Ethical and Legal Conflicts in Medicine

Educational Objectives

The goal of this program is improve clinical practice by providing clinicians with information about the functioning of corporate boards, accredited medical staff, and pay-for-performance programs. After hearing and assimilating this program, the clinician will be better able to:

1.   Assess the factors that define a corporation and govern its day-to-day operations.

2.   Avoid legal liabilities when serving on a corporate board.

3.   Fulfill obligations associated with belonging to a medical staff accredited by the Joint Commission on the Ac­creditation of Healthcare Organizations.

4.   Describe how pay-for-performance programs link incentives to specific goals related to quality care.

5.   Develop an approach to managing new clinical evidence that conflicts with pay-for-performance guidelines.

Faculty Disclosure

In adherence to ACCME Standards for Commercial Support, Audio-Digest requires all faculty and members of the planning committee to disclose relevant financial relationships within the past 12 months that might create any personal conflicts of in­terest. Any identified conflicts were resolved to ensure that this educational activity promotes quality in health care and not a proprietary business or commercial interest. For this program, the faculty and planning committee reported nothing to disclose.

Acknowledgments

Mr. Newton was recorded at 14th Annual Medical and Surgical Approaches to GI Disorders Symposium, held July 20-24, 2009, in Kiawah Island, SC, and sponsored by Division of Continuing Education, Medical College of Georgia, Augusta.  Dr. Satin was recorded at Family Medicine Update 2009, held May 13-15, 2009, in Minneapolis, MN, and sponsored by Univer­sity of Minnesota Continuing Medical Education and the Department of Medicine and Community Health, Minneapolis, MN. The Audio-Digest Foundation thanks the speakers and the sponsors for their cooperation in the production of this program.

Board and Medical Staff Leadership Duties and Potential Responsibilities

Andrew Newton, JD, Vice President for Legal Affairs, Medical College of Georgia, Augusta

Corporations: legal entities created under government authority; laws treat corporations as citizens (eg, permitted to own property and participate in lawsuits under corporate name); defining factors  —  government law (limits func­tioning and purpose), articles (internal laws and regulations), bylaws (details of routine operation) and directors (appointed by corporation through procedures specified in articles)

Board members and directors: manage and direct affairs of corporations; fiduciary duties  —  “loyalty, care, and obe­dience”; loyalty  —  acting in best interest of corporate entity; source of laws governing conflict of interest (COI); COI  —rules vary between corporations; require disclosure and management (at minimum); applies to all financial and personal interests; indirect interest through family and other social connections requires consideration; disclo­sure recommended by speaker as best general means of fulfilling loyalty duties; care  —  defined as care expected of “ordinarily prudent” person in similar position and circumstances; concept similar to “ordinary care” under medical malpractice law; Georgia precedent defines as “common sense, practical wisdom, and informed judgment”; direc­tors expected to take corporate matters seriously and devote adequate time necessary to consider issues brought be­fore corporate board; speaker asserts failure to ask questions or debate may indicate unhealthy corporate boards; obedience  —  refers to obeying articles and bylaws; directors expected to respect purposes and goals of corporation and carry out corporate mission

Subordinates: laws typically entitle directors to rely on information presented by officers, employees, committees of board, attorneys, consultants, and advisors (when presumed competent); ie, directors may assume veracity of infor­mation presented by reliable subordinates

Liabilities: courts typically do not reexamine decisions with benefit of hindsight; legal criteria assess whether direc­tors “acted with good faith belief that they were acting in the best interest of the corporation” (ie, demonstrated in­tention to do right) and “acted with the care of an ordinarily prudent person in a similar position” (ie, behaved reasonably); indemnification  —  legal protections specified by articles and bylaws of corporation; typically covers defense and payment of claims; granted only to employees attempting to act in best interest of corporation (“pure heart”); director’s and officer’s insurance (D and O)  —  typically maintained to protect board members against claims; speaker recommends familiarity with terms of D and O (eg, policy limits)

Compliance: policy manuals  —  typically approved by corporate board; provide critical information about distribu­tion of authority and internal controls (eg, specifying which employees may sign contracts and checks); reasonable compensation and personal benefit  —  tax compliance law applied to nonprofit corporations; requires gathering of benchmark data demonstrating reasonable employees compensation; Internal Revenue Service form 990  —  documentation of expenses and expenditures required for most nonprofit organizations; recently expanded; poten­tial discrepancies on 990 forms require close attention;  speaker recommends examining 990 forms (available on­line) before contributing to charities; Securities and Exchange Commission filings  —  associated with larger, publicly traded for-profit companies; smaller privately held companies typically have public filings with state au­thorities; speaker recommends general familiarity with filings, tax returns, and significant insurance claims

