In the intricate world of healthcare, where patient safety is paramount, the process of credentialing healthcare staff is crucial. However, this seemingly straightforward task is burdened with complex legal implications that impact both hospitals and their suppliers. A conversation between Sharon Jenkins, Ed.D., Erin Bass, J.D., and Rhett Suhre sheds light on the challenges and potential solutions surrounding healthcare credentialing and employment law.
A Look into the Landscape
Erin Bass, a partner at Dentons, the largest law firm globally, discusses her role in advising employers across the United States on complying with a myriad of employment laws. This includes ensuring that employers follow the rapidly evolving laws related to background checks, as well as advising on joint employment risks. Erin highlights the delicate balance that suppliers must strike between satisfying credentialing requirements and abiding by employment laws, a challenge that has significant ramifications for the healthcare industry.
Sharon Jenkins, Ed.D.: Tell us about yourself and work.
Erin Bass, J.D.: I am a partner in the employment group at Dentons. Dentons is the largest law firm in the world. My practice is based on advising employers across the country on complying with a range of employment laws.
I also defend employers in court or with government regulators if they’re accused of violating those laws. As part of that work, I advise employers on compliance with the rapidly changing laws around protections for employees related to background checks as well as joint employment issues.
Sharon: Rhett, as Founder of C4UHC and key leader in our credentialing pilot with SMI, perhaps you could lay some groundwork for our discussion.
The Birth of C4UHC and Credentialing Challenges
Rhett Suhre: Credentialing has been an issue probably since mid-2000s. Hospitals wanted to ensure that the individuals that were coming in to support the products or services related to patient care had been vetted and that vetting involved things like background checks, drug screens, training etcetera.
The challenge is that there were no standards established and so initially the individuals were being asked to meet all the same requirements that hospital employees were, even though they were not the ones providing direct patient care. Some of that has been resolved, some of it hasn’t.
There is still the requirement to ensure that anybody supporting patient care has been vetted in different areas. But because of the lack of standards, it became very challenging, and the hospitals quickly realized that it was not something that they were willing or able to take on themselves. And at the same time, third party organizations offered services so that they could provide credentialing.
Due to the lack of standards, we saw variations in the requirements, and we saw variations in the processes each hospital required. So, for something that should have been fairly standard, it has now become a very challenging process because of the diversity of requirements and processes. What has happened is the supplier organizations have ended up having to duplicate the processes to meet the requirements because the requirements vary, and they must duplicate the actual processes of documentation. C4UHC was created to establish standards and interoperability and provide efficiency to the healthcare ecosystem in support of more effective patient care.
With these two primary goals, we formed a canvas group of all stakeholders and created the standards in 2019 and revised in 2020, we’re currently in the process of establishing how we effectively communicate that that individual has met the requirements per the ANSI-NEMA SC-1 2020 standards and have it accepted by all parties.
Erin: Suppliers have a real challenge when it comes to complying with these various credentialing requirements that also are butting up against their obligations under employment laws.
The current situation creates waste, inefficiencies, and costs.
Standardization for Efficiency
Rhett emphasizes the need for standards and interoperability in healthcare credentialing, which C4UHC aims to achieve through the American National Standards Institute (ANSI)-NEMA SC-1 2020 standards. These standards offer a structured framework that can be adopted across the healthcare ecosystem to streamline the credentialing process, reducing costs and enhancing patient care.
Rhett: Yes, in 2012 the estimated cost of credentialing to healthcare was about a billion dollars a year. Our current estimates are that it exceeds $12 billion a year. So in 10 years, we’ve had a 10X increase in the cost of credentialing and we don’t have anything that shows that there has been a measurable difference in the reduction of risk to the patient. This is why we need ANSI-NEMA SC 1 2020 standard adoption throughout our healthcare ecosystem.
Erin, one of the biggest challenges is directly related to your area of expertise, background checks. We run background checks on our employees per state and federal guidelines and we do the adjudication to make sure that we’re following the laws and we’re hiring good people while following the laws that are applicable.
Navigating the Legal Landscape
Erin delves into the legal complexities of healthcare credentialing. State and federal laws dictate the information that employers can request in background checks. For instance, California restricts the use of consumer credit reports, creating a challenge for suppliers whose employees must undergo consumer background checks as part of credentialing. The joint employment doctrine also comes into play, as hospitals exert control over supplier staff, potentially making them liable for employment law violations.
Erin: As a level set, let’s discuss what the law requires as far as background checks. And then we’ll talk about the risks to both the supplier as well as anyone imposing these requirements. So big picture, there’s a host of state laws across the country that limit the kinds of information employers can request in background checks.
