Fellow Ais 4 Laws Regs & Ethics (Revised)

Laws and Regulations

Susan Greenwood-Clark, RN, MBA, FACHE

This section will focus on your knowledge of the:

Effects of government policy on healthcare operations

Opportunities for and restrictions on lobbying activities and other contact with government officials

Implementation of laws pertaining to healthcare

Legal responsibilities and liabilities of organizations and professionals

Identification of restraint-of-trade situations

Identification of healthcare-related fraud and abuse

“ Law is a system of principles and rules devised by organized society for the purpose of controlling human conduct.”

Southwick, A.F. The Law of Hospital and Health Care Administration (2 nd ed). 1988 page 3.

Types of Law

Constitutional

Statutory

Judicial

Administrative

Know the trends and pitfalls in legal fields:

Criminal law

Contracts

Antitrust

Negligence

Fraud & abase

Taxation

Administrative Law

Law of Corporations

Environmental regulation

others

Contract Law

Private agreements give rise to certain duties that are enforceable in a public forum (court system)

All physician-patient and institution-patient relationships are founded in contract – the patient requests treatment and the provider agrees to provide it in return for payment

This establishes certain legally enforceable duties and expectations

Contract Law

Contractual aspects exist in relationships between a healthcare organization and

Physicians

Nurses

Other employees

Suppliers

Payors

Government

others

Corporation Law

Because a corporation has a charter from the state, it receives certain benefits:

Perpetual existence

Legal personality

“ corporate veil” that shields the individual who created it and those who operate it

Corporate charters also create legal obligations

Government licensure

Regulation

Oversight merely to virtue of its corporate status

Criminal Law

Prosecution and conviction for:

Assault

False imprisonment

Violation of civil rights

Defamation (libel and slander)

Environmental pollution

murder

Negligence/Tort Law

Violation of some proven “standard of care” or failure to exercise due care under the circumstances.

Alleged medical malpractice

Healthcare organizations were once protected by the doctrine of “charitable immunity”, this is no longer the case

Negligence – failure to:

Determine the qualification of a physician prior to granting or renewing staff privileges

Failure to monitor the qualifications of nurses or healthcare workers

Failure to maintain and implement adequate institutional policies

Failure to follow the organization’s own bylaws

Failure to maintain adequate facilities and equipment

Failure to comply with “anti-dumping” laws regarding emergency room patients

Supervise the performance of contractors (including hired physicians)

Maintain appropriate peer review and quality assurance functions

Prevent the unauthorized disclosure of information from patient records

Protect patients from healthcare workers who carry communicable or infectious diseases

Protect the identities of AIDS or substance abuse patients

Follow standard orders and protocols

Inform the patient or family when injuries result from known deviations from the standard of care

Counsel persons regarding known or knowable genetic conditions that would affect their children

Fraud and Abuse

False claims

“ Kickbacks” for referrals or Medicare patients

Physician self-referrals

Hugh potential for penalties – fines and expulsion from the Medicare program

Antitrust Laws

Physicians and healthcare organizations were once exempted from antitrust statutes because of their “learned profession” status

However we are now subject to antitrust laws of both federal and state governments.

Mergers

Consolidations

Acquisitions

Reduction of services

Joint Ventures

Antitrust Laws

The incentives of antitrust laws (to preserve and promote competition) seem counter to the policy imperatives of healthcare reform (efficiency, lower cost, reduction of duplication of services).

