Annotated Sample Issues Contract for the provision of Professional Services at a Hospital

Transcription

1 Annotated Sample Issues Contract for the provision of Professional Services at a Hospital The following sample agreement is an example of an agreement between a hospital and a pathology group. This agreement is not provided as a model in any sense, but rather is used as a vehicle for identifying specific contract provisions that may raise issues. The agreement is footnoted throughout to identify many of the provisions that raise specific issues that may be of concern to a pathology group and/or the hospital. Please Note: In general, sample agreements are made available to CAP members as a supplement to the CAP s other practice management resources. The sample agreements illustrate the general form and content of representative contracts, but they are not intended as models and should not be used without appropriate adaptation to reflect changing laws and regulations and the specific needs of each pathologist. Please send your comments and suggestions for updates and changes to Doug Knapman, Director, Practice Management dknapma@cap.org fax phone ext 7738 direct

2 College of American Pathologists Annotated Issues Contract for the provision of Professional Services at a Hospital AGREEMENT FOR PATHOLOGY DEPARTMENT COVERAGE [GROUP COVERAGE] 1 THIS AGREEMENT, made and entered into as of, 20 (the Effective Date ), is by and between, a corporation doing business as ( Hospital ), and, a ( Group ). RECITALS: WHEREAS, Hospital operates an acute care hospital known as, which maintains a Pathology Department (the Department ) on Hospital s premises 2 to provide clinical and anatomical pathology services, and Hospital desires to assure physician coverage for the Department. WHEREAS, Group employs or otherwise contracts with physicians duly licensed in the State of ( State ) and qualified as doctors of medicine with experience 3 in furnishing pathology services (such physicians collectively Physicians ), and Group desires to provide Physicians for full-time coverage of the Department. WHEREAS, Group and Hospital agree that it is in the best interest of Hospital s ability to provide quality patient care in a cost-effective and efficient manner for Hospital to contract with an entity to be the exclusive provider of pathology services of the Department. NOW, THEREFORE, for and in consideration of the recitals above and the mutual covenants and conditions contained herein, Hospital and Group agree as follows: 1 This agreement is not provided as a model in any sense, but rather is used as a vehicle for identifying specific contract provisions that may raise issues. Each pathologist should exercise independent judgment about what provisions would best suit the needs of the pathologist. No provisions in any agreements posted by the CAP should be used without appropriate adaptation to reflect changing laws and regulations and the specific needs of each pathologist. 2 Practices may want to consider changing the wording that specifies the Hospital s premises. With the current wording additional laboratories established in Hospital associated locations (surgery centers, physician offices, etc.) may not be included. Practices may want to consider specifying hospital and all wholly owned subsidiaries. Practices may also want to consider specifying they have right of first refusal for any new hospital locations or subsidiaries. 3 Be aware that specifying with experience may be perceived as not allowing the hiring/use of newly qualified pathologists.

3 Page 3 of Group s Obligations. AGREEMENT: (a) Services. While this Agreement is in effect, Group shall provide Physicians to provide all pathology 4 services at Hospital and to supervise the operation of the Department in accordance with Group s obligations hereunder (the Services ). Group shall ensure 5 that each Physician complies with all terms and conditions contained herein 6. Group shall also cause Physicians to 7 : (i) cooperate with Hospital s employee health program and the designated health employee nurse in providing, reviewing, and developing health services for employees who work at Hospital; 8 (ii) attend any and all meetings within Hospital that Physicians are asked to attend by Hospital s Chief Executive Officer (the CEO ); 9 (iii) provide Services to Hospital employees for jobrelated injuries, illnesses, or exposures and charge no professional fees for such Services; 10 and (iv) perform such other duties as may from time to time be requested by Hospital s Governing Board, its Medical Staff, or the CEO. 4 Consider changing all pathology services. This contract is likely only for professional pathology services. 5 Consider changing ensure. A pathology group is not in a position to ensure conduct of its pathologists. A group might prefer language specifying that the group will require all of its pathologists to comply with applicable provisions, such as Group shall require each of its Physicians to comply with. Note also that the group may want to carefully review the wording so that physicians do not become liable for contractual breaches by the Group. 6 Consider moving any of these requirements to another section of the contract. The statements following this marker are additional obligations and do not define professional pathology services. By having the requirements in this initial section may give them greater significance. 7 Consider deleting also cause Physicians to. In general, the Group may find it beneficial to limit its obligations to what the Group will do, and not add separate requirements applicable to physicians. 8 cooperate in providing, reviewing and developing health services for employees is open-ended. In particular it does not provide a context for the health services, or place a limit the services to those appropriate for the specialty of pathology. Note that hospitals may desire to have a pathology group specify that they agree to not charge any professional fees for pre-employment physicals and Hospital employee safety testing, to the extent permitted under applicable laws and regulations. Such provisions can raise fraud and abuse issues to the extent that the pathology group is requested to provide something of value to the hospital in return for an exclusive contract. 9 A pathologist may want to consider reducing or eliminating this obligation, particularly to the extent that attendance in meetings is covered in the Medical Staff bylaws. Alternatively, a group could propose adding qualifying phrases such as mutually agreed upon or as reasonably requested. 10 Consider changing to include these services as a portion of Part A services and make sure this obligation is consistent with your compliance policy. Note that as mentioned above agreeing to provide health care services which benefit the hospital without charge can raise kickback issues for both the pathology group and the hospital. -3-

