Tag Archives: dialysis

5 Tips to Reduce Outpatient Lawsuits

If a patient or her attorney believes a physician is responsible for a bad outcome at an outpatient medical facility, the facility itself will be sued, not just the physician. Therefore, it is up to the facility to have established procedures and protocols in place to deter the risk of lawsuits. Here are five tips for outpatient medical facilities that may help reduce the risk of lawsuits.

#1. Good patient communication

Communication is the No. 1 issue in any medical setting – outpatient care is no exception. Within outpatient services, patients don’t typically have the same depth of relationship with the doctors as they do with their own primary physician. This often makes them more inclined to pursue legal action in the case of a bad outcome or adverse event. If facility physicians and staff take even a few minutes of extra time to answer all questions and address all concerns, patients and their families will walk away feeling as though they had all the information – even if a bad outcome occurred.

#2. Confirmation of informed consent

The patient is at the outpatient facility because of a medical problem – usually determined by his primary physician – who then referred him to the outpatient facility. It is the facility’s job to confirm that informed consent has occurred between the patient and physician, so policies must be in place to ensure this happens with each and every patient encounter. Patients must be informed of the details of the procedure, the risks and benefits and any alternative treatment options. A procedure should not be performed until informed consent has been confirmed. When patients or their families feel they were provided all available information, they are much less likely to pursue a lawsuit in the case of an adverse outcome.

#3. Proper documentation

Documentation can make or break a case when attorneys become involved. Be sure everything is documented, including all test results as well as the date, time and subject of all conversations with both the referring physician and patient. In the event of an adverse outcome where the court becomes involved, the ability to show all conversations is essential. For example, it can be invaluable to show that the referring physician was spoken to on a specific date and that the patient was given specific recommendations.

#4. Thorough and safe medical records

The outpatient setting leaves many opportunities for accidental breaches simply because so many patients are cycled through the facility on any given day. Printed medical records must be kept safe and strictly out of the public view – and that includes being locked away each night. It’s essential that facilities have protocols in place that diligently track the security of medical records at every step.

#5. Prompt diagnosis

Patients often don’t realize how long it may take for medical tests to return. Some lab tests can take days or weeks. Outpatient medical facilities must have an efficient procedure in place for obtaining results and delivering them to patients and the ordering physician in a timely manner. Let’s say a patient had an MRI because of an unidentified growth in breast tissue. If the MRI indicates suspicion for cancer, how does the facility ensure that test results aren’t getting lost in the shuffle? The cancer could spread and lead to a bad outcome. A system of checks and balances must be in place that helps the ordering physician see the results, and act quickly based on the findings. In an outpatient facility, all staff must be informed as to which test results need to be called in to the referring physician immediately.

Bottom Line – All of these reasons come back to the No. 1 issue: communication. For a busy outpatient facility, it can feel as though there simply isn’t enough time to talk to patients, but, from a risk management perspective, the importance cannot be stressed enough. It’s important to take the time to communicate every step of a patient’s care with her – to listen and answer her questions. Not only does this help to build trust, it can also minimize the risk of a lawsuit. Excellent communication between the provider and patient almost always creates a “win-win” situation.

How to Best Use Provider Networks

We are all familiar with preferred provider organizations (PPOs), and many have utilized either subset networks (exclusive provider organizations) or other iterations to control escalating medical claim costs. While these approaches to provider networks had proven successful between 1970 and 2010, based on the impacts of the Affordable Care Act (ACA) they may no longer be sustainable in their current configuration.

There are simple strategies that build on the current model for provider networks and that may help improve a health plan’s performance, and I will get into those shortly. But first let’s develop a common understanding of how PPOs contract.

The marketability of a PPO is based on reducing the cost of claims and providing access to a large number of providers. Typically, PPOs use a variety of cost mitigation techniques including discounts, per diems, case or global rates and relative value schedules (RVS). For a PPO to negotiate its greatest savings, it must enroll a large number of members and be able to steer utilization.

When negotiating for professional services, a PPO typically works with two models, though a third could be added when specialty care is involved. The first model is a discount off billed charges. This is a relatively easy agreement to secure because it doesn’t affect the provider’s practice unless highly utilized. The second model is based on a relative value schedule (RVS), which was implemented in the late 1950s when the California Foundation for Medical Care established a cost for services and applied factors by region. This model was known as the California Relative Value Schedule (CRVS). A similar approach was implemented by Medicare under the title of Regionally Based Relative Value Schedule (RBRVS), which has become a standard for contracting of professional services today. As a result, most professional contracts are now based on Medicare RBRVS plus 10% to 30% depending on the region, type of provider and enrollment population. In some cases, specialty providers may contract based on fixed fees, or a variation of other methods.

