Understanding the Process of Starting a Medical Practice

By: Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.
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For many physicians, the idea of opening a medical practice is very appealing.  You can be your own boss, control your hours and vacation time, make your own decisions regarding patient care, as well as control the business operations of the practice.  However, before a physician goes forward with opening a medical practice, there are numerous complex issues, legal and otherwise, that a physician needs to consider.  This article is intended to help physicians recognize these issues with the goal of making the transition run more smoothly and to limit potential exposure relating to opening a medical practice.

Corporate Formation:

Among the first decisions a physician must make is to determine the type of business entity through which the medical practice will be conducted.  This is a very critical decision that should be made on the advice of competent counsel because the choice of entity has a major impact on several aspects of the medical practice including the physician’s liability exposure, and tax treatment.  In New York State, a physician must conduct his/her practice through professional entity including for instance a professional service corporation (“PC”); a professional limited liability partnership (“LLP”); or a professional limited liability company (“PLLC”)[1].  Once a physician selects the type of entity and name of the entity, the appropriate paperwork must be filed with the New York State Secretary of State and New York State Department of Education in order to begin the corporate formation process.  Once the entity is formed, the entity will have to obtain a tax identification number, hold meetings, and have the appropriate governing agreements drafted (ie an operating agreement/partnership agreement/shareholder agreement).  In the event that a physician decides to “partner” with another physician(s), these agreements will govern the relationship between the physicians.  Furthermore, as per New York State law, it is imperative that these entities keep correct and complete books. As such, physicians must ensure that they hold annual meetings, conduct elections for managers/officers/directors, and review and update any agreements relating to the entity.  Failure to comply with these requirements may result in one of the entity’s creditors being able to “pierce the corporate veil” and therefore collect from the entity’s owners. 

Personnel/Staff:

When starting a medical practice, it is especially important to have trustworthy and reliable staff, including clerical staff (ie billers, receptionists) and professional staff (ie other physicians, physician assistants and nurses).  Prior to hiring these individuals, it is important to check all references and ensure that those individuals are a good fit with the practice as these individuals will have access to the practice’s confidential information and will have direct contact with the patients of the practice.  Employment agreements must also be drafted (or independent contractor agreements if applicable) for these individuals as well.  Furthermore, when hiring staff, physicians need to consider obtaining health insurance, workers compensation insurance, unemployment insurance, disability insurance, and of course malpractice insurance.   In order to further protect the practice, it is recommended that all practices have a comprehensive employee manual in place that clearly articulates expectations, as well as the practice’s policies including consequences for violating these policies.

Practice Location/Equipment and Supplies/Technology:

Identifying your office location is also an important aspect of starting a practice.  Things to consider when looking at office space are as follows: square footage, price per square foot, local referral sources, competition, accessibility, parking, expansion opportunities, and local demographics.  Furthermore, physicians need to consider whether they want to rent the office space or purchase the property.  Either way, the medical practice will have to negotiate a good real estate agreement which protects the practice.

Your practice will also need to obtain equipment and supplies. A physician can often rent large equipment, which may be more practical.  In this case, it’s important to have the equipment lease reviewed in order to ensure that liability is limited.

Technology is another area that is often overlooked although a practice’s IT infrastructure is often vital to the success of a practice.  In addition to the decision of whether or not to invest in an Electronic Medical Records (EMR) System, physicians need to consider having phone lines, computer systems and appropriate computer networks in place.

Insurance Panels:

For many physicians, it is vital to be on insurance panels in order to get referrals from those panels.  In the event that a physician wants to be an in-network provider, he/she needs to determine which health insurance plans to participate with.   The physician then needs to go forward with becoming credentialed with the plans-this is not an overnight process and requires advanced planning.  Once approved, the physician will then need to sign a participation agreement which needs to be reviewed as well.  The physicians will also need to obtain a National Provider Identifier (“NPI”) for the medical practice, as well as for each physician practicing at the practice.

