New Coverage for HIPAA Proceedings

By Kimberly Wittchow, JD

Digest, Fall 2001

On January 1, 2002, OMIC will add patient privacy regulatory proceedings coverage to its fraud and abuse insurance program. This is because, hot on the heels of the government’s Medicare/Medicaid fraud and abuse initiative, another potential regulatory nightmare for ophthalmologists looms. The Health Insurance Portability and Accountability Act (HIPAA), one of the federal laws invoked in anti-fraud cases, contains new patient information privacy regulations enforceable beginning April 2003. This complex set of rules sets stringent standards for maintaining the privacy of individually identifiable health information.

Clarifications and guidelines already have been published to further elucidate the HIPAA statutes, with more to follow as health care providers try to make sense of HIPAA in relation to state privacy laws and their current practices. Simply stated, the law provides that a health care provider may not use or disclose protected health care information (PHI) except as required or permitted. Health care providers will need to provide patients with new blanket consent and specific authorization forms for the use of patient PHI. Ophthalmologists and anyone they share PHI with (such as companies providing accounting, billing, accreditation, or legal services) must enter into business associate agreements stating they will take appropriate safeguards in the transmission and use of PHI. When PHI is disclosed, providers may be require to de-identify the PHI or make reasonable efforts to disclose only the minimum information necessary to accomplish the intended purpose.

Under the new regulations, patients will have many affirmative rights that providers must facilitate. For example, patients can request restrictions on the use of their PHI; inspect, copy, and amend their PHI; and request an accounting of disclosures that providers have made of their PHI. In addition, health care providers must comply with certain administrative requirements, including: documenting their policies and procedures; appointing a privacy official; implementing privacy training; and creating administrative, technical, and physical safeguards to protect PHI.

HHS Encourage Cooperation
While much of this seems daunting, the U.S. Health & Human Services Department is encouraging cooperation and assistance to help providers achieve compliance – unlike the witch-hunt tactics of anti-fraud forces. Further, when assessing a practice’s reasonable compliance, the government will take into consideration a provider’s size and type of activities related to PHI. Punitive enforcement, at this point, is not a priority. However, civil fines, lawsuits, criminal fines, and imprisonment are tools the government can imply if it chooses to aggressively ferret out non-compliers.

What does this mean to OMIC insureds? First, it is essential that ophthalmologists understand the law and how it applies to their practice. Second, they must discern what steps to take to be compliant come spring 2003. Third, practitioners need to implement a protocol and then follow through on prescribed compliance procedures. Fourth, ophthalmologists should ensure that, as part of their insurance package, they are covered in the event the government targets their practice for violation of HIPAA regulations.

In light of the quickly approaching April 2003 deadline, OMIC is taking measures to protect and educate insureds. Risk management seminars will cover HIPAA privacy rules, and in early 2002, OMIC will make a HIPAA compliance program planning tool available to help insureds further understand the law and implement protocols to protect patient health care information.

Coverage for HIPAA Proceedings
Also in 2002, OMIC is expanding its fraud and abuse insurance program to cover HIPAA proceedings. OMIC’s Fraud & Abuse/HIPAA Privacy insurance will cover legal expenses civil proceedings instituted against the insured by a government entity alleging violations of HIPAA privacy regulations. OMIC’sComprehensive Fraud & Abuse/HIPAA Privacy insurance will cover legal expenses for proceedings instituted by a government entity alleging HIPAA privacy violations and resulting in administrative fines and penalties.

This HIPAA privacy coverage is in addition to both policies’ coverage of billing errors proceedings instituted by a government entity, third party payor, or qui tam (whistleblower) plaintiff under the False Claims Act. OMIC will provide a Fraud & Abuse/HIPAA Privacy policy free to its professional liability insureds $25,000 limits ($50,000 effective Jan 1, 2011). Higher limits to $100,000 are available for additional premium. OMIC offers American Academy of Ophthalmology members who are not OMIC professional liability insureds the opportunity to purchase this legal expense coverage as well. OMIC insureds and other Academy members also are eligible to purchase the Comprehensive Fraud & Abuse/HIPAA Privacy policy with limits ranging from $250,000 to $1,000,000. A $1,000 deductible applies to both policies.

