Hospital Credentialing in the 21st Century:

1

• Hospital Credentialing in the 21st Century
• New Risks and New Rewards
• Presented by
• Michael D. Neubert and
• Gregory J. Pepe
• Neubert, Pepe Monteith, P.C.

2

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

3

• Historical Perspective
• Traditional credentialing and re-credentialing
  process
• credentialing has been the core of the quality
  process for hospitals for decades
• focus on physicians competency and professional
  behavior
• ? However the process and criteria was often ill
  defined and
• investigations superficial and affected by
  personal
• relationships and medical politics
• the most dramatic change in the concept of
  credentialing is the idea that privileges are
  temporal

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• before the 1990s, if the privileges were
  initially granted they were renewed almost
  automatically leading to a sense of entitlement
  among physicians on staff at hospitals
• today privileges are loaned to the applicant
  for a period of time
• ? Article 2.A.3. No Entitlement to Appointment
  Norwalk Hospital Credentialing Policy
• Important that this policy be strictly followed
• historically, the risks of deficient
  credentialing and re-credentialing process were
  not significant as they are today
• ? the trend, however, has been one increasing
  legal risks since 1965
• ? now more than ever, poor credentialing
  practices equate to poor business practice as
  well

5

• Evolution of the theory of Corporate Negligence
• Credentialing Practices have carried significant
  civil exposure from private litigants since the
  1960s
• Patients who allege that credentialing system
  failed to protect them from a bad physician
• ? Darling v. Charleston Community Memorial
  Hospital
• ? Johnson V. Miseriocordia Community Hospital

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

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• Johnson v. Miseriocordia Community Hospital
• In 1980 the Supreme Court of Wisconsin held that
  the failure of a hospital to investigate a
  surgeons qualifications for the privileges
  requested gives rise to a foreseeable risk of
  unreasonable harm and therefore, the hospital has
  a duty to exercise due care in selection of its
  medical staff
• ? surgeon unsuccessfully attempted to remove a
  pin fragment from Johnsons right hip damaging
  patients common femoral nerve and artery
  resulting in a permanent paralytic condition of
  his right thigh muscles
• ? Hospital admitted to failing to contact any of
  the surgeons references or check alleged
  credentials
• ? Hospital records were devoid of any
  information concerning the procedure used to
  approve surgeons appointment

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• ? The court stated that the Hospital was
  required to solicit information from
  applicants peers, including those not
  referenced in his application, who are
  knowledgeable about his education, training,
  experience, health, competence, and ethical
  character.
• ? In addition, the hospital will be charged with
  gaining and evaluating the knowledge that would
  have been acquired had it exercised ordinary
  care in investigating its medical staff
  applicants and its failure to do is negligence

9

• Physicians who believe they were victimized by a
  credentialing system driven by anti-competitive
  agenda
• ? Polmer v. Presbyterian Hospital of Dallas
• 366 million jury verdict in favor of a
  cardiologist and against a Hospital Chair of
  Internal Medicine, Chief of Cardiology and
  Director of Cath Lab who summarily suspended his
  privileges to perform certain cardiac procedures
  for six months
• Expanded exposure under the Doctrine of Apparent
  Agency or Ostensible Agency
• ? Kafri V. Greenwich Hospital (2000)

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• Kafri V. Greenwich Hospital (U.S. District Court
  for CT)
• Judge Nevas denied Greenwich Hospitals Motion
  for Summary Judgment who had been sued for the
  alleged negligence of Greenwich Radiology, an
  independent contractor, on the theory of apparent
  agency. Judge Nevas stated
• the Court finds several reasons for applying
  the doctrine of apparent agency to a hospital.
  No reasonable patient in the position of the
  plaintiff would assume anything else but that the
  medical staff physicians were employees of the
  hospital. Indeed, a patient has the right to
  rely on the reputation of the hospital when she
  agrees to have a medical procedure performed at
  the hospital. As such, it is reasonable for the
  public to assume that a hospital to which it
  goes for treatment exercises medical supervision
  over, and is responsible for the negligence of,
  medical personnel providing services whether
  they are independent contractors or not.

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

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• New Risks facing Hospitals (i.e. the stick)
• Hospitals and medical staff physicians are at
  risk for acts and omissions of individual
  physicians in areas other than clinical
  competency and professional behavior
• ? all indications point to an unyielding
  continuation of this trend
• Physicians acts and/or omissions have exposed
  hospitals to legal claims of breach of fiduciary
  duty, fraud, deceit, corporate negligence,
  anti-trust and False Claims Act violations

13

• Legal and Regulatory Backdrop
• Past five years intense and growing focus on
  issues of patient safety and quality in health
  care industry
• Both state and federal regulators are
  scrutinizing as never before the effectiveness of
  the systems the hospitals have put in place to
  protect and promote patient safety i.e.
  credentialing and peer review.
• ? OIGs Supplemental Compliance Program
  Guidance for Hospitals (January , 2005)
• Hospitals must also take an active part in
  monitoring the quality of medical services
  provided by appropriately overseeing the
  credentialing and peer review of their medical
  staffs

