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Health Department Weighs Regulating Physician Practices and Walk-In Clinics

In recent years, we have witnessed the rapid evolution of many innovative models for delivering health care services. Most basic are the so-called “walk-in clinics” some- times staffed by a primary care physician but more often by a nurse practitioner or a physician assistant.1 These are commonly found in pharmacies and retail stores with high customer traffic. They offer low cost services such as flu shots, cold and sore throat remedies, treatment of minor injuries, and other basic health care services on-site. At the opposite end of the spectrum are large physician-owned multi-specialty practices that have grown to include hundreds of physicians, nurses and other health care professionals operating at dozens of locations. While patients are seen in the practice’s various offices, most of the physicians have admitting privileges at local hospitals, so they can also attend their patients needing in- hospital treatment and procedures. Additionally, they offer their patients the opportunity to get both primary and specialist physician services from one organization, which can enhance the continuity and quality of care.

In between are private medical practices offering primary care physician services in storefront offices in multiple locations.

Patients can either schedule an appointment in advance, or simply walk into a location and be seen promptly by a physician. These and many other models of delivering health care services have become quite popular. They came about in response to various factors not the least of which are the many patients who do not have a regular physician, the increasing difficulty on the part of patients who do have a physician to schedule a timely visit, and their convenience. Macro factors driving the growth of these providers include escalating medical costs, changing market conditions, consolidations and closings of hospitals, reductions in reimbursement payments, and the impact of the Affordable Care Act.2

The proliferation of these new models of care delivery has prompted New York’s Public Health and Health Planning Council (PHHPC) to look into how these practices are structured, owned and controlled, the quality of care they are providing, and their effects on the health care marketplace in New York, all with a view toward determining whether regulation of some or all of them would be appropriate. However, there are potentially significant obstacles to any attempt by the PHHPC to regulate these practices.

Regulatory Scheme

Historically, there has been a reason- ably clear division of responsibilities in New York State’s regulation of health care delivery between the Department of Health and the Department of Education. The Health Department licenses institutional providers of health care and has sweeping regulatory and supervisory powers over them. Articles 28 and 36 of New York’s Public Health Law (PHL) define the types of health care providers that are subject to licensure and regulation by the Health Department. These include but are not limited to:

  • 
general hospitals
  • public health care
  • diagnostic center
  • treatment center
  • outpatient clinic
  • ambulatory surgery center
  • nursing home
  • dental clinic
  • dental dispensary
  • rehabilitation center
  • certified home health agency
  • licensed home health care services

The Health Department, through the PHHPC, reviews certificate-of-need applications to establish, expand, change ownership, downsize, or close these facilities, taking into account such factors as community need, the character and competence of the proposed owners and operators, financial feasibility, compliance with facility design requirements, and other criteria. The department also has promulgated comprehensive rules, regulations and standards for each type of licensed facility under its purview.3 The department’s powers are such that it can and has placed a moratorium on new applications for certain types of facilities. For example, for many years, the PHHPC had a near-total moratorium on new certified home health agencies (CHHA), and would only consider mergers, changes in ownership, or closure of existing CHHAs, or applications to establish CHHAs for so-called “special needs populations.”

While the Health Department has broad authority over licensed health care facilities—and to some extent those physicians, nurses and other professionals who practice within those facilities— the Education Department is the agency that is responsible for licensing all physicians, nurse practitioners, nurses, physician assistants and other individual health care professionals.4 However, unlike the Health Department’s broad authority over health care facilities, the Education Department merely assures that a practitioner who wishes to pro- vide health care services in New York meets the state’s requirements for licensure. Once licensed, and if they practice their profession competently and ethically, physicians and other practitioners are mostly unregulated other than having to comply with technical requirements such as completing continuing medical education credits for license renewal. The Education Department is not even empowered to define what constitutes professional misconduct. The Legislature reserved that right to itself when it enacted Education Law §6530-32 which spells out in detail what constitutes professional misconduct and the penalties therefor.