Antitrust Laws

Litigation is brought by:

U.S. Department of Justice

Federal Trade Commission

State antitrust agency

Antitrust action:

Can take years to litigate

Cost millions of dollars to defend

Can cost millions or more in damages and penalties

Tax Laws

Tax-exempt organizations must comply with tax laws’ limitations and requirements regarding:

Lobbying activities

Political campaigning

Community benefits

Charitable purposes

Private inurement

Unrelated business income

Other Legal Obligations

Admission and discharge procedures

“ Hill-Burton Act”

EMTALA – Emergency Medical Treatment and Active Labor Act

Involuntary Commitment of Mentally Ill persons

Informed Consent

Know the circumstances when consent can be refused

Procedures needed to secure and document informed consent

Legal aspects of medical records

Forms and consents

Standards for retention/disposal

Rights of ownership and control

Use as evidence in litigation

Informed Consent

Know the legal principles affecting consent for treatment of:

incompetent adults

Young minor children

Mature minors

Pregnant minors

Seriously ill newborns whose parents refuse to consent to care

Informed Consent

Know the legal principles affecting consent for:

Abortion

Sterilization

Euthanasia

Genetic therapies

Other procedures having religious or ethical overtones

Potential liability for “wrongful life” or “wrongful birth”

Need more in-depth resources?

Southwick, A.F. The Law of Hospital and Health Care Administration (2 nd ed). Health Administration Press. 1988.

J. Stuart Showalter, J.D. Southwick’s The Law of Healthcare Administration, 3 rd ed .

Dean M. Harris, J.D., Contemporary Issues in Healthcare Law and Ethics, 2 nd ed.

Scott C. Withrow, J.D., Managing Healthcare Compliance

Ready for some test questions?

With respect to the processes by which healthcare organizations maintain the confidentiality, security, and integrity of the medical record, all of the following statements are true except :

The original medical record of a patient being transferred from one healthcare organization to another may accompany the patient to the new organization

Healthcare organizations must have a mechanism to preserve the confidentiality of data/information identified as sensitive.

The organization must have a mechanism to safeguard records against loss, destruction, tampering, and unauthorized access or use

Written policies must require that medical records may be removed from the organization’s jurisdiction only in accordance with a court order, subpoena, or statute

Laws and Regulations Test Questions

Correct answer is 1

Ownership of medical records rests with the hospital or with the physician who keeps records of private patients. The owner of the record thus has the right of physical possession and control.

Source: JCAHO, Comprehensive Accreditation Manual for Hospitals, p. IM-10 and IM-11, Standard IM.2. – IM.2.3

All of the following are commonly recognized to be a right of each patient except the right to:

Receive considerate and respectful care

Access protective services

Communicate with a caregiver in the language of the patient's choosing

Be informed about and participate in decisions regarding their care

Correct answer is 3

When a patient and caregiver enter into a contractual relationship, the caregiver has agreed to diagnose and treat the patient in accordance with the standards of acceptable medical practice. Acceptable care can be given even if the caregiver cannot communicate in the language of the patient's choosing.

Source: JCAHO. Comprehensive Accreditation Manual for Hospitals, pp. RI-6-17, Standards RI.1. – RI.4.3.

All of the following statements about documentation in the medical record are true except:

Verbal orders must be authorized by the practitioner within a time frame to be defined by the medical staff

Verbal orders can only be accepted by registered nurses

Authentication may be made by actual written signatures, initials, rubber stamp signatures, or computer “signatures”

That entries must be authenticated by the actual author only.

Correct answer is 2

Verbal orders must be dated and identify the names of the individuals who gave them and received them. Individuals who receive verbal orders are qualified to do so and are authorized by the medical staff to do so as identified by title or category of personnel. When required by state or federal law and regulation, verbal orders are authenticated by the author within a specified time frame.

Source: JCAHO. Pp IM-25 – 26, Standards IM.7.7 and IM.7.8.

A non-legitimate reasons to release information from a patient’s medical record is when:

Subpoenaed by a court order

Requested by the spouse or next of kin

The patient becomes incompetent

Reporting statistics for a research project

Correct answer is 2

The spouse or next of kin have no inherent authority to authorize release of privileged information. The other answers are recognized exceptions to the requirement of confidentiality of medical records.

Source: Showalter, J.S. Southwick’s The Law of Healthcare Administration (3 rd ed), 1999, pp. 441-446.

