In the course of a discussion about the liabilities faced by providers at the recent Behavioral Healthcare Leadership Summit, Richard J. Willets, CPCU, ARM, national program director, and John O’Connor, program claims director with NSM Insurance Group’s Addiction Treatment Providers’ Insurance Program addressed not only liability award trends, but tough liability questions raised by providers.
Trend: Bigger liability awards
There is a clear, upward trend in the size of professional liability claims and resulting awards.
According to Willets, “A million dollars used to be a pretty big award, but now juries are more and more sympathetic, and juries and judges are willing to punish nonprofits and healthcare providers much more than they used to be.”
Professional liability lawsuits often are based on allegations of professional malpractice; erroneous assessments; mismanagement or misapplication of suicide risk information; improper prescribing or management of medications; or other professional errors or omissions involving care.
Ironically, explained O’Connor, “Claims related to suicide risk can actually be lower when a patient’s suicide attempt is ‘successful.’” He recounted a recent case involving a client that repeatedly asked to be moved into a higher level of care, in this case, from outpatient up to residential. After the treatment provider refused to make the change, citing a lack of need, the client attempted suicide by self-immolation, but survived with serious burns that will require extensive surgery, hospital stays, and a lifetime of costly care.
Treatment providers liable for ‘level of care’ decisions
A common liability concern emerges each time a substance-use disorder (SUD) treatment provider evaluates an incoming patient and seeks insurer certification to enter that patient into a clinically indicated level of care. Frequently, say providers, insurers disagree with their treatment recommendations and certify treatments that are substantially less than what the providers say is necessary.
One Florida-based provider raised this hypothetical scenario: A patient comes in seeking treatment and is admitted for assessment. Based on the assessment, a course of residential treatment is recommended, but that level of care is denied by the insurer in favor of a partial-hospitalization program (PHP). The treatment provider appeals the decision, documenting its reasoning and following on with a physician-to-physician call to explain. The denial is not reversed.
In that circumstance, the treatment provider, who worried that “this patient is on my watch,” is left with three options, as he described them:
• “Write me a check or discharge.” Accept the PHP reimbursement and place the patient in residential treatment, provided that the patient overcomes a sense of "sticker shock" and pays the difference between the insurer’s PHP reimbursement and the provider’s cost for residential treatment. If the patient refuses to pay the difference, the patient is discharged.
• “Step the patient down.” In this case, the provider would move the patient to the lower insurer-recommended level of care (PHP treatment), a decision that requires the patient to arrange for his or her own room and board.
• “Take the loss.” Accept the PHP reimbursement, place the patient in residential treatment, and write off the difference.
“For me, the ‘safest’ level of care is to take the loss,” said the provider. “What if that patient—if I discharge him early—goes home and hurts or kills himself? My understanding is that the liability for that rests not on the insurer that approved it at that level, but on my license. So,” he asked, “is there an option I’m missing here—or am I doomed to getting [pushed around] by the insurance companies?”
“You’re doing the right thing,” O’Connor replied.
A “can’t win” situation?
The provider went on to explain his fear that, once his organization’s tendency to “play it safe” by providing additional services without reimbursement became recognized by an insurer, the organization could be vulnerable to an insurer “playing games” and extracting more care than it was paying for. “That is certainly a possibility,” O’Connor replied.
What would happen, the provider wondered, if he dealt with the situation in a different way: “What is my liability if, after x days of treatment is approved by an insurer, the insurer won’t approve any more? What if I ask for the difference and the patient chooses to go home, rather than pay for the treatment on his own? ”
“You have to follow what’s clinically indicated,” O’Connor stated, adding that “I realize that this puts you in a really bad spot. It also puts you at risk—for an unlawful termination of service or for failing to provide a clinically indicated level of care. I don’t know if there is any way around [the liability].”
O’Connor made clear that a provider is “well within his rights to discharge a patient that refuses to pay” for services beyond those reimbursed by insurance, but noted that a lawsuit resulting from an adverse patient event after such a discharge could “make all of the information that you used to argue with the insurer for more care discoverable so that it could then be used against you.”
Because, from a liability perspective, MBHOs “are extremely well insulated financially,” O’Connor indicated that “even if we were successful in arguing your right to terminate care, the cost of a settlement could well come back against your professional liability coverage. It might well be a situation where you can’t win.”
Get the latest information on Business Strategy and other valuable topics at this three-day retreat bringing together treatment center owners and executives and key members of the financial community for prime networking opportunities and in-depth discussions for those looking to grow, invest and transform their business.