Thus, a licensed nurse practitioner, for example, is free to set up her own professional corporation, hire other nurse practitioners, rent space, and offer their services to the general public, whether in a walk-in clinic, their own private office, or elsewhere.5 As long as they practice competently and ethically and within the scope of their licenses, they are not subject to further regulation by the Education Department. The Education Department does not deter- mine whether the state or any of its communities has too many surgeons or pediatricians or nurse practitioners, or that a moratorium should be placed on licensing certain types of physicians or other health care professionals. The Education Department specifically does not supervise or set standards of practice for physicians.

There are a few areas where the functions of these two departments over- lap. For instance, some years ago the Legislature enacted §230-d of the PHL. This law requires that, if a private physician practice wants to perform certain types of invasive or surgical procedures requiring anesthesia in its offices, the physician practice must meet certain safety criteria and be accredited by private accreditation agencies approved by the Health Department.

There are potentially significant obstacles to any attempt by the Public Health and Health Planning Council to regulate practices with new models of care delivery.

Another area of overlap is impaired or incompetent physicians. If a surgeon botches a surgery on a patient at one of the hospitals overseen by the Health Department, that department investigates and determines what went wrong and who should be held accountable. To the extent the hospital is at fault, the Health Department can impose fines and other penalties, and can demand and oversee the implementation of a plan of correction. To the extent that the surgeon was at fault, the Health Department can refer the matter to its Office of Professional Medical Conduct (OPMC)6 which then investigates the surgeon’s performance, and may recommend disciplinary/corrective action by the Education Department. In the case of impairment or a serious threat to patients, the commissioner of the Department of Health is empowered to suspend the medical license of a physician pending the outcome of the investigation and disciplinary process.7 However, as the agency that issued the license, only the Education Department can actually revoke a physician’s medical license.

Current Review

The PHHPC’s current review and discussions seem to have been prompted by a number of considerations. Some medical groups are now so large and offer such sophisticated specialty and sub-specialty services, that they resemble the medical staff of a licensed hospital. Some of the largest physician groups have state-of-the-art medical equipment such as linear accelerators and PET Scans that are normally found in hospitals. Their physicians can and do perform complex treatments and procedures that formerly had to be performed in a licensed hospital or ambulatory surgery center.

Hospital associations object that, while their hospital members have to go through the complex and lengthy Certificate-of-Need (CON) process before they can obtain permission to acquire such major equipment, private physician groups are under no such obligation. Health insurers and managed care plans have expressed concern over the growing range of expensive services and procedures being provided by the largest of these medical practices, as well as their growing financial clout in negotiating payment rates. Other concerns that have been raised relate to the quality of care provided in walk-in clinics, their some- times cramped space and compromised patient confidentiality in retail outlets, and whether patients are improperly “steered” toward having their prescriptions filled at the pharmacy where the walk-in clinic is located.

What makes the PHHPC’s deliberations so interesting is not only what it may decide in terms of possible regulation of these various providers, but whether in fact the Health Department and PHHPC have any authority to do so. The terms “diagnostic center” and “treatment center” are defined in the Health Department’s regulations as:

...a medical facility with one or more organized health services not part of an in-patient hospital facility or vocational rehabilitation center primarily engaged in providing services and facilities to out-of-hospital or ambulatory patients by or under the supervision of a physician... for the prevention, diagnosis, and in the case of a treatment center, treatment of human disease, pain, injury, deformity or physical condition, not including the individual or group private practice of medicine. (Emphasis added.)8

Should the PHHPC and Health Department unilaterally decide to regulate walk-in clinics, storefront medical offices, and multi-specialty physician practices within the definition of a diagnostic and treatment center, or even to set standards of practice, it will come up against the Education Law and several significant decisions by the courts holding that the Health Department has no authority to regulate what are purely physician practices.

For example, Education Law §6532 states with regard to Article 131-A (Definitions of Professional Misconduct Applicable to Physicians et al.):

Neither the commissioner of education, the board of regents nor the commissioner of health may promulgate any rules or regulations concerning this article.