In the past, hospitals have been less effective in lobbying than physicians because:

Legislators like physicians more

Physicians have better lobbyists

The law prevents hospitals from lobbying

Hospitals don’t vote

Correct answer is 4

Legislators are persuaded by their impressions of how many voters agree or disagree with any particular position. Hospitals have often been thought of as impersonal institutions rather than groups of potential voters. Viewed thus, when physicians’ interests and hospitals’ interest conflict, the interests of physicians (who vote in large numbers) consistently prevail.

Source: Webbed, L.J., “A Positive View of Lobbying”, Health Progress . Nov 1993. 74(9):64

In general, courts exhibit attitude regarding controversies over medical staff privileges?

Human lives are at stake and the courts must intervene to protect physicians’ rights to save those lives.

If the decision were supported by reasonable evidence, courts will not substitute their judgment for that of the hospital board.

Hospitals must not be permitted to interfere with the doctor-patient relationship.

Courts may not entertain suits regarding medical staff privileges.

Correct answer is 2

Although they will entertain suits regarding medical staff privileges, courts generally give great deference to a hospital's decision to deny or limit privileges so long as a reasonably fair process for making that decision was in place.

Source: Showalter, pp. 510-514

Under federal law, whenever a patient comes to a hospital emergency department with an emergency condition:

With few exceptions, the patient's ability to pay may be considered in determining whether to provide treatment

With few exceptions, the patient’s condition must be stabilized before he/she is transferred or discharged

A police officer may be asked to authorize treatment

The hospital has no duty to treat the person if he/she is not a patient or a member of the medical staff

Correct answer is 2

The federal “anti-dumping” statue clearly provides that emergency patients must not be transferred or discharged before their condition has been stabilized, regardless of their ability to pay for care.

Source: Showalter, J.S. and Reams, B.D. The Law of Hospital and Healthcare Administration: Cases and Materials . 1993. p.98

In considering applications for medical staff privileges, hospitals receive reports from a U.S. Government clearinghouse on malpractice payments and adverse medical staff and licensure actions. In general, these reports have had which effect?

Reports have rarely led hospitals to make privileging decisions they would not have made otherwise

Reports have been timely and helpful and have reduced the complexity of the privileging process

Had they not received the reports, most hospitals’ privileging decisions would usually have been different

Hospitals usually receive significant information that neither the practitioner involved nor any other sources had provided.

Correct answer is 1

According to a study by the HHS Office of Inspector General, without the data bank reports, hospitals’ privileging decisions would have been different only one percent of the time.

Source: Dept. of Health and Human Services, Office of Inspector General, “National Practitioner Data Bank: Usefulness and Impact of Reports to Hospitals”. Feb 1993.

Which of the following statements best summarizes the prevailing legal standard used to judge the actions of members of a not-for-profit healthcare organization’s governing board?

They must act in good faith, with reasonable care, and with the best interests of the corporation in mind.

They must exercise the same high level of fiduciary duty as is applied to the trustees of a trust.

The must avoid gross negligence and willful misconduct.

They are immune from personal liability.

Correct answer is 1

In most jurisdictions, acting in good faith with reasonable care is the standard for personal liability of board members. Regardless of whether they are called “trustees” or “directors”, board members are not held to be trustees in the fiduciary sense of the word. Regardless of the standard applied, they can be held personally liable under some circumstances, and though they certainly should avoid gross negligence and willful misconduct, that is not the best answer.

Source: Showalter, pp. 101-103

Which of the following is the clear trend regarding a hospital's liability for the actions of members of its medical staff?

The hospital may be held liable for a physician’s negligence even though the physician is an “independent contractor”.

Hospitals are not liable for such actions because they are simply physical sites where patients receive treatment from privately retained physicians.

Courts are becoming more reluctant to impose liability on hospitals for the negligence of physicians who use their facilities.

The hospital is liable only if the physician is an employee.

