolicitation provisions. Otherwise, the termination agreement should identify the physician’s competitive and solicitation activities post-termination.

A noncompetition provision should include the geographic territory in which and the time period during which the departing physician cannot compete with the former employer. It is important to remember courts will render these provisions as unenforceable and invalid if improperly drafted or overly broad. It is common to see nondisparagement provisions, whereby each party agrees to refrain from making any negative or false statements regarding the other. Nondisclosure provisions are common as well with regards to what may be disclosed to third parties.

The separation agreement also should address the return of company property, including office key, credit card, computer, cell phone, and beeper. Patient records and charts should be completed and returned to the employer. Often, the departing physician will still be allowed reasonable access to patient records post-termination for certain authorized purposes (e.g. defending disciplinary actions, malpractice claims, and billing/payer claims and audits), usually at the physician’s own expense.

The termination agreement may also outline how patients will be notified about the physician’s departure. If a patient wishes to continue treatment with the departing physician, the former employer must be ready to transition the patient.

A well-written termination agreement will provide for mutual releases. However, there are often exclusions from the mutual releases, such as pre-termination date liabilities; medical malpractice claims resulting from the physician’s misconduct; or taxes, interests, and penalties covering the pre-termination date.

Step 3: Severance Pay

Depending on the circumstances surrounding the termination and employment agreements, a physician may be entitled to severance payments beginning on the date of termination and/or for a period of time post-termination. The departing physician should determine whether severance is appropriate and whether he or she is willing to forego severance payments in exchange for other benefits. Depending on the dollar amount and the physician’s career objectives, it may be worthwhile to sacrifice severance payments for a less onerous noncompete provision, for example.

Step 4: Take the High Road

Because you never know when your paths might cross with former coworkers or employers, it is always sensible to remain discreet and level-headed during this trying period. Although it is natural to discuss an impending move with others, a prudent physician will avoid water-cooler gossip.

In the event conflicts arise, limit the public disclosure of these disputes. Neither side wins the public relations battle, and often, both sides lose. This is a circumstance where experienced legal counsel can be invaluable as you navigate these potentially rocky waters. You would be well served to seek legal advice to discuss your intentions before making an actual move.

As always, remember conversations you have with counsel are typically protected by attorney-client privilege. It is always advisable to secure legal counsel to review the terms of an employment agreement, negotiate a fair termination/separation agreement, and serve as an advocate during this challenging career move.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.