4 Page 4 of 23 (b) Coverage. While this Agreement is in effect, Group shall provide Physicians to cover the Department on a 24-hour per day basis every day of the calendar year, with a sufficient number, as determined by Hospital 11, of Physicians physically present in the Department to provide full coverage of the Department at all times. 12 On or before the first day of each calendar month, Group shall provide to the CEO and, following approval by the CEO, shall post within the Department, a schedule of Physicians assigned to provide coverage in the Department during the calendar month. 13 (c) Other Physicians. Physicians employed by or under contract with Group shall perform the Services. At all times while this Agreement is in effect, the CEO shall have the right to request removal of any Physician if, in the CEO s best judgment, such removal is in the best interests of Hospital. Group shall immediately remove any such Physician upon receipt of the CEO s request. 14 (d) Physician Qualifications. Each Physician who provides Services in the Department shall be duly licensed and qualified as a doctor of medicine to practice medicine in the State, and shall be approved for membership and/or clinical privileges on the Medical Staff of Hospital in accordance with Hospital s Medical Staff Bylaws and Rules and Regulations. Each Physician shall be Board Certified prior to performing Services hereunder or, if not already 11 Permitting the hospital to determine the number of physicians providing services may jeopardize the independent contractor status of the Group. Alternatives would to obligate the Group to provide sufficient number of physicians to provide the services.. 12 The language makes no distinction between on-premises coverage and on-call coverage. Pathologist may want to consider clarifying language that makes clear the more limited nature of on-premises coverage. 13 Hospital involvement in the Group s monthly staffing schedule may jeopardize the independent contractor status of the Group. In some cases, a Group may agree with the Hospital on a general coverage schedule and a requirement to provide prior notification to laboratory and medical staff of monthly coverage schedules. As an independent contractor the Group should determine how it will staff the department with pathologists to meet its service obligations and the Group should understand that obligation includes notifying laboratory and hospital staff who to expect to provide the services at any given time. 14 This sentence may raise a number of issues for a Group. The word remove is ambiguous: does it mean terminate, or arrange for a particular pathologist to not provide services to Hospital? In addition, the proposed standard is not objective. Rather, it is up to the CEO based on the best interests of the Hospital. A pathology group may want to eliminate the hospital s CEO ability to request the removal of one of the Group s physicians. If that is not possible, a Group may want to consider seeking a more objective standard, e.g., the best interests of quality patient care. In addition, a Group may consider requiring the CEO to provide sufficient notice of any concerns with one of their Physicians in order for the Group to perform timely corrective action. The resolution process, including appropriate time frames, should be included in the agreement. If the concern is serious the CEO may request the physician not be scheduled to provide services under this contract. If the Group appears to be giving up its right to decide whom to employ or how to resolve any concern on the part of the Hospital, the independent contractor status of the Group may be jeopardized. -4-

5 Page 5 of 23 certified, shall apply for and obtain 15 Board certification no later than 180 days from the date he or she first provides Services hereunder. 16 Group shall provide proof of such certification to Hospital upon request. (e) Applicable Standards. All Services shall be performed in compliance with all applicable standards set forth by law or ordinance or established by the rules and regulations of any federal, state, or local agency, department, commission, association, or other pertinent governing, accrediting, or advisory body having authority to set standards for health care facilities, including the Joint Commission on Accreditation of Healthcare Organizations ( Joint Commission ). 17 Also, each Physician shall perform all Services in accordance with all Hospital rules, regulations, procedures, policies, and bylaws and all Hospital Medical Staff rules, regulations, procedures, policies, and bylaws. 18 (f) Records and Reports. Group shall provide or cause to be provided to Hospital all records and reports requested by Hospital, 19 including without limitation a daily written memorandum of all Services performed pursuant to this Agreement and all applicable Hospital charges 20, in accordance with Hospital s schedule of such charges, incurred in connection with such Services. Group s records of billings and receipts relating to Services performed 15 shall be Board Certified limits the utilization of pathologists who are qualified for examination to be Board Certified. Potential alternative wording would be Each Physician shall be Board Certified or qualified for examination to be Board Certified in Anatomic Pathology or Clinical Pathology. 16 The proposed time frame poses issues. The regular scheduling of Board Certification exams and other administrative processing issues beyond the control of the Group may make it difficult to comply with this requirement. A Group may seek to eliminate any such requirements, particularly in view of the fact that the requirement that a pathologist must be qualified for examination to be Board Certified already places time limits on an un-certified pathologist. 17 Different accrediting agencies have conflicting requirements. Thus, a Group may want to limit this provision to apply only to the current standards of accrediting bodies to which the laboratory currently subscribes. 18 Group may want to limit this provision to such Hospital rules and regulations applicable to the practice of pathology to which the Group s physicians are obligated. The Group may also want to limit the obligation to those rules and regulations that have been duly implemented in accordance with the bylaws of the Hospital and Hospital Medical Staff. 19 Group may be concerned that the proposed language creates open-ended reporting obligations and does not limit the information the Hospital can request. Alternatively, agreements may specify that the Group satisfy reporting obligations associated with documenting Physician services in patient s medical records and capturing appropriate information for billing of Hospital services associated with the Physician services. 20 The requirement of a daily memorandum of services may not be necessary and may be unduly burdensome where such information already is captured in a laboratory information system. In any event, a Group may conclude that it is unreasonable to expect the Group, as an independent contractor, to report services to the Hospital that it will bill. Reporting obligations in regards to Part A services may be separately documented. If such reporting is required by the Hospital the parties may consider noting the obligation in the contract with the idea that the timing and format will be mutually agreed upon. -5-