Compliance:

As you are aware, there are many healthcare rules and regulations that a physician is expected to comply with-HIPAA, Stark and Anti-Kickback to name a few.  Due to recent initiatives by Medicare, the Office of Inspector General, Medicaid, the Office of the Medicaid Inspective and Third Party Payors to uncover fraud, waste and abuse in the healthcare system, it is inevitable that almost all physicians will be involved in an audit in the future.   In order to decrease the chance of audit and mitigate and potential audit results, it is advisable that all practices implement a compliance plan.  These compliance plans outline reasonable standards and procedures that your practice should comply with that are in compliance with the myriad of healthcare rules and regulations.  For instance, your practice should have appropriate HIPAA policies in place, as well as other safeguards to ensure against inappropriate relationships and billing practices.  Before implementing a compliance plan, you should consult with legal counsel regarding steps your practice should take to ensure compliance.    

Conclusion:

Staring your own practice can be very exciting; however, it is a big task as there are many issues that need to be taken into account.  To that end, it is in the best interest of the physician to retain a team of professionals specializing in health care – attorneys, accountants, IT professionals, etc. – to assure that the new practice has limited exposure and increased profitability.  Opening a medical practice takes time, and it is advisable for physicians to begin planning in advance.

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@weisszarett.com.

Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC., with experience representing healthcare providers in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling.  Ms. Marder also has experience advising healthcare clients on a wide range of regulatory issues including Stark, the Anti-Kickback Statute, fraud and abuse regulations, HIPAA, reimbursement and licensing matters.


[1] In New York State, physicians are not precluded from practicing as sole proprietors or in a general partnership.  However, these arrangements are not advisable from a liability perspective.

Retrospective Audits: How to Avoid Them

By: Mathew J. Levy, Esq.
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There is perhaps no more frustrating moment in a physicians career than when a health plan or managed care company notifies them that, after the physician has spent countless hours and expended endless efforts to get paid fifty or sixty cents on the dollar, the payor is now suddenly demanding that some exorbitant amount of money be “repaid” to the payor. The basis for such a demand? The payor has reviewed as few as six charts, isolated what it interprets as a pattern of inappropriate billing, takes the amount involved and extrapolates that amount to extend over a randomly selected number of past years. The result? A “discrepancy” of several dollars quickly becomes a demand for several hundred thousand dollars.  While couched as a “retrospective audit” or a “probe review,” many physicians have simply termed it as legalized extortion.

Understanding how these audits come about is a key first step in avoiding their potential wrath.  The triggering event in most cases is a simple computer analysis that identifies those physicians who are billing and/or coding differently than their supposed peers, labels those physicians as “outliers” and refers them for additional scrutiny.  To avoid these initial steps, physicians must first come to realize that just as accountants are needed to manage the complexities of the Tax Code, today’s billing and coding systems dictate the need for specialized assistance.  The traditional model of relying exclusively on staff who bill and/or code in a certain fashion because “we’ve always done it this way” or because “this is how other practices are doing it” is outdated, risky and self-defeating.  Even a simple “snap-shot” review of current billing practices, done on an annual basis by a certified coder, can provide valuable insight into what methods are current areas of scrutiny, what trends are developing with one’s peers and/or what can be done to keep the practice in the mainstream. Advice from any billing resource should be provided verbally (any written reports could be discoverable in any future proceedings) and should be provided directly to the physicians involved.

Physicians must also understand that even the smallest of amounts in dispute can generate extremely large demands for repayment. If a discrepancy is noted by the computer review, that notation triggers “additional scrutiny” of the practice. While neither statistically valid nor based upon a truly random sample, even the smallest of discrepancies provides the reviewer with a simple method to demand exorbitant monies be “repaid” to the payor.   The basic “repayment formula”:

Claimed Overpayment

X

Rate of Code Usage

X

Number of Years Enrolled

DEMAND

Using this formula, even a billing discrepancy of only $2.00 can bring about an enormous demand

Claimed Overpayment – $2.00

X

Rate of Code Usage – eight per day, 40 per week, 2000 per year

X

Number of Years Enrolled – 12

DEMAND – $48,000.00

In consideration of such a potentially draconian impact, the need to secure expert, up to date advice has never been more paramount.  For the very reason physicians rely upon an accountant to understand and keep abreast of the ever changing tax laws, they can no longer expect their staff to hold sufficient expertise to properly conduct their billing and coding. From Medicare’s Fraud and Abuse Bulletins to the never ending stream of Policy and Procedure Manual updates of every health plan and managed care company, the amount of information to be digested is simply overwhelming. To expect general office staff to properly manage that information is both unrealistic and extremely risky. Just as accountants steer taxpayers away from IRS “red-flags” and identify inappropriate deductions, a certified coder focuses on what each payor’s particular demands are and what issues might trigger (and thereby avoid) an audit or targeted review.

