By Priya Bathija

It’s been a busy year so far, and the BDB Health & Medicine Reporter covers a broad range of topics in this issue. The article, “Sorry Works…or Does It? Insurance Coverage Implications of Patient Apology Programs,” looks at how physicians can embrace apology programs without alienating their insurance company or jeopardizing liability protection. Kevin Quinley, Senior Vice President of Risk Services for the Medmarc Insurance Group and Hamilton Resources Corporation, Chantilly, VA, lays out some tips for doctors on how to reconcile apology programs with insurance policy compliance.

Another article, “Pay-for-Performance: Giving Your Practice a shot in the Arm” discusses taking advantage of private pay-for-performance programs so that physicians may reap financial benefits by offsetting adverse economic effects such as high malpractice premiums and stagnant reimbursement.

We also feature shareholder Richard Milligan (Canton) for all his work and contributions to the firm since he joined BDB in 2003.

Finally, our Updates summarize the final regulations for the Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program, introduce a recently launched HIPAA Compliance Enforcement Web site, and include recent advisory opinions issued by the Office of the Inspector General, among other news.

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By:  Kevin Quinley, Guest Author

“Love means never having to say you’re sorry,” according to Eric Segal’s protagonist in the 1960’s hit movie, Love Story.  That may work in love but, increasingly, it may not apply to the more adversarial realm of medical malpractice and adverse patient outcomes.  Recently Newsweek magazine (10/16/06, “Disclose, Apologize, Explain,” p. 50) spotlighted health care errors, describing a recent program from the Harvard Medical School system.  Fourteen hospitals affiliated with the Harvard Medical School have instituted a program that embraces four steps in the event of physician or hospital mishaps:

·        Disclose.  Tell the patient and to the family what happened.

·        Take responsibility.

·        Apologize at once, on the theory that compassion diffuses anger and restores trust.

·        Explain to the family or patient what will be done differently in the future.

This template strays from the classic legal and risk management advice that doctors and nurses should keep their mouths shut, making no admissions or statements of responsibility.  Instead disclosure, apology and early offers of financial compensation have drastically reduced the number of medical malpractice suits at Veterans Hospitals in the 1990s and, more recently, in medical malpractice coverage programs run by the University of Michigan and by Colorado’s COPIC, a private insurer specializing in medical malpractice coverage for doctors.

Patients facing adverse medical outcomes often want explanations and a sense of contrition in the face of medical error.  They may decide to hire lawyers and file medical malpractice lawsuits simply to get “the real story” on what happened and because they feel ignored because no one sat down to explain and apologize.  Various medical malpractice insurance companies now embrace apology programs to address patient concerns over adverse outcomes and to avoid fractious claims and lawsuits.  More than 15 states have passed so-called “apology laws,” which protect doctors’ expression of remorse from being used against them in trial.  Some insurance companies credit apology programs with reducing their claim payouts and improving their loss ratios.

While such programs garner increasing publicity and interest, they pose challenges from an insurance coverage standpoint.  No doctor wants to jeopardize his or her medical malpractice insurance coverage.  Without such coverage, a physician might face possible bankruptcy from even spurious liability claims.[1]  Apology programs have implications for insurance coverage and doctors must be aware of these before jumping on any apology program bandwagon.  Let us look at some of the prime insurance coverage issues that can arise from physicians embracing apology programs. 

Usurping the insurer’s claim-handling role

Most insurance companies discourage policyholders from playing the role of claims adjuster.  Part of the adjuster’s role is to determine legal liability.  Insurers resist policyholders substituting their judgment for the judgment of the carrier’s own claim staff.  This is more than a philosophical preference.  The CONDITIONS section of your insurance policy spells out your duties in the event of a claim.  Breaching a Condition may negate the ability to receive an insurance policy’s financial protection.  For example, many liability policies contain a condition that discourages the insured from making any commitment to pay without the insurer’s consent.  Common in insurance policies is language along the following lines:

No insured shall, without our consent, make any offer or payment, except for first aid.