6 Page 6 of 23 hereunder shall be available to Hospital upon request. 21 Group shall also require the prompt submittal to Hospital s medical records administrator and/or the patient s private physician of written reports of all examinations, treatments, and procedures performed pursuant to this Agreement. Group shall use the medical records and report forms provided by Hospital. All records and reports required by this Section are and shall be the exclusive personal property of Hospital. 22 (g) Director as Authorized Representative. The Physician who is appointed director of the Department pursuant to Section 2 shall have the authority to speak for and act on behalf of all Physicians and to bind the Group and each Physician for all purposes under this Agreement. 23 (h) Use of Premises. Group shall not use or knowingly permit any other person who is under its direction to use any part of Hospital s premises for any purpose other than the performance of Services for the Hospital, its patients, and its private physicians pursuant to this Agreement. 24 (i) Representations and Warranties. Group represents and warrants to Hospital as follows: 25 (1) Group is not bound by any Agreement or arrangement that would preclude Group from entering into, or from fully performing the Services required under, this Agreement; 21 A requirement that the Group reports its charges and, in particular, its receipts to the Hospital, may undercut the independent contractor status of the Group. There also is a risk that the Hospital will use such information to attempt to reduce Part A reimbursement otherwise paid to the Group. 22 The Group may want to consider adding a provision requiring the Hospital to provide access and copies of the records and reports at the request of the Group or Physician. Access to such records could be crucial to the Group in defending a professional liability actions and billing audits. 23 The Group needs to decide which members of the Group should have authority to bind the Group. In some groups, the authority to bind the group may rest with a Group officer that is not the Department Director. The Group may want to revise this language to reflect whoever the Group would like to have authority to bind the Group. 24 The proposed language is broad. It could be construed to bar the Group from using the facilities for outside consulting services, or services relating to the administration of the Group, such as coordinating with billing companies or managing the retirement plans of the Group. The Group may want to seek language that permits the Group to use the space for things which do not interfere with the Hospital s mission, etc. Alternatively, the Group could seek to change the language to mutual agreement on exceptions to this requirement. Now or at some time in the future it may be beneficial to the Hospital and the Group for the Physicians at the Hospital to perform services for other entity patients. In this case the Group and the Hospital may create a separate agreement or incorporate into this agreement reasonable compensation to the Hospital for the use of its premises. 25 The Group may want to confirm that items 1-7 are aligned with Medical Staff Bylaws. -6-

7 Page 7 of 23 (2) No Physician s license to practice medicine in the State or any other jurisdiction has ever lapsed or been denied, suspended, revoked, terminated, relinquished, or made subject to terms of probation or other restriction; 26 (3) No Physician s medical staff privileges at any health care facility have ever been denied, suspended, revoked, terminated, relinquished under threat of disciplinary action, or made subject to terms of probation or other restriction; 27 (4) Each Physician holds a valid Drug Enforcement Agency number that has never been revoked, suspended, terminated, relinquished, placed on terms of probation, or restricted in any way; 28 (5) No Physician has ever been sanctioned by, excluded, or otherwise declared ineligible to participate in, or barred or suspended from, Medicare, Medicaid, or any other federal health care program, and has never been convicted of an offense related to health care; (6) No Physician is currently the subject of a disciplinary or other proceeding or action before any governmental, professional, medical staff, or peer review body; 29 (7) Each Physician has, and shall maintain throughout the term of this Agreement, an unrestricted license to practice medicine in the State and staff membership and privileges at Hospital. 30 (j) Hospital Employees; Physicians Obligations. Group shall not solicit the services of, employ or procure on behalf of another the employment 26 This language is broad. It could be read to apply to the decision of a physician to no longer maintain a license in a state in which the physician no longer practices and does not intend to practice in the future. A Group may want to consider appropriately modifying this clause. 27 Clauses 3-5 may already be covered in the Medical Staff Bylaws. If that is the case, a Group may want to consider elimination of theses clauses as redundant. 28 Pathologists frequently do not have any involvement with prescriptions, and thus, may not have or need any DEA registration. A Group may want to eliminate this clause and make sure the Medical Staff Bylaws do not require a pathologist to have a DEA number. 29 The language in this provision is very broad. It potentially covers routine billing audits. It also covers investigations, a much broader category than completed actions imposing some penalty on physicians. A Group may want to consider limiting this obligation to completed proceedings that impose some penalty or discipline on physicians. 30 If this is a new contract or a new pathologist is hired they will not have staff membership and privileges. Consider changing.and staff membership and privileges at Hospital. to and will obtain and maintain staff membership and privileges at Hospital. -7-

