Pennsylvania Association of Community Health Centers June 23, 2009

1. Pennsylvania Association of Community Health CentersJune 23, 2009 Beyond the Basics...Establishing Successful Community Health Center & Hospital Collaborative Models – Legal Considerations Presented by: Marcie H. Zakheim

2. Today’s Presentation … • Topics for today’s presentation • Reasons to collaborate • Health center – hospital collaborative opportunities • “Hot” trends in health center - hospital partnerships • Legal considerations • Key planning and negotiation steps

3. Reasons to Collaborate

4. Reasons to Collaborate: HRSA Expectations • Section 330 legislation, as well as HRSA, encourage coordination, collaboration and integration with other provider(s) located in health center’s service area • Federal, State and local health and social services delivery projects/programs (including other HRSA grantees, Section 330 grantees and FQHC look-alike entities) • Providers of ancillary, secondary and tertiary care

5. Reasons to Collaborate: Mission • Maintain / enhance amount, level and type of services available to health center patients • Initiate new or enhance existing programs • Bring “in-scope” services currently provided by referral only • Bring “in-house” services currently provided off-site

6. Reasons to Collaborate: Mission • Facilitate / improve continuum of care • Secure access to specialty / ancillary /tertiary services and other necessary services not provided by health center • Provide follow-up care indicated by referral arrangements (and vice versa) • Ensure appropriate level of care on timely basis through • Emergency room diversion programs • Residency training arrangements

7. Reasons to Collaborate: Good Business • Expand access locations and patient bases • Increase market share • Enhance and improve clinical, administrative and managerial capacities, resources, expertise and systems • Minimize risks and reduce operational costs • Increase capital and financial support, revenue, and other resources • Provide opportunities for health center to participate in programs in which it cannot do on its own • Increase integration with the medical community

8. Health Center – Hospital Collaborative Opportunities

9. What are the Structural Options? • Formal Referral Arrangements • Note: Informal referral arrangements CANNOT be used to provide required services or any other “in-scope” services • Separate Contractual Arrangements • Umbrella Affiliation Arrangements • Integrated Programs/Services

10. Formal Referral Arrangements • Hospital agrees to furnish services to all health center patients who are referred to it by the health center regardless of ability to pay (subject to capacity limitations) • Health center ensures that its patients have access to services it does not (and/or cannot) provide • Hospital is financially, clinically and legally responsible and is solely liable for damages related to services • Hospital bills and collects payment for the services

11. Formal Referral Arrangements • Hospital agrees to • Provide services consistent with, at a minimum, the prevailing standards of care • Provide assurances regarding professional qualifications, licensure, eligibility to participate in federal programs • Refer patients back to the health center for clinically appropriate care • Share medical notes/records/feedback regarding diagnosis and treatment to assist follow-up care by health center

12. Formal Referral Arrangements • PIN #2008-01: “In-scope” referral arrangements • If the hospital provides/bills for service, the service itself is not in scope • However, the formal referral arrangement and follow-up care provided by health center will be in-scope if the health center: • Executes a formal, written agreement, including • How the referral will be made and managed • Process for referring patient back to health center for follow-up care • Maintains responsibility for the treatment plan • Provides, pays for, bills for the follow-up care

13. Separate Contractual Agreements • Contracts for specific health care services • Leases for space, equipment, personnel • Management/administrative services contracts • Contracts to co-locate services or programs (e.g., primary care on hospital site; residency training at the health center site) • Shared service contracts and joint purchasing arrangements • Community Benefit Grant

14. Separate Contractual Agreements: Lease of Personnel • Health center contracts with the hospital to furnish services to health center’s patients on behalf of health center • May be used to procure clinical, administrative and/or managerial expertise and experience that health center cannot obtain directly but wants to include in-scope • Health center is financially, clinically and legally responsible for the services purchased (but the hospital may agree to support the costs of care) • The patients receiving services from the hospital and/or its personnel are considered health center patients

15. Separate Contractual Agreements: Lease of Personnel • Hospital assures that hospital and its contracted personnel will • Provide services in accordance with the health center’s Section 330 grant and applicable rules and policies • Provide services consistent with applicable health care and personnel policies, procedures, standards, protocols • Satisfy the health center’s licensure, credentialing and other professional qualifications • Prepare medical records consistent with the health center’s protocols • Develop and furnish programmatic and/or financial records required by the health center

