The Emerging Exposure of Physicians in Hospice Care

Over the years the role of the physician in home care and hospice has evolved dramatically. Previously, the medical director of the organization was typically a volunteer – either a young doctor struggling to establish a full-time medical practice or an older physician transitioning into retirement – whereas now it is more common to have a salaried physician as an integral member of the organization’s medical team. Today, home care and hospice facilities employ physicians as medical directors who are skilled both in palliative pain and symptom management, and in relationship building with the local medical community.

The role of employed physicians as medical directors of hospices and home care facilities is critical to an organization’s success. These physicians are responsible for a number of critical facets in an organization, including: overseeing the clinical aspects of the hospice or home care organization (as required by Medicare) and directing overall patient care policies; medical education via formal rotations, fellowships and other mentoring opportunities; consultation to hospice and home care staff and community physicians on difficult cases; palliative care consultation outside of the Medicare hospice benefit; in-service training for hospice/home care staff and CEU offerings to community physicians; active participation in admission/eligibility/recertification decisions; active participation in interdisciplinary team meetings; home visits to hospice patients; having a voice in agency administrative direction on the senior management team; and quality improvement and cost containment through activities such as drug formularies, protocol development and working with community physicians.

Along with the important role of the medical director come risks of which the home care facility and hospice must be aware to minimize the additional exposures they face in the event that a decision made by the director compromises the care to patients or results in a negative outcome for the organization. Following are several steps to help minimize the organization’s liability risks:

  • Educate medical directors on the duty they have to every patient, the standard of care they should meet and the understanding that they are responsible for the medical care provided. The medical director’s job description should accurately reflect understanding of this duty and standard.
  • Give medical directors access to the patient’s medical information upon admission to the hospice and before they sign the patient’s certification form. The medical director should have adequate time to review medical information to make an informed decision before certifying the admission.
  • Establish guidelines for medical directors to reference when admitting a patient to hospice care or when taking on a patient for home care. The guidelines should include informing patients about the role of the medical director in their care and the interdisciplinary team approach to planning care.
  • Encourage discussions between medical directors and attending physicians about each patient and his or her specific needs to clarify any gray areas concerning certification of the patient.
  • Educate attending physicians on the concept of hospice care and the criteria used to make appropriate admission decisions.
  • Encourage the medical director to make a home visit when significant questions are raised about admission certifications or recertifications.
  • Ensure that medical directorship arrangements are in writing, that physicians are compensated at fair value, and outline the services the physicians are to perform as well as the compensation for such services.

This last point is of particular importance as medical directors in their role are in a prime position to generate business for a health care organization. As a result, the government over the last few years has been looking at the relationship between the medical director and the health care organization with heightened scrutiny. It is, therefore, critical that the medical directorship arrangement is in strict compliance between the provider and the physician with regard to three areas: the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark Law) and the False Claims Act (FCA).  If an organization is found to be in violation of any of these laws, there can be staggering financial tolls, administrative actions and, in some cases, criminal liability against both physicians and providers.

The AKS law prohibits the knowing and willful payment of remuneration to induce or reward patient referrals or the generation of business involving any item or service payable by federal healthcare programs (drugs, supplies or healthcare services for Medicare and Medicaid patients). Remuneration can include anything from cash to free office space, expensive hotels stays and meals to excessive compensation for medical directorships. The statute covers those who offer or pay remuneration as well as those who solicit or receive remuneration. Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms and exclusion from participation in federal healthcare programs.

The Stark Law prohibits physicians from referring patients who receive health care services paid by Medicare or Medicaid to entities with which the physician has a financial relationship, unless an exception applies. Financial relationships include both ownership/investment interests and compensation arrangements such as medical directorships. In addition, the Stark Law requires that physicians must be paid at fair market value and that the provider/physician arrangement is commercially reasonable. Penalties for violations of the Stark Law include fines as well as exclusion from participation in federal health care programs.

The FCA creates liability for any person who knowingly presents, or causes to be presented, a fraudulent claim for payment or approval; or who knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; or who conspires to commit a violation of the FCA. FCA violations include claims such as overcharging the government for services rendered or charging for services not performed.

With the responsibility an employed physician has as a medical director of an organization it is essential that a health care organization’s Entity Professional Liability insurance provides coverage in the event there is a claim for patient injuries, illnesses or even death related to the physician’s role in his or her medical directorship capacity. It is also important that home health care and hospice organizations implement a systematic and thorough compliance program that routinely monitors and provides oversight of their medical directorship arrangements to avoid any fines or other serious violations

Physicians should always be required to carry their own individual Professional Liability insurance coverage that follows them wherever they provide services. The home care or hospice entity should also contemplate purchasing individual Professional Liability for their employed physicians, in addition to their Entity Professional Liability coverage. Manchester Specialty provides health care organizations with Entity Professional Liability coverage that insures employed physicians as medical directors. To find out more about our coverage, you or your local agent/broker can contact us at 855.972.9399.