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There is not a single, universal blueprint for closing down a health care practice. Requirements often differ slightly based on state law and circumstance. That said, in order to make the process go smoothly to minimize any potential risk or liability, there are some general guidelines that health care providers should be aware of prior to closing down a practice.

Notification

There are several parties that a practice may be required to notify prior to its closing. These parties include, but are not limited to: patients, federal and state agencies and licensing boards, employees, payors, vendors, and other business associates. Each party has unique notification requirements, subject to relevant law and custom.

Notification to Patients

Notification to patients normally must occur between one and three months prior to the closing date to avoid claims of abandonment. Notification should be given to all active patients, which depending on your state, can be any patient the physician has treated sometime in the past 12-36 months. The timing and method of notification can differ based on the health status of the patient. For example, high risk patients may need the notice to be sent via certified mail so the practice can track whether it was received or, if undeliverable, the practice can record that an attempt was made to reach the patient in an effort to minimize risk of any claim to the contrary.

In each case, the notice to patients will need to include certain information. This information will likely include the date of closing, the name(s) of local physicians that would be willing to accept new patients, the name of the physician(s) taking over the practice (if applicable), instructions for how to obtain or transfer medical records and a deadline for submitting record requests, new contact information for the departing physician, a way to contact the practice regarding any questions or concerns patients and their families may have in regards to the practice closing, and information regarding where the medical records will be stored after the practice closing. Providing thorough and accurate notice to patients will help address any confusions patients or their families may have, and hopefully reduce any complications going forward.

Some states, such as Illinois, require the notice to be published as an advertisement in the local newspaper. States that have this requirement will specify the period of time prior to closing the advertisement needs to be published and how long the advertisement will need to run. Notification also should be posted throughout the practice, and patients who call or visit should be given verbal reminders.

Notification to Employees

It is important to notify practice employees. It is best that employees hear about the closing from the practice directly and that they are notified early in the process. Practices can incentivize employees to stay until the practice is officially closed, but should be prepared to hire temporary help should employees decide to leave prior to the closing date.

Notification to Entities

When closing a practice, certain federal, state and local agencies and organizations may need to be notified. Each entity will have different requirements, so it is important to be familiar with these requirements or consult with a local expert. For example, notification to the Federal Drug Enforcement Agency (DEA) must be in writing and specify whether you wish to continue or surrender the DEA registration. Also, providers are required to notify the Centers for Medicare & Medicaid Services no later than 90 days after a decision to retire or withdraw from the Medicare program.

Notification also should be made to the practices malpractice insurance carrier and any other insurance carriers that contract with the practice (for example, workers compensation policy or as part of any employee benefit plans). If the practice is affiliated with any hospitals, referring physicians, state and local medical societies, insurers or managed care companies, they also should be given notice.

As with any winding up of a business, it is important to review contracts to which the practice is a party. Contracts, for cleaning services, waste disposal, internet, laboratory services, and the like may require notice in writing of termination and could have penalties for early termination. The same goes for termination or assignment of any lease agreements. If the practice owns the space where it is located, it will need to determine if the space will be sold or leased to a new business.

Record Retention

While the medical record itself generally is understood to be the property of the practice, the information contained in the record is the property of the patient. As such, the practice should obtain HIPAA-compliant authorizations to transfer records at the patients request. Where records are not transferred, they will need to be stored by the practice for a period of time. Some states have specific record retention requirements. Indiana, for example, requires that all records must be retained and kept confidential by the practitioner for at least seven years.

If your state does not have a required period of retention, a good general rule is to arrange to store adult medical records for seven to ten years. For minors, good practice is to retain medical records until they reach the age of 21 years and the length of time the practice retains adult records has gone by since the last treatment date.Medicare and Medicaid records should be retained in their original form for at least ten years.In any case, it is important that records be available for the period prescribed by your states malpractice statute of limitations.

In some states, a state archive or health department will store health records from closed facilities. However, it is more common that records are transferred to another healthcare provider or stored physically in a HIPAA-compliant storage facility or electronical repository. Whether records are held in a storage facility or transferred to another healthcare provider, it is important to notify patients of the storage location and instruct them as to how to obtain records after the practice has closed. Any records that can legally be destroyed should be shredded or otherwise destroyed in a HIPAA-compliant fashion.

Insurance

Closing a practice does not exempt it from liability for anything that may have occurred while the practice was active. The practice will need to ensure that both it and its providers are covered by liability insurance through a tail policy or some other form of continuing coverage. If a provider is retiring and has been with his or her malpractice carrier for a certain period of time, it may be possible to obtain tail coverage for little or no cost.

Additional Considerations

Make sure to collect accounts receivable. The practice may need to arrange for another physician to collect remaining accounts or turn past due accounts over to a collection or billing agency.

Be sure to repay all debts and liabilities and pay malpractice premiums. Once all liabilities have been paid, practice owners will need to determine how to distribute any remaining income. It is recommended that the practice retain some funds for a period of time to cover the cost of surprise or otherwise unknown liabilities that may present at a later date.

It is recommended that the practice consult with legal counsel to complete certain legal documents to properly dissolve the practice entity with the state of formation. Further, the practice should consult with its accountant to make sure any tax-related issues are addressed.

Conclusion

Closing a medical practice may seem like a challenging task. While there are a number of components to consider, it does not need to be an overwhelming experience. By keeping these guidelines in mind, and consulting the necessary experts, a practice can create and execute a plan that allows for a seamless transition and minimizes future legal implications.

Christina M. Kuta, J.D., LL.M., M.S.W., is of counsel in the Health Law group atRoetzel& Andress in Chicago. She can be reached atckuta@ralaw.com.

Delaney Perl, J.D., is an associate in the Health Law group atRoetzel& Andress in Chicago.

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Closing your health care practice: What you need to know - Medical Economics

This entry was posted on October 7, 2022 at 1:46 am and is filed under Legal Issues Genetic Medicine. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. |