Moreover, just as every taxpayer understands the need to obtain (and retain) receipts in order to support their tax deductions, today’s physician must understand the critical need to create (and retain) a medical record which adequately supports their billing claims.  There are ample “short-cuts” to creating a record that will not only withstand audit scrutiny but will also deny payors the ability to reject future, individual claims for payment. From simple pre-printed forms, through digital transcription to an electronic medical record, ample resources exist that can document the level of services rendered, confirm the medical necessity for those services and bar both retrospective repayment demands and prospective denials of payment.

Physicians who are willing to realize that billing and coding in today’s medical practice management environment are so obscenely complex that they require ongoing advice from expert specialists will have taken an enormous first step in avoiding coming under review and the potentially devastating impact of a retrospective audit.

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@weisszarett.com.

Joint Commission MS.01.01.01: A Golden Opportunity for Physicians to ‘Level the Playing Field’ at Intra-Hospital Hearings

By: David A. Zarett
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Reprinted with permission from: Health Law Journal, Fall 2010, Vol. 15, No. 2, published by the New York State Bar Association, One Elk Street, Albany, New York 12207.

Imagine this very realistic, and unfortunate, scenario: A physician client comes into your office one day with a certified mail letter from the only hospital where he has a medical staff appointment, advising that all of his privileges have been “summarily suspended, effective immediately.” The letter continues that this action was taken by the Departmental Director (who happens to be your client’s number one competitor), after he determined that despite a 15 year unblemished professional record, your client has suddenly become an “imminent risk of harm” to patients, having just experienced his first meaningful complication in the operating room.

As the physician’s attorney, you must explain to him that as a result of the action by the hospital—taken before he even knew there was an “investigation” on going in the first place—he is no longer able to admit patients to the hospital, a restriction that could last for months. As this is the only hospital where he has privileges, it will have the effect of practically shutting down his medical practice. Even worse, you’ll explain that: (1) he will likely be reported to the National Practitioner Data Bank, where information about the summary suspension is forever accessible by any hospital, licensing agency, professional board, or health care organization to which he applies in the future;1 (2) he has already been, or will most likely be, reported to the Department of Health’s Office of Professional Medical Conduct (“OPMC”), which will initiate its own investigation, potentially resulting in charges of professional misconduct;2 (3) the summary suspension may eventually have to be disclosed to the New York Physician Profile website, where it will be available to anyone who “Googles” his name;3 (4) the summary suspension could be relied upon by the managed care plans to remove him from their panels; (5) the summary suspension could be used by his malpractice insurance carrier to nonrenew or terminate his liability coverage; and (6) even if he had been smart enough to get privileges at more than one hospital, if both are part of a larger “health system,” his privileges at the other hospital within the same system could be adversely affected as well.

To make matters even worse, you must explain to your physician client that due to the scarlet-letter effect of a “summary suspension”—which is only supposed to be implemented when a physician truly poses a real, tangible and imminent risk of harm to patients—he will most likely not get privileges at a “substitute” hospital at least until the summary suspension is removed or resolved. Finally, you may not be able to immediately run to Court to seek an injunction to challenge the suspension, since in virtually all instances you must first exhaust the “procedural due process rights” set forth in the hospital’s medical staff bylaws and an administrative review process before the New York State Public Health Council—which could take months.4