8 Page 8 of 23 of, any individual currently employed by Hospital or under a service contract with Hospital, and neither Group nor any of the Physicians shall engage in any other activity that would be in conflict with their respective obligations hereunder. Group shall cause all Physicians to comply with the terms and conditions of this Agreement. (k) Medical Staff Membership. The Medical Staff membership and/or clinical privileges of each Physician at Hospital shall terminate concurrently with the termination of such Physician s membership in or employment by Group, the expiration or termination of this Agreement, or the rescission of Hospital s approval of such Physician pursuant to Section 1(c). Any Physician whose staff membership and clinical privileges are terminated hereunder shall not be entitled to the hearing and appellate review set forth in Hospital s Medical Staff Bylaws. Group shall obtain the agreement of each Physician to the foregoing and provide Hospital with evidence of same in the form of the Waiver attached as Exhibit A. 2. Director Of Pathology Services. Group shall appoint, subject to the prior approval of the CEO, one Physician to serve as Director of the Department while this Agreement is in effect. The duties as Director shall include: (a) Participating in the educational programs conducted by Hospital and its Medical Staff in order to assure Hospital s overall compliance with accreditation and licensing requirements, and performing such other reasonable teaching functions as Hospital may request; (b) Directing non-physician Department personnel in the performance of professional Services for patients; any other activity is a broad term. Group may want to seek more limited language that better defines specific prohibited activities. In addition to eliminating the any other activity language, Group may want to seek language permitting additional exceptions by stating except by written mutual consent. 32 The Group may want to include a similar raid of employees obligation upon the hospital. 33 The prior approval language may undercut the Group s independent contractor status, as well as its discretion in providing a Director. The Group may want to seek language stating that the Physician appointed as the Director of the Department is reasonably acceptable to hospital, or perhaps reasonably acceptable to a specific representative of the hospital. 34 A Group may want to specify a process for the Director to be replaced. A Group may want to consider addressing how a request to replace the Director is be handled, process and time frame to cure any hospital concerns, providing for a interim Director, time frame for approval of a new Director, and requiring prompt approval from the Hospital are topics to consider including in such a process. -8-

9 Page 9 of 23 (c) Advising Hospital with respect to the selection, retention, and termination 36 of all personnel who may be required for the proper operation of the Department; provided that Hospital shall retain the ultimate decision-making authority regarding the selection, retention, and termination of all such personnel; (d) Establishing schedules for all Services provided by Physicians in accordance with the terms of this Agreement; (e) Supervising the development and implementation of Hospital s 37 quality assurance and quality improvement programs and procedures in the Department; (f) Assisting Hospital in the preparation and conduct of surveys by the Joint Commission and/or any other national, state, or local agency; and (g) Performing any other duties that Hospital, its Governing Board, its Medical Staff and/or the CEO may request Hospital s Obligations. (a) Equipment, Facilities, Supplies, Utilities and Services. Hospital shall, at no cost to Group, provide all equipment, facilities, supplies, utilities, including telephone service, and other services, including laundry, linen and janitorial services, as Hospital shall, in its sole discretion, 39 determine from time to time are necessary for the performance of the Services and the proper operation of the Department. All items supplied by Hospital pursuant to this Section are and shall remain the exclusive personal property of Hospital. 35 The language of this section may be confusing. In the laboratory, physician services are frequently referred to as professional services and non-physician services are referred to as technical services. The word professional in this clause thus may be confusing. Instead, the parties may want to consider replacing professional with pathology or Departmental. 36 A Group may consider changing termination to evaluation to reduce exposure to being held responsible for illegal termination of a Hospital employee. 37 The Group may want to include Departmental quality programs and qualifying Hospital s programs to be as appropriate for the Department. 38 This is an open-ended obligation with no apparent limitations. The Group may seek to limit this clause to either state may request and mutually agreed upon and/or as appropriate to the position of Director of the Department. 39 While the Hospital will have ultimate control of its budget, the Group may want to seek a clause that requires the Hospital to consider the advice of the Group, and include the Group/Director in the Department s budget and strategic decision-making process. -9-

