Hospital Credentialing in the 21st Century:

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Hospital Credentialing in the 21st Century:

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Title: Hospital Credentialing in the 21st Century:

1

Hospital Credentialing in the 21st Century
New Risks and New Rewards
Presented by
Michael D. Neubert and
Gregory J. Pepe
Neubert, Pepe Monteith, P.C.

INTRODUCTION
According to the Office of the Inspector General
(OIG) and Joint Commission for Accreditation of
Healthcare Organizations (JCAHO), Hospitals
credentialing practices will come under increased
scrutiny. As a result, Hospitals will need to be
able to demonstrate and document an effective
evaluation process of individual requests for
privileges and the criteria used for granting
these privileges.

Historical Perspective
Traditional credentialing and re-credentialing
process
credentialing has been the core of the quality
process for hospitals for decades
focus on physicians competency and professional
behavior
? However the process and criteria was often ill
defined and
investigations superficial and affected by
personal
relationships and medical politics
the most dramatic change in the concept of
credentialing is the idea that privileges are
temporal

before the 1990s, if the privileges were
initially granted they were renewed almost
automatically leading to a sense of entitlement
among physicians on staff at hospitals
today privileges are loaned to the applicant
for a period of time
? Article 2.A.3. No Entitlement to Appointment
Norwalk Hospital Credentialing Policy
Important that this policy be strictly followed
historically, the risks of deficient
credentialing and re-credentialing process were
not significant as they are today
? the trend, however, has been one increasing
legal risks since 1965
? now more than ever, poor credentialing
practices equate to poor business practice as
well

Evolution of the theory of Corporate Negligence
Credentialing Practices have carried significant
civil exposure from private litigants since the
1960s
Patients who allege that credentialing system
failed to protect them from a bad physician
? Darling v. Charleston Community Memorial
Hospital
? Johnson V. Miseriocordia Community Hospital

Darling v. Charleston Community Memorial Hospital
The doctrine of corporate negligence was
introduced in 1965 when the Illinois Supreme
Court upheld a jury verdict against a hospital
for injuries to an eighteen year college football
player as a result of treatment for a broken leg
by an on-call non employee emergency room
physician. The court ruled that the doctrine of
charitable immunity no longer applied and that
the standards for hospital accreditation, the
state licensing regulations and the hospitals
bylaws demonstrated that the medical profession
and other responsible medical authorities
regarded it as both desirable and feasible that a
hospital assume certain direct responsibilities
for the care of patients

Johnson v. Miseriocordia Community Hospital
In 1980 the Supreme Court of Wisconsin held that
the failure of a hospital to investigate a
surgeons qualifications for the privileges
requested gives rise to a foreseeable risk of
unreasonable harm and therefore, the hospital has
a duty to exercise due care in selection of its
medical staff
? surgeon unsuccessfully attempted to remove a
pin fragment from Johnsons right hip damaging
patients common femoral nerve and artery
resulting in a permanent paralytic condition of
his right thigh muscles
? Hospital admitted to failing to contact any of
the surgeons references or check alleged
credentials
? Hospital records were devoid of any
information concerning the procedure used to
approve surgeons appointment

? The court stated that the Hospital was
required to solicit information from
applicants peers, including those not
referenced in his application, who are
knowledgeable about his education, training,
experience, health, competence, and ethical
character.
? In addition, the hospital will be charged with
gaining and evaluating the knowledge that would
have been acquired had it exercised ordinary
care in investigating its medical staff
applicants and its failure to do is negligence

Physicians who believe they were victimized by a
credentialing system driven by anti-competitive
agenda
? Polmer v. Presbyterian Hospital of Dallas
366 million jury verdict in favor of a
cardiologist and against a Hospital Chair of
Internal Medicine, Chief of Cardiology and
Director of Cath Lab who summarily suspended his
privileges to perform certain cardiac procedures
for six months
Expanded exposure under the Doctrine of Apparent
Agency or Ostensible Agency
? Kafri V. Greenwich Hospital (2000)

