TEACHING HOSPITALS OF TEXAS

1. October 13, 2013 Brandy Schnautz Mann Jackson Walker L.L.P. bmann@jw.com TEACHING HOSPITALS OF TEXAS 2013 HEALTH LAW SEMINARPhysician Employment: Peer Review and Other Concerns for Hospitals

2. Corporate Practice of Medicine • Corporate practice of medicine prohibition • Prohibits practice of medicine by unlicensed persons – including entities such as corporations • Effectively prohibits direct employment of physicians by non-physicians • Includes lay individuals and entities • Applies to governmental entities unless excepted from the rule

3. Corporate Practice of Medicine • Unlike some states, Texas does not exempt hospitals or other licensed health care entities from the prohibition* • Today, however, more hospitals in Texas than ever before can directly employ physicians

4. Physician Employment • Hospital direct employment of physicians* • Statutes for particular hospital districts • e.g., Dallas County Hospital District, Maverick County Hospital District • Repeated legislative attempts in the last decade to exempt certain classes of hospitals

5. Physician Employment • Hospital direct employment of physicians • Since 2011, critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer can employ physicians* • Health & Safety Code Chapter 311, Subchapter E for hospitals listed above

6. Physician Employment • Hospital direct employment of physicians • Other bills passed in 2011 for larger hospital districts • Harris, Bexar, El Paso, and Tarrant County Hospital Districts and Scottish Rite Hospital in Dallas • New requirements for 501(a) corporations to ensure physician independence

7. Employment Limitations* • Even with exemptions, hospital employment is limited • Governing body of hospital not authorized to supervise or control the practice of medicine

8. Employment Limitations • Chief Medical Officer (CMO)* • Policies to ensure independent medical judgment* • No discrimination between employed and not employed physicians with respect to privileges • Physician involvement in liability issues* • Non-competes limited*

9. Chief Medical Officer • The CMO is the hospital’s designated contact with the Texas Medical Board • Must report that hospital is hiring physicians • Must report any action or event CMO reasonably believes in good faith compromises independent medical judgment of a physician

10. Employment Policies • Written policies must cover: • Credentialing and privileges • Quality assurance • Utilization review • Peer review and due process* • Medical decision-making • Complaint mechanism to process and resolve complaints regarding interference with medical judgment

11. Peer Review Laws • Chapter 161 of the Health & Safety Code • Chapters 151 and 160 of the Occupations Code (Medical Practice Act) • Federal Health Care Quality Improvement Act of 1986 (HCQIA) • Intended to work in concert, but they are distinct laws*

12. Peer Review Laws • “Medical peer review committee” or “professional review body” defined in the Occupations Code • “Medical committee” defined in the Health and Safety Code • “Professional review body” defined in HCQIA

13. Peer Review Purposes • Quality assurance/utilization review • Review of medical staff applications and requests for reappointment • Disciplinary actions involving physicians

14. Peer Review Purposes • Considerations for public hospitals, hospital authorities, and hospital districts • Contracts with health care facilities* • Applicability of Public Information and Open Meetings Acts • Immunity

15. Due Process for Physicians* • Triggered by adverse review action • Notice and hearing • Right to counsel • Recording • Witnesses • Statement • Review of written decision

16. Confidentiality • Intended to encourage discourse and candor among participants • Protects records and proceedings from • Discovery • Subpoenas (civil litigation v. TMB)* • Public Information Act (open records requests) • Open Meetings Act*

17. Confidentiality • Limitations • Does not apply to records made or maintained in the regular course of business • May be waived • Permissive disclosures* • Defense of committee or members* • Some reporting is required and does not constitute a waiver*

18. Immunity • Participants in the peer review process are protected from civil liability and discipline or discrimination • Committee members and employees • Witnesses • Reporting parties

19. Immunity • Limitations • Good faith • Without malice or knowledge of falsity • Reasonable belief that action or recommendation is warranted by the facts • Does not apply to some actions • Civil rights suits or actions by the United States or a state’s attorney general

20. Reporting Requirements • To the TMB • Certain adverse actions taken by the committee* • Physician posing a continuing threat to the public welfare through the practice of medicine • TMB reports to the Data Bank* • Duty may not be nullified through contract*

21. October 13, 2013 Brandy Schnautz Mann Jackson Walker L.L.P. bmann@jw.com TEACHING HOSPITALS OF TEXAS 2013 HEALTH LAW SEMINARPhysician Employment: Peer Review and Other Concerns for Hospitals