10 Page 10 of 23 (b) Personnel. Hospital shall employ such non-physician personnel as Hospital deems necessary for the proper operation of the Department and the performance of the Services or any other Group obligation set forth in this Agreement. All such personnel shall be subject to the direction and control of Physicians in the performance of professional Services to patients. 40 (c) Exclusivity. If and so long as Group is not in default hereunder, Hospital shall not contract with any other physicians or entities for the Services to be provided by Group under this Agreement Group s Compensation. (a) Fee Schedules. The fees for the Services provided by Physicians shall be in accordance with Exhibit B. The fee schedule for Services shall at all times be comparable to the fees customarily charged in the community for comparable services. 42 (b) Billing and Collection. Hospital shall be responsible for billing for all Hospital Services pursuant to this Agreement, and Hospital shall have the exclusive right to collections therefrom. Group shall separately bill patients for professional Services rendered pursuant to this Agreement and has the exclusive right to collections therefrom. Hospital does not guarantee the collectability of any of Group s billings. (c) Entire Compensation. Group s separate billings shall constitute its sole compensation for all administrative and professional Services rendered by Physicians hereunder, including any and all Services rendered by 40 The language of this section may be confusing. In the laboratory, physician services are frequently referred to as professional services and non-physician services are referred to as technical services. The word professional in this clause thus may be confusing. Instead, the parties may want to consider replacing professional with pathology or Departmental. 41 The language of this provision may create confusion or ambiguity with respect to reference or other services that the Group may not be able to provide. The confusion could lead to a claim that the Group is responsible for the cost of all referrals to outside labs or pathologists. In any event, the Group may want to consider adding a clause elsewhere that specifies that the Group controls or is responsible for arranging for reference laboratory testing. While it is not uncommon for Hospitals to request for these arrangements to be subject to their approval, the Group may want to seek initial control and at least a commitment from the Hospital to consider its advice. The Group also may want to consider whether it wants to seek the right of first refusal for exclusive provision of services for any additional hospital locations or subsidiaries. 42 The language of this sentence is pretty broad. The Group may want to seek some modification, such as for comparable services and settings. The Group may also want to consider seeking clarification that the fees meet legal and regulatory requirements. The Group also may want to consider seeking language addressing how to update the fee schedule for new services and updated fees. -10-

11 Page 11 of Director Group shall have the sole responsibility to compensate Physicians. Group reserves the right, in its sole discretion, to determine the compensation payable to each Physician working in the Department. Group shall indemnify and hold Hospital harmless from any and all claims, costs, and/or liability suffered or incurred by Hospital in connection with any claims for compensation by such Physicians for Services rendered hereunder. The indemnification obligations herein stated in this Section shall survive the expiration or earlier termination of this Agreement. 45 (d) Managed Care. Group shall participate in all third-party payment or managed care programs in which Hospital participates, 46 render Services to patients covered by such programs, and accept the payment amounts provided for under these programs as payment in full for Services of Group to program patients. 47 If Group is unable or unwilling to obtain the right to participate in the managed care programs in which Hospital participates, Hospital 43 To the extent that this language suggests that the Group will provide substantial services to Hospital without compensation, it raises significant Kickback concerns. OIG has indicated that to avoid these kickback concerns, the Hospital should pay pathologists fair market value for their Part A services. The Group should consider how it wants to address this compliance issue. A Group may want to include a separate clause addressing Part A compensation that specifies the services included. A Group may want to add a separate clause to cover the performance and compensation for autopsies. The Group may also consider specifying an automatic annual increase of the fees based on a governmental index (i.e., Medicare Economic Index). 44 If the Group is or considering billing patients for Professional Component of Clinical Pathology services, it may want to consider language requiring the Hospital to notify patients at the time of admission regarding the patient s obligation to pay for these pathology services. 45 The indemnification language is broad and potentially not covered under a pathologist s professional liability coverage. Instead, a Group might seek language such as the Group is entirely responsible for paying its Physicians to eliminate the indemnification language. 46 While hospitals have an interest in having their hospital-based physicians participate in managed care plans, the proposed language is very broad. Under the proposed language, a pathologist would appear obligated to participate in a managed care plan that reimbursed mere pennies on the dollar. Moreover, even if a pathologist were willing to accept low reimbursement, care should be taken to consider the issue of the pathologists inability to control the contracting strategy of the third party payor. There are a variety of ways that this clause can be rewritten to reserve a Group s right to negotiate its own contracts and/or get improved bargaining positions and limits the requirement in certain cases where the contract terms proposed by payors are unrealistic. 47 This clause limits the right of the Group to balance bill patients for any services rejected by the insurance. While a Group might be willing to agree to not balance bill, in some circumstances, it may want to preserve its rights for non-covered services. -11-