An insurance company worries that its rights to defend a medical malpractice claim could be prejudiced.  If a physician apologizes to a patient and in effect concedes liability, an insurance company may argue that this hampers its ability to fully defend a claim.  This relates to the next reason for insurer concerns.

Potential prejudice to the insurer’s claim resolution efforts

Even if state laws bar such apologies from being admitted as evidence of liability, the insurance company can argue that such an apology creates an expectation of recovery in the mind of the patient that may be very difficult to dislodge once the insurer drills down deeper into the investigation and defense of a case.  Offering money – even a nominal amount – to a patient is a bell that cannot be unrung. 

Other pragmatic questions abound when harmonizing apology programs with medical malpractice insurance coverage:

• Who determines whether an adverse outcome is in fact a case of liability or not on the part of the policyholder physician?

• What happens in “gray area” cases where negligence may exist on the healthcare provider’s part but also contributory negligence on the part of a noncompliant patient or an intervening cause due to a malfunctioning medical device?  Liability questions in medical malpractice cases and adverse events are rarely black and white.  Nuances and shades of gray abound.  What to do in these cases?  Make a monetary offer?  Offer an apology even though liability is not clear-cut?  Reserve expressions of remorse only for the most clear-cut cases of deviation from the standard of care? 

• If a physician makes a nominal monetary offer to a patient or a patient's family, who funds this -- the physician or the insurance company?

• If the patient or family accepts the offer, does the physician insist on a duly executed Release of all claims? Without a Release, the family or patient may still be free to pursue a broader claim to recover additional damages.  Pressing for a Release has its own perils, though.  The risk is that the gesture may prompt the family or the patient to seek legal counsel to review the document.  This in turn may cause the doctor to lose control of the claim, triggering the conventional litigation process that apology programs aim to sidestep.

• If a physician expresses remorse and coordinates this gesture with his or her malpractice insurance company, will this be used by the insurance company as an underwriting factor?  Would this gesture possibly come back to haunt the physician at renewal  in the form of either higher premiums for coverage or loss of coverage?

Desire for Quick Resolution v. Need for Methodical Investigation  

Timing factors loom as an added challenge.  Part of the problem in adverse outcomes is that a physician may want to move rapidly to address patient concerns.  Patients also desire speedy resolution of their issues regarding an adverse outcome.  By contrast, the insurance company will want to undertake an investigation.  This may entail a thorough review of medical records, determining the relevant standard of care for a procedure and interviewing various parties who provided care to the patient in question.  An investigation like this takes time, time that perhaps neither the patient nor the physician wants to take in the desire to bring closure to an event and foreclose an adversarial claim process.

Reconciling Apology Programs with Insurance Policy Compliance

Ideally, physicians would like to “have their cake and eat it too” by participating in apology programs but doing so without alienating their insurance company or jeopardizing their liability protection.  How can doctors reconcile these two aims?  Here are five tips: 

• Educate your insurance agent or broker on the fact that you have adopted or participate in an “apology program.” Make this part of the specifications when going to get quotes for medical malpractice coverage.

• Take time to educate prospective medical malpractice insurers about this program.  Be prepared to make a cogent case to the insurer as to how and why wise decisions will be made.  Allay concerns that doctors will routinely “promise the world” to a patient or family due to every adverse outcome. 

• Align yourself with insurers that support and encourage apology programs as a rational way to address adverse outcomes.

• Get buy-in from your insurance company before expressing any apology to a patient or before making any monetary offer.

• If your insurance company balks at giving its approval for either an apology or a monetary offer, decide whether you want to handle the claim outside of your insurance coverage and policy contract. 

Sorry works, but so do financial protections in the form of medical malpractice insurance.  The point here is not to persuade doctors to bypass apology programs due to insurance coverage issues.  Rather, practitioners need to be aware of insurance coverage perils that can lurk in so-called apology programs and use these tips to sidestep the financial landmine of lost liability protection!

By:  Joe Feltes

Physicians looking for ways to offset the adverse economic effects of high malpractice premiums and stagnant—if not diminishing—reimbursement, may want to consider participating in voluntary pay-for-performance initiatives in order to enrich their practices’ anemic bottom line.

