1 2 Legal and Operational Guide for Free Medical Clinics Co-published with the American Medical Association Foundation This guidebook was made possible by the generosity of the American Medical Association Foundation and AHLA’s Public Interest Donors. 1 2 © Copyright 2015 AMERICAN HEALTH LAWYERS ASSOCIATION 1620 Eye Street, NW, 6th Floor Washington, DC 20006-4010 www.healthlawyers.org [email protected] All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photo copying, recording, or otherwise, without express, written permission of the publisher. Printed in the United States of America “This publication is designed to provide accurate and authoritative information with respect to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.” —from a declaration of the American Bar Association 3 4 FOREWORD The Free or Charitable Medical Clinic continues to serve as an important safety net for millions of under- and uninsured individuals throughout the country. Such clinics are often staffed by volunteer physicians, nurses, and other health care providers who provide primary health care services to those who have limited or no access to health care providers or prescription care, and to indigent populations, including the homeless, undocumented persons, Medicaid recipi- ents. Some clinics are even equipped to provide additional health services, such as basic dental, vision, and behavioral health care services. Implementation of the Patient Protection and Affordable Care Act (ACA) will not diminish the need for Free Medical Clinics. In fact, the non-partisan Congressional Budget Office estimates that anywhere from 29-31 million Americans will remain uninsured following full implementation of the ACA, largely because they are unable to afford care; they are undocumented immigrants; or they are eligible for Medicaid but reside in a state that chose not to expand the Medicaid program. Ad- ditional millions will continue struggling to access health care because of long-standing barriers that existed long before the ACA became law, such as lack of transportation options, poor health literacy, high cost of medications, and lack of dental and mental health care access. The American Health Lawyers Association (AHLA) recognized the need for a resource that community and health care leaders can use in their efforts to build a Free or Charitable Medical Clinic so that under- and uninsured populations might have improved and regular access to primary health care services. While local and state laws governing the establishment and operation of clinics vary, The Legal and Operational Guide for Free Medical Clinics will give clinic organizers a broad understanding of the numerous and most commonly encountered legal and operational issues that must be taken into consideration, such as the scope of services to be provided; funding sources; 501(c)(3) tax-exemption; recruitment and licensure of medical volunteers; insurance coverage and liability; prescription drug management; patient privacy; and quality of care and other patient care issues. This resource was made possible by the generosity of the American Medical Association Foundation, the National Association of Free and Charitable Clinics, AHLA’s volunteer-authors who contributed their time and expertise, and AHLA’s Public Interest Donors. It is our sincere hope that this valuable resource will have an impact on helping community leaders and health care providers turn the idea of building and operating a Free Medical Clinic into reality. For the millions who will struggle accessing primary health care services on a regular basis, the Free Medical Clinic will be one of the most important safety nets that continues to positively impact their overall quality of life. 3 4 TABLE OF CONTENTS PART I THE FREE MEDICAL CLINIC: KEY ISSUES CHAPTER 1: An Overview A. Introduction .........................................................................................................11 B. Impact of the Affordable Care Act ........................................................................11 C. Typical Patient Population ....................................................................................13 D. Scope of Services ................................................................................................13 1. Primary Care ...................................................................................................14 2. Mental and Behavioral Health ..........................................................................14 3. Dental .............................................................................................................14 E. Staff and Personnel .............................................................................................14 F. Tax Exemption .....................................................................................................15 G. Funding and Support ...........................................................................................16 1. Sponsorship....................................................................................................16 2. Fundraising .....................................................................................................16 3. Grants .............................................................................................................16 4. Unrelated Business Income Tax .......................................................................16 5. Donated Supplies ............................................................................................18 PART II START-UP ISSUES CHAPTER 2: Structuring a Free Medical Clinic A. Incorporating as a Nonprofit Under State Law ......................................................19 B. Operating as Part of Another Tax-Exempt Organization ........................................20 C. Articles and Bylaws ..............................................................................................22 1. The Organizing Document ...............................................................................22 2. Bylaws ............................................................................................................22 3. Governance Issues ..........................................................................................24 4. Directors and Officers .....................................................................................25 D. Medical Direction .................................................................................................28 E. Obtaining 501(c)(3) Tax-Exempt Status..................................................................28 5 6 F. Application for Recognition of Exemption .............................................................29 1. Completing Form 1023 or 1023-EZ..................................................................32 2. Schedule A .....................................................................................................35 G. Tax-Exempt Status Under State Law ....................................................................37 CHAPTER 3: State Laws on Licensure and Other Authorizations A. Licensure of the Free Medical Clinic .....................................................................40 1. Student-run Clinics ..........................................................................................40 2. Nurse Practitioner-led Clinics ...........................................................................40 B. Licensure of Medical Volunteers ...........................................................................41 1. Physicians .......................................................................................................41 2. Nurses (NPs, LPNs, and RNs) .........................................................................42 3. Mental Health Professionals ............................................................................43 4. Social Workers and Clergy ..............................................................................44 5. Physician Assistants ........................................................................................44 6. Pharmacists ....................................................................................................44 7. D e n ti s ts ...........................................................................................................45 8. Specialized Services .......................................................................................45 C. Credentialing and Privileging ................................................................................45 D. Deemed Status Under the Federal Tort Claims Act ...............................................48 E. Pharmacy Distribution Licensure ..........................................................................50 1. Federal and State Regulations .........................................................................50 2. Narcotics ........................................................................................................50 F. Other State Specific Requirements .......................................................................51 CHAPTER 4: Limiting Liability