12 Page 12 of shall have a right to terminate this Agreement upon 30 days written notice Term. The initial term of this Agreement ( Initial Term ) shall be for a period of one year, commencing on the Effective Date. At the end of the Initial Term and each Renewal Term (as hereinafter defined), if any, the term of this Agreement shall be automatically extended for an additional period of one year (each such extension, a Renewal Term ), unless terminated pursuant to Section Termination. (a) Termination With or Without Cause. Either party may terminate this Agreement with or without cause by giving the other party at least 30 days prior written notice of such termination ( Notice of Termination ). 52 (b) Termination for Breach. Either party may terminate this Agreement upon breach by the other party of any material provision of this Agreement, provided that, to effect such termination, the non-breaching party must give the breaching party at least 15 days prior written notice of the termination (a Breach Notice of Termination ) and describe in such notice the breach claimed by the terminating party. 53 (c) Immediate Termination by Hospital. Hospital may terminate this Agreement immediately by written notice to Group (an Immediate Notice of Termination ) upon the occurrence of any of the following events: This clause gives the Hospital a short fuse to terminate in the event that the Group does not maintain a contract with a managed care plan. In view of the fact that the Hospital likely will not be able to replace a Director in 30 days and the Hospital cannot operate without one, the parties may want to consider striking or modifying this clause. 49 Practices may want to consider adding language clarifying that the Hospital does not have any right to contract now or in the future for Services of Group. 50 Where a hospital requires managed care contracts, the Group may want to consider asking for the hospital s assistance in Managed Care contracting or assist in the Group s efforts to receive Fair Market Value for the Group s Services from Managed Care programs. 51 The term of the contract is a very individual determination. In some cases, a Group may want to specify a longer initial term (e.g., 3 years) and notice period (e.g., 90 to 180 days) to not automatically renew. 52 This effectually makes the contract a 30-day contract without regard to the nominal term listed in Section 5. The Group and Hospital should carefully consider whether the uncertainty created by such a short termination without cause provisions successfully protects the interests of both parties. 53 Consider how much notice is appropriate for a material breach. Also consider whether there should be any right to cure any identified breach, and if so, state how much time should be provided for a cure. 54 Consider whether it is appropriate to terminate the whole agreement, as opposed to removing the Physician involved, in the event of these occurrences. The parties also may want to -12-

13 Page 13 of 23 (1) Any Physician s license to practice medicine in the State or any other jurisdiction lapses or is denied, suspended, revoked, terminated, relinquished, or made subject to terms of probation or other restriction; 55 (2) Any Physician s medical staff privileges at any health care facility are denied, suspended, revoked, terminated, relinquished under threat of disciplinary action or made subject to terms of probation or other restriction, or Physician takes a leave of absence; 56 (3) Any Physician s Drug Enforcement Agency number is revoked, suspended, terminated, relinquished, placed on terms of probation, or restricted in any way; 57 (4) Any Physician is sanctioned by, excluded or otherwise declared ineligible to participate in, or barred or suspended from, Medicare, Medicaid, or any other federal health care program, or is convicted of an offense related to health care; 58 (5) Group fails to make a timely disclosure pursuant to Section 11; 59 (6) Any Physician engages in conduct that, in the sole discretion of Hospital, could affect the quality of professional care provided to Hospital patients or the performance of duties required hereunder or be prejudicial or adverse to the best interest and welfare of Hospital or its patients; 60 (7) Any Physician breaches the confidentiality provisions of this Agreement; 61 consider whether there should be a separate clause dealing with the immediate removal of a Physician. 55 Consider removal of Physician instead of group termination. 56 Consider removal of Physician instead of group termination. 57 Consider removal of Physician instead of group termination. 58 Consider removal of Physician instead of group termination. 59 Group may want to consider whether the time frames listed in Section 11 are more appropriate. 60 Consider removal of Physician instead of group termination.. 61 Consider removal of Physician instead of group termination

14 Page 14 of 23 (8) Any Physician fails to maintain the insurance required by this Agreement; or 62 (9) Hospital closes or ceases patient care operations, or sells all or substantially all of its assets. 63 (d) Effective Date of Termination; Opportunity to Cure. The effective date of termination of this Agreement shall be (i) in the case of a termination pursuant to Section 6(a), the date of termination specified in the Good Reason Notice of Termination, provided that such date shall not be less than 30 days after the date such Good Reason Notice of Termination is given, 64 or (ii) in the case of a termination pursuant to Section 6(b), the date of termination specified in the Breach Notice of Termination, provided such date shall not be less than 15 days after the date such Breach Notice of Termination is given, and (iii) in the case of a termination pursuant to Section 6(c), the date on which the Immediate Notice of Termination is given. If a party terminates this Agreement pursuant to either Section 6(a) or Section 6(c), the other party shall have no rights to cure or contest the termination of this Agreement. If a party terminates this Agreement pursuant to Section 6(b), the other party shall have the right to cure the breach described in the Breach Notice of Termination prior to the effective date of termination set forth in such notice, provided that, if the breach is not cured during such period, this Agreement shall automatically terminate on the date of termination set forth in the Breach Notice of Termination. 65 (e) Effect of Termination. As of the effective date of termination of this Agreement, neither party shall have any further rights or obligations hereunder except for rights and obligations accruing prior to such effective date of termination, or arising as a result of any breach of this Agreement. If either party terminates this Agreement during the Initial Term, then the parties shall not enter into any type of agreement or arrangement with each other with respect to the goods and/or Services that are the subject of this Agreement prior to the date the Initial Term otherwise would have expired. Notwithstanding the foregoing, any provisions of this Agreement creating obligations extending beyond the term of this Agreement will survive the 62 Consider removal of Physician instead of group termination. However, it also may be appropriate for a Group termination clause if the Group, separately from its Physicians, fails to maintain its professional liability insurance. 63 A Group should consider whether a Hospital sale should be an occasion permitting termination.. 64 If 6(a) has not been eliminated both the Hospital and Group may want to consider a more reasonable time frame. 65 Consider including the Opportunity to Cure specifications as part of the clause for termination. Also consider whether it might be more appropriate to separate out Physician and Group termination, provide for appropriate cure time frames, and create a reasonable time frame for both the Hospital and Group to continue operation. -14-

