CMS Loosens Medical Staff Rules for Multi-Hospital Systems

By: Jesse Adam Markos, Esq.
Wachler & Associates, P.C

On May 7, 2014, the Centers for Medicare & Medicaid Services (“CMS”) issued a Final Rule that directly impacts medical staff self-governance and physician representation on a hospital’s governing body. The Final Rule, which will take effect on July 11, 2014, allows hospital systems with more than one hospital to use a single medical staff and abandons the requirement that there be a physician member of the medical staff on the governing body.

By way of background, CMS previously published a Final Rule requiring that each hospital have its own independent medical staff. This was intended to protect medical staff autonomy and self-governance. However, CMS noted that numerous benefits (such as more efficient sharing of knowledge and better on-call coverage) can be derived from a unified medical staff structure. CMS also noted that many hospital systems have been using a unified medical staff model for a number of years. These unified medical staffs often rely on a system of committees made up of representatives from the various hospitals in the system to ensure that hospital-specific concerns are addressed.

In the Final Rule, this prohibition on the use of unified medical staffs has been modified to allow hospitals and their respective medical staffs the flexibility to decide which medical staff framework works best for their situation. Because the structure of a hospital’s medical staff is defined within medical staff bylaws, which must be approved by both the medical staff and the governing body, a multi-hospital governing body cannot unilaterally force the members of its separate hospital medical staffs to accept a unified medical staff. Instead, hospital systems that wish to adopt a unified structure are required to provide for a vote on the issue and the medical staff members of each separate hospital in the system must vote either to accept a unified structure or to opt out and maintain a separate and distinct medical staff for their respective hospital.

The Final Rule also abandons CMS’ proposed requirement that a medical staff member from at least one hospital in the system be included on the governing body to ensure communication and coordination. However, this conflicted with some State and local laws that require members of a public hospital’s governing body to either be publicly elected or appointed. As a result, this requirement has been modified in the Final Rule and the governing body is now only required to consult periodically throughout the year with the individual responsible for the organized medical staff of each hospital, or his or her designee. Importantly, this proposal does not preclude medical staff membership on the governing body.

This new Final Rule is particularly important for those medical staffs in multi-hospital systems or one that is the subject of a potential merger. However, it remains important for all organized medical staffs to remain current with all applicable law and accreditation requirements and to protect their autonomy and authority to self-govern.