Medical staff: typically share governance and members with corporate boards; mandated by requirements from Joint Commission (JC) for specific corporate entities; composed of providers; focus on quality of care; self-governing (capable of autonomously passing rules and regulations), but accountable to corporate board; bylaws, rules, and regulations  —  adopted by medical staff; under standards for JC accreditation, bylaws require approval by both med­ical staff and governing board; conflicts between medical staff and corporate board commonly result in gridlock due to shared governance requirements; duties  —appointing new members; granting privileges to members; con­ducting peer reviews (to assess quality); providing fair hearings for adverse actions; legal status  —  treated as exten­sion of care facility (rather than separate legal entity); members of medical staff require knowledge of corporate governing documents (eg, bylaws, rules, and regulations); leadership should be familiar with JC expectations; ap­pointments and privileges  —  granted according to bylaws, rules, and regulations; speaker recommends seeking le­gal advice before making adverse decisions without clearly specified authority; collegiality  —  how well individuals on staff get along with others; applicable to appointments and privileges when directly affecting quality of care; economic credentialing  —  granting appointment or privilege based on economics rather than quality; fairly contro­versial; decisions typically require individualized legal advice; courts condone decisions based on overutilization tied to quality; court decisions frequently favor hospitals when physicians negatively affect finances; effect on qual­ity primarily considered; closed or exclusive staff  — highly controversial; effect on competition primarily consid­ered; legal decisions frequently stem from antitrust law; tactics permissible in larger markets may unfairly compromise competition in smaller markets; limiting size to prevent overcrowding acceptable; provision of fair hearings  —  important role of medical staff; providing due process (notification and opportunity to speak) critical; federal and state laws occasionally grant immunity to peer review decisions; at minimum, accused practitioners re­quire notice of charges and hearing date; bylaws specify rules for discovery of evidence; hearing must give defen­dant opportunity to present and respond; mandatory that  decision panels be impartial (ie, exclude anyone involved with incident); medical staff bylaws, rules, and regulations determine right to legal counsel; public hospitals more commonly require attorneys (due to government involvement); decisions or recommendations by panels required in writing (JC standard)

Laws concerning medical staff: Healthcare Quality Improvement Act  —  federal law granting immunity to medical staff taking adverse action against providers; medical staff must demonstrate reasonable behavior in 4 ways 1) dem­onstrated reasonable belief action in furtherance of quality health care, 2) acted after reasonable effort to obtain rel­evant facts, 3) acted after adequate notice of hearing procedures afforded to accused practitioner, 4) acted in reasonable belief action warranted; health issues  —hospitals must reasonably accommodate providers with disabil­ities; legal protections include disabilities affecting movement or mental capacity and infections (eg, HIV positiv­ity); consider risk posed to patients by individual providers in their duties; Centers For Disease Control and Prevention issue guidelines for infected providers; occasionally regulated by specialty boards; care facilities should follow universal precautions assuming any provider or patient potentially carries infection; addictions  —  providers in recovery from substance abuse protected from discrimination by Americans With Disabilities Act; questions about beginning of recovery should be addressed to provider of individual addiction treatment

Rare claims: negligent credentialing claims  —  accuse hospital of fault for granting privileges (eg, physicians granted permission to use medical device after only limited experience); negligent policy claims  —  allege hospital proce­dures and policies insufficient to prevent malpractice (eg, negligent blood bank policies transmit infections); poli­cies brought before hospital board require evaluation for potential liability

Ethics and Pay-for-Performance

David J. Satin, MD, Assistant Professor, Department of Family Medicine and Community Health, University of Minnesota, Minneapolis

Pay-for-performance (P4P): highly politicized issue; third-party payer (eg, insurers) or health system (eg, health maintenance organization [HMO]) awards periodic bonuses linked with specific quality-related goals; incentives  —standard P4P provides monetary rewards (financial incentive); many projects publicly display data related to clinics or clinicians (eg, Minnesota Community Measurement Project), creating social incentives; studies show social in­centives and financial incentives equally effective; behavior changes associated with public display of data found equal to changes yielded by 10% alteration in salary; physician tiering systems  —  rankings based on quality and ef­ficiency; patients charged different copayment rates based on physician tier ranking

Performance measurements: typically 1) structural measures (eg, bonuses for electronic medical records), 2) pro­cess measures (eg, checking hemoglobin (Hb) A_1c levels every 3 mo in diabetic patients) or, 3) outcome measures (most popular; eg, achieving Hb A_1c <7% and BP <130/80 mm Hg in diabetic patients); performance goals  —  national P4P system through Centers for Medicaid and Medicare Services (CMS) currently incorporates 178 stan­dard measures; all independent P4P programs (created by eg, insurers, HMOs) set individual measures; in Minne­sota, primary care physicians subject to 11 different programs with 11 sets of measures and goals; design elements of P4P programs vary (eg, Arizona program pays greater bonuses for reducing Hb A_1c from 14% to 12% than for reductions from 12% to 10%)

