Year in Review: Opportunities for Illinois and Missouri Hospitals to Consider New Medical Staff StructuresDecember 2017
Nearly all aspects of hospital operations are subject to extensive federal and state laws and regulations. These sometimes conflict with each other or are inconsistent. This has been the case in Illinois and Missouri with regard to medical staff governance. However, in 2017, both states took steps to align state requirements with federal, opening up opportunities for hospitals to reconsider their current medical staff structures.
Federal Conditions of Participation
In order to receive Medicare and Medicaid payments, hospitals must comply with the Medicare Conditions of Participation established by the federal Centers for Medicare & Medicaid Services (CMS). The Conditions of Participation set out, among other things, the standards for a hospital’s medical staff. One such standard states that a healthcare system that includes separately certified hospitals that each have their own Medicare provider agreement and CMS certification number may opt to be overseen by a single governing body and organize a unified and integrated medical staff for its member hospitals, unless doing so would conflict with state law.
CMS defers to a hospital’s governing body to weigh the various factors and permissible options related to participating in federal programs. For example, a governing body might prefer to enroll its multiple campuses as separate hospitals to avoid compliance issues of one campus' affecting the participation status of all campuses, while retaining a single “system governing body” and unified medical staff. Another system’s governing body might choose to take advantage of the benefits of integrating clinical services across campuses by enrolling as one integrated hospital. CMS focuses on ensuring that each hospital, regardless of how that may be defined for participation purposes, independently demonstrates compliance with the Conditions of Participation. This approach gives a governing body the flexibility to make the best business decisions in light of the priorities and circumstances of its hospitals and campuses.
Illinois Hospital Regulations
Until this year, Illinois hospital regulations required each licensed hospital to have a governing authority responsible for that hospital’s organization, management, control, and operation. In 2017, the rules were changed to permit two or more hospitals in a healthcare system to have a single “system board” serve as the governing authority of all hospitals within the system. When established, the system board becomes responsible for ensuring that each of the system hospitals complies with all applicable requirements.
Under the new rules, if a “system board” is established, separately licensed hospitals that are part of the hospital system may choose to organize a unified, integrated medical staff upon acceptance by a majority vote of the medical staff members of the participating hospitals. Consistent with the flexible approach taken by CMS under the Conditions of Participation, the Illinois rules allow but do not require hospitals in a healthcare system to establish a unified medical staff.
Missouri Hospital Regulations
Missouri regulations related to hospitals’ governing bodies and medical staffs do not address the permissibility of a hospital system's maintaining a single governing body or a unified medical staff across hospitals. However, this year, the Missouri Department of Health and Senior Services was ordered to review and revise hospital licensure regulations in order to promote efficiencies. Part of that task involves eliminating all regulations and inspections that are duplicative of the CMS rules, and ensuring that Missouri’s rules are consistent with and do not contradict the Conditions of Participation. The Department of Health and Senior Services may adopt and enforce rules that promote a higher degree of patient safety than do the Conditions of Participation. Thus, when this regulatory reform is completed in mid-2018, it is expected that compliance with the Conditions of Participation should generally constitute compliance with the Missouri hospital licensing standards.
Hospitals in Illinois that are part of a multi-hospital system now have organizational options to take advantage of the flexibility offered by the Conditions of Participation. If they have not already done so, they should consider adding to their agendas for 2018 an analysis of whether the establishment of a “system board” would be advantageous, taking into account principles of general corporate law and all other relevant factors. This approach might lead to the decision to organize an integrated, unified medical staff across hospitals. For example, if a system maintained two hospitals in a metropolitan area, having a single medical staff could create opportunities for efficiency and quality improvement. But to achieve this, the hospitals involved would have to take care to meet all relevant legal requirements, such as holding a vote in accordance with current bylaws, adopting appropriate documents governing the medical staff, and establishing processes for permitting medical staff members to reassess periodically whether to remain as a unified staff.
Based on the reform mandate described above and enacted in 2017, it appears that Missouri hospitals may obtain in 2018 the flexibility similar to that recently made available to Illinois hospitals. Thus, the leaders of Missouri hospital systems should begin considering whether a reorganization of their medical staffs along the lines of the Conditions of Participation would be advantageous, so that they can act quickly upon the enactment of new rules in 2018.
Please contact Mike Davidson, Jill McFarland, or your regular Lewis Rice healthcare attorney if you have any questions about these matters or other issues related to hospital licensure or medical staff organization.