Rather, your client’s only hope to right this wrong is to go forward with the intra-hospital hearing process to challenge the “summary suspension” internally, and hope to prove that the Departmental Director either jumped the gun based on faulty conclusions; or worse, is acting out another agenda having nothing to do with your client’s skills as a physician. Thus, you and your client sit down and crack open the hospital’s Medical Staff Bylaws to determine his “rights” at the hearing, and the ground rules applicable to this “due process” procedure.5 And this is where you will likely have to explain to your client that the procedure leading up to the imposition of the suspension and the process for challenging it could be characterized as far from fair. For example, you learn that prior to implementing the summary suspension, neither the Departmental Director nor anyone else at the hospital had an obligation to advise the physician of the investigation, get your client’s input on the matter, or have an outside independent expert review of the chart. You may also learn that at the upcoming hearing:

• The physician is presumed guilty, and it is his burden to prove by “clear and convincing” evidence that the action by the hospital was “unreasonable” or “arbitrary and capricious.”

• The physician has no rights to pre-hearing disclosure, so the hospital is not required to provide you with any information in advance, such as the medical records at issue or any exculpatory information that would prove the suspension was not warranted in the first place.

• The physician is not guaranteed an advance preview of any outside expert reports obtained by the hospital, or knowledge of what information was provided to the outside “expert” if one was obtained (oftentimes, relevant information is not received by the hospital’s outside expert, such as office records and diagnostic tests, which would have led to differing conclusions of the care rendered by the target physician).

• To your chagrin, while allowing you to “represent” your client at the hearing, some hospitals limit the lawyer’s role to attending only, but not speaking at the hearing.

So much for “due process,” your client says, as he heads home to share the news with his spouse and loved ones.6

While we are not questioning the legitimate value and importance of meaningful and effective peer review and quality assurance, one wonders why medical staff members throughout the state have allowed such inequities in the process to persist for years when so much is at stake. This problem persists due to a trend for medical staff members to avoid active involvement in their own bylaw process. Fortunately, the Joint Commission has recently implemented new requirements that are effectively requiring all hospitals to revamp their medical staff bylaws to implement a series of changes designed to give more power and control to the medical staff body as a whole. Specifically, in March 2010, the Joint Commission approved a revised “Medical Staff Standard” MS.01.01.01 (formerly MS.1.20), which addresses the organized medical staff’s self-governance and its accountability to the governing body.7 According to the Joint Commission, the new standard “contributes to patient safety and quality of care through the support of a well-functioning, positive relationship between a hospital’s medical staff and governing body.”8 All hospitals and critical access hospitals are expected to be in full compliance by March 31, 2011.9 The revised MS.01.01.01 will require significant changes to most hospitals’ medical staff bylaws, and other similar governance documents, to be made over the next few months.

While a large portion of the Joint Commission’s requirements pertain to the parliamentary aspects of medical staff bylaws, and attempts to re-balance the power sharing between the medical staff rank and file versus the few elected committees thereof (such as “Medical Board” or the “Medical Executive Committee”), the practical result of MS.01.01.01 is that all hospitals, and their lawyers and administrators, are going to be hustling to substantially revise their bylaws and make major revisions to comply with the new Joint Commission standard.

This is therefore a perfect opportunity for members of the medical staff (i.e., your physician clients) to effect more than just the bare minimum changes to comply with MS.01.01.01—but also meaningful changes to the bylaws to enhance the procedural protections to a “target” physician in a peer review hearing. These modifications could include: (i) adding a “presumption of innocence” in favor of the target physician, and requiring the hospital to carry a burden of proof justifying the imposition of its disciplinary action and penalties; (ii) requiring the hospital to make reasonable information available to the target physician in advance so that he can prepare for the hearing (such as being given prior access to the medical records and expert reviews); and (iii) requiring that the hospital produce exculpatory evidence. The modifications could also require that before a physician is summarily suspended, he be given an opportunity to “meaningfully” respond to the charges of misconduct. “Shoot first and ask questions later,” is not a responsible way to manage the professional career of medical staff members.

If the purpose of a hospital’s due process rules is to get to the truth of matter, then a fair hearing process is the only way to achieve such goals if one accepts the basic premise of an adversary system of justice. Indeed, like any system of justice, procedural fairness helps to assure the integrity of the process as a whole. The medical staff bylaw overhaul required by MS.01.01.01 presents a golden opportunity for the physicians of the organized medical staff to propose amendments to the medical staff bylaws to address these inequities. The organized medical staffs of hospitals should take this opportunity to implement changes to the bylaws to protect the rights of all its members so that fair hearings will take place.