Kafri V. Greenwich Hospital (U.S. District Court
for CT)
Judge Nevas denied Greenwich Hospitals Motion
for Summary Judgment who had been sued for the
alleged negligence of Greenwich Radiology, an
independent contractor, on the theory of apparent
agency. Judge Nevas stated
the Court finds several reasons for applying
the doctrine of apparent agency to a hospital.
No reasonable patient in the position of the
plaintiff would assume anything else but that the
medical staff physicians were employees of the
hospital. Indeed, a patient has the right to
rely on the reputation of the hospital when she
agrees to have a medical procedure performed at
the hospital. As such, it is reasonable for the
public to assume that a hospital to which it
goes for treatment exercises medical supervision
over, and is responsible for the negligence of,
medical personnel providing services whether
they are independent contractors or not.

As a result of court decisions like Kafri,
hospitals are at increased risk of becoming
secondary insurers, in affect, for radiology,
anesthesiology and other contracted service
groups regardless of their status as independent
contractor

New Risks facing Hospitals (i.e. the stick)
Hospitals and medical staff physicians are at
risk for acts and omissions of individual
physicians in areas other than clinical
competency and professional behavior
? all indications point to an unyielding
continuation of this trend
Physicians acts and/or omissions have exposed
hospitals to legal claims of breach of fiduciary
duty, fraud, deceit, corporate negligence,
anti-trust and False Claims Act violations

Legal and Regulatory Backdrop
Past five years intense and growing focus on
issues of patient safety and quality in health
care industry
Both state and federal regulators are
scrutinizing as never before the effectiveness of
the systems the hospitals have put in place to
protect and promote patient safety i.e.
credentialing and peer review.
? OIGs Supplemental Compliance Program
Guidance for Hospitals (January , 2005)
Hospitals must also take an active part in
monitoring the quality of medical services
provided by appropriately overseeing the
credentialing and peer review of their medical
staffs

High profile criminal and civil cases brought by
DOJ against Hospitals based allegations of
negligent or reckless credentialing process
? Redding Medical Center, Tenet Health Care
Corp.
350 million settlement arising out of
negligent credentialing of its Chief of
Cardiology and Chair of Cardiovascular Surgery
relative to their alleged performance of
unnecessary cardiac procedures

False Claims Act U.S. v. Tremoglie
? In 1997, a Pennsylvania HMO, Keystone Health
Plan East, learned that an individual named
David Tremoglie fraudulently presented himself
has a psychiatrist and was employed by a
behavioral health organization to treat Keystone
patients. The Government took the position that
all claims for reimbursement based on Tremoglies
work violated the False Claims Act.
Wire Fraud U.S. v. United Memorial Hospital
? In 2003, United Memorial Hospital signed a
federal guilty plea agreement in which it
admitted to fraud in connection with the alleged
over utilization of pain management surgical
procedures, one of which resulted in the death of
a patient. The Hospital also admitted to
inadequate credentialing of the chair of
Anesthesia and agreed to pay 750,000.

The Solution
General Considerations
Credentialing is a truly peer based process
Individuals being considered for privileges must
be reviewed with the information and detail
necessary to answer the core question. Will
this individual deliver high quality care to the
first and every subsequent patient?
No longer acceptable to use the question Can we
prove the individual is awful enough to not
approve or re-approve privileges? Instead
organizations should be answering the question
Do we have sufficient information to prove that
the individual continues to be as good as we
require?

