Healthcare News & Insights

Beware: Malpractice, legal risks on the rise for hospitals

As healthcare reform continues to push changes on the industry, hospital execs need to be more vigilant than ever of the growing number of legal risks to their facilities. 451038207

Using some initial data from Obamacare’s rollout, the RAND institute for Civil Justice released a study about how the Affordable Care Act (ACA) will impact healthcare and insurance. As Modern Healthcare’s article on the study shows, hospitals should expect legal risks to increase. RAND predicts that medical malpractice claims will increase by $120 million a year as more Americans get health insurance.

ACA’s legal side effects

The study’s results corroborate the fears expressed during a panel discussion on the ACA and raising malpractice risk, which featured various attorneys, healthcare professionals and insurance providers. As Fierce Healthcare reports on the discussion, there are several areas where hospital administrators can expect changes and greater risk for malpractice claims:

  1. Standard of care — The ACA’s  care quality and standard measures are directly changing what’s considered the “standard of care” in hospitals and in court. This means attorneys may try to define the standard of care for a patient differently than in the past.
  2. Vicarious liability  To handle the rising influx of patients, many facilities are relying more on nonphysician providers to give care. This may expose facilities and physicians to lawsuits for medical errors made by another health team member based on vicarious liability.
  3. Improper handoffs  As team-based care becomes more prevalent in hospitals to improve clinician communication and coordination, there’s a possibility of bad handoffs creating problems, like losing track of or miscommunicating patient data. These sorts of snafus may lead to a new legal problem.
  4. Physician burnout  As more people begin receiving medical treatment with their new insurance, the risk of physician burnout is likely to increase, as are the number of medical errors the burnt-out doctors might make.

The panel also warns that lawsuits may target accountable care organizations and other large healthcare networks for the prospect of receiving a bigger payout or settlement from the organizations’ “deep pockets.”

FCA threats

Unfortunately, it’s not just ACA-driven malpractice that hospitals will have to worry about. Attorney Scott Becker of Becker’s Hospital Review warns that lawsuits involving the False Claims Act (FCA), Stark Law and Anti-Kickback Statute (AKS) are also changing.

In the past, FCA lawsuits were limited to when healthcare facilities billed the government for services never performed or miscoded. However, recent legal changes have made it possible for Stark and AKS violations to lead to FCA lawsuits, too.

Fueling this change is the fact the government is increasingly relying on self-disclosures from hospitals’ staff for information on possible FCA, Stark and AKS violations. And though there are some benefits of self-disclosing violations, Becker still warns, “Self-disclosures are unpredictable, and hospitals do not know what the outcome is going to be when they take their self-disclosures to the government.”

Regardless of how the violations come to light, Becker says many hospitals are settling Stark, AKS and FCA cases because they risk huge fines and major damage to their reputation from lawsuits. His best advice to hospitals for dealing with these kinds of issues: Do everything in your power to stay compliant and avoid violations in the first place.

Hospitals can do this through constant compliance planning, such as consistent coding and billing audits and annual compliance system reviews and updates. Hospitals should also examine their relationships and contracts with individual physicians from a compliance mindset. “Hospitals need to make sure they are employing physicians for a true need rather than just for patient referrals,” according to Becker.

Finally, Becker advises senior hospital leaders to get involved with FCA violations and investigations, regardless of how big or small the issue may be. If word of a potential FCA violation comes up the ladder, then leaders need to inform the employee reporting the issue that it’s being looked at and conduct an investigation on the matter.

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