Incentivizing: in United States, P4P programs augment physician salaries (ie, rewards paid on top of standard fees); rewards range from 1.5% to 40% of billings; most programs provide true bonuses; few withhold percentage of fees for redistribution as P4P rewards; P4P rationale  —  incentives reliably alter physician behavior; incentivizing physi­cian behavior toward particular guidelines typically increases adherence; following certain guidelines or pursuing specific goals shown to improve outcomes; however, programs seeking to improve outcomes through incentives have failed; incentives improved intermediate level markers (eg, Hb A_1c levels, BP measurements, adherence to b-blockers and aspirin), but failed to improve critical measures such as all-cause mortality, morbidity, and repeat myocardial infarction (in United States); preliminary improvements seen in Britain; office-level changes may re­quire many years to prove and demonstrate benefit

Action to control cardiovascular risk in diabetes (ACCORD) trial: randomized trial of >10,000 patients with type 2 diabetes, cardiovascular disease, or associated risk factors; compared standard glucose control (reduction of Hb A_1c to 7%-7.9%) to intensive therapy (reduction of Hb A_1c to <6%); at 1 yr, achieved stable median Hb A_1c levels of 7.5% for standard group and 6.4% for intensive group; at 3.5 yr, total deaths 203 for standard group and 257 for in­tensive; concluded intensive therapy to target normal Hb A_1c levels increased mortality; unintended effects of inten­sive therapy possibly responsible (rather than lower Hb A_1c values); intensive arm terminated by National Institutes of Health in 2008 due to increased mortality; >1 yr later, many P4P programs still issued bonuses for maintaining Hb A_1c levels <7%; delays in updating P4P goals create potential conflicts (eg, physicians forced to choose between adopting recent therapeutic developments or maintaining lower copayment rates granted by P4P adherence)

Patterns of adopting guidelines: can divide physicians into conservative adopters (follow guidelines until official change published), liberal adopters (base specific areas of practice on current research), and independent adopters (do not believe in guidelines; make decisions based on literature alone); Twin Cities family residency survey  —par­ticipants reported their response to ACCORD findings while still subject to unrevised Minnesota P4P guidelines; 5% to 10% applied old treatment guidelines with exceptions; 30% to 40% continued applying older guidelines (no change); largest cohort responded they would move to different guidelines with different Hb A_1c recommendations; due to large number of diverse guidelines available, physicians may seek out guidelines advocating nearly any pre­ferred practice; small number of participants ceased following guidelines related to specific area affected by clini­cal findings; 1 to 2 abandoned P4P guidelines; none abandoned guidelines completely; faculty more conservative than residents when adopting changes

Obsolete guidelines: updating clinical practice based on new evidence historically problematic, but P4P creates new dilemmas when deciding which evidence to adopt; speaker asserts all 176 American Medical Association P4P guidelines will eventually be overturned; clinicians must weigh strength of guidelines against strength of evidence

US Preventive Services Task Force: representative stated 9% of all guidelines outdated at publication; average lifes­pan of guideline 5.4 yr (before being overturned by new evidence)

Quantitative approaches to quality improvement: abandoning these approaches difficult to defend; Pierre Louis  —  published study in 1835 assessing bloodletting for pneumonia; participants subjected to varying amounts of bloodletting; at 1 yr, mortality rates increased in proportion to amount of blood drawn; findings either ignored, or cited as proof statistics inapplicable to complexities of medicine; findings not reevaluated for 20 yr; speaker asserts that arguments against quantitative approach (eg, counting outcomes) resemble criticisms leveled at Pierre Louis (eg, alleging outcomes too complex to accurately measure); P4P applied as tool for incentivizing quantitative ap­proaches to quality improvement

Conclusions: speaker urges P4P and quality improvement programs to develop systems for timely guideline revi­sions in response to new clinical research; individual clinicians should develop strategies for responding to new de­velopments, in absence of updated guidelines or P4P leadership

Suggested Reading

Baker T, Griffith SJ: The missing monitor in corporate governance: the directors' & officers' liability insurer. Georgetown Law Journal, 95:175, 2007; Buse J: Action to control cardiovascular risk in diabetes (ACCORD) trial: design and methods. The American Journal of Cardiology 99:S21, 2007 Glickman SW et al: Pay for performance, quality of care, and out­comes in acute myocardial infarction. JAMA 297:2373, 2007; Lindenauer PK et al: Public reporting and pay for perfor­mance in hospital quality improvement. NEJM 356:486, 2007; Lucian LL, Fromson JA: Problem doctors: is there a system-level solution? Annals of internal medicine 144:107, 2006; Olsen M: The statute of limitations for indemnification when no charges are filed: how soon is a director required to make a claim? Journal of Corporation Law 31:1035, 2006; Rosenthal MB et al: Pay for performance in commercial HMOs. NEJM 355:1895, 2006; Tassel KV: Hospital peer review standards and due process: moving from tort doctrine toward contract principles based on clinical practice guidelines. Seton Hall Law Review 36:1179, 2006; Werner RM, Bradlow ET: Relationship between Medicare’s hospital compare perfor­mance measures and mortality rates. JAMA 296:2694, 2006; Wynn JP: Legal liability coverage and voluntary disclosure. The Accounting Review 83:1639, 2008.