Privileges that were once deemed lifetime
entitlements are not granted as true privileges.
Candidates must continuously prove themselves to
be worthy of trust
Credentialing combines a thorough initial
evaluation of an individuals qualifications and
an ongoing monitoring process
Core components of competency are judgment,
technical performance and outcome
? Article 5.B incorporates these components as
factors in the procedure for reappointment
? Judgment refers to the decisions made during
the course of care
selecting the right clinical protocol
the correct medication
appropriate tests
requesting necessary consultations

? Technical Performance focuses on execution of
professional skills used
surgical technique
history and physical exam
interpretation of laboratory values
adequacy of communications with other
professionals
? Outcomes have always been the publics
ultimate measure
of professional success
The operation was a success but the patient
died sums up the ultimate negative outcome
in addition to case specific outcomes, outcomes
now include cost of case, customer satisfaction
and the time it takes to achieve improvement

Conclusion Difficult decisions are now expected
to arise regularly (e.g. whether or not to grant
privileges to an applicant who only uses a more
costly and dangerous procedures. Even if the
applicants outcomes have been acceptable, the
Credentialing Committee is expected to consider
the costs and risks incurred in exposing patients
to outdated procedures.)

Core Credentialing
Over the past 3 decades privileging concepts have
progressed along a continuum from detailing each
privilege offered in a laundry list to granting
a large block of ill-defined privileges based on
specialty training
Presently these concepts have been effectively
combined through the concept of core privileges.
Concept of core privileges is meant to simplify
the privileging decisions by taking into account
the competence acquired throughout a full
residency training program and demonstrated by
board certification
? Candidates can be granted all privileges for
which their education and training qualifies
them without needing special consideration
? Core competency can only be assumed for
individuals who completed training after the
privileges were accepted as mainstream medicine

? Others, even if board certified, should be
asked to provide specific evidence of
competency
Problems with Core Privileging
? Over time training programs delete specific
skills and training. (Example Before 1990
all pathologists received training to perform
bone marrow aspirations. After 1995 this was
dropped as a core element of training.)

? Use of Board Certification as a basis for
core privileging (Example Board Certified
gynecologist being granted privileges to
perform hysterectomies without further
documentation. However, a pelvic exenteration
may still require documentation of specific
training since it is complex in nature and
infrequent, even in residency program.)
the fact that Board Certification may be a basis
for granting privileges in certain basic , common
procedures does mean that a physician is
competent to perform more complex and less common
procedures

When using core privileging do not overlook the
need to completely evaluate the candidate.
? Completion of a residency and passing a test
may not fully assure competent performance.
? JCAHO requires that when the Medical Staff
uses a system involving classification or
categorization of privileges, the scope of
each level of privileges must be well defined
and the standards to be met by the applicant
stated clearly for each category (MS.5.15.4)
? It is important that the principals of core
credentialing be consistent between practice
areas

Data Collection and Integration
Privileging must be based on accurate information
Information must be verified
? When possible it is best to use original
sources (e.g. schools, training programs,
licensing authorities)
Most commonly used objective date sources
? National Practitioner Data Bank (NPDB)
? AMA physicians profile registry
? Federated Board of State Medical Examiners

It is in the hospitals best interest to have an
extremely detailed application.
? should include meaningful questions which seek
complete details of significant issues
? undesirable candidates may actually choose not
to complete the application
Norwalk Hospitals Credentialing Policy states
that an application shall be complete when all
questions on the application have been answered
and all supporting documentation have been
supplied and all information verified
? Good Policy and should be adhered to
? Forced decisions without full information
are better answered with a decision of No

Many healthcare organizations prefer to avoid an
initial conflict and having to face a lawsuit
? better to have to defend a lawsuit centering
on your decision to not grant privileges than
to be a party to a law suit by an injured
patient claiming negligent credentialing

The present Credentials Policy at Norwalk
Hospital
JCAHO Compliant
? Not a guarantee that credentialing will not
become a problem unless strictly followed
Possible amendment to Economic Credentialing
Requirement
? Citizenship Criteria seeks to select
physicians who are willing to center their
practices in the community and deny privileges
to physicians who are seeking staff privileges
for purpose of obtaining potential referrals
? Conflicts Criteria Hospital policies which
prohibit conflicts of interest support
government programs to stop fraud and abuse.
Indeed, many conflict policies may be viewed as
extensions of ethics in Patient Referral Act
(STARK) to the private payor setting. OIG
published the following in the Comments of a
Solicitation regarding the practice of economic
credentialing