16. Separate Contractual Agreements: Lease of Personnel • Health center retains the right to • Monitor and evaluate whether contracted staff is complying with all qualifications, policies, procedures, standards and protocols, and whether they are performing satisfactorily • Terminate the contract or request/require removal, suspension and/or replacement of any contracted professional who fails to meet qualifications, is non-complaint, performs unsatisfactorily, and/or provides sub-standard care • Bill and collect from third party payors/patients, and retain all revenue, for services provided by the hospital and it personnel

17. Separate Contractual Agreements: Community Benefit Grant • Defrays a portion of the costs of providing otherwise uncompensated care to the health center’s patients • “Bona fide” charitable donation to assist the community • Furthers the charitable missions of the parties • Presents a minimal risk of abuse of federal health care programs • Does not limit or restrict patient’s freedom of choice or the provider’s professional judgment • Terms are narrowly tailored to accomplish stated purpose only • Arrangement contains certain safeguards to protect against prohibited referrals or generation of business

18. Umbrella “Affiliation” Agreements • Joint planning process and planning body • Priorities and associated time frames • Nature of joint control and management of collaborative activities “outside” of Section 330 scope • Extent of preferred relationship, if any • Each party’s financial expectations and commitments • Right to change the collaboration over time • Right to terminate the agreement if the other party affiliates with a mission-incompatible entity or a competitor

19. Integrated Services/Programs • If operated in the health center’s scope of project • Integrated services/programs are operated as under the health center umbrella • Health center must assume operational and financial authority for the services/programs • The hospital clinicians are either integrated into the health center’s workforce or purchased by the health center through a Lease of Clinical Capacity • May require “Transition Agreement” • Must ensure that the integration does not impact the health center board’s • Compliance with Section 330 size, composition and selection requirements • Autonomous and independent decision-making

20. “Hot” Trends in Health Center – Hospital Partnerships

21. What are the “Hot” Trends in Partnerships? • Residency training arrangements • ER diversion programs • Leveraging the safe harbor for Section 330 grantees • Leveraging ARRA funding

22. Residency Training Arrangements • Core Principles • Hospital maintains control over, and responsibility for the costs of teaching activities performed at the health center, which are provided in accordance with the hospital’s policies and procedures • Classroom teaching, undergraduate programs, and orientation programs • Curriculum development and faculty meetings • Resident recruitment, selection, placement and evaluation, and setting of schedules • Program administration and evaluation

23. Residency Training Arrangements • Core Principles (cont.) • Hospital retains general responsibility for salaries and benefits (including malpractice insurance) of hospital faculty and residents and other costs but health center pays for clinical time of faculty for which it bills (need to avoid “double billing” of Medicare/Medicaid and Federal grants) • Hospital provides FMV payment to the health center for the time spent by health center clinicians and support staff in providing (as well as equipment and space used for) teaching activities

24. Residency Training Arrangements • Core Principles (cont.) • Health center maintains responsibility and authority over activities related to direct patient care services • Scope, location and scheduling of services • Right to approve/require removal, suspension, replacement of hospital faculty/residents providingclinical services to health center patients • Diagnosis and treatment-related activities • Billing third parties for clinical services provided

25. ER Diversion Programs • CMS guidance pertaining to ER Diversion grants: overall impact on health center • Provides opportunity for initiating or increasing health center- local hospital collaborative activities that recognize health centers as appropriate alternate non-emergency services providers • Establishes legal principle that, after an appropriate EMTALA screening and non-emergency determination, the patient can choose whether to receive care from the hospital or from an alternative provider

26. ER Diversion Programs • Potential Models: • Hospital refers patients who present with non-emergent/urgent conditions to the health center’s existing site(s), possibly with transportation linkage • Health center places personnel in hospital for purposes of intake, registration, making appointments for patients who present with non-emergent/urgent conditions • Health center assumes operator status for hospital-owned ambulatory clinic or new health center site located on or near hospital campus to provide alternate non-emergency services

27. ER Diversion Programs • Under all potential models, must address • Whether patients are referred to the health center in lieu of treatment of non-emergency condition OR only for follow-up appointment • Separation of EMTALA screening personnel from ER treating clinicians • Documentation of patient choice • Referral protocols • Collaboration between providers and other staff of hospital and of health center • Development, maintenance and sharing of medical records

28. Safe Harbor for Section 330 Grantees • Health Center Safe Harbor under Federal Anti-Kickback statue: final OIG rule issued October 4, 2007 [42 C.F.R. 1001.952(w)] • Protects certain arrangements between health center grantees and other providers or suppliers of goods, services, donations, loans, etc. • Must contribute to the health center’s ability to maintain or increase the availability, or enhance the quality, of services provided to its medically underserved patients