Remember, no matter how popular, well-liked, or “in” your physician client may be with the hospital crowd today, the tables can and always do turn. Your client could find himself being the recipient of a “summary suspension” letter, which with the stroke of a pen will adversely affect the rest of his professional career. Now is the opportunity to implement changes to the rules of the road so that a hearing to challenge this potentially catastrophic disciplinary action is done in a fair, even-handed and objective fashion.

Endnotes

1. The National Practitioner Data Bank (“NPDB”) is an electronic repository of all payments made on behalf of physicians in connection with medical liability settlements or judgments, as well as adverse “peer review” actions against medical licenses, clinical privileges, and professional society memberships of physicians and other health care practitioners. The NPDB was established by Congress as part of the Health Care Quality Improvement Act of 1986 (“HCQIA”). 42 U.S.C. §§ 11101, et seq.

2. 10 N.Y.C.R.R. § 405.3(e); N.Y. Pub. Health Law § 230(10)(a).

3. N.Y. Pub. Health Law § 2995-a.

4. Public Health Law § 2801-b(2) sets forth the appropriate procedural framework whereby an aggrieved physician may invoke the jurisdiction of the Public Health Council when the governing body of a hospital terminates or impairs a physician’s privileges “without stating the reasons therefor, or if the reasons stated are unrelated to standards of patient care, patient welfare, the objectives of the institution or the character or competency of the applicant.” Public Health Law § 2801-b[1]. New York courts have repeatedly dismissed actions brought by physicians who sought to have their medical staff privileges restored without first pursuing their administrative remedies before the Public Health Council. Gelbard v. Genesee Hosp., 87 N.Y.2d 691, 664 N.E.2d 1240 (1996).

5. The following is a hypothetical set of procedures and guidelines that we typically see in medical staff bylaws when representing physicians in these types of matters. However, medical staff bylaws do vary from hospital to hospital.

6. The Health Care Quality Improvement Act establishes a minimum threshold for procedural due process for professionals subject to peer review by providing those involved in the peer review process with near complete immunity from claims for monetary damages arising from peer review actions, so long as these standards are met. In order to receive this immunity, only the following four safe harbor provisions set out in 42 U.S.C. § 11112(a) must be met: that the professional review action was taken (1) in a reasonable belief that the actions was in furtherance of a quality health care, (2) after a reasonable effort to obtain the facts of the matter, (3) after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are fair to the physician under the circumstances, and (4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort to obtain facts and after meeting the requirements of paragraph (3).

7. Approved: Revision to Medical Staff Standard MS.01.01.01, 30(4) Perspectives, The Offi cial Newsletter of the Joint Commission 1 (April 2010), at 1.

8. Revisions to Hospital Medical Staff Standard S.01.01.01 (formerly MS.1.20) (presentation slides), The Joint Commission, available at http://www.jointcommission.org/NR/rdonlyres/81A0E2F3- CA04-4DC6-905B 64449A76339B/0/MS010101FINAL40810.pdf (last visited September 27, 2010).

9. Approved: Revision to Medical Staff Standard MS.01.01.01, 30(4) Perspectives, The Offi cial Newsletter of the Joint Commission 1 (April 2010), at 1.

Understanding the Negotiation of Managed Health Care Contracts

By: Mathew J. Levy, Esq.
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To the dismay of the majority of physicians today, both the practice of medicine and the  “Business” of medicine have become so intertwined that it has become impossible to differentiate the two.  Unfortunately, those physicians who either choose to resist this trend, or worse, ignore it altogether, all too often find themselves mired in unfavorable contractual relationships which, in turn can lead to lower revenue to the practice.  While physicians understandably wish to focus on the treatment of their patients, it is now essential that they understand the importance of properly handling the business of medicine as well.

