Minimize your risk of being decredentialed

By Bruce J. Goldstein, Esq. & Mark D. Abruzzo, Esq.

Recently there has been an upsurge in the number and frequency of inquiries regarding adverse credentialing decisions—i.e., decisions in which a managed care organization (MCO) disapproves a physician’s application to become a part of a panel, or refuses to renew an existing physician’s contract and kicks them off a panel. This upsurge can be attributed to a number of factors including the passage of time (resulting in an increased number of reviews), legislative changes mandating periodic credentialing and the influence of supply and demand in the marketplace.

Adverse credentialing decisions can have adverse consequences for both the sender and the recipient. This article addresses adverse credentialing decisions from the perspectives of both the MCO and the physician. From the physician’s perspective, we will explore ways to avoid an adverse credentialing decision and what to do if one is received. From the MCO’s perspective (and remember: there are physician controlled MCOs!), we will discuss possible pitfalls of decredentialing and how best to limit them.

Most “how to” articles start with an anecdote—this one being no exception: A large, reasonably successful family practice servicing an elderly and indigent population was referred to the credentialing committee of a large MCO for quality reasons. The process started when the medical director arrived at a scheduled site visit to a practice. Upon arrival, he was placed in a cramped, windowless office to await his meeting with the doctor, who arrived nearly half an hour late. Following their meeting, a number of charts were pulled based on billing profiles and related criteria. Documentation was reviewed to assess both quality of care and medical necessity.

The medical director found significant deficiencies in both the documentation as well as the quality of care delivered (which may or may not have been related to the documentation problems). Based on the medical director’s findings, the MCO’s credentialing committee recommended termination of the physician’s contract. Following receipt of notice, the physician requested a hearing.

Upon our review of the charts in question and an interview with the physician it was apparent to us that the MCO had ample grounds to terminate the physician’s contract. Since the MCO was a significant source of revenue for the physician, we determined that it would be best for the physician to acknowledge the deficiencies at the hearing and ask for an opportunity to remain on the MCO’s panel. We also went armed with a prepared written statement pursuant to which the physician agreed to undertake significant remedial action (including the engagement of an on-site consultant for a period of time) and to waive all further rights of appeal.

The MCO agreed to give the physician a year to clean up his act.

Credentialing has always been a fact of life for physicians—hospital staff privileges are just one example. But with the advent of managed care, the process and criteria have taken on increasing importance and complexity. However, following a few simple rules can help the physician navigate these waters with comparative ease, even when the weather gets rough.

Practice good medicine. As hackneyed as this sounds, following this simple rule will address most, if not all credentialing issues. And, in many instances, it is precisely the kind of behavior an MCO is trying to encourage. Under the rubric of practicing good medicine falls proper documentation, adherence to standards of care and the like. When the physician does these things, the potential for an adverse credentialing decision is greatly diminished.

The medical director can be your ally. Most physicians exhibit a visceral reaction to the medical director. On the cynical side, they can make or break a practice by decredentialing the practice’s physicians. But medical directors serve an increasingly legitimate role in assuring quality care and keeping costs down. And under managed care, the role of medical director isn’t about to go away any time soon. So the medical director should be treated with the dignity and respect that a referring physician would be afforded.

Ask for help. Many MCOs have staff who can provide guidance and advice—for free. Just be very careful about what is disclosed because there is no confidentiality privilege in this relationship (as there would be with a physician/patient or client/attorney). When in doubt, consult counsel.

Don’t bluster. When faced with a decredentialing action, a physician’s first instinct is to sue. Chances are, though, that the MCO has the law on its side. As long as its credentialing policies and procedures are complete and up-to-date, and are not implemented in an arbitrary fashion, the only beneficiaries of such blustering are the lawyers. The better approach is one of conciliation. If you think termination was arbitrary, seek counsel first, then bluster.

Follow through. If you get caught red-faced, make a commitment to clean up your act and then follow through. It is in everyone’s interest that the quality of the care you deliver improve, and if threatened decredentialing is what it takes, so be it.

Decredentialing can have very serious legal and business ramifications for a physician beyond a potential loss of income. It requires a report to the various reporting databanks (including the National Practitioner Data Bank). It can affect hospital staff privileges, malpractice rates and even the outcome of professional liability actions. While the rules outlined above provide general guidelines that will serve most physicians adequately, any physician faced with decredentialing should proceed carefully.

