HR Directors Guide to Physician Employment

Physician Employment and
Medical Staff Matters -
Fun Times For HR Directors!
Wisconsin Healthcare Human Resources Association
Webinar: January 16, 2020
Presented by Sarah Coyne

Learning Objectives
• Understand the legal parameters applicable to hospital
employment of physicians and how that translates into physician
employment negotiating and agreements.
• Understand how forthcoming changes to the regulatory
framework will affect physician - hospital arrangements.
• Understand the algorithm for deciding whether a demonstrated
problem with competence or conduct by an employed
practitioner should be handled via employment or medical staff
process, including reporting issues.

© 2019 Quarles & Brady LLP - This document provides information of a general nature. None of the information contained herein is
intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and information or future
developments may affect the subjects addressed in this document. You should consult with a lawyer about your particular
circumstances before acting on any of this information because it may not be applicable to you or your situation.
Hospitals Employing Practitioners

Basic Physician Employment Requirements (Stark/AKS)
• Fair market value.
• Commercially reasonable even in the absence of referrals.
• Does not vary with the volume or value of referrals except
that personally performed services may be compensated
with a productivity bonus.
• Identifies specific services (not a sham).
• NEED NOT BE IN WRITING .... But probably should be –
more to come on what it should include.

2016 Stark Statutory Changes (Regs In 2019)
• Hospitals, Federally Qualified Health Clinics and Rural Health Clinics may
provide financial assistance to physicians/ groups to employ non-physician
practitioners (with caveats).
• Certain time block arrangements for shared equipment that were
prohibited may involve payments from hospitals to physicians or vice versa
(with caveats).
• “Takes into account” will be used instead of “based on” the volume or value
of referrals – takes away an attenuated legal argument.
• “In writing” can mean an assembly of documents, emails.
• A few other things.

Proposed Stark Law Exceptions (1 of 2)
•Limited Remuneration To A Physician: Up to $3,500 per
calendar year, even where there is no documentation and
it is not set in advance – YAY A DE MINIMUS EXCEPTION
FINALLY!!!

Proposed Stark Law Exceptions (2 of 2)
• Value Based Arrangements: would apply to Medicare AND Non-
Medicare patients, as proposed. This is a new framework that
would allow hospitals and physicians to escape Stark Law liability
if they take financial risk and serve a VALUE (rather than volume)
based purpose. While complicated, this definitely creates a
LOWER BAR for arrangements seeking to bring value in the
manner defined by the Stark Law than the prior exceptions.
• Donation Of Cybersecurity Technology And Related Services.

Stark Law - Advanced Practice Clinicians
• As of 2016, hospitals may give subsidies to physician practices to
recruit APCs (PA, NP, CNM, CSW, psychologists).
• Capped at 50% of the APC's compensation with certain limits.
• Limited to the first two years of the APC's employment – which
could incentivize front loading of the compensation and benefits.
• Certain other requirements – similar to physicians (writing, not
conditioned on referrals, etc.).

Physician Employment Agreements (1 of 3)
•Although not required, an employment agreement is a
guidebook for managing a relationship with a lot of
internal tension. So if you are going to have one, try to
include:
• Specific obligations (hours, location, on-call, administrative
duties).
• Compensation including any quality bonus or stipend for
supervision of non-physicians.
• Agreement to meaningfully use electronic medical record.

•Agreement to participate in peer review process as
necessary to ensure quality and safety. (Example: FPPE to
determine certain surgical skills are current).
•Agreement to undertake education and training as
necessary to keep skills current.
•Confidentiality of information – not just patient but
hospital business information.
•Nonsolicitation of staff if the employment terminates.

•Agreement to be bound by provider-payor agreements
where required by those agreements.
•Assigning rights for professional billing to any payor.
•Noncompete – (Wisconsin tends not to like them –
geographic radius must reflect the market, one year is
ideal – these are not hard and fast rules).
•Termination clause – include parameters for termination
without cause.

General Legal Considerations – Employing APCs
•Scope of practice
•Admitting privileges
•Membership on medical staff
•Hearing rights

APCs Who Have Prescribing Authority
•APCs with prescribing authority under state law may
prescribe medications within their area of education,
training, and experience.
•In Wisconsin APNPs may not prescribe:
• Schedule I controlled substances.
• Schedule II Amphetamines and sympathomimetic drugs or
compounds with some exceptions.
• Anabolic steroids for the purpose of enhancing athletic
performance or other non-medical purpose.

CMS - Four Types Of Advance Practice Nurses
•A professional licensed RN can be one of four roles:
1. CRNA
2. CNM
3. NP
4. CNS
•All practice in collaboration with a physician.
•Varying scopes of practice – lots of room for disagreement
in where the scope of each starts and ends.