29. Safe Harbor for Section 330 Grantees • Requirements • Written agreement signed by both parties that covers and specifies the amount of all goods, items, services, donations, loans, etc. provided to the health center, which may be fixed sum, fixed percentage, or established by a fixed methodology • Goods, items, services, donations, loans, etc., must be medical or clinical in nature or directly relate to any services (not just patient services) provided under the scope of project • Reasonable expectation (and documentation of the basis) that the arrangement will contribute meaningfully to services to the underserved – must re-evaluate at least annually

30. Safe Harbor for Section 330 Grantees • Requirements (cont.) • Disclosure of the existence and nature of the arrangement to patients who inquire about it • No restriction on referrals (maintenance of provider professional judgment), health center’s ability to contract with others and/or patient freedom of choice • Goods, items, and/or services furnished under the arrangement must be available to all health center patients who clinically qualify for them, regardless of payor status or ability to pay, subject to hospital capacity

31. The American Recovery and Reinvestment Act (ARRA) • Signed into law on February 17, 2009 • Includes $2 billion in grants to health centers to • Support comprehensive primary and preventive health care to an increasing number of patients • Create or retain thousands of health center jobs • Support pressing capital improvement needs, such as construction, repair, renovation, and equipment purchases (including health information technology – HIT – systems) • HHS has already distributed • $155 million to establish 126 new health center sites • $338 million to support care to an increasing number of patients and to create or retain jobs at all existing health centers

32. The American Recovery and Reinvestment Act (ARRA) • Still to come • Capital Improvement Program (CIP) grants - $862.5 million appropriated to support infrastructure needs, such as construction, repair, renovation, and equipment purchases (including health information technology systems) • Health Information Technology (HIT) Systems/Networks grants - $125 million appropriated to support Electronic Health Record (HER) and HIT systems for health centers • Facility Investment Program (FIP) grants - $512.5 million appropriated to fund an estimated 100 significant facility projects (major facility investments in health centers including construction, repair, renovation, and equipment purchase)

33. The American Recovery and Reinvestment Act (ARRA) • ARRA offers great opportunities for expansion but also presents a high level of responsibility • Transparency and accountability are critical elements of ARRA • Health centers should anticipate a high level of scrutiny in their use of these funds • Funds can be used in conjunction with other funding as necessary to complete projects, but must be tracked and reported separately • Separate Notice of Grant Award, Payment Management System Account • Internal tracking – examples include time and effort reports, cost centers, ledgers, etc.

34. Legal Considerations

35. HRSA Scope of Project • PIN #2008-01: Scope of Project Policy • All health centers must request and obtain prior approval from BPHC to implement significant changes in the federally-approved scope of project • Add or delete services • Increase, decrease or relocate service sites • Examples of changes that do not require prior approval • Adding a service to a site already within scope as long as the service is already provided in scope at another site • Changing type of providers furnishing an in-scope service • Changing hours of operation of in-scope site

36. HRSA Scope of Project • In general, a request to change the approved scope of project will be approved if it • Does not require any additional 330 funding • Does not shift resources from the current target population • Furthers the health center’s mission by increasing / maintaining access and quality of care • Is consistent with Section 330 and Program Expectations • Provides credentialing / privileging of providers

37. HRSA Scope of Project • Approval factors (cont.) • Does not eliminate or reduce access to a required services • Does not result in diminution of the level or quality of services provided to current target population • As applicable, continues to serve an MUA/MUP • Board minutes document approval by the health center’s board • Does not significantly affect the current operation of another health center located in same or adjacent service area

38. HRSA Scope of Project • Additional considerations for new services • All required services must be provided within the approved scope of project • Either directly or through established written purchase agreement or formal referral arrangement • Regardless of how they are furnished, all in-scope services must be • Readily available and reasonably accessible to all patients equally regardless of ability to pay • Offered on a sliding fee / discount schedule • Can provide non-required services in-scope or out-of-scope

39. HRSA Scope of Project • Additional considerations for new sites • To include a new site, the following conditions must be met: • Face-to-face encounters between the health center’s patient and provider are generated • Provider exercises independent professional judgment in furnishing services • Services are provided directly or on behalf of the health center, whose board retains control and authority over the services • Services are provided on a regularly scheduled basis • Includes “contracted” sites if all criteria are met

40. HRSA Scope of Project • Format and Timing for Change in Scope Request • All requests must be prepared as described in the PIN 2008-01 and must be electronically through the Electronic Hand Book (EHB) separate from the continuation grant application • BPHC expects to indicate a final decision within 60 days of submission but could take longer • Effective date of an approved change • No earlier than the date that BPHC receives a complete request • No later than 120 days from NGA • No retroactive coverage for changes that are implemented prior to receipt of the request