Also, MCOs must follow specific legal guidelines in promulgating and enforcing credentialing criteria. Failure to follow these guidelines gives rise to remedies for physicians that can alter the outcome of a decredentialing action. These are best explored with counsel. Having a lawyer on your team will not intimidate an MCO into changing its course. It will, however, ensure that the MCO is not gaming the system, and that you are being treated as fairly as the rules allow.

On the MCO’s side of the table, credentialing and decredentialing are double edged swords. One the one hand, credentialing is becoming increasingly important from a business and liability perspective. Among the factors to which MCOs must respond are financial and organizational pressures on MCOs leading to cut-backs of varying degrees among contracting physicians, court decisions finding MCOs liable for acts and omissions of their contracting physicians, pressure on MCOs from consumers for more accountability and better quality of care, and numerous legislative efforts to address abuses (real or perceived) by MCOs.

On the other hand, decredentialing a physician opens an increasingly large can of worms. We are all familiar with the multitude of factors which have led to the creation of highly adversarial relationship between physicians and MCOs. When you layer on top of that the adverse financial impact to physicians who are decredentialed, it’s no wonder decredentialing decisions are being fought with increasing frequency and fervor.

The first major stumbling block likely to be encountered by an MCO is the result of an historical accident. Years ago, many physicians were enrolled under significantly looser credentialing standards (a license and malpractice insurance were enough) either because MCOs were attempting to fill panels or because they were apt to rely on the credentialing mechanisms of hospitals. While standards have been substantially tightened since then, they are also inconsistent with standards that were applied on the front-end selection. Such inconsistent application can leave a decredentialed physician feeling angry and bewildered and muttering words like “call my lawyer.”

MCOs also take a lot of heat for decredentialing tied to utilization or financial performance. It is the goal of every MCO is to be staffed with quality, efficient, low-utilization physicians. But a constant, consistent pattern of physician deselection for overutilization and economic performance is also a potential lightning rod for litigation.

Last, but not least, patients now have a keen interest in decisions by an MCO to deselect their doctors.

The bottom line is that credentialing and decredentialing by MCOs of individual physicians is subject to attack by many parties on many grounds. What MCOs must do in response is make certain that their credentialing process is as airtight as possible.

Some thoughts on how to accomplish this:

MCOs must do their own credentialing, or contract the responsibility out to competent third parties. They cannot rely on the credentialing of hospitals and others.

Credentialing criteria must go beyond individual physician qualifications and take into consideration the full range of beneficiaries’ needs. For example, an MCO will often be responsible for arranging for the total health needs of enrollees rather than just inpatient hospital servicesóthus, criteria such as configuration of office space, accessibility to the office and coverage for the physician’s practice must be considered. These criteria should be reviewed on occasion.

Credentialing criteria should applied as consistently as possible, not only from physician to physician but upon recredentialing or decredentialing as well. It is possible that a physician might be enrolled on the front end who subsequently might not meet applicable criteria. “Blemishes” should be duly noted along with the reason for acceptance of the application. For example, the physical layout of the physician’s office might not have met preferred standards, etc., yet his enrollment might have been made, given the needs of the particular community. The “blemish” should be noted along with the compelling reason(s) to accept the application in light thereof.

MCOs should consider credentialing and recredentialing on a “physician-blind basis,” where the identity of an applicant is not revealed when the initial criteria are applied.

The credentialing process should be completely objective. Hence, physician-members of the credentialing committee who are also participating members of the MCO should refrain from any substantive discussion or vote on any applicant within their specialty area of practice who are candidates for deselection (to avoid claims of antitrust).

Each physician must be afforded proper due process upon deselection. Due process can also be used to document application of the criteria. Due process includes notice of the reason for deselection and an opportunity to meet with the governing body (the entire body and not just one or two members) to discuss the matter before a final decision is rendered.

Criteria and due process are equally critical. One without the other is insufficient. All the due process in the world cannot protect against criteria which are wrongfully applied (e.g., race, disability and the like). Similarly, a decision to deselect for the right reasons will be subject to attack if the process is inadequate.

The credentialing process must be in writing and formally adopted by the MCO’s board. Any modifications should similarly be adopted and in writing.

Every physician member should have a copy of the process which should be made a part of, by attachment to, his/her physician contract. The process should be not be inconsistent with any term or provision of the physician’s contract.

Bruce J. Goldstein, Esq., and Mark D. Abruzzo, Esq., are partners in the Wade, Goldstein, Landau & Abruzzo, P.C. law firm in King of Prussia, Pa.