One such aspect of the business of medicine that physicians often ignore is the negotiation of managed health care contracts.  Unfortunately, most physicians do not know that these contracts are negotiable.  Accordingly, these physicians enter into such agreements without even reading its terms and, satisfied with just the mere prospect of treating the respective health plan’s insured’s, store the agreement away never to be seen or found again.  The provisions of a managed health care contract are just as important as the respective insurance carrier’s fee schedule, and again, are negotiable.  The purpose of this article is to quickly highlight a few concepts to consider in negotiating a managed health care contract.

Indemnification or “Hold Harmless” Provision

When a health plan offers a contract to a physician, its terms will be unfairly and predictably favorable to the carrier.  One such example of a “one-sided” term is the indemnification or “hold harmless” provision of the contract.  An indemnification provision essentially protects one party to a contract from any liability arising from the actions or omissions of the other party to the contract in performing its obligations therein.  Often, a proposed contract will provide this protection only for the health plan.  Therefore, it is important that the indemnification provision be modified so as to provide mutual protection against the respective liabilities arising out of actions or omissions of both parties – essentially forcing both parties to handle their own liabilities.

Termination Without Cause

As in any agreement that a physician may enter into, it is essential that there exist an “exit strategy” whereby the contract can be terminated for any reason.  As the contract will likely contain terms that may change according to factors outside the physicians’ control, it is necessary that the physician be able to terminate the contract if those changes cause its terms to become onerous or result in the practice losing money.  This is of particular importance if the health plan, pursuant to the provisions of the contract, chooses to reduce the amount of reimbursement for a particular service under its fee schedule.  Thus, if this reduction in fee reimbursement causes the contractual relationship to become untenable, it is essential for the physician to have the ability to terminate it.

Evergreen Provision

Similarly, it is important for the physician to be able to re-negotiate the terms of a contract over time, while at the same ensuring it remains in effect without interruption.  This can be established by insisting that an “evergreen provision” be added to the contract.  An evergreen provision provides that the contract (and its present terms) will automatically renew at a set time interval – usually every year.  While this provides the physician with the peace of mind that the contractual relationship will carry on without interruption, it also provides a mechanism whereby the physician can force re-negotiation of certain provisions of the contract in anticipation of the renewal.  This ability to re-negotiate is essential as it allows the physician to avoid “being stuck” with unfavorable terms for an untenable period of time.

Claims-Based Provisions

At the heart of a managed health care contract are the provisions setting forth the obligations of both parties when it comes to the actual submission of claims and the subsequent payment thereof.  It is in the best interests of the physician that the contract provide for both a clear and efficient methodology for the submission of claims and the prompt payment of those claims by the health plan.  Therefore, it is essential that the physician take great care to review these “claims-based” provisions to ensure the cost-effectiveness of the contract to the practice.  To that end, the physician is encouraged to pay particular attention to the following:

  • the amount of days a physician has to submit a claim after performing a particular service;
  • the documentation a physician must submit with a claim;
  • the amount of days a health plan has to remit payment upon receipt of a claim;
  • the amount of interest, if any, the health plan will pay if remittance of payments are late; and
  • the amount of time the health plan has to institute overpayment procedures.

Conclusion

Even in this brief discussion, it should be apparent to the physician that, when it comes to the business of medicine, complacency will only serve to the detriment of the practice.  In entering into agreements with managed health care plans, physicians are well-advised to carefully review its terms and provisions, negotiate with the health plan.

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-926-3320 or email: mlevy@weisszarett.com.

New York State Physician Profile: A Practitioner’s Guide

By David A. Zarett, Esq.

After some highly publicized cases involving “bad outcomes” by physicians with prior disciplinary histories which were otherwise unknown to the public, in particular the Lisa Smart matter of 1997, the New York State Legislature passed and Governor George Pataki signed into law, the New York Patient Health Information and Quality Improvement Act of 2000 (the “Act”), creating what we now know as the New York State Physician Profile (“the Profile”).1

