Medical Directorships Come with Responsibilities, Risks

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Bill GompersBy Vanessa Orr

While it may seem that becoming the medical director of a facility is an easy way for a physician to earn extra income, the position comes with myriad responsibilities, including ones of which doctors may not be aware.

“A lot of physicians think that becoming a medical director won’t require a lot of time and will require very little effort,” said Bill Gompers, CFE, Producer, Risk Strategies Company, Danna-Gracey. “How wrong they are if it is done right.”

Depending on the specific arrangement, the duties of a medical director can be extensive.
“Before accepting the position, it is critical that doctors understand the legal, regulatory and professional liability issues involved in the particular medical directorship that they are contemplating,” said Gompers.

In some places, medical directors are required to provide patient care, while in others they are not. Duties may include credentialing; ensuring that the practice is in regulatory compliance; developing and implementing protocols, policies and procedures; vetting standards and supervising any ancillary personnel; performing chart and peer reviews; performing the administrative duties needed for licensure and board requirements, and providing generalized oversight to the practice, among others.

“What some physicians might think of as a way of supplementing their income for very little effort is really taking on a great deal of responsibility if they do the duties required in the
needed manner,” said Gompers. “In fact, in some states including Florida, the failure to do these duties as defined in state statute could have an effect on the status of their medical licenses.”

While some of the tasks of a medical director can be delegated, the medical director can be held responsible when a patient suffers an adverse effect or the entity’s regulatory compliance is called into question.

“Many physicians don’t realize that their medical professional liability policy most likely excludes medical director-initiated duties,” said Gompers. “In order to protect themselves from any suits or issues, they may need to get a separate policy or be added on to the facility’s policy where they are serving as the medical director.”

There are a number of red flags that may signal a problem when looking at a medical director agreement.

“For example, if a person is a medical director at a facility like a nursing home, and refers patients there while getting a monthly fee as a medical director, he or she may be violating anti-kickback regulations,” said Gompers.

The Physician Self-Referral Law, commonly referred to as the Stark law, prohibits physicians
from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship.

“If a physician doesn’t make sure that the ancillary staff meets their in-service education requirements and are adequately trained or that all of the professionals in the facility have the correct licensure, they may also be liable if something happens,” added Gompers. “In the state of Florida and other places, the medical director is also responsible to make sure that a facility’s billing procedures are appropriate and meet all requirements.”

In Florida specifically, any licensed healthcare clinic may not operate without the day-to-day supervision of a single medical or clinic director, who is, in the state’s view, the focus point of maintaining high quality care and ensuring that the facility is operating in compliance with the law. When applying for recertification, medical directorships will be reviewed by the state
as part of the licensure requirement, and if there is a complaint about the facility, every facet, including the medical director’s role, will be reviewed.

“Anybody contemplating entering into a medical directorship should have a contract and consult with a healthcare attorney to ensure that the proposed business arrangement does not violate any state or federal laws such as corporate practice of medicine and payment arrangements,” said Gompers. “They need to make sure that they understand their duties under the contract and consider if they can appropriately perform those duties.

“They also need to make sure that they have their own liability coverage to protect them in this role, or make sure that they are included in the policy of the facility or clinic engaging them and get a Certificate of Insurance as evidence of such,” he added. “A number of physicians fail to realize how important this role is to the facility and how much exposure they may have.”