Correct answer is 1

There has been a clear trend in recent years toward imposing liability on hospitals through the doctrines of “apparent authority” and “ostensible agency”. This is in contrast to the traditional rule that physicians were independent contractors who merely used the hospital’s facilities.

Source: Showalter, chapter 5

A joint venture laboratory owned by a hospital and physicians on its medical staff would probably be in violation of fraud and abuse laws if it were to:

Market its services to both investors and non-investors

Offer ownership shares at the same price to referrers and non-referrers

Require investors to refer business to it

Base its profit distributions on the amount of capital contributed, not on referrals.

Correct answer is 3

Physicians’ referral of business to entities in which they have an ownership interest is closely scrutinized under federal “antikickback” laws, which are intended to outlaw arrangements that induce physicians to refer patients and thus enhance revenues. Any physician-owned entity that required physician investors to refer business to it would directly violate “safe harbor” regulations promulgated by HHS. The other answers represent circumstances unrelated to inducement of referrals and within published “safe harbor” guidelines.

Source: Crane. T.S. “The Problem of Physician Self-Referral under the Medicare and Medicaid Antikickback Statute”. JAMA . 268(1): 86-91 (1992.)

Professionalism

and Ethics

The American College of Hospital Administrators (ACHA) was established in 1933 for the following hallmarks:

Public service orientation

Self-regulation

A code of ethics

Expectations, such as assuring competence of members through continuing professional education

Samaritanism

Charity

These hallmarks can be found in the ACHE Code of Ethics

Professionalism and Ethics

Ethical Policy Statements have also been developed by ACHE to address specific concerns of healthcare executives

These are published on the ache.org website, and included in the annual report.

Ethics is often defined as a formal study of morality.

Sociologists – mores, customs and behavior found in a culture

Physicians – meeting the expectations of their profession and society and acting in certain ways towards patients

Ethics to Healthcare Executives – special charge and responsibility to:

patient

client

others served

The organization

Its personnel

Themselves

The profession

And ultimately, but less directly, to society

ACHE’s Code of Ethics

first published in 1939

Several iterations since

Major revision in 1987

Code is reviewed and updated annually

Primary and contextual focus of the Code is protecting and furthering the interests of the patient, client and others served.

In the Code , special attention is given to such issues as:

Responsibility to those served by the organization

Obligations to the profession and the organization

Roles in providing health services to the community and those in need of services

Conflicts of interest

The Code encompasses the concept of moral agency (or advocate) which holds that healthcare executives are morally accountable for the implications of their:

Malfeasance (wrongdoing or misconduct, especially by a public official)

Nonfeasance (failure to do what ought to be done) and

Misfeasance (the performance of a lawful action in an illegal or improper manner)

ACHE affiliates are obliged to bring to the attention of the ACHE Ethics Committee any information that reasonably causes them to believe there has been an infraction of the Code.

Alleged infractions of the Code are reviewed by the Ethics Committee, with the help of other elements of the ACHE governance structure.

The Ethics Committee makes a recommendation to the Board of Governors, which has final authority.

The Code includes appeals and reviews, which provide for substantive and procedure due process.

American Medical Association’s Principles of Medical Ethics

Based on work of a 19 th century English physician, Sir Thomas Percival.

Subsequent revisions continue to incorporate portions of the Hippocratic philosophy governing physician-patient relationships.

The Principles were last revised in 1980 – which moved away from previous emphasis on benefits and harms, and adopted the language of rights and responsibilities.

The Principles direct members to “strive to expose those physicians deficient in character or competence, or who engage in fraud or deception”.

American Nurses Association’s Code for Nurses

Philosophy is that the goal of nursing is to support the client’s responsibility and self-determination to the greatest extent possible.

Specific provisions set out the relationships among nurses, and with nursing, clients, employers and the public.

Nurses are expected to act when healthcare and safety are affected by the incompetent, unethical or illegal practice of any person.

Codes of Ethics for professional groups

Provide for self-regulation

Must be sufficiently precise so that guidance is meaningful, both to the members of professional groups and societies and to those who are charged with enforcing the code.