Increasingly, Physicians invest in and own
entities, such as ambulatory surgical centers,
cardiac catheterization labs, and specialty
hospitals, that compete with hospital services.
These physicians may be in a position to steer
profitable business or patients to their own
competing businesses through their control of
referrals. A credentialing policy that
categorically refuses privileges to physicians
with significant conflicts of interest would not
appear to implicate that anti-kickback statute in
most situations.
Moreover, the only issues which seem to concern
the OIG were (1) policies that allow the hospital
to have discretion as to when to apply the
policy, and (2) situations where the hospital
commands that the physician refer a specific
number of patients to the facility.

Need for strict adherence to Credentials Policy
Commitment from Board, Senior Management and
Medical Staff leaders
? At many hospitals the VP of Medical Affairs
who is employed by the hospital takes
responsibility for enforcement of the
credentialing policy
Credential Committee an important tool in the
process
? It is important that the Credentialing
Committee is an active empowered committee, they
are the first line of defense in this process
Importance of Documentation.

Re-credentialing Process
Need to avoid rubber stamping reappointment
applications
? Article 5.B Factors For Evaluations (Norwalk
Credentials Policy)
current clinical competence, judgment and
technical skill in the treatment of patients
current ability to safely and competently
exercise the clinical privileges requested and
perform the responsibilities of staff
appointment
capacity to satisfactorily treat patients as
indicated by the results of the Hospitals
performance improvement and professional and peer
review activities and
information on any lawsuits initiated since last
appointment which shall be made available to the
Credentials Committee by the relevant department
chair.
Honest objective assessments by Department
Chairman and Credentials Committee

Clinical Privileges for New Procedures under
Credentialing Policy - Article 4.A.2
Importance of communicating to medical staff the
rules for obtaining clinical privileges for New
Procedures and the need to follow them.
Need for strict enforcement of these rules and
documentation of the process
Support for this process from the Board,
Administration and Medical Staff Officers

Medical Staff Issues for 2005 and Beyond
Confidentiality HIPAA
Is the Medical Staff a covered entity within
the meaning of HIPAA?
If yes, are appropriate measures in place to
comply with HIPAA such as BAAs, procedures and
policies re Phl, etc?
If no, does it never-the-less make sense to
behave as if the answer is yes
Appoint a designated privacy official for the
Medical Staff

Conflicts of Interest
New payment models from managed care entities are
seeking to impose so-called best practices
standards for disease management protocols on
hospitals through the contracting process.
? Are appropriate coordination measures in
place to assure that MCO best practice mandates
are not in conflict with Medical Staff best
practice assumptions?
An effective working relationship between
hospital contracting personnel and the Medical
Staff is strongly suggested.

Corporate Compliance
All compliance measures to be initiated at the
hospital must permeate to the Medical Staff
level. Most important among the current
compliance issues are the following
? Personal Conflicts of interest
? Review of all Contracts with Medical Staff
Physicians who refer patients to the hospital
(Stark II and Anti-Kickback)

Credentialing
Programmatic Credentialing and Re-credentialing
policies should be adopted to guard against
recent attacks on the credentialing process by
the plaintiffs bar seeking to hold the Medical
Staff/Hospital liable for negligent credentialing

Pay-For-Performance (P4P) Initiatives
With two of Connecticuts largest MCOs (Anthem
and Aetna) launching P4P programs which pay
higher reimbursements for demonstrable programs
of clinical quality initiatives and physician
interdependence, the Medical Staff should
investigate the role it can play, together with
the hospital, in the development of such clinical
programs.
Medicare has started implementing P4P payments to
physicians involved in Physician Group Practice
(PGP) Demonstration projects around the
country. Physicians at Middlesex Hospital are
involved in the PGP program which seeks to
identity quality measures in Diabetes, Congestive
Heart Failure, Coronary Artery Disease and
Preventive Care.