The Legislature’s intent could hardly be more explicit.

A past instance when the Health Department attempted to establish guidelines for physician practice is also instructive. Prior to the Legislature’s enactment of the office-based surgery accreditation requirements in PHL §230- d, the Health Department through the

PHHPC’s predecessor, the Public Health Council, enacted “guidelines” for office- based surgery practices in 2001.9 These guidelines covered the administration of anesthesia, pre-surgery and post-surgery evaluations of patients, monitoring equipment, credentialing of physicians and other professionals, informed con- sent, and what to do in case a patient developed an emergency condition.

While the Health Department has broad authority over li- censed health care facilities, the Education Department is the agency that is responsible for licensing all physicians, nurse practitioners, nurses, physician assistants and other individual health care professionals.

Among other things, the Public Health Council intended these guidelines to become standards of care that could be used by judges and juries in deciding whether medical malpractice had occurred. When these guidelines were challenged by nurse anesthetists, both the Supreme Court and the Appellate Division found them to be not guide- lines or recommendations but actual regulations, and that in promulgating them the council and the health department had exceeded their authority. The Supreme Court, citing Education Law §6532, wrote:

...the Legislature has not delegated any authority to the defendants to legally allow them to set the standards for physician conduct outside of [PHL] Article 28.

The Appellate Division unanimously affirmed, noting that the Health Department and council conceded they had no authority to regulate services provided in private physician offices. The court found that the Health Department and council:

...impermissibly acted in the absence of legislative guidance and

contrary to an express legislative mandate prohibiting such action (See, Education Law §6532).

The Court of Appeals, finding that the nurse anesthetists lacked standing, reversed. But the message from the lower courts, based upon careful statutory analysis and ample precedent, was clear.

Conclusion

The PHHPC has statutory authority: to consider any matter relating to the preservation and improvement of public health and may advise the commissioner thereon...10

The PHHPC also has statutory authority to enact the state’s sanitary code, which inter alia may:

deal with any matters affecting the security of life or health or the preservation and improvement of public health in the state of New York, and with any matters as to which the jurisdiction is conferred upon the public health and health planning council. (Emphasis added.)11

Should the PHHPC and Health Department determine that regulation of any of these new provider models is advisable, the prudent course would seem to be to put them forward in the form of recommendations to the Legislature, rather than attempting to act on their own.


1. For a discussion of the legal issues surrounding the op- eration of “walk-in clinics,” see Serbaroli, “Legal Guidelines for Operators of ‘Walk-In’ Clinics,” NYLJ, March 30, 2007, p.3.

2. Public Law 111-152.
3. See, e.g., 10 NYCRR Part 405.
4. See, e.g., NY Ed. Law Articles 130-131.


5. Under Educ. Law §6902(3)(a), nurse practitioners are required to collaborate with a licensed physician qualified in the specialty involved, in accordance with a written practice agreement and protocols. Nurse practitioners are autono- mous and are not required to practice under the supervision of a physician.

6. See, NY Public Health Law (PHL) §230.


7. PHL §230(12)


8. 10 NYCRR §751.1.


9. For disclosure purposes, this writer was a member andvice chair of the Public Health Council when it approved these guidelines.

10. PHL §225(1).

11. Id. §225(5).

This article was previously published in the New York Law Journal.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume III, Number 269

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About this Author

Francis Serbaroli, Greenberg Traurig Law Firm, New York, Healthcare and Litigation Attorney
Shareholder

Francis J. Serbaroli is a shareholder in the Health Care & FDA Practice of Greenberg Traurig's New York office. Frank has three decades of experience in the health care industry. His clients include health insurers and managed care plans; hospitals, nursing homes, clinics, ambulatory surgery centers and home health agencies, clinical laboratories, renal dialysis providers, faculty practice plans, pharmaceutical companies, and medical device and equipment manufacturers. He handles a wide range of corporate, regulatory, compliance, reimbursement, corporate governance,...

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