Must be living documents that provide meaningful guidance to individuals who want to do the right thing, but who are uncertain as to what that is.

Education about its ethical code and expectations should be a part of any continuing education development program undertaken by a profession

Patient Rights and Responsibilities

Two moral philosophies are especially important as a context for solving ethical problems:

Utilitarianism – is a type of teleology that measures the ends or results produced by a certain action; the action producing the greatest good is that which is morally correct.

Deontology – based on duty; there are right and wrong actions, regardless of the end produced by that action.

Four principles that can be used to guide healthcare executives in developing a personal ethic:

Respect for persons (which incorporates autonomy, confidentiality, fidelity and truth telling)

Beneficence

Nonmaleficence

Justice

Principles guiding personal ethics should:

permeate an organization’s philosophy

be reflected in its mission statement and other written expressions of values

be reflected in all the policies, procedures and rules used by the organization

be part of the healthcare executive’s personal ethic, as well as part of all decision making

Institutional Ethics Committees

Interdisciplinary teams to provide

advice

Consultation

Education

Analysis

for physicians, patients, staff and healthcare executives.

Focused on biomedical ethical issues and administrative ethics.

Infant care Review Committees (ICRC) are established in response to the Federal Child Abuse Amendments of 1984.

Educate hospital personnel and families of disabled infants

Recommend institutional policies and guidelines as to withholding medically indicated treatment

Offer counsel and review in such cases

Institutional Review Board

Established to meet the requirements of the department of Health and Human Services, and other federal and state agencies in various types of research.

Prospectively review proposed research that involves human subjects to determine whether research subjects will be at risk of harm and to ensure that legally effective informed consent will be obtained

Types of research in healthcare organizations

Clinical trials – primarily performed in academic health centers and other teaching hospitals

Practice of Medicine research – performed in larger hospitals and HMOs – use of previously collected data and survey research to evaluate the practice of medicine

Patient satisfaction

Outcomes measurement

Patient Bill of Rights

Suggest appropriate ethical relationships between the patient and the organization and its employees

Emphasize maximization of patient autonomy while recognizing the needs of the health services organization

Responsibility of patients in the care process

Expectations of Ethical Conduct

Statements or guidelines established by trade associations

Set out expectations for ethical conduct and relationships with the community, and those served, and organizational conduct in general.

Health care providers are expected to accommodate the religious and social beliefs and customs of patients whenever possible.

Cultural and Spiritual Diversity

Equal Employment Opportunity Commission

Create protected classes of persons against whom it is illegal to discriminate

Unlawful discrimination

Sexual harassment

Intimate or romantic relationships in the workplace

Sexual orientation

Affirmative action

Diversity programs

Provision of services based on values

There is no expectation that the organization’s legally compliant value system as expressed in its statement of organizational philosophy or other guiding principles must be breached to meet the demands of patients, clients, or others served, or of employees.

Governmental facilities may not enforce theologically based positions since this constitutes an unconstitutional establishment of religion.

Thus, governmental facilities provide services that nongovernmental facilities may not be forced to provide.

Conflicts of Interest

Occur when one has conflicting duties or responsibilities and meeting one of them makes it impossible to meet the other

Example: a decision maker (manager or corporate director) is also a decision maker for an organization with which business is done.

ACHE Code of Ethics

ACHE affiliates are expected to accept no gift or benefit “offered with the express or implied expectation of influencing a management decision”.

An organizational policy that no gratuities can be accepted is the cleanest and clearest approach and leaves nothing to the potential recipient’s judgment.

Need more in-depth resources?

ACHE’s Code of Ethics

ACHE Ethical Policy Statements

Contemporary Issues in Healthcare Law and Ethics, 2 nd ed. by Dean M. Harris, J.D.

