Legacy Planning for Physicians — 10 Things to Consider

January 3, 2013

There never seems to be a good time to pause and consider the circumstances that will arise and the tasks that must be performed after your (a physician’s) death. Perhaps it is a state of denial or wishful thinking that the world will stop when we die that leads us to postpone planning for the inevitable. The biggest obstacle to overcome is the inertia that robs us of the ability to plan ahead for the closing of a practice following death.

Planning ahead for such a contingency should include personal estate planning for the orderly distribution of property after death and the payment of any debts of the estate. For this, an attorney specializing in drafting wills and estate planning should be consulted. There are attorneys who specialize in planning for physician practices as well. Once your planning is done, you can "rest easy" knowing that your patients, your family, and the myriad of other people and entities who will be affected by your death will not be left with unanswered questions and unnecessary work.

What follows is an outline of steps to be taken in the event of a physician's death. Knowing the scope of the tasks to be performed allows you to plan ahead and also provides a "to do" list for those stepping into your shoes when you are gone.

1. People and entities to notify after a physician's death

  • Estate/probate attorney and accountant
  • Patients — Texas Medical Board Rule 165.5, in pertinent part, states: "… (a) When a physician retires, terminates employment or otherwise leaves a medical practice, he or she is responsible for: (1) ensuring that patients receive reasonable notification and are given the opportunity to obtain copies of their records or arrange for the transfer of their medical records to another physician… Notice must be given by publication, written notice posted in the physician's office and send letters to patients."
  • Colleagues — those who were closely associated with the physician or the practice.
  • Pharmacies — let them know that the physician will no longer be prescribing.
  • Drug Enforcement Agency — Notify the DEA and return the physician's controlled substance certificate.
  • Texas Medical Board — TMB rule 165.5(a)(2), provides that the TMB must be notified (within 30 days) when a physician terminates practice…. and is no longer available to patients, specifying who has custodianship of the records and where the records may be obtained.
  • Liability insurers — Notify professional, business, and general liability insurance carriers of the physician's death. Consider purchase of a "tail" policy to protect against unknown potential claims. Inquire about a possible rebate of premiums paid.
  • Insurance plans — Give written notification of the physician's death to government health insurance contractors (Medicare and Medicaid). Commercial insurance carriers should be given notice as specified by the individual contracts.
  • Membership organizations — Inform local medical society, specialty societies, the Texas Medical Association, and any other professional organizations of which the physician was a member.
  • Landlord and lessors — Notify landlord and invoke, if applicable, termination upon death clause. Review and terminate leases on equipment.
  • Physician's answering service
  • NPI number — Update status in the National Plan and Provider Enumeration System (NPPES) as to the physician's identifier number and the entity.

2. Patient Care

  • Office visits — Create a list of local physicians (by specialty) in advance for referral purposes if immediate referrals are needed.
    Designate staff to cancel or reschedule existing appointments and coordinate the notification to patients of pending lab results.
  • Categorization of patients — Identify who will need immediate medical assistance. Those patients with chronic conditions requiring ongoing treatment should be timely notified as discussed in this article.
  • Specialist consults/referrals — Outside specialist consultations received after the physician's death should be reviewed to determine whether immediate action is needed.

3. Call and rounds

  • Inform each hospitalized patient or legal guardian of a hospitalized patient of the physician's death, and provide contact information for the provider who will be covering for the physician until the patient or legal guardian arranges for a new physician. Hospital administration should be contacted to assist in finding replacement coverage for the physician's already-scheduled rounds.
  • The physician's call/rounds schedule (practice, hospital, and nursing home/hospice, if applicable) must be reviewed to determine back-up coverage. Coverage arrangements for patients of the practice should be made in advance to ensure uninterrupted coverage should a physician's death occur. A list of all hospitals where the physician has call duties should be maintained and readily available to staff. 

4. Pending labs, imaging reports, dictations, etc.

  • Coverage arrangements for reviewing x-rays or other imaging and lab results should be made in advance with local physicians or partners. In addition, arrangements should be made with local physicians in advance for review and approval of the deceased physician's recent dictations. Preferably, the information should be in the patient's medical record when the records transfer to a new physician.

5. Medical records

  • Patient access — After notification of the physician's death, many patients may contact the practice requesting access to their medical records. A HIPAA-compliant release, signed by the patient or the patient's authorized representative, should accompany all requests to transfer or copy medical records.
  • Records maintenance — The records should be retained (digital or hard copy) for the appropriate state and federal regulatory periods. Keep in mind that some managed care contracts require retention for a longer period than state law. Other considerations are retention of records for purposes of the defense of any known or unknown potential medical malpractice claims.

​Texas Medical Board Rule 165.5(b) provides:

"(1) A licensed physician shall maintain adequate medical records of a patient for a minimum of seven years from the anniversary date of the date of last treatment by the physician.

(2) If a patient was younger than 18 years of age when last treated by the physician, the medical records of the patient shall be maintained by the physician until the patient reaches age 21 or for seven years from the date of last treatment, whichever is longer.

