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TEX. OCC. CODE § 157.005: “A person to whom a physician delegates the performance of a medical act is
not considered to be practicing medicine without a license by performing the medical act unless the
person acts with knowledge that the delegation and the action taken under the delegation is a violation of
this subtitle.”
(a) A physician may delegate to a qualified and properly trained person acting under the
physician's supervision any medical act that a reasonable and prudent physician would find
within the scope of sound medical judgment to delegate if, in the opinion of the delegating
physician:
(1) the act:
(A) can be properly and safely performed by the person to whom the medical act
is delegated;
(B) is performed in its customary manner; and
(C) is not in violation of any other statute; and
(2) the person to whom the delegation is made does not represent to the public that the
person is authorized to practice medicine.
(b) The delegating physician remains responsible for the medical acts of the person performing
the delegated medical acts.
(c) The board may determine whether:
(1) an act constitutes the practice of medicine, not inconsistent with this chapter; and
(2) a medical act may be properly or safely delegated by physicians.
Tex. Occ. Code 157.052(c) - At a site serving a medically underserved population, a physician licensed
by the board may delegate to a registered nurse or physician assistant acting under adequate physician
supervision the act of administering, providing, or carrying out or signing a prescription drug order, as
authorized by the physician through a physician's order, a standing medical order, a standing delegation
order, or another order or protocol as defined by the board.
• “Site serving a medically underserved population” means:
(A) a site located in a medically underserved area;
(B) a site located in a health manpower shortage area;
(C) a clinic designated as a rural health clinic under 42 U.S.C. Section
1395x(aa);
(D) a public health clinic or a family planning clinic under contract with the
Texas Department of Human Services or the Texas Department of Health;
(E) a site located in an area in which the Texas Department of Health
determines there is an insufficient number of physicians providing services to
eligible clients of federal, state, or locally funded health care programs; or
(F) a site that the Texas Department of Health determines serves a
disproportionate number of clients eligible to participate in federal, state, or
locally funded health care programs. TEX. OCC. CODE § 157.052(a)(4)
Physician supervision is adequate for the purposes of this section if a delegating physician:
1. is responsible for the formulation or approval of the physician's order, standing
medical order, standing delegation order, or other order or protocol, and periodically
reviews the order and the services provided patients under the order;
2. is on-site to provide medical direction and consultation at least once every 10
business days during which the advanced practice nurse or physician assistant is on-site
providing care;
3. receives a daily status report from the advanced practice nurse or physician
assistant on any problem or complication encountered; and
4. is available through direct telecommunication for consultation, patient referral, or
assistance with a medical emergency.
• Tex. Occ. Code 157.0541(b) – At an alternate site, a physician licensed by the board may delegate to
an advanced practice nurse or physician assistant, acting under adequate physician supervision, the
act of administering, providing, or carrying out or signing a prescription drug order as authorized
through a physician's order, a standing medical order, a standing delegation order, or another order or
protocol as defined by the board.
o “alternate site” means a practice site:
(1) where services similar to the services provided at the delegating
physician's primary practice site are provided; and
(2) located within 75 miles of the delegating physician's residence or
primary practice site.
o Note that there are different standards for “adequate physician supervision” under this statute.
See TEX. OCC. CODE § 157.0541(c).
• B/c the nurse and PA can sign a prescription drug order, it is unnecessary to leave a presigned
prescription pad.
MEDICARE/MEDICAID CERTIFICATION
o Can shut down, but are intermediate sanctions – state inspects, state closes, Medicare withdraws
funding, 15 day notice prior to termination, patients can stay until course of treatment done
Have to give procedural DP, but no constitutional claim b/c no state action [Heckler –
Medicare does surveys]
Cospito – loss of benefits
o Certification is a voluntary procedure for health care organizations to meet the qualifications for
participation in government funding programs (as opposed to Licensure, which is a mandatory
governmental process, and accreditation, which is a voluntary private process.)
o To receive funding under the Medicaid Act, “a state must submit to the Secretary and have
approved by the Secretary a plan for medical assistance which meets the requirements of” 42
USC sec. 1396a(a)… “The plan must include descriptions of the standards and methods the state
will use to assure that medical or remedial care services provided to the recipients are of high
quality… The appropriate state agency must determine on an ongoing basis whether the
participating institutions meet the requirements for continued participation…” In conducting the
review the state must use federal standards, forms, methods and procedures… See Textbook Page
401 State of Smith v. Heckler).
o When a Hospital enters into a Medicare provider agreement it specifically undertakes to comply
with Federal statutes and regulations governing Medicare certified hospitals; see section 1861(e)
of the Social Security Act, 42 U.S.C. § 1395x(e); 42 C.F.R. Parts 482 and 488. Idem.
