The Risks of Referral Rotation
The issue of patients' right to freedom of choice of providers has generated enormous tension and conflict, especially between hospitals and post-acute providers that are not owned by or affiliated with hospitals, so-called free standing providers.
Hospitals may be tempted to ease tension and conflict through use of a rotation system of referrals. That is, when patients cannot or will not choose the provider they wish to use, hospitals will assign patients to a provider on the list to receive referrals. Each listed provider receives one referral before any provider receives another referral. Although it is certainly tempting to try to resolve conflict through use of such a system, it is clear that a rotation system of referrals may compromise quality of care.
First, many post-acute services are provided under the supervision of physicians based upon their specific orders. Because physicians supervise these services, they are at risk for legal liability, along with providers and their staff members, if providers and their staff members do not meet applicable standards of care.
Consequently, physicians have a clear interest in assuring the quality of care provided by post-acute providers to their patients. Physicians may, therefore, choose to designate in their orders which provider will render services to their patients. This helps to assure quality of care and manage their liability risks.
When physicians order services from a particular provider, 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, 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. The quality of care received by patients who need services related to these specialties may be compromised if they are referred to providers that do not have specialty programs when such programs are available from providers that serve the area in which the patients reside. Hospitals' risk of liability may be significantly enhanced when specialty physicians order care from providers that have a specialty program and those orders are ignored in favor of a system of referral rotation.
Nonetheless, all providers are required to abide by patients' right to freedom of choice of providers. There are a number of sources of this right as follows:
All patients have a common law right based upon court decisions to control the care provided to them, including who renders it. Thus, when patients, regardless of payor source or type of care, voluntarily express preferences for providers, their choices must be honored.
Federal statutes of the Medicare and Medicaid Programs guarantee Medicare beneficiaries and Medicaid recipients the right to freedom of choice of providers. (Medicaid recipients who participate in a waiver program may have waived this right.) Consequently, when Medicare patients and non-waiver Medicaid patients voluntarily express a preference for a home health agency, these choices must be honored.
The Balanced Budget Act of 1997 (BBA) requires hospitals to develop a list of home health agencies that meets the following criteria:
Medicare certified;
Provide services in the geographic areas where patients reside; and
Ask to be on the list.
In addition, if hospitals place the names of agencies in which they have a discloseable financial interest on the list, the relationship between the hospital and the agency must be disclosed on the list. This list must be presented to patients so that they can choose the home health agency that they wish to provide services to them.
If physicians have written orders for services from specific agencies, case managers and discharge planners must tell patients about the orders when the list is presented to them. They must also tell patients that they have the right to choose a different agency, if they wish to do so.
Hospitals Conditions of Participation (COP's) include the basic requirements of the BBA described above. They also require discharge planners/case to develop an appropriate discharge plan for each patient. The risk of legal liability for both hospitals and case managers/discharge planners may be greatly enhanced when discharge planners/case managers fail to develop a plan that best meets patients' needs in favor of a system of rotation, including honoring physicians' orders for agencies that have specialty programs that may benefit patients.
Patients are likely to accept the agencies ordered by their physicians. If, however, patients voluntarily express their preferences or choose an agency other than the agency ordered by their attending physicians from the list presented to them, patients' choices "trump" physicians' orders and must be honored.
In conclusion, it is clear that physicians may write orders for post-acute providers that state that services are to be provided by designated providers. Such orders are consistent with patients' right to freedom of choice of providers and physicians' efforts to appropriately limit their risks of legal liability. To the extent that use of rotation systems interferes with such designations based upon quality of care or preclude patients from receiving care from specialty programs, hospitals should avoid using them in order to appropriately manage risks of legal liability.
Elizabeth E. Hogue, Esq.
Office: 877-871-4062
Fax: 877-871-9739
Twitter: @HogueHomecare
Copyright, 2021.
Elizabeth E. Hogue, Esq.
All rights reserved.
No portion of this material may be reproduced in any form
without the advanced written permission of the author.
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