By taking advantage of private pay-for-performance programs, physicians could reap financial benefits while at the same time ramping up for what promises to lie ahead.  CMS continues to move toward a paradigmatic shift in distributing reimbursement, evidenced by legislative measures such as the Medicare Value Purchasing Act of 2005 (S.1356), which seeks to amend title XVIII of the Social Security Act  and give quality-based payments to providers who furnish high-quality care to Medicare beneficiaries.

Under the new system, physicians who meet certain quality and performance measures (the bedrock of evidence-based medicine) established by the Department of Health and Human Services will be rewarded by getting a bigger slice of the reimbursement pie.  Physicians who do not meet these performance measures, on the other hand, will receive less reimbursement.  In some cases, these physicians may even be penalized financially.

Pay-for-performance advocates believe that offering providers economic incentives for meeting performance measures is an effective way to improve quality outcomes, reduce errors, avoid complications, and lower costs.  Early evidence seems to support the validity of this premise.

A number of CMS pay-for-performance demonstrations and private-sector programs are operating today.   One private-sector player, for example, is the Bridges to Excellence coalition, which comprises multiple employers in several states, including Ohio.  The coalition’s goal is to reward health care quality through measurement, reporting, rewards, and education.

Working with several agencies, including the National Committee for Quality Assurance (“NCQA”), MEDSTAT, and WebMD Health, the Bridges to Excellence coalition launched three programs in which physicians may qualify to receive financial bonuses based on implementing specific processes to manage disease, reduce errors, and increase quality as well as efficiency.

Physician Office Link is a pay-for-performance initiative that allows physicians to qualify for monetary bonuses based on their implementation of specific processes that are designed to reduce errors and improve patient quality in the office.  For physicians who become certified, Diabetes Care Link offers a bonus for each diabetic patient participating in the program.  Cardiac Care Link enables physicians to achieve recognition for high performance in cardiac care, which in turn results in a per-patient financial reward.  Bridges to Excellence bonuses are available in markets where employers or health plans adopted the program and invested funds that will be paid out in bonuses to participating physicians who become certified.

Physicians, understandably, may be reluctant to submit performance measure and outcome data that could generate a “report card,” particularly if outcome reporting focuses on negative outcomes, as is the case with the New York State Health Department’s public reporting of mortality, by surgeon, following coronary bypass surgery.

The Bridges to Excellence Diabetes Care Link takes a decidedly different approach.  Participating physicians submit to NCQA process and outcome measures (such as HbA1c, blood pressure, and lipid profiles) for their diabetic patients.  Prior to submission, patient data are stripped of certain identifiers, including name, address, and social security numbers.  These identifiers are replaced by randomly assigned identification numbers that preserve confidentiality and comply with HIPAA. 

NCQA and the American Diabetes Association, in what is known as the Diabetes Physician Recognition Program (DPRP), award physicians who satisfy these process and outcome measures a one-year or three-year “certification”.  These physicians are recognized on NCQA’s web site.  Physicians who do not achieve recognition are not publicly identified.  Certification, in this sense, operates as a “positive-spin” report card, rather than a negative report card, which should assuage some physician concern.     

Physicians and hospitals alike have a legitimate concern about what might happen if outcome data were to get into the hands of malpractice attorneys.  Ultimately, to expect providers fully to buy into adopting performance measures and reporting outcomes, it is necessary for legislatures—federal and state—to create “safe harbors” to protect against introducing performance data into evidence in litigation against providers.

Ohio’s H.B. 197, as passed by Ohio’s General Assembly, represents a good, first step toward achieving that protection by prohibiting performance measure information from being used as evidence in any civil, criminal, or administrative proceeding.

For now, physician participation in pay-for-performance initiatives that are being offered through Bridges to Excellence, as well as through various managed care plans and coalitions in northeast Ohio, presents minimal liability risk.  At the same time, bonuses paid through these programs may give practices a much-needed economic shot in the arm and, at the same time, give physicians a head start toward meeting the challenge that CMS pay-for-performance programs will present.