Executive Summary
The Affordable Care Act (ACA) is creating new liability risks for hospitals and exacerbating some existing risks. The potential dangers involve implied standards of care and cost constraints that affect medical care.
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Default standards of care are being created through reimbursement guidelines.
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There is a greater risk that patients will allege care decisions were made for financial reasons.
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Reimbursement guidelines cannot be cited in court as standards of care, but they still will be used in that manner.
Risk managers should be aware that the Affordable Care Act (ACA) is creating new liabilities that were not apparent when the law first took effect, says Rob Francis, COO of The Doctors Company, based in Napa, CA, and the nation’s largest physician-owned medical malpractice insurer.
Part of the ACA’s overall goal is to move the health system from fee-for-service to a quality-based model, and some unintended consequences are beginning to appear, Francis says. Reimbursement is increasingly tied to meeting quality standards, which can skew how physicians and hospital leaders provide care, he says.
One troubling trend is the creation of default standards of care that prevent physicians from making clinical decisions based on their best judgment. As reimbursement guidelines become a new standard of care, malpractice lawsuit opportunities could increase up to eightfold, Francis says.
“Doctors are telling us that they are not being allowed to use their own judgment because if they deviate from the guidelines, they won’t receive reimbursement,” Francis says. “They’re being told that they have to do it that way or not get paid, and that means they sometimes have to provide care in a way that is not what they think best. That greatly increases the chance of a malpractice allegation.”
The Sustainable Growth Rate bill passed by Congress in April establishes a new two-track payment system for doctors that is intended to move more patients into risk-based payment models. Doctors that qualify for the alternative payment track will receive higher reimbursement rates starting in 2019. That bill also included a provision stating that the quality standards cannot be used as standards of care in liability actions.
“But what actually happens is that, in people’s minds, they are becoming the standard,” Francis says. “Even without being able to refer back to the federal quality standards, they come into play because the expert witnesses are adopting them as the standard of care and then testifying that those are the standards accepted in the medical community. They don’t have to mention the reimbursement guidelines themselves.”
Clinicians should be encouraged to follow their own judgment and carefully document any deviation from the reimbursement guidelines so that there is evidence of the effort to provide the best care for the patient, Francis says.
Cost concerns
As fee-for-service medicine continues to be replaced by value-based, pay-for-performance compensation, Francis says there will be increased allegations that care is being withheld for financial gain of the providers. At the same time, with more aggressive Medicare payment denials leaving patients with high medical bills, more patients will sue for what they deem unnecessary care.
“Any allegation of care decisions based on financial motivation is something that blows up jury awards,” Francis says. “If you look back at the managed care movement in the 1990s, there were huge awards that came out of accusations that HMOs and hospitals were choosing care because they made more money doing it this way instead of another way. Any time that allegation creeps into a lawsuit, it inflames the jury and substantially increases the awards.”
Francis cites the example of a post-surgical patient who develops complications at home and needs to go an emergency department (ED). If that patient is directed to the hospital that is part of the physician’s network, rather than the closest hospital, allegations could arise that the referral was made for financial reasons.
“Those facts did result in a multi-million dollar settlement back in the 1990s, and I’m afraid we’re going to those cases again,” Francis says. “It would be worthwhile to remind physicians and nurses that if they send someone to the emergency room, they should tell the patient to go to an emergency room and not our emergency room.”
Deductibles worrisome
The influx of newly insured patients also is increasing liability risks, Francis says. Many of these patients typically received care in the past on an acute basis through EDs and clinics, but now their high deductibles are causing them to forego care until the condition worsens. As their health condition worsens, liability risk increases because the malpractice risk is always higher when the patient is sicker.
Physicians also are reporting concerns that requirements for electronic medical records (EMRs) pose a number of liability risks. They worry that despite all the benefits, EMRs can harm the physician-patient relationship. Physicians can be so busy entering information into the EMR or going through the great volumes of data available that they devote less time to interacting personally with the patient, Francis says.
“That disconnect always works against the doctor if there is an adverse event and you end up in litigation. The patient who feels like you ignored him or her and only had half your attention during the exam will be more likely to sue and less willing to settle,” Francis says. “On top of that, we’re also hearing concerns that EMRs can lead to an overload of frequent and disruptive alerts, causing alert fatigue. That’s one more risk factor.”