15 Page 15 of 23 expiration or termination of this Agreement, regardless of the reason for such termination Group s Status. Group and each Physician shall act at all times under this Agreement as independent contractors. Hospital shall not have and shall not exercise any control or direction over the manner or method by which any Physician provides the Services. However, Group shall require all Physicians to perform at all times in accordance with currently approved methods and standards of practice for Services in the medical community. The provisions of this Section shall survive expiration or termination of this Agreement, regardless of the cause of such termination. 8. Insurance; Indemnification (a) Group shall maintain, at its sole expense, professional liability insurance for all Physicians who provide Services pursuant to this Agreement, in amounts required to maintain Hospital Medical Staff membership/clinical privileges in good standing. Group shall obtain this insurance from a carrier and in a form satisfactory to Hospital. Group shall provide Hospital with a certificate of such insurance coverage upon execution of this Agreement by Group and thereafter during the term of this Agreement upon Hospital s request. Further, Group shall provide Hospital with a statement from the insurance carrier that Hospital shall be notified at least 30 days prior to any change to or cancellation of such insurance coverage. 70 (b) The coverage required by this Section shall be either on an occurrence basis or on a claims-made basis. If the coverage is on a claims-made basis, not less than 30 days prior to the termination of Group s claims-made coverage, Group shall purchase tail or retroactive coverage in the amounts required for all claims arising out of incidents occurring prior to termination of such coverage, and shall provide Hospital with a certificate evidencing such tail 66 Hospitals sometimes seek this language to address certain Stark Act concerns relating to having a contract of at least one year. However, in view of the fact that pathologists rarely refer to the hospital, the parties may want to consider not including the Initial Term portion of this section. 67 Many professional liability insurers purport to not cover indemnification. Before committing to any indemnification the Group may want to get a written confirmation that its professional liability insurance will cover the specific indemnification liability. If insurance will not cover the indemnification, consider deletion to avoid creating new legal exposure to the Group or its physicians. 68 Consider whether the hospital commits to consistent insurance requirements. Pathologists have a similar interest in having the hospital adequately insured as the hospital does in having the pathology Group adequately insured. 69 In some states and with some Professional Liability carriers a separate policy is needed to cover Medical Director Services. Group may want to verify its professional liability policy covers all its services and locations for which it is providing Services. It is wise for each Group to consult with its Professional Liability Carrier on these issues. 70 The Group may want to seek similar liability insurance commitments, at Hospital appropriate amounts, from the Hospital. -15-

16 Page 16 of 23 or retroactive coverage. If Group 71 fails to purchase such coverage or fails to provide Hospital with a certificate of such coverage, Hospital shall have the right, as hereby acknowledged by Group, to purchase such coverage and notify Group in writing of the total premium costs therefor. Group shall pay to Hospital the total premium for such coverage immediately upon Group s receipt of such notice. (c) Each party shall fully, completely, and unconditionally indemnify, defend, and hold harmless the other party, and such other party s directors, officers, employees, agents, and affiliates, from and against any and all claims, actions, liabilities, costs, and expenses (including without limitation judgment and settlement costs, court costs, and attorneys fees) arising out of or relating to, or alleged to arise out of or relate to, negligent or intentional acts or omissions of the indemnifying party or any failure by the indemnifying party to perform any obligation or covenant of the indemnifying party in the Agreement Access To Books And Records. (a) If the value or cost of Services rendered pursuant to this Agreement is $10,000 or more over a 12-month period then, until the expiration of four years after the furnishing of Services hereunder, such party shall, upon written request, make available to the Secretary of the Department of Health and Human Services (the Secretary ), the Secretary s duly-authorized representative, the Comptroller General, or the Comptroller General s duly-authorized representative, such books, documents and records as may be necessary to certify the nature and extent of the cost of such Services. If any such Services are performed by way of subcontract with another organization and the value or cost of such subcontracted Services is $10,000 or more over a 12-month period, such subcontract shall contain a clause to the same effect as immediately above. (b) The availability of a party s books, documents and records shall be subject at all times to all applicable legal requirements, including without limitation such criteria and procedures for seeking and obtaining access that may be promulgated by the Secretary by regulation. The provisions of this Section shall survive expiration or termination of this Agreement, regardless of the cause of such termination. 71 Some Groups may find the level of detail in this section onerous. Other Groups may find it useful to have the details in place if this situation should arise. 72 The Group should consider consulting with its Professional Liability Carrier to ensure any indemnification clauses are consistent with its professional liability policy. -16-