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• High profile criminal and civil cases brought by
  DOJ against Hospitals based allegations of
  negligent or reckless credentialing process
• ? Redding Medical Center, Tenet Health Care
  Corp.
• 350 million settlement arising out of
  negligent credentialing of its Chief of
  Cardiology and Chair of Cardiovascular Surgery
  relative to their alleged performance of
  unnecessary cardiac procedures

15

• False Claims Act U.S. v. Tremoglie
• ? In 1997, a Pennsylvania HMO, Keystone Health
  Plan East, learned that an individual named
  David Tremoglie fraudulently presented himself
  has a psychiatrist and was employed by a
  behavioral health organization to treat Keystone
  patients. The Government took the position that
  all claims for reimbursement based on Tremoglies
  work violated the False Claims Act.
• Wire Fraud U.S. v. United Memorial Hospital
• ? In 2003, United Memorial Hospital signed a
  federal guilty plea agreement in which it
  admitted to fraud in connection with the alleged
  over utilization of pain management surgical
  procedures, one of which resulted in the death of
  a patient. The Hospital also admitted to
  inadequate credentialing of the chair of
  Anesthesia and agreed to pay 750,000.

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• The Solution
• General Considerations
• Credentialing is a truly peer based process
• Individuals being considered for privileges must
  be reviewed with the information and detail
  necessary to answer the core question. Will
  this individual deliver high quality care to the
  first and every subsequent patient?
• No longer acceptable to use the question Can we
  prove the individual is awful enough to not
  approve or re-approve privileges? Instead
  organizations should be answering the question
  Do we have sufficient information to prove that
  the individual continues to be as good as we
  require?

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• Privileges that were once deemed lifetime
  entitlements are not granted as true privileges.
  Candidates must continuously prove themselves to
  be worthy of trust
• Credentialing combines a thorough initial
  evaluation of an individuals qualifications and
  an ongoing monitoring process
• Core components of competency are judgment,
  technical performance and outcome
• ? Article 5.B incorporates these components as
  factors in the procedure for reappointment
• ? Judgment refers to the decisions made during
  the course of care
• selecting the right clinical protocol
• the correct medication
• appropriate tests
• requesting necessary consultations

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• ? Technical Performance focuses on execution of
  
• professional skills used
• surgical technique
• history and physical exam
• interpretation of laboratory values
• adequacy of communications with other
  professionals
• ? Outcomes have always been the publics
  ultimate measure
• of professional success
• The operation was a success but the patient
  died sums up the ultimate negative outcome
• in addition to case specific outcomes, outcomes
  now include cost of case, customer satisfaction
  and the time it takes to achieve improvement

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

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• Core Credentialing
• Over the past 3 decades privileging concepts have
  progressed along a continuum from detailing each
  privilege offered in a laundry list to granting
  a large block of ill-defined privileges based on
  specialty training
• Presently these concepts have been effectively
  combined through the concept of core privileges.
• Concept of core privileges is meant to simplify
  the privileging decisions by taking into account
  the competence acquired throughout a full
  residency training program and demonstrated by
  board certification
• ? Candidates can be granted all privileges for
  which their education and training qualifies
  them without needing special consideration
• ? Core competency can only be assumed for
  individuals who completed training after the
  privileges were accepted as mainstream medicine

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• ? Others, even if board certified, should be
  asked to provide specific evidence of
  competency
• Problems with Core Privileging
• ? Over time training programs delete specific
  skills and training. (Example Before 1990
  all pathologists received training to perform
  bone marrow aspirations. After 1995 this was
  dropped as a core element of training.)

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• ? Use of Board Certification as a basis for
  core privileging (Example Board Certified
  gynecologist being granted privileges to
  perform hysterectomies without further
  documentation. However, a pelvic exenteration
  may still require documentation of specific
  training since it is complex in nature and
  infrequent, even in residency program.)
• the fact that Board Certification may be a basis
  for granting privileges in certain basic , common
  procedures does mean that a physician is
  competent to perform more complex and less common
  procedures

23

• When using core privileging do not overlook the
  need to completely evaluate the candidate.
• ? Completion of a residency and passing a test
  may not fully assure competent performance.
• ? JCAHO requires that when the Medical Staff
  uses a system involving classification or
  categorization of privileges, the scope of
  each level of privileges must be well defined
  and the standards to be met by the applicant
  stated clearly for each category (MS.5.15.4)
• ? It is important that the principals of core
  credentialing be consistent between practice
  areas

24

• Data Collection and Integration
• Privileging must be based on accurate information
• Information must be verified
• ? When possible it is best to use original
  sources (e.g. schools, training programs,
  licensing authorities)
• Most commonly used objective date sources
• ? National Practitioner Data Bank (NPDB)
• ? AMA physicians profile registry
• ? Federated Board of State Medical Examiners

25

• It is in the hospitals best interest to have an
  extremely detailed application.
• ? should include meaningful questions which seek
  complete details of significant issues
• ? undesirable candidates may actually choose not
  to complete the application
• Norwalk Hospitals Credentialing Policy states
  that an application shall be complete when all
  questions on the application have been answered
  and all supporting documentation have been
  supplied and all information verified
• ? Good Policy and should be adhered to
• ? Forced decisions without full information
  are better answered with a decision of No