Ethics in Health Service Management , Kurt J. Darr, J.D., Sc.D., FACHE

Heath Care Ethics, John F. Monagle and David C. Thomasma

Organizational Ethics in Health Care , Philip J. Boyle Edwin R. DuBose, Stephen J. Ellingson, David E. Guinn, and David B. McCurdy

The Tracks We Leave: Ethics in Healthcare Management , Frankie Perry R.N., FACHE

Ready for some test questions?

Professionalism & Ethics Test Questions

The major purpose of the code of ethics for members of a healthcare executive’s association is to:

Enhance the image of the healthcare management profession

Set forth standards of ethical behavior for healthcare executives

Set ethical guidelines for the advancement of members within the organization

Provide a forum for dialogue on healthcare policy issues

Correct answer is 2

A code of ethics sets guidelines and standards for behavior (not for advancement, as in answer 3). Answers 1 and 3 may happen as a result of having a code of ethics, but they are not the major purpose.

Healthcare facilities serving disabled populations might wish to systematically review concerns by:

Adding specific questions to patient satisfaction instruments

Consulting periodically with advocacy groups

Reviewing patient complaints raised by disabled individuals

Reviewing their compliance with the Americans with Disabilities Act.

Correct answer is 1

The key word is systematic, as the other offered strategies are episodic or perfunctory.

A well-designed satisfaction instrument would be attentive to the organization’s responsiveness to various special needs groups.

Source: Rakich, J., Longest, B. and Darr, K. Managing Health Service Organizations , 3 rd ed. 1993. chapter 17.

The healthcare executive with opposing duties (obligations) – meeting one of which makes it impossible to meet the other – has a:

Conflict of interest

Management ethical dilemma

Need for a consultant

Situation that is impossible.

Correct answer is 1

This is the classic definition of conflict of interest – when someone has two duties/obligations (loyalties) and meeting one duty/obligation makes it impossible to meet the other.

Source: Darr, K. Ethics in Health Services Management , 3 rd ed.1997. p.99

The ethical percepts (organizational philosophy) that guide an organization’s activities are found in a variety of sources that are:

Reflected in everyday actions

The sole province of senior management

Part of the governing body’s formal actions

Written and unwritten

Correct answer is 4

Written and unwritten evidence of the organization’s philosophy can be found in the various activities that it undertakes through its governance activities. Choice 4 is the broadest and therefore the most correct. Choice 2 is wrong. Choices 1 and 3 are correct, but only partially explain the stem.

Source: Darr, pp. 46-53.

The most common and useful ways to overcome resistance to change in organizations are:

Education and communication

Manipulation and co-optation

Committees and task forces

Inspirational leadership and managerial skill.

Correct answer is 1

Committees and task forces and inspirational leadership and management skills may produce education, but they may not.

Manipulation and co-optation are attempted in some instances, but both involve an element of deceit and raise ethical questions.

The correction answer is education and communication.

Source: Rakich, Longest, and Darr. Pp.594-597

Coordination among governance, management, and professional staff is a major problem for most healthcare organizations. A common way to solve the problem of coordination is:

Provide a local area network to leaders of each group using personal computers

Have overlapping membership of committees that are part of each group

Have quarterly meetings where issues of concern to the groups are discussed

Provide copies of memoranda and policy statements to leaders of each group

Correct answer is 2

Overlapping committee membership is a common technique used by healthcare organizations because it enhances the quality of decision making and facilitates communication among governance, management and professional staff.

Source: Rakich, Longest, and Darr. Pp. 248-249

In efforts to encourage licensed clinical staff to engage in continuing education, healthcare executives are given substantial assistance by the fact that these professionals:

Are encouraged by significant peer pressure

Must meet requirements of their certifying group

Are often interested in opportunities to transfer

Must meet malpractice law continuing education standards

Correct answer is 2

Professional groups that certify health services professionals increasingly require those who wish to remain certified to engage in continuing education, usually measured in hours per year. Choices 1 and 3 stimulate interest in continuing education, but are very secondary. Choice 4 is nonsensical.