(3) A physician may destroy medical records that relate to any civil, criminal, or administrative proceeding only if the physician knows the proceeding has been finally resolved.

(4) Physicians shall retain medical records for such longer length of time than that imposed herein when mandated by other federal or state statute or regulation.

(5) Physicians may transfer ownership of records to another licensed physician or group of physicians only if the physician provides notice consistent with §165.5 of this chapter (relating to Transfer and Disposal of Medical Records) and the physician who assumes ownership of the records maintains the records consistent with this chapter.

(6) Medical records may be owned by a physician's employer, to include group practices, professional associations, and non-profit health organizations, provided records are maintained by these entities consistent with this chapter.

(7) Destruction of medical records shall be done in a manner that ensures continued confidentiality."

Continue compliance with HIPAA and breach notification policies. This includes accounting for disclosures of patient protected health information (PHI).

6. Clinical staffing and operations

Personnel issues after death will depend on whether there is a surviving physician in the practice. Below are some of the personnel considerations if a physician in solo practice dies.

  • Retaining an employee to handle notices/copying duties
    The physician should designate the individual(s) or position(s) who will be retained on duty after death. One of this employee's duties will be to comply with the patient notice requirements under TMB Rule 165.5. Another duty will be to respond to patient requests for copies of medical records. Another planning issue is to complete necessary documents to appoint an individual to handle payments if the physician was the sole authorized signer on financial accounts.
  • Employee retentions and terminations
    Since the income stream after death will be limited, decisions must be made about necessary personnel to be retained to handle practice closure responsibilities. Caregivers, such as nurses, PAs, and nurse practitioners for whom proper supervision cannot be obtained should be terminated. A person (or persons) who will be responsible for immediately managing patient care coverage, dealing with outstanding claims, notifying patients and health plans of the death of the physician and how to access medical records, donating or destroying inventoried medications, and copying and distributing medical records should be kept in the practice's employment for as long as payroll will allow.
  • Accounts receivable
    An additional duty of staff retained will be to continue to collect receivables as long as feasible.

7. Taxes/legal considerations

  • Pay sales and other applicable taxes on inventory if products or taxable goods are sold or kept at the practice. Contact comptroller of public accounts to pay any annual franchise taxes that may be due.
  • All records that are currently under audit or are subject to an ongoing audit should be maintained, regardless of record destruction rules. Tax records and organization/entity documents should be stored for the time period as recommended by your accountant or attorney.
  • Narcotics ledger should be stored for at least two years in case of a DEA audit.
  • If a physician in solo practice as a PA dies, file "Articles of Dissolution" with the Texas Secretary of State's Office. If not a solo practitioner, arrange for transfer of partnership interest.

8. Disposition of copy machines, computers, and other equipment
Maintain a list of all passwords to be readily available to a designated person.

  • HIPAA privacy laws may be invoked with the return, sale, or disposal of the practice's copy machine. Private patient data saved on the machine's hard drive can potentially be accessed by parties obtaining possession of the machine. To prevent an inadvertent breach of PHI, ensure proper destruction of PHI on equipment.

If the physician has x-ray or mammography equipment in the office, the physician holds a license from the Texas Department of Health and must maintain a record of the transfer or disposal of such equipment.

9. Disposition of supplies, drugs, and samples

  • DEA registration terminates upon the death of the registrant. Federal Regulation 21 CFR Section 1307.21 requires disposal of all controlled substances that were in the registrant's possession.
  • The practice must submit a letter to the DEA agent. It will then receive instructions regarding the disposal of the controlled substances. Contact information for your local DEA office can be found at www. http://www.deadiversion.usdoj.gov/index.html
  • Upon death, all DEA order forms in the registrant's possession must be voided (write "VOID" in large print on the forms) and returned to the Registration Unit of the DEA.
  • Prescription drugs that are not "controlled substances" can be disposed of without involvement from the DEA. Take care to avoid the inadvertent diversion of discarded drugs. One possible manner of disposal is to contact a hazardous waste disposal company to determine whether it can dispose of the drugs under the current contract or for a fee.
  • Unused official prescription forms should be voided and returned to the Texas Department of Public Safety's Prescription Program.
  • Other disposal possibilities include: contact pharmaceutical representatives to inquire whether the pharmaceutical companies would take back unopened, unexpired drugs or contact a charitable organization to donate the drugs.

10. Investigate selling the practice with an attorney experienced in representing medical entities.

The goal of this article is to educate physicians about the many tasks and duties that must be anticipated when a physician dies. It is not an exhaustive list, and is subject to change given the circumstances of the physician or changes in the law. Planning is hard, but essential. Doing so will ensure that the ones you take care of will be taken care of after you are gone.

This article was created in part by reference to material and/or ideas adapted from the Texas Medical Association and the Tennessee Medical Association.

Rosemary Hollan can be reached at hollanlaw@satx.rr.com

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