o “CMS may terminate a provider's agreement to participate in the Medicare program if CMS
determines that the provider "fails substantially to meet the applicable provisions of section
1861." Section 1866(b)(2)(B) of the Act. CMS may also terminate a provider's agreement to
participate in the Medicare program where the provider is not in substantial compliance with the
provisions of title XVIII of the Act or the applicable regulations or if the hospital no longer
substantially meets the appropriate conditions of participation or requirements. Section 1866(b)
(2)(A) of the Act; 42 C.F.R. sec. 489.53(a)(1), (3).
o A hospital that is dissatisfied with CMS's determination to terminate it from participation in the
Medicare program is entitled to a hearing. Sections 205(b), 866(h)(1) of the Act; 42 C.F.R. sec.
498.5(b), 498.3(b).
o The process of determining compliance and challenging adverse decision provide substantial
procedural protections to providers. See Textbook page 407.
o The most intense disputes arise when findings are such that the facility is shut down immediately,
without a chance for correction or rebuttal. These shutdowns have been challenged as
unconstitutional but usually without success considering the patient protection concerns at stake
and the ample procedural rights following a temporary shutdown. See Textbook page 407.
o Remember that a constitutional challenge requires state action, which usually doesn’t exist for
private accreditation (like that of the Joint Commission for the Accreditation of Hospitals).
TEO + ANTITRUST
1. Page 380- The History of Marcus Welby Hospital and How it Grew
A charity will be tax exempt under section 501(c)(3) of the Internal Revenue Code if it is organized
exclusively for the charitable purposes set out in its articles, no part of its net earnings inure to the benefit
of a private individual or shareholder, and so long as it does not engage in certain lobbying and political
activities. Harding Hospital, Inc v. United States. The provision of free or below cost service to those
unable to pay is no longer essential. Eastern Kentucky Welfare Rights Organization v. Simon. A nonprofit
cannot legally divert assets to any purpose other than its charitable purpose set out in its Articles, or else,
face Ultra Vires liability. Queen of Angels Hospital v .Younger. To keep nonprofit tax exempt status
hospitals must demonstrate their property is being used exclusive for their stated charitable purpose. Utah
County v. Intermountain Health Care, Inc.
Learned professions are not exempt from the Sherman Act. Weiss v. York. If there is a (1)
contract, combination, or conspiracy, (2) restraint of trade, and (3) an effect on interstate commerce, there
will be a violation of §1 of the Sherman Act. Id. A medical staff may satisfy the conspiracy requirement
within itself, but it will not be able to conspire with a hospital. Id. However, if the actors of the conspiracy
are operating in the ordinary course of business, and the economic motivations are parallel to the
corporate body as a whole, there is only one entity and thus no conspiracy. Id. An actor will not violate §1
by way of restraint of trade if under all the circumstances there is not unreasonable restraint. Id. But,
boycotts or concerted refusals to deal are per se illegal restraints of trade. Id. Plaintiffs claiming per se
violations must make a threshold argument showing whether the practice is not justified by plausible
arguments that it is intended to enhance overall efficiency and make markets more competitive, and
showing that the defendant possess the market power and exclusive access to an element essential to
effective competition. Hassan v. Independent Practice Associates. So long as it is clear from the record
that the agreement is not plainly anticompetitive there will not be a per se violation. Arizona v. Maricopa
County Medical Society.
§2 of the Sherman Act prohibits monopolization. Sherman Act §2. To be considered a monopoly an actor
must possess monopoly power in the relevant market and have willfull acquisition or maintenance of that
power as distinguished from growth or development as a consequence of superior product, business
acumen, or historic accident. Ocean State Physicians Health Plan, Inc v. Blue Cross & Blue Shield of
Rhode Island. Exclusionary conduct tends to impair the opportunities of rivals, but also either does not
further competition on the merits or does so in an unnecessarily restrictive way. Id. However, a desire to
crush a competitor standing alone is insufficient to make out a violation of the antitrust laws. Id. The
McCarran Ferguson Act exempts from the antitrust laws conduct which are part of the business of
insurance, regulated by the state, and not in the form of boycott, coercion or intimidation. Id. Three
criteria relevant in determining whether a practice is part of the business of insurance are (1)whether a
particular practice has the effect of transferring or spreading a policy holder’s risk, (2) whether the
practice is an integral part o the policy relationship between the insurer and the insured, (3) whether the
practice is limited to entities within the insurance industry. Id. Additionally, an insurer, like any buyer of
goods or services, is lawfully entitled to bargain with its providers for the best price it can get. Id.
o “The rules governing the use of the assets of a nonprofit charitable organization are well
established: All the assets to a corporation organized solely for charitable purposes must
be deemed to be impressed with a charitable tryst by virtue of the express declaration of
the corporation’s purposes. . .It follows that a nonprofit corporation cannot legally divert
its assets to purposes other than charitable purposes.” Queen of Angels Hospital v.