There are some federal laws that require certain disclosures in connection with background checks, as well. I think those are easier to meet in this setting because if you’ve made the disclosures and gotten the required consents, you can check the box. So I’ll focus on the state law requirements.
Across the country, various states have laws that restrict what information an employer can request from an employee in a background check. A good example is California, because it has one of the stricter rules. In California, employers cannot obtain consumer credit reports except in limited situations, such as for managers or employees in positions that have regular access to certain information like Social Security numbers and dates of birth.
But it’s not clear that supplier employees who are required to go through credentialing would qualify for one of those exceptions under California law, where it would be lawful to obtain consumer credit report information. Maybe in some cases the supplier employees do qualify, and maybe in some cases they don’t. Which really tees-up the problem for the supplier.
As an employer, what is it supposed to do when some hospitals demand these consumer credit reports as part of the credentialing process? If the law says you can’t obtain that information from your employees, are you just supposed to not send those employees to the particular hospital that requires that information? How are you, as a supplier, getting staff to those hospitals to do their jobs?
This, of course, assumes that the supplier even knows what background checks are being run. As I understand, in many cases, the supplier does not even know what checks are being run because the third party credentialing organizations are handling it. Well, employers have to make certain disclosures and obtain certain authorizations from employees before running background checks. There may also be additional disclosures needed before the employer can take action based on those background checks, such as by terminating the employee for failing. How can the supplier comply with those requirements if it doesn’t even know what check is being run?
There’s also the complexity of which state law applies. Let’s say a supplier in Arizona has an employee who lives in Nevada but who travels to California for work on a regular basis. The California court may say, while that employee is physically in California, California employment laws apply. So now the supplier needs to ensure its background checks also comply with California law.
With all these complexities, it creates a huge headache for suppliers. you have to ask, how do these credentialing requirements improve patient safety? If the supplier has no involvement in providing patient care, why does a hospital need to have a consumer credit report on that individual, particularly where the law might not allow the employer to obtain one?
I saw tiered credentialing in the ANSI-NEMA SC-1 Standards, and I think this makes so much sense. This would enable suppliers as employers to apply different criteria to the screenings depending on what access the supplier’s employee will have. That would go a long way to help suppliers comply with employment laws.
I would also note, C4UHC’s proposal for interoperability solves some of these concerns. If there was one set of requirements, that significantly reduces the number of complexities and competing requirements under employment laws that a supplier needs to resolve.
The Dilemma of Joint Employment
The concept of joint employment adds a layer of risk to hospitals to the credentialing process. Erin explains that if hospitals exercise substantial control over supplier employees, they could be deemed joint employers and held responsible for compliance with employment laws. This raises concerns about the applicability of various state laws when supplier employees work across different locations.
One legal doctrine that is important to talk about in this context is the joint employer doctrine. This is a doctrine that says more than one entity can be deemed the legal employer of an employee, and thus legally responsible for complying with employment laws and financially responsible for any violations. The touchstone of the doctrine is how much direction and control an entity exercises over a worker.
Let’s take the example of a hospital and a supplier. If the hospital exercises enough direction and control over the supplier’s employee, the hospital can be deemed a joint employer with the supplier over the employee. If the hospital is deemed a joint employer, the hospital can be held financially responsible for any liability for failure to comply with employment laws, including laws around background checks.
The joint employment test looks at multiple factors in the totality of circumstances. So, the requirements that the hospital imposes through credentialing are factors that would weigh in favor of a court finding the hospital to be a joint employer.
The ANSI-NEMA SC-1 2020 national standard that’s tiered based on level of access fixes a lot of these problems. It reduces the level of control and interaction the hospitals have directly with the suppliers’ employees and therefore reduces their joint employment risk.
Conclusion: Towards a More Streamlined Future
The dialogue between Sharon Jenkins, Erin Bass, and Rhett Suhre sheds light on the intricate interplay between healthcare credentialing and employment law. The challenges posed by evolving laws, joint employment considerations, and the lack of standardization are clear. However, the ANSI-NEMA SC-1 2020 standards offer a promising solution that can revolutionize the healthcare credentialing landscape, promoting efficiency, cost-effectiveness, and most importantly, enhanced patient care.
As the healthcare industry continues to evolve, finding a harmonious balance between credentialing requirements and legal compliance is essential. The adoption of standardized credentialing practices could pave the way for a future where both patient safety and legal adherence are seamlessly integrated, benefitting healthcare providers, suppliers, and patients alike.