26

• Many healthcare organizations prefer to avoid an
  initial conflict and having to face a lawsuit
• ? better to have to defend a lawsuit centering
  on your decision to not grant privileges than
  to be a party to a law suit by an injured
  patient claiming negligent credentialing

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• The present Credentials Policy at Norwalk
  Hospital
• JCAHO Compliant
• ? Not a guarantee that credentialing will not
  become a problem unless strictly followed
• Possible amendment to Economic Credentialing
  Requirement
• ? Citizenship Criteria seeks to select
  physicians who are willing to center their
  practices in the community and deny privileges
  to physicians who are seeking staff privileges
  for purpose of obtaining potential referrals
• ? Conflicts Criteria Hospital policies which
  prohibit conflicts of interest support
  government programs to stop fraud and abuse.
  Indeed, many conflict policies may be viewed as
  extensions of ethics in Patient Referral Act
  (STARK) to the private payor setting. OIG
  published the following in the Comments of a
  Solicitation regarding the practice of economic
  credentialing

28

• Increasingly, Physicians invest in and own
  entities, such as ambulatory surgical centers,
  cardiac catheterization labs, and specialty
  hospitals, that compete with hospital services.
  These physicians may be in a position to steer
  profitable business or patients to their own
  competing businesses through their control of
  referrals. A credentialing policy that
  categorically refuses privileges to physicians
  with significant conflicts of interest would not
  appear to implicate that anti-kickback statute in
  most situations.
• Moreover, the only issues which seem to concern
  the OIG were (1) policies that allow the hospital
  to have discretion as to when to apply the
  policy, and (2) situations where the hospital
  commands that the physician refer a specific
  number of patients to the facility.

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• Need for strict adherence to Credentials Policy
• Commitment from Board, Senior Management and
  Medical Staff leaders
• ? At many hospitals the VP of Medical Affairs
  who is employed by the hospital takes
  responsibility for enforcement of the
  credentialing policy
• Credential Committee an important tool in the
  process
• ? It is important that the Credentialing
  Committee is an active empowered committee, they
  are the first line of defense in this process
• Importance of Documentation.

30

• Re-credentialing Process
• Need to avoid rubber stamping reappointment
  applications
• ? Article 5.B Factors For Evaluations (Norwalk
  Credentials Policy)
• current clinical competence, judgment and
  technical skill in the treatment of patients
• current ability to safely and competently
  exercise the clinical privileges requested and
  perform the responsibilities of staff
  appointment
• capacity to satisfactorily treat patients as
  indicated by the results of the Hospitals
  performance improvement and professional and peer
  review activities and
• information on any lawsuits initiated since last
  appointment which shall be made available to the
  Credentials Committee by the relevant department
  chair.
• Honest objective assessments by Department
  Chairman and Credentials Committee

31

• Clinical Privileges for New Procedures under
  Credentialing Policy - Article 4.A.2
• Importance of communicating to medical staff the
  rules for obtaining clinical privileges for New
  Procedures and the need to follow them.
• Need for strict enforcement of these rules and
  documentation of the process
• Support for this process from the Board,
  Administration and Medical Staff Officers

32

• Medical Staff Issues for 2005 and Beyond
• Confidentiality HIPAA
• Is the Medical Staff a covered entity within
  the meaning of HIPAA?
• If yes, are appropriate measures in place to
  comply with HIPAA such as BAAs, procedures and
  policies re Phl, etc?
• If no, does it never-the-less make sense to
  behave as if the answer is yes
• Appoint a designated privacy official for the
  Medical Staff

33

• Conflicts of Interest
• New payment models from managed care entities are
  seeking to impose so-called best practices
  standards for disease management protocols on
  hospitals through the contracting process.
• ? Are appropriate coordination measures in
  place to assure that MCO best practice mandates
  are not in conflict with Medical Staff best
  practice assumptions?
• An effective working relationship between
  hospital contracting personnel and the Medical
  Staff is strongly suggested.

34

• Corporate Compliance
• All compliance measures to be initiated at the
  hospital must permeate to the Medical Staff
  level. Most important among the current
  compliance issues are the following
• ? Personal Conflicts of interest
• ? Review of all Contracts with Medical Staff
  Physicians who refer patients to the hospital
  (Stark II and Anti-Kickback)

35

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

36

• Pay-For-Performance (P4P) Initiatives
• With two of Connecticuts largest MCOs (Anthem
  and Aetna) launching P4P programs which pay
  higher reimbursements for demonstrable programs
  of clinical quality initiatives and physician
  interdependence, the Medical Staff should
  investigate the role it can play, together with
  the hospital, in the development of such clinical
  programs.
• Medicare has started implementing P4P payments to
  physicians involved in Physician Group Practice
  (PGP) Demonstration projects around the
  country. Physicians at Middlesex Hospital are
  involved in the PGP program which seeks to
  identity quality measures in Diabetes, Congestive
  Heart Failure, Coronary Artery Disease and
  Preventive Care.

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