Younger, citing Pacific Home v. County of Los Angeles (p. 423 text).
o Here, while the JV bt a non-profit corp and a profit corp is not per se invalid, and it’s ok
that MWH wants to sell its nursing home (which is separate from the hospital), so long as
it continues to run its hospital in LA with the religious, educational, and charitable
purposes set out in the Articles, MWH’s contemplated arrangement is invalid due to the
proposed use of the capital funds from selling the home:
o The arrangement bt MWH and the for profit HMO doesn’t appear to be at arms- length
with any definite benefit that will further the charitable mission of MWH.
o a) The 1% ownership interest for each of the Trustees is not appropriate: this
creates an inurement problem. Absolute dedication of assets to charity is a precondition
to exemption under section 501(c)(3).
o b) The discretionary 30% profit distribution “from time to time” as the HMO
Board chooses does not guarantee or even reasonably ensure a return on MWH’s
investment, that could be used to benefit MWH’s charitable purposes; instead, arguably it
could inure private benefit to the HMO.
o c) If the arrangement were more concrete, there would not necessarily be any
issue with a profit distribution so as long as the profits were used by MWH for some
purpose laid out in the Articles. A pledge by the HMO to use 35% or more of its
revenues (the amount equal or greater to value of MWH’s investment in the HMO) to pay
for charity services or send patients to MWH would likely be appropriate.
Inurement – A hospital may lose its tax exempt status if part of its
net earnings inure to the benefit of a private individual or
shareholder. Hospital-Physician Joint Venture – General Counsel
Memo. A hospital cannot legally divert assets to any purpose other
than charitable purposes – ultra vires concern. Queen of Angels
Hospital v. Younger. Hospitals must demonstrate their property is
being used exclusively for their stated charitable purpose. Utah
County v. Intermountain Health Care, Inc. If MW chooses to be a
nonprofit, MW is advised to be precautious in any joint venture
agreement it forms to be sure that the new entity is following its
charitable purpose stated in its Articles.
DELEGATION
TEX. OCC. CODE § 157.005: “A person to whom a physician delegates the performance of a medical act is
not considered to be practicing medicine without a license by performing the medical act unless the
person acts with knowledge that the delegation and the action taken under the delegation is a violation of
this subtitle.”
(d) A physician may delegate to a qualified and properly trained person acting under the
physician's supervision any medical act that a reasonable and prudent physician would find
within the scope of sound medical judgment to delegate if, in the opinion of the delegating
physician:
(1) the act:
(A) can be properly and safely performed by the person to whom the medical act
is delegated;
(B) is performed in its customary manner; and
(C) is not in violation of any other statute; and
(2) the person to whom the delegation is made does not represent to the public that the
person is authorized to practice medicine.
(e) The delegating physician remains responsible for the medical acts of the person performing
the delegated medical acts.
(f) The board may determine whether:
(1) an act constitutes the practice of medicine, not inconsistent with this chapter; and
(2) a medical act may be properly or safely delegated by physicians.
Tex. Occ. Code 157.052(c): At a site serving a medically underserved population, a physician licensed
by the board may delegate to a registered nurse or physician assistant acting under adequate physician
supervision the act of administering, providing, or carrying out or signing a prescription drug order, as
authorized by the physician through a physician's order, a standing medical order, a standing delegation
order, or another order or protocol as defined by the board.