17 Page 17 of Confidentiality. 73 (a) Hospital Information. Group recognizes and acknowledges that, by virtue of entering into this Agreement and providing Services to Hospital hereunder, Group and Physicians may have access to certain information of Hospital that is confidential and constitutes valuable, special, and unique property of Hospital. Except pursuant to Group s duties hereunder, Group shall not, and Group shall cause each of the Physicians not to, at any time, either during or after the term of this Agreement, disclose to others, use, copy, or permit to be copied, without Hospital s express prior written consent, any confidential or proprietary information of Hospital, including without limitation information that concerns Hospital s patients, costs, or treatment methods developed by or for Hospital, and information that is not otherwise available to the public. (b) Terms of this Agreement. Except for disclosure to Group s legal counsel, accountant, or financial advisors (none of whom shall be associated or affiliated in any way with Hospital or any of its affiliates), neither Group nor any Physician shall disclose the terms of this Agreement to any person who is not a party or signatory to this Agreement, unless disclosure thereof is required by law or otherwise authorized by this Agreement or consented to by Hospital. Unauthorized disclosure of the terms of this Agreement shall be a material breach of this Agreement entitling Hospital to immediately terminate this Agreement pursuant to Section 6(b). (c) Patient Information. Neither Group nor any Physician shall disclose to any third party, except where permitted or required by law or where such disclosure is expressly approved by Hospital in writing, any patient or medical record information regarding Hospital patients, and Group and Physicians shall comply with all federal and state laws and regulations, and all bylaws, rules, regulations, and policies of Hospital and its Medical Staff, regarding the confidentiality of such information. Group acknowledges that in receiving or otherwise dealing with any records or information from Hospital about its patients receiving treatment for alcohol or drug abuse, Group and Physicians are fully bound by the provisions of the federal regulations governing Confidentiality of Alcohol and Drug Abuse Patient Records (42 C.F.R. Part 2, as amended from time to time). (d) Survival. The provisions of this Section shall survive expiration or termination of this Agreement, regardless of the cause of such termination. 73 Consider whether confidentially considerations should be equally applicable to the Hospital and its employees. Consider whether there also should be HIPAA compliance and Business Associate provisions as appropriate. -17-

18 Page 18 of Required Disclosures. Group shall notify Hospital in writing as soon as possible (but in any event within three business days) after any of the following events occurs: (a) Any Physician s license to practice medicine in the State or any other jurisdiction lapses or is denied, suspended, revoked, terminated, relinquished, or made subject to terms of probation or other restriction; (b) Any Physician s medical staff privileges at any health care facility are denied, suspended, revoked, terminated, relinquished under threat of disciplinary action, or made subject to terms of probation or other restriction; (c) Any Physician s Drug Enforcement Agency number is revoked, suspended, terminated, relinquished, placed on terms of probation, or restricted in any way; (d) Any Physician is sanctioned by, excluded, or otherwise declared ineligible to participate in, barred, or suspended from, Medicare, Medicaid, or any other federal health care program, or is convicted of an offense related to health care; (e) Any Physician becomes the subject of a disciplinary or other proceeding or action before any governmental, professional, medical staff, or peer review body; (f) An event occurs that substantially interrupts all or a portion of Physician s professional practice or that materially adversely affects Group s ability to perform Group s obligations hereunder; or (g) Any Physician is required to pay damages in any malpractice action by way of judgment or settlement. 12. Arbitration. Any dispute or controversy arising under, out of, or in connection with, or in relation to this Agreement, or any amendment hereof, or the breach hereof shall be determined and settled by arbitration in the city in which Hospital is located in accordance with the rules of the American Arbitration Association and applying the laws of the State. 74 Any award rendered by the arbitrator shall be final and binding upon each of the parties, and judgment thereon may be entered in any court having jurisdiction thereof. The costs shall be borne equally by both parties. During the pendency of any such arbitration and until final judgment thereon has been entered, this Agreement shall remain in full force and effect unless otherwise terminated as provided hereunder. The provisions of this Section shall survive expiration or termination of this Agreement regardless of the cause of such termination. 74 A Group may want to consider specifying the American Health Lawyers Association instead of the American Arbitration Association. The Group may also consider discussing the pro and cons of arbitration in regards to this contract with its legal counsel. -18-