Collaboration Generally
•CMS tends to defer to state regulations to define scope of
practice although there are payment rules requiring
collaboration with a physician.
•Wisconsin law and CMS (to get paid) require that APNPs,
CNMs, CRNAs must work in collaboration with a physician.

Collaboration - APNPs
• Must be DOCUMENTED – need not be an agreement.
• Are agreements overkill?
• Are agreements the gold standard?
• Do agreements increase physician liability exposure?
• For APNPs, the rule changed in 2016 to clarify that the burden of
documentation is on the APNP, not the physician.
• CMS also places the burden on the nurse.
• For psych APNPs e.g. in Distinct Part Units – the burden of physician
collaboration is overwhelming given the shortage of psychiatrists.

Collaboration - CNMs
•A certified nurse midwife practices in collaboration with a
physician.
•Must have a collaborative AGREEMENT with a physician
with post-graduate training in obstetrics.
•Need not be an OB/ GYN – can be a family practitioner
with graduate training in obstetrics.

Supervision (For Now) - PAs
•All physician assistants must work under the supervision of
a physician currently but collaboration is proposed.
•Also proposed – a separate licensing board for PAs.
•Even currently, a physician assistant is able to perform
without much in the way of cosignature – must have an
annual meeting with the supervising physician regarding
prescribing.

APCs - Privileges
•APCs must be credentialed and have privileges to practice
in the hospital.
•The credentialing process may be (but is not required to
be) as rigorous as it is for physicians.
•The due process requirements for physicians (for the
hospital to have immunity under HCQIA) are not necessary
for APCs.

APCs - Medical Staff Membership
•APCs may be members of the medical staff but are not
required to be.
•Wisconsin law (Wis. Stat. s. 50.36) allows "hospital staff
membership" for "any practitioner" acting within the
scope of practice.
•Critical Access Hospitals (CAHs) have discretion, PPS
hospitals are explicitly permitted to allow non-physicians
on the medical staff under the Medicare Conditions of
Participation (COPs).

Proposed Reinstatement Of Hospital
Licensing Code (DHS 124)

Administrative Rule Status
•Clearinghouse Rule CR 19-135, proposing to revise DHS
124.
•Based on a statement of scope from 2015.
•Oct. 31, 2019: Went to legislative council (clearinghouse
for administrative rules).
•Nov. 21, 2019: Legislative council submitted a report to
DHS.
•Dec. 6, 2019: Public hearing held by DHS.

Next Steps For Legislative Process
•Final draft rule will be sent to Governor for review.
•Upon Governor approval, the rule will go to a legislative
standing committee in each house of the legislature.
•After standing committee acts (or time expires), the rule
goes to The Joint Committee for Review of Administrative
Rules –which can stall it.
•Then goes to legislature for vote and (if approved)
publication.

Definitions – Proposed Changes (1 of 2)
•The definitions of "house staff," "allied health personnel"
and "legally authorized person" are removed.
•The definition of "medical staff" is replaced with "hospital
staff" which means "the hospital’s organized component of
practitioners that was recommended to be on the hospital
staff by the hospital staff, and is comprised of individuals
appointed by the governing body of the hospital."

Definitions – Proposed Changes (2 of 2)
• "Practitioner" would be redefined to include practitioners other than
physicians, dentists and podiatrists:
• New Definition: "physicians, dentists, podiatrists or other professions permitted by
Wisconsin law to distribute, dispense and administer medications in the course of
professional practice, admit patients to a hospital, or provide any other health care
service that is within that professions' scope of practice and for which the governing
body grants clinical privileges."
• Now allows more types of practitioners, and defines it by parameters other than just
type:
• Those who prescribe
• Those who admit
• Those who provide services and have privileges

Statements Of Deficiency And Plans Of Correction
• Before: There was no formal guidance on statements of deficiency
and plans of correction.
• Proposed:
• Plans of correction must be submitted 10 calendar days after
receiving a statement of deficiency.
• Plans of correction must include a set time period during which
the hospital will fix the deficiency.
• DHS will notify the hospital if the plan of correction is deficient
and will describe the deficiency.

Waivers And Variances (1 of 2)
•Prior: There were criteria in DHS 124.04 for obtaining
waivers and variances, along with a fairly extensive
process.
•Proposed: DHS 124.02 – if a hospital submits a request in
writing for a variance or waiver, DHS may grant it if DHS
determines that it is necessary to protect the public or
(might be an "and") will support the efficient and
economic operation of the hospital.

Waivers And Variances (2 of 2)
• Examples of when a waiver or variance would help the
hospital with efficiency/ economy:
• Strict enforcement of a requirement would result in
unreasonable hardship on the hospital or a patient; OR
• An alternative to a rule is in the interests of better care or
management.

