New Jersey - Volume XIII, Number 1 - January, 2004

NJ COURT STRIKES DOWN MEDICAL STAFF BYLAWS PROVISION A recent decision by New Jersey Superior Court Judge Alexander Lehrer in Monmouth County, New Jersey, could require most hospital medical staffs to revise their bylaws. CentraState Medical Center’s medical staff bylaws include a section which creates an investigative committee to determine whether there may be a basis to take disciplinary action against a physician. If the investigative committee recommends that disciplinary action be taken, and the Medical Executive Committee accepts that recommendation, the physician is then given a “fair hearing.”

Unfortunately, under the CentraState bylaws, the burden then shifts to the physician to prove by “clear and convincing evidence” that the recommendation of the investigative committee was “arbitrary, capricious or unreasonable.” In issuing its ruling the Court found that the burden must remain on the hospital to prove that the physician engaged in wrongdoing, voided the entire proceeding undertaken against the physician, and restored his privileges.

The CentraState bylaws provision struck down by the Court has been inserted into many hospital medical staff bylaws at the urging of a Pittsburgh law firm which claims to specialize in medical staff bylaws and consults with hospitals concerning ways to allow hospitals to better control physicians.

MEDICARE PRESCRIPTION DRUG, IMPROVEMENT & MODERNIZATION ACT HAS SOMETHING FOR EVERYONE Besides providing a new prescription drug benefit, the Medicare Prescription Drug, Improvement and Modernization Act (“DIMA”), signed into law last month, affects many aspects of reimbursement to physicians and their entities. The conversion factor for the physician fee schedule will increase by 1.5%, rather than be reduced as initially proposed. Payment rates for certain drug administration services will increase, with the intent of offsetting elimination of the Average Wholesale Price-based reimbursement methodology for most drugs and biologicals under Medicare Part B, to be replaced, beginning in 2005, with an “average sales price” reimbursement methodology. Effective January 2005, certain cardiovascular and diabetes screening tests will receive limited coverage. In addition, physicians will be reimbursed for an initial routine physical examination of Medicare beneficiaries who become eligible for Medicare on or after January 1, 2005, if the exam is performed within 6 months of eligibility. DIMA blocks, for an additional two years, the annual payment cap on physical, occupational and speech therapy services. However, there will be a 1% reduction in payment for services furnished in ambulatory surgery centers, beginning April 1, 2004, with a freeze on rates from the last quarter of 2005 through 2009 while the GAO conducts a study of the ASC payment system and implements a revised payment system no later than 2008. Payment rates for most durable medical equipment will be frozen through 2008 and more stringent requirements implemented for prescribing certain DME. Health & Human Services is to amend its Evaluation & Management Documentation Guidelines yet again, with the objective of reducing paperwork burdens, but only after considering input from practicing physicians and conducting pilot programs. Finally, there is a new Medicare “opt out” option for podiatrists, optometrists, and dentists, effective February 2004.

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