• “Site serving a medically underserved population” means:
(G) a site located in a medically underserved area;
(H) a site located in a health manpower shortage area;
(I) a clinic designated as a rural health clinic under 42 U.S.C. Section
1395x(aa);
(J) a public health clinic or a family planning clinic under contract with the
Texas Department of Human Services or the Texas Department of Health;
(K) a site located in an area in which the Texas Department of Health
determines there is an insufficient number of physicians providing services to
eligible clients of federal, state, or locally funded health care programs; or
(L) a site that the Texas Department of Health determines serves a
disproportionate number of clients eligible to participate in federal, state, or
locally funded health care programs. TEX. OCC. CODE § 157.052(a)(4)
Physician supervision is adequate for the purposes of this section if a delegating physician:
5. is responsible for the formulation or approval of the physician's order, standing
medical order, standing delegation order, or other order or protocol, and periodically
reviews the order and the services provided patients under the order;
6. is on-site to provide medical direction and consultation at least once every 10
business days during which the advanced practice nurse or physician assistant is on-site
providing care;
7. receives a daily status report from the advanced practice nurse or physician
assistant on any problem or complication encountered; and
8. is available through direct telecommunication for consultation, patient referral, or
assistance with a medical emergency.
• Tex. Occ. Code 157.0541(b) At an alternate site, a physician licensed by the board may delegate to
an advanced practice nurse or physician assistant, acting under adequate physician supervision, the
act of administering, providing, or carrying out or signing a prescription drug order as authorized
through a physician's order, a standing medical order, a standing delegation order, or another order or
protocol as defined by the board.
o “alternate site” means a practice site:
(1) where services similar to the services provided at the delegating
physician's primary practice site are provided; and
(2) located within 75 miles of the delegating physician's residence or
primary practice site.
o Note that there are different standards for “adequate physician supervision” under this statute.
See TEX. OCC. CODE § 157.0541(c).
• B/c the nurse and PA can sign a prescription drug order, it is unnecessary to leave a presigned
prescription pad.
MEDICARE/MEDICAID CERTIFICATION
o Can shut down, but are intermediate sanctions – state inspects, state closes, Medicare withdraws
funding, 15 day notice prior to termination, patients can stay until course of treatment done
Have to give procedural DP, but no constitutional claim b/c no state action [Heckler –
Medicare does surveys]
Cospito – loss of benefits
o Certification is a voluntary procedure for health care organizations to meet the qualifications for
participation in government funding programs (as opposed to Licensure, which is a mandatory
governmental process, and accreditation, which is a voluntary private process.)
o To receive funding under the Medicaid Act, “a state must submit to the Secretary and have
approved by the Secretary a plan for medical assistance which meets the requirements of” 42
USC sec. 1396a(a)… “The plan must include descriptions of the standards and methods the state
will use to assure that medical or remedial care services provided to the recipients are of high
quality… The appropriate state agency must determine on an ongoing basis whether the
participating institutions meet the requirements for continued participation…” In conducting the
review the state must use federal standards, forms, methods and procedures… See Textbook Page
401 State of Smith v. Heckler).
o When a Hospital enters into a Medicare provider agreement it specifically undertakes to comply
with Federal statutes and regulations governing Medicare certified hospitals; see section 1861(e)
of the Social Security Act, 42 U.S.C. § 1395x(e); 42 C.F.R. Parts 482 and 488. Idem.
o “CMS may terminate a provider's agreement to participate in the Medicare program if CMS
determines that the provider "fails substantially to meet the applicable provisions of section
1861." Section 1866(b)(2)(B) of the Act. CMS may also terminate a provider's agreement to
participate in the Medicare program where the provider is not in substantial compliance with the
provisions of title XVIII of the Act or the applicable regulations or if the hospital no longer
substantially meets the appropriate conditions of participation or requirements. Section 1866(b)
(2)(A) of the Act; 42 C.F.R. sec. 489.53(a)(1), (3).
o A hospital that is dissatisfied with CMS's determination to terminate it from participation in the
Medicare program is entitled to a hearing. Sections 205(b), 866(h)(1) of the Act; 42 C.F.R. sec.
498.5(b), 498.3(b).
o The process of determining compliance and challenging adverse decision provide substantial
procedural protections to providers. See Textbook page 407.
o The most intense disputes arise when findings are such that the facility is shut down immediately,
without a chance for correction or rebuttal. These shutdowns have been challenged as
unconstitutional but usually without success considering the patient protection concerns at stake
and the ample procedural rights following a temporary shutdown. See Textbook page 407.
o Remember that a constitutional challenge requires state action, which usually doesn’t exist for
private accreditation (like that of the Joint Commission for the Accreditation of Hospitals).
CORPORATE PRACTICE OF MEDICINE
B Amend the Medical Staff Bylaws to declare that additional criterion for
medical staff membership is to practice an efficient style of medicine that
avoids wasting medical resources or providing unnecessary care.
MW may amend. Generally, hospital bylaws regarding business
judgments will be followed even if they incidentally effect medical
personnel issues. Business judgment issues are better addressed by
the corporation, not the medical profession. Mahan v. Avera St.