41. Scope of Project: Adding Specialty Services • PIN #2009-02 – 12/18/08 • Factors for approval – in addition to all general factors from PIN 2008-01 • Necessary for the adequate support of primary care – demonstrate that the proposed service • Is a logical extension of required primary care services already provided; and/or • Complements required primary care services • Demonstrate and document target population’s need for the proposed services – describe unmet needs in narrative and with data • Demonstrate ability to maintain level and quality of required primary health services

42. Scope of Project: Adding Specialty Services • Factors for approval (cont.) • Demonstrate the additional service will generate adequate revenue to cover its costs • Provide assurance that • Service will be accessible and equally available to all patients of the center regardless of ability to pay and on a sliding fee scale (as necessary) • Center will be able to maintain control over service delivery • Service will be provided at a site or location that is presently in approved scope or eligible to be included according to scope definitions

43. Scope of Project: Adding Specialty Services • Examples of potentially “acceptable” specialty services • Pulmonary consultations/exams • Cardiology screenings/diagnoses • Minor podiatry outpatient procedures/exams • Psychiatric consultations/exams • Periodontic services • Colonoscopies • Oncological care

44. Scope of Project: Changing Target Population • PIN # 2009-05 – 3/23/09 • Applies solely to health centers receiving only special population funding (no 330(e) funding) that want to add a new target population beyond the one for which the health center was funded • Factors for approval – in addition to all general factors from PIN 2008-01, the health center must • Document unmet need of new population • Document support and/or cooperation from any neighboring health center(s) in the form of a Board-endorsed letter, or an explanation why such letter cannot be obtained

45. Scope of Project: Changing Target Population • Factors for approval (cont.) • Maintain, to the extent possible, existing level of services for current target population for which it was originally funded Demonstrate compliance with any and all applicable requirements (e.g., no governance waivers, services available to all residents of the service are) • Demonstrate that the center can generate sufficient revenue from the new population to cover direct costs and a reasonable share of overhead costs • Provide a reasonable projection of grant funds and patients allocated between appropriate 330 sub-parts • Must propose an amount of current 330 grant to be reallocated to the new population

46. HRSA Affiliation Policies • HRSA Affiliation PIN #97-27: • Purpose: to protect the autonomy and integrity of health center project by limiting third party involvement in the structure, governance and operation of health center • Corporate Structure • No parent/subsidiary or similar structures (e.g., Sole Member) unless • Health center retains all Board selection and composition requirements, and exercises all prescribed authorities and • The structure is specifically approved by HRSA

47. HRSA Affiliation Policies • Governance: under all affiliation arrangements, board must remain compliant with all Section 330-related selection and composition requirements and retain all prescribed authorities • No other entity or appointed individual may • Select the majority of health center board members, non-consumer members, or members of the Executive Committee, or function as board chair • Preclude the selection, or require the dismissal, of board members not appointed by that party • Have overriding approval authority, veto authority or “dual majority” authority

48. HRSA Affiliation Policies • Management and Finance • No other entity can employ Executive Director/CEO • No other entity can employ CFO and/or CMO, subject to good cause exception (PIN #98-24) • Health Services/Clinical Operations • No other entity can employ the majority of health center’s PCPs, subject to good cause exception (PIN #98-24) • Non-exclusivity: no other entity can control health center’s relationships with other providers unless control will not impact health center’s ability to collaborate and coordinate with other local providers

49. HRSA Affiliation Policies • PIN #98-24: Amendment to #97-27 • HRSA prefers that health centers directly employ CFO, CMO, and core staff of primary care providers • HRSA may grant a “good cause” exception • Programmatic benefit (e.g., improved or increased access, expertise, quality, capital) • Sufficient accountability for operation and direction of grant-approved project and the expenditure of grant funds – should include accountability criteria in written agreements between the parties

50. Other Legal Considerations • Section 330-related laws, regulations, expectations and policies • Other PINs and Program Assistance Letters (PALs) (including PIN 98-23 – Program Expectations) • 45 CFR Part 74 (or Part 92): Procurement and property standards (incorporating OMB Circulars A-110 and A-122) • HHS Grants Policy Statement • Notice of Grant Award/special terms and conditions • FTCA coverage • Section 340B discount drug pricing • Other federal/state law – Medicaid/Medicare, Fraud and Abuse, physician self referral, tax law, antitrust, etc.