The Act can be found at New York Public Health Law § 2995 et seq. (“the Profile Statute”) and its regulations can be found at Title 10 N.Y.C.R.R. 1000 et seq. (hereinafter, the “Profile Regula-tions”). In general the Profile is a publically available online database which contains a wealth of information about every physician licensed in New York State, including background on a physician’s medical education and training, board certification, medical staff privileging, and legal actions taken against the physician such as medical malpractice awards or settlements.2 In February 2002, some two years after the Act was signed, the Profile went live.3 The stated purpose of the Profile is to provide patients with information about health care providers and thereby improve the quality of health care in New York State.4

Data Collected-Initial

Data and Updating Requirements The data collected in the Profile spans from “required data,” such as education and board certification, to “optional data” such as publications and a statement by the physician. Significantly, New York Public Health Law § 2995-a (7) states that a physician who provides materially inaccurate information to the Profile is guilty of professional misconduct. One explanation for this particular provision is that the information maintained by the Profile is based on the information reported by the physicians in their initial profile submission upon licensure (10 N.Y.C.R.R. 1000.4) and pursuant to the physician’s self-updating requirements (10 N.Y.C.R.R. 1000.5).

Physicians can update their Profile information by contacting the Profile customer service center and obtaining a Physician Survey Form. The Physician Survey Form is a ten-page form which lists all the information a physician will find in their Profile and allows for modifications which are then submitted to the Profile for updating.7 There is also an online updating option which requires that the physician obtain a username and password from New York State.8

How is the Profile Utilized?

The Profile is utilized by patients, insurance payors, hospitals and physician rating/review websites (such as healthygrades.com and vitals.com), amongst others. The Profile has vastly increased the amount of data available to the public regarding physicians licensed in the State of New York. While many utilize the Profile, the information on the Profile is primarily based on self-reported data.9 Failure of physicians to timely self-report to the Profile has an obvious negative effect on the ability of patients to make informed decisions regarding their choice in practitioner and puts into question the accuracy of the information presented by physician ratings websites. It also puts physicians at risk for not following the Profile updating requirements. Attorneys representing physicians would be wise to remind their physician clients to confirm the accuracy of their profiles and to timely update their profiles. But that is easier said than done due to the lack of regulatory guidance about Profile updating.

Practical Guidance

There is confusion about what information needs to be updated to the Profile and when such updating responsibilities are triggered. One such area of confusion which we have encountered in our practice relates to New York Public Health Law § 2995-a(1)(d), the reporting of hospital privileges restrictions. Any restriction or loss of a physician’s hospital privileges constitutes non-optional information which requires updating to the Profile within 30 days.10 Recognizing physicians’ due process rights to challenge a disciplinary action taken against their privileges by a hospital, New York Public Health Law § 2995-a(1)(d) states that a physician must submit to the Profile “a statement of any loss or involuntary restriction of hospital privileges or a failure to renew professional privileges at hospitals within the last ten years, for reasons related to the quality of patient care delivered or to be delivered by the physician where procedural due process has been afforded, exhausted, or waived, or the resignation from or removal of medical staff membership or restriction of privileges at a hospital taken in lieu of a pending disciplinary case related to the quality of patient care delivered or to be delivered by the physician …” (emphasis).

In our practice we have faced this issue when representing physicians who have their hospital privileges summarily suspended, sought appeal of the suspension via the hospital due process hearing rights, and were successful in reversing the suspension through the intra-hospital hearing process. Upon review of the Profile Statute and Regulations, along with consultation with representatives at the Profile, we advised our clients that an update was not necessary even though they had been suspended from clinical practice at their respective hospitals for an extended period of time during the pendency of the internal due process hearing process. From a tactical standpoint, the ability to delay the updating or potentially avoid the updating of a hospital privileging adverse action can be very beneficial when representing a physician who is facing such a predicament. As a result of the paucity of regulatory guidance on the specifics of Profile updating in nuanced situations such as these, we have found it necessary to request two opinions from the Profile to determine whether a physician-client’s Profile updating obligations had been triggered. Requesting an opinion from the Profile on reporting obligations for your physician clients is a worthwhile avenue for attorneys to evaluate a physician’s updating obligations especially when an update would have the potential to damage a practitioner’s reputation. We have also found it helpful at times to call the Profile and speak to one of their knowledgeable staff members on specific client related issues.