Luke. Thus, MW is advised that so long as such amendment would
withstand scrutiny, to the extent it does not substantively conflict
with the bylaws bargained for by the medical staff or undermine
their physicians’ medical treatment decisions. This should be a
purely economic concern so as to avoid any corporate practice of
medicine issues.
C. Amend the medical staff bylaws to declare that any physician who
consistently loses money for the hospital will be removed for the medical
staff.
o Probably not. Hospital bylaws and medical staff bylaws are a binding
contract between the two which must be honored and followed. St.
John’s Hospital Medical Staff v. St John regional Medical Center.
Cannot amend med staff w/o procedure.
o However, Hospital bylaws regarding business judgments will be
followed even if they incidentally effect medical personnel issues – K in
nature. Mahan v. Avera St. Luke. First, since the medical staff legally
bargained for its bylaws with MW, MW does not have the power to
unilaterally amend the medical staff bylaws. And second, although
Mahan stands for the general principle that a Hospital knows business
better than a medical staff, and decisions relating to economic
business concerns should be left to the hospital, a hospital can not
breach its agreement with the medical staff via its bylaws without
facing breach of contract liability. Thus, although the purpose behind
this purposed amendment is one of economic concern, MW is still
advised against such amendment.
STARK
o Financial relationship
o 1395 (h)(6)
o Includes durable medical equipment (DME) but is wheelchair DME? See 1395 x(n)-
wheelchair is DME
o 1395nn(h)(5)
o Except as provided in subparagraph (c), in the case of an item or service for which
payment may be made under part B, the request by a physician for the item or
service, including the request by a physician for a consultation with another physician
(and any test or procedure ordered by, or to be performed by (or under the
supervision of) that other physician) constitutes a “referral” by a “referring
physician”
o Borderline if there is a request and case for being a referral is weak here
o (A) except as provided in subsections (c) and (d) of this section, an ownership or
investment interest in the entity, or
o Entitron is traded on small Puerto Rican stock exchange and had stockholders equity
of 74 million last year but average of 80 million for 3 years before that
o (c)
If have stock in big company then not count as entity and have defined big to
be really big so looks like entitron falls under exceptions unless quotations
are not published on daily basis. Thus ownership of entitron is NOT
considered to be ownership or investment interest
o (d)
But in this example services are provided near hospital but not at the hospital
so exception is not applicable
o Physicians’ services provided personally by (or under the personal supervision of)
another physician in the same practice group (as defined in subsection (h)(4) of this
section as the referring physician
4(A)(i) requires that all services of the physicians who are members provide
substantially the full range of services which the physician routinely provides,
including medical care… through the joint use of shared office space.
Group practice exception fairly narrow and dealing with indirect referrals and
not satisfy (4)(a)(iv)
o In the case of designated health services provided by a hospital (other than a hospital
described in paragraph (1) if- the referring physician is authorized to perform services
at the hospital, and the ownership or investment interest is in the hospital itself (and
not merely in the subdivision of the hospital)
You can refer to hospital in which you have interest if you are authorized to
perform services
o If genuinely just serving rural area (and not other locales) then give exception and not
considered ownership or investment interest
o Is Stephenville rural?
ANTIKICKBACK
o (1) Whoever knowingly and willfully solicits or receives any remuneration (including
any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in
kind—
o (A) in return for referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made in whole or
in part under a Federal health care program, or
o shall be guilty of a felony and upon conviction thereof, shall be fined not more than
$25,000 or imprisoned for not more than five years or both
o (2) whoever knowingly and willfully offers or pays any remuneration… (same as in
(1)
• Think Dr Y is ok here- have to show mens rea, receipt/solicitation, “in return”, federal health
program. Can show federal health program but as to others think Dr Y is ok
o Hanlester case (p 582) defines knowingly and willfully in the antikickback statute as
requiring appellants to (1) know that 1128b prohibits offering or paying remuneration
to induce referrals, and (2) engage in prohibited conduct with the specific intent to
disobey the law
o Greber case “if one purpose of the payment was to induce future referrals, the
Medicare statute has been violated”
• Addt’l Chandler hypo: If Dr Y did not know but when receives charity card asks why.
Pharmacist says b/c have promotion for providers who refer the most prescriptions and you
had number 23 and picked yours out.
o Point is law creates vast realm of prosecutorial discretion. Under this addt’l info on
hypo then probably have issues
o Instinct that not violating statute but concerned a little with bonus tied to getting
100 promises signed.