Contracting with institutions is very different. In a traditional PPO, hospitals may contract through either a discount off what is billed, fixed per diems for room and board, ICU or CCU or a combination. The discount model is relatively straightforward. A contract that includes per diems will typically have a number of variations such as an “outlier.” The outlier or hospital deductible is a dollar threshold that, when exceeded, triggers re-pricing. In outliers’ purest form, the claim reverts back to a discount off billed charges to first dollar. Some contracts may allow the re-pricing to begin with amounts above the outlier, but this is not the standard.

In situations where treatment is standardized, such as childbirth and knee replacement surgery, a PPO may contract on a case rate basis, which establishes a fixed reimbursement for all care associated with the event. Some of the charges that may fall outside of the event would be physical therapy, durable medical equipment and medications. There will be other treatments, including transplantation, that may include case or global rates. While case and global rates may appear similar, they can vary greatly by network and provider organization. In some cases, the application of a case rate does not limit the claim liability to the contracted amount. As an example, we had an experience with a national network where the $1.8 million transplant charge was paid at $1.3 million even though the PPO had a $250,000 case rate.

This method is not characteristic of case or global rate practices, but consultants and clients should be mindful of exposure as it could affect the plan’s claim reserves and medical excess coverage.

The Affordable Care Act continues to affect claim costs in both fully insured and self-funded environments. Overall claim trends appear to be manageable, although some specialty care and acute care hospitals have changed billing practices as a result of unlimited lifetime benefits. An example is dialysis, where the total cost per patient has skyrocketed. In an audit of dialysis claim costs, we have identified two national provider groups as being abusive in the billing of services. Claims that prior to implementing ACA would average $28,000 to $40,000 per patient per month are now ranging between $60,000 and $105,000 per patient per month. These patients have not been of major concern to PPO contracting managers because of the low volume of claims. As a result, networks have settled for discounts of 15% to 35% off billed charges. Depending on the patient’s diagnosis, Medicare pricing could come into play, resulting in allowable charges closer to $10,000 per month, which may stabilize the group’s overall health plan spending. These and other tools will be discussed in future articles.

In addition to contracting for cost control, most PPO agreements include claim filing requirements and auditing authority. In today’s electronic age, the use of clearing houses such as WebMD have significantly improved claim submission and processing times. As a result, many PPO contracts may require the professional provider to submit claims within 30 to 90 days of treatment, or sacrifice reimbursement. The same principle may apply to institutional contracts, though the timeline for submission may be 90 days. In some cases, a PPO contract may allow an institutional provider to submit claims for a premature birth or transplant patient as long as 150 to 180 days following discharge. Risk managers, consultants and claim payers need to be aware of exceptions to the claim submission rules as they could create a non-reimbursable event if the medical stop loss policy run-out period ends before the processing of the claim.

As part of the due diligence process, it is in the client’s best interest to identify any barriers to audits of financial and medical appropriateness. A number of provider networks surrender the client’s audit authority to secure greater pricing concessions. While pricing concessions are important to the overall claim spending, it only takes one catastrophic claim to hurt a health plan’s performance. Many leaders in the PPO industry understand the need for transition, but it could take a few years to re-engineer existing provider contracts in the areas of auditing for appropriate pricing and care setting, cost to charge, captitation or other non-discounted approach to re-pricing, as well as a reduction in network size to efficiently manage the consumption.

Now that we have a common understanding of PPO contracts and we agree that change will take time to implement, let’s briefly discuss simple strategies using the current PPO model that may help improve a health plan’s performance. A strong PPO can assist clients in controlling costs when the plan design encourages people to use in-network providers. Therefore, when offering a PPO, it is appropriate to include a minimum 20% differential benefit between in- and out-of-network providers. Additionally, providing for deductibles and out-of-pocket amounts will drive patients to network providers. To avoid emergency room frequent fliers, a health plan should have an appropriate co-payment as an inducement to have patients seek care in a clinical setting.

In reviewing our block of business, which includes commercial employers, public agencies and healthcare clients, we have determined that over-utilization is not a significant concern. We have identified a number of areas where a properly crafted plan document coupled with specialty vendors may aid in the control of high-dollar claims. For example, implementing a dialysis management program can reduce average claim cost by 70%.

Beware of vendors who require a percentage of savings, as their fees could double the net claim amount. Consider the addition of domestic medical tourism. While medical tourism is a hot topic, and many of these vendors redirect care outside of the U.S., a number of employers are finding local solutions through direct contracting of specialty care and adding these under domestic tourism provisions.

An employer might include the addition of cost-plus or in-network allowable amounts and the maximum allowable reimbursements for out-of-network claims. One final concept is to utilize an exclusive provider organization-type plan design packaged with a PPO network. Essentially, the health plan would only offer in-network benefits unless care is on an emergency based outside the network’s service area.

This is the first in a series addressing all forms of provider networks. Future articles will introduce the reader to establishing local networks, direct provider contracting and capitation of medical groups, which generates provider engagement in health outcomes and financial management. Recent discussions with leaders of a number of national PPO networks found that many are currently attempting to apply these principles with varying success.