Finally, on multiple occasions we have assisted physicians who received notice from the Profile of a posting of a malpractice award, with an appeal pursuant to 10 N.Y.C.R.R. 1000.3, requesting reversal of the decision to publish the award.11 This written appeals process permits the physician to submit factual clinical information to the Department of Health, which reviews the submission under the standard of whether the settlement/award is “relevant to patient decisionmaking.”12 In our practice, we represented a physician who had a substantial money damages verdict against him. Though it was his first settlement/award the Profile sought to post the award pursuant to 10 N.Y.C.R.R. 1000.3(b)(2)(i) as the plaintiff had suffered a permanent injury. We successfully appealed the decision to post the award to the Profile. While the jury found our client liable, the Profile (through the panel set up to review Profile appeals pursuant to 10 N.Y.C.R.R. 1000.3(b)(2)(ii)(a)) agreed that, “…despite the awarding of payment to a complaining party, appropriate provision of patient care was provided.”13 It is important to note the 30-day time limit by which the appeal must be submitted is based on the date of the Profile notice, not the date of receipt of the notice.14

Conclusion

If you are an attorney who represents physicians it is important for you to consider Profile related issues when representing your client in a wide array of matters. From the benign situation of a physician resigning privileges at one hospital in order to take a new position at another institution, to the more serious and career-threatening situation of a physician facing criminal charges, each may trigger a Profile update obligation. For those attorneys who represent physicians before the Office of Professional Medical Conduct (“OPMC”), one of the first things mentioned at the physician’s Interview by the OPMC investigator is the physician’s need to update their Profile. Ideally as a result of your counsel, your client will be able to inform OPMC that they are in full compliance with their Profile updating obligations. Furthermore, as explained, it is also critical that the physician’s Profile information be accurate as misleading information to the Profile constitutes professional misconduct.15 A relatively simple way to verify your client’s accurate reporting to the Profile is to assist them with the completion of their Physician Survey Form. Finally, if your client is faced with the obligation to update a negative change to their Profile (such as a criminal conviction) you may want to consider submitting an optional statement in which the physician can explain the conviction and potentially limit the reputational damage that can understandably result from such an update.

David A. Zarett, Esq. and Joshua A. Boxer, Esq., Weiss & Zarett, P.C. New Hyde Park, New York, representing physicians in “Profile” issues and related proceedings.

1. See Buettner and Sherman, New York Daily News, March 8, 2000, “Fight For Law To Open Malpractice Records.”

2. See Public Health Law § 2995-a, which lists the information collected by the New York State Physician Profile.

3. The New York State Profile is located at www.nydoctorprofile.com.

4. New York Public Health Law § 2995(1).

5. The non-optional information that a physician must update to the Profile within thirty days of any such change includes education and certification, board certification, teaching appointments, hospital privileges, participation in state or federal health insurance programs, translation services offered at their office, malpractice award payments, license actions, hospital privileging limitations, and criminal convictions. The optional information that a physician must update within 365-days of any such change includes practice office location, publications, professional community service activities, health plan contracts or other affiliations, and the physician concise statement which is an optional statement a physician can include on their Profile.

6. New York Public Health Law § 2995-a (4).

7. The Profile Customer Service Center can be reached at (888) 338-6999.

8. To obtain e-access for Profile updating online contact the New York State Health Provider Network at (866) 529-1890 to apply for an HPN account.

9. Physicians are required to report malpractice judgments and/or settlements pursuant to 10 NYCRR 1000.3, and those judgments or settlements are also separately reported by professional liability carriers pursuant to N.Y. Ins. Law § 315.

10. N.Y.C.R.R. 1000.5(a).

11. A physician is able to appeal a malpractice settlement/award posting to the Profile if they have two or fewer awards/settlements within the most recent 10 years. 10 N.Y.C.R.R. 1000.3(b)(1).

12. 10 N.Y.C.R.R. 1000.3(b)(2)(ii)(a).

13. 10 N.Y.C.R.R. 1000.3(b)(2)(ii)(a).

14. 10 N.Y.C.R.R. 1000.3(b)(2)(ii)(b).

15. See New York Public Health Law § 2995-a (7).