Attorney: 'Rotation' referrals may compromise care

DPs also cautioned about legal risks

Patients' right to freedom of choice of providers has been a source of continuing conflict, especially between hospitals and post-acute providers not owned by or affiliated with hospitals — so-called freestanding providers, notes Elizabeth Hogue, Esq., a Burtonsville, MD-based attorney specializing in health care issues.

Hospitals may be tempted to ease that tension, she adds, through a rotation system of referrals, whereby they assign patients who cannot or will not choose a provider to one on a list to receive referrals. Under such a system, Hogue says, each listed provider receives one referral before any provider receives another.

But while the rotation system is an appealing solution, she continues, it actually may compromise quality of care.

"First, many post-acute services are provided under the supervision of physicians based on their specific orders," Hogue explains. "Because physicians supervise these services, they are at risk for legal liability, along with providers and their staff members, if the providers and staff members do not meet applicable standards of care."

As a result, physicians have a clear interest in assuring the quality of care provided by post-acute providers to their patients, and so may choose to designate in their orders which provider will render those services, she says. "This helps to assure quality of care and manage their liability risks."

When physicians order services from a particular provider, Hogue points out, other providers — including discharge planners and case managers — may not ignore, alter, or delete any orders from patients' medical records. If these discharge planners and case managers are licensed nurses or social workers, she adds, they may be subject to discipline by state licensure boards if they modify orders from patients' physicians.

Some post-acute providers have developed specialty programs in orthopedics, respiratory services or palliative care, for example, Hogue notes. Quality of care received by patients who need services in these areas may be compromised, she suggests, if they are referred to providers that don't offer them when those who do provide these specialty programs are available in the area in which the patients live.

Hospitals' risk of liability may be significantly increased, she says, when specialty physicians order care from a provider that has a specialty program and those orders are ignored in favor of a system of referral rotation.

Whatever the situation, Hogue says, all providers are required to abide by patients' right to freedom of choice of providers, as she explains below.

1. All patients have a common law right based on court decisions to control the care provided to them including who renders it. When patients, regardless of payer source or type of care, voluntarily express preferences for providers, their choices must be honored.

2. Federal statutes of the Medicare and Medicaid programs guarantee beneficiaries and recipients of these programs the right to freedom of choice of providers, although Medicaid recipients who participate in a waiver program may have waived this right.

3. The Balanced Budget Act of 1997 (BBA) requires hospitals to develop a list of home health agencies that meet these criteria:

a. medicare certified;

b. provide services in the geographic areas where patients reside;

c. asked to be on the list.

If hospitals place on the list the names of agencies in which they have a financial interest that should be disclosed, the relationship between the hospital and the agency must be specified on the list, she adds. "This list must be presented to patients so they can choose the home health agency they wish to provide services to them."

If physicians have written orders for services from specific agencies, Hogue continues, case managers and discharge planners must tell patients about the orders when the list is presented to them and must tell patients they have the right to choose a different agency, if they wish.

4. Hospital Conditions of Participation (COPs) include the basic requirements of the BBA, described above. They also require discharge planners/case managers to develop an appropriate discharge plan for each patient.

The risk of legal liability for both hospitals and discharge planners/case managers may be increased, Hogue notes, when discharge planners/case managers fail to develop a plan that best meets patients' needs in favor of a system of rotation.

Patients are likely to accept the agencies ordered by their physicians, she adds. If, however, patients voluntarily express their preferences or choose an agency other than the one ordered by their attending physicians, Hogue says, patient choices "trump" physician orders and must be honored.

[Editor's note: Elizabeth Hogue may be reached at (301) 421-0143 or by e-mail at]