Thinking of retiring or relocating? Thinking of selling or closing your practice to work at another group or in a healthcare system or clinic? If so, no matter your specialty, there are specific laws, considerations and obligations you must consider, some of which will live on well beyond when the practice closes. There are a number of issues to consider, including: notification of the licensing board; notification to patients of the need to transfer their care, and their right to access their records; and notification to funding sources and business partners. Here is what you need to know before making this significant change in your career in order to protect you from liability, disciplinary action by the State Boards and potential exposure from future lawsuits.
NOTIFICATION TO THE STATE LICENSING BOARD
For all areas of practice in medicine and psychiatry, psychology, socialwork, therapy, rehabilitation of all types, etc., (hereinafter “practice group”), the state where the practice is located has rules and regulations governing the closure of a practice. If you are planning to retire and no longer planning to practice in the state in any capacity, a Voluntary Surrender of License form should be completed and sent to your Board. The requirements differ by state as to whether you need to surrender your physical license and wall certificate – check with your Licensing Board. If the reason you are closing the practice has to do with a disciplinary action, that must be disclosed to the Board as well.
If you are relocating and may return to the area at some point, you can stay actively licensed in the state as long as you continue to meet the CME requirements, pay your licensing fees as required and re-credential with your Board as required. While you must maintain the state’s CME and licensing requirements, you do not need to practice in the state to keep the license on active status.
NOTIFICATION TO PATIENTS
If you plan to close your practice for any reason, it is helpful to notify patients of the change no less than six months in advance unless there are issues that cannot be avoided that prevent you from practicing, such as sickness, injury, disability or death. Notification must include information on the closure, including when it will happen, and a general recommendation to another group practice, hospital, clinic or other options for continued care. It is important not to refer to specific providers because there is a cause of action in litigation that involves a “negligent referral.” If a subsequent provider is the target of a later lawsuit, a referring provider can be implicated for an allegedly negligent referral. For this reason, only provide the names and contact points for groups, clinics, or hospitals with the same or similar specialty. Note: it is important to check your state’s regulation for termination to ensure you are compliant with the particular language required.
If a patient requires prescriptions that you have previously provided, the option of offering a 30-day supply of medication should be considered prior to the date of closure, unless the patient has transferred care before the closure, or has a supply or refills for more than 30 days. However, this should be determined taking into consideration the patient’s specific treatment issues or plans.
NOTIFICATION TO FUNDING SOURCES AND BUSINESS PARTNERS
You must also notify your funding sources, including insurance carriers, Medicaid, Medicare, and other contractual partners of the practice closure. Your agreement with the insurance company will tell you exactly how to terminate your participation. If the practice is affiliated with a health care institution, clinic, or has a coverage agreement with other practices, notice should be sent regarding the plan for practice closure and the date of closure. It is helpful to get a plan in place at least six months in advance, as this will provide an opportunity to resolve any billing disputes or unpaid claims before the closure and reduce the accounts receivable balance by the time the closure occurs. In addition, any collection for unpaid services, deductibles, or contractual fees can be resolved before the practice closes. It is much easier to resolve billing issues and collections on accounts receivable before the practice closes.
If you are a solo practitioner with employees, it is important to have all agreements regarding severance pay and other separation issues in writing. Your employees should have enough notice to find new employment or make arrangements for benefits upon the practice closure. If you are in a practice with others, in addition to having all financial agreements regarding the closure in writing, any agreements among the partners concerning asset distribution, such as furniture, equipment, and supplies, should also be done in writing. If the assets are to be sold, the distribution of the funds received should have an agreement in place before the sale of the assets.
MEDICAL RECORD DISTIRBUTION AND RETENTION
All Medical Boards have rules and regulations for the handling of medical records and other important documents, such as unused drug prescription pads, after the closure of a practice.
Electronic medical records require storage on an encrypted system and, if the records can be transferred to an external hard drive, the hard drive should be stored in a secure location such as a safe deposit box. For paper records, scanning and saving to the hard drive will prevent the need to rent space from a medical record storage facility. States have different requirements for how long records must be kept for adult and minor patients. Be aware of the requirements in your particular state. It is important to protect all records from unauthorized access or from damage such as fire, water, and humidity. If you are a solo practitioner planning to maintain paper files, the expense of storage in a HIPAA compliant facility should be considered in your financial planning. If you are in practice with others or selling your practice to another provider, the ongoing expenses of storage and the details of accessing records in the future should be worked out with your partners before the practice closure.
A patient’s access to their records always requires a signed HIPAA compliant release for records, and for behavioral health records the release must be specific to behavioral health records. If the patient is not signing the release in the presence of you or someone on your staff, it should be notarized to verify the identity of the person requesting the records. Patients should be required to pick up records in person to verify the identity of the recipient. If pick up is not possible for a verifiable reason, the records can be sent via certified mail with a signature of the patient required on the return receipt. The practice can charge a reasonable fee for copying records and for postage if that is elected. It is important to check if your state has regulations concerning how much can be charged. Patients can also choose to have records sent directly to a subsequent treating physician. This does require a signed consent, but the records can be sent directly to another provider without the need for certified mail signed by the patient.
The destruction of physical records and unused prescription pads require shredding. For electronic record destruction, deletion is sufficient until the hard drive contains no further records. Once all records are deleted, the hard drive should be destroyed to prevent unseen metadata from being retrieved. Remember, simply deleting records does not mean that you have permanently erased them as the unseen metadata can be accessed from a seemingly empty hard drive.
FUTURE POTENTIAL LIABILITY
The statute of limitations on medical malpractice claims varies by state, but it is typically between 2 to 3 years from the date of alleged injury or the date that an injury should have reasonably been known by the patient. Again, this varies by state but typically, for patients less than 18 years old, the statute of limitations does not expire until the patient is two years beyond the date of majority, or 20 years old. For those practicing in areas involving infants, children, and adolescents, this is a significant consideration when closing a practice. For this reason, as well as many others, the safe storage and protection of medical records is very important to defend yourself in the future, if necessary.
In the event that litigation is brought after the practice closes, you will still be required to defend yourself and possibly protect even your personal assets. Thus, during the closure of the practice, it is incumbent on the professional to discuss ongoing requirements for professional liability coverage with your insurance carrier for a period of time after the practice closes, including “tail” coverage. If the practice was incorporated, after the assets of the practice are liquidated, and depending on the nature of the incorporation, a source of funding will be required to retain counsel, cover the costs of defending litigation, and possibly cover any financial settlement or verdict. Closing a practice does not eliminate the potential for future legal exposure for medical malpractice claims. This must be discussed with your carrier to protect you and your heirs. It is an expense that must be considered in your post-closure financial planning.
If selling your practice to another provider, it is important to have a contract that assigns responsibilities. Make sure that your attorney reviews any such contract. If the contract is drafted by an attorney for the provider purchasing the practice from you, it may be drafted in a way that protects them, not you. Similarly, if the contract is drafted by your attorney, the other provider may also want to hire their own attorney to review the document.
For whatever reason you are choosing to close your practice, you deserve the peace of mind that comes with proper planning and implementation. It is always advisable to contact your professional liability carrier to review the steps that you have taken to ensure that they are sufficient, and to provide information regarding compliance with state and governmental regulations. In addition, it is recommended that you consult with an attorney in your state to ensure you are in compliance with state requirements. Every situation is different, so it is important to have all the information you need to ensure a smooth transition and a protected future.