Maternity And Neonatal Care – Nurse Responsibility
• Proposed Rule:
• An RN shall be responsible for the laboring mother from the time she is
admitted to the hospital (including an admission assessment) and
continuing through the early postpartum period.
• An RN shall be responsible for the infant from the time of admission
(including an initial assessment) and continuing until the baby is
considered "stabilized" by current and accepted standards of practice.

Security Of Newborns
• Prior Rule:
• "Security" of newborns was not explicitly regulated (at least not using
that word) although there were some safeguards e.g. only assigned
personnel in the postpartum unit, limitations on discharge.
• Proposed Rule:
• Hospital must have policies that address infant identification and
security.
• Still has specific requirement regarding discharge limitations (only to a
parent with custody or another authorized individual, recording the
identity of the recipient, etc.).

Patient Rights And Responsibilities In CAHs
• Before DHS 124 sunsetted, the patient rights section applied to
both PPS hospitals and CAHs.
• DHS sunsetted 124 to eliminate the mismatch between CoP
requirements and Wisconsin requirements.
• BUT the CoPs only address patient rights in PPS hospital settings.
• Proposed rule for CAHs is consistent with the prior DHS 124
patient rights provision in most ways.

Restraint And Seclusion
• The proposed patient rights for CAHs do not include explicit
standards for patient restraints and seclusion, although there are
such rights incorporated by reference to Wis. Stat. s. 51.61.

Freestanding Emergency Departments
• Prior Rule: did not address freestanding emergency departments but there
were rules for emergency departments generally, some of which carry over.
• Proposed Rule: Freestanding emergency departments must:
• Be provider-based under the provider-based rules.
• Comply with the CoPs for hospitals.
• Be under the direction of the emergency services department of a Wisconsin-
licensed hospital.
• Provide emergency services, 24 hours/day, 7 days/week, 365 days/year.
• Consistent with the CoPs for emergency departments generally.

Freestanding Emergency Departments - Personnel
• Proposed Rule Prescribes Minimum staffing at all times:
• One physician specialized in emergency medicine.
• One RN specialized in emergency nursing.
• One laboratory technician.
• One person qualified to perform radiological services for plain films.
• Also, someone on-call to perform CT scanning within 30 minutes and ultrasound
within 1 hour.
• Also more prescriptive than CoPs.

Corrective Action Issues

Corrective Action – What Is It?
• Corrective action is a medical staff term meaning
the evaluation of a physician's clinical privileges
or medical staff membership as part of a
professional review action.
• Usually it is a separate section of the medical
staff bylaws – it is in everyone's best interest
(medical staff and hospital administration) to
have this well drafted to delineate the process
and correlate with HCQIA immunity.
• Goes through the MEC, potentially a medical staff
hearing, and ultimately the Board.

Employment vs. Medical Staff
• Employment and medical staff membership/ privileges must be
understood by all relevant hospital staff as two different things.
• With any disciplinary or clinical quality problem with an
employed physician, there is a fork in the road.
• If there is an employment performance improvement plan –
keep it in the employment arena so that it doesn't constitute a
restriction on privileges.
• There may be naturally developing tensions between employed
and independent medical staff.

Involvement Of Human Resources
• Human Resources is often the first to
learn of a problem with a medical staff
member who is employed.
• There should be a process and
expectation that the medical staff
leadership will be made aware of such
a problem and that a conscious
decision will be made to go through
employment versus corrective action.

Involvement Of Hospital Administration
• Many hospitals have the CEO as an ex officio non-voting
member of the MEC.
• Most of the time, the CEO is in attendance during the
corrective action process and medical staff hearing, and is the
liaison to the board.
• Medical staff may push back on administrative involvement
and feel it is interfering.
• In the end, corrective action is a medical staff process – it is
fine for administration to be aware and in attendance.

Summary Suspension
• The CEO is usually empowered under the medical staff bylaws
to summarily suspend a physician's privileges when there is a
concern for patient safety or disruption of hospital operations.
• If the summary suspension lasts more than 14 days, the
physician has the right to request a hearing.
• If the summary suspension lasts more than 30 days, the
physician is reported to the NPDB.
• It is difficult when the medical staff bylaws go beyond these
legal timelines (e.g. allowing a hearing immediately if
summarily suspended).

Other Misconduct Reporting Considerations
•Caregiver Misconduct (entities) – 7 calendar days (fewer
for long term care).
•Nurse Misconduct (supervising nurses) – to institutional
supervisors or BON.
•Physician Misconduct (other physicians) – to Medical
Examining Board.
•Physician Assistant – proposed to be to new PA board.

ANY QUESTIONS?
Sarah Coyne
(608) 283-2435
sarah.coyne@quarles.com

HR Directors Guide to Physician Employment

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