For further information regarding OMIC’s new Fraud & Abuse/HIPAA Privacy program, please call the Sales Department at (800) 562-6642, ext. 654.

Underwriting Life, Health & Disability

	By Geri Layne Craddock, CLU Vice President at Marsh Affinity Group Services, a service of Seabury & Smith
	[Digest, Winter, 2002] Underwriting is a risk evaluation process used by insurance companies to determine whether an applicant’s potential risk is appropriate to the coverage requested. While underwriting guidelines vary from company to company, the overall process for life, health, and disability coverage is similar. Insurance companies rely on experienced reviewers, called underwriters, to evaluate and classify risk. When a life, health, or disability underwriter receives an application, he or she verifies the application information, collects omitted data, and gathers additional input. If a medical exam or test is required to evaluate health risks, the underwriter will arrange for it and review the results. The underwriter might contact the applicant’s doctor to check medical records, call to verify employment status, or review motor vehicle records. In some cases, insurance companies turn to a third party verification service, such as the Medical Information Bureau (MIB). The Medical Information Bureau The MIB, a nonprofit association of more than 600 life insurance companies in the U.S. and Canada, has compiled data and facilitated the exchange of insurance information since 1902. The MIB obtains its information from insurance applications; however, insurance companies and the MIB may only share personal information as authorized by the applicant in writing and in accordance with applicable laws.1 MIB reports may include, among other things, data on height, weight, lab tests and blood pressure readings, but only if these factors are considered to be significant to an applicant’s longevity or health. Some nonmedical information, such as an adverse driving record, participation in a dangerous sport, or how often someone has applied to other member insurance companies for coverage, also may be reported by the MIB through its insurance activity index. All of this information is highly confidential and tightly controlled. Entire medical records are not on MIB reports. Rather, conditions (“risk factors”) that show up on medical records, not specific numbers, are coded on MIB reports. These codes serve as “flags” to underwriters, who can pursue further investigation if they deem it necessary. According to industry standards, an underwriter cannot base a decision solely on MIB data. Insurance companies must conduct their own investigations, using MIB reports only as verification. The Applicant’s Role The applicant’s primary role in the underwriting process is to complete the application accurately and truthfully. The form must be signed and dated, as applications without signatures cannot be processed. Forms should be returned promptly. An individual’s health status and signature are valid only for a specified period of time. If weeks or months elapse before an application is submitted, most insurance companies will require verification of health status again before processing the application. After receiving a life, health, or disability application, the underwriter may call the applicant to collect more data. The sooner the applicant provides the information, the faster the process will go. The insurance company may return an application if additional information is needed. Once all the necessary information is collected, the underwriter evaluates this information against the insurance company’s accepted underwriting policies. These confidential guidelines vary, but generally include age, income, morbidity rates (likelihood of becoming ill), occupation, and height and weight charts. It can take from several weeks up to a few months to underwrite an application, depending on the company, the type of insurance sought, the complexity of the applicant’s medical history, and the response time to the underwriter’s requests for information. Unfortunately, insurance companies sometimes have to decline applications. In cases where the applicant believes he or she has been declined mistakenly, the insurance company usually allows the applicant to appeal the denial. Some companies allow reapplication for coverage after a certain amount of time has elapsed. In instances where a policy expires, the insured may have to repeat the underwriting process, depending on the clauses of the policy. Some policies allow insureds to automatically renew their coverage without repeating underwriting, even if conditions (such as health) have changed. Other policies require insureds to reapply for insurance and undergo what is known as post-selection underwriting in which the carrier decides whether or not to grant continued coverage. Members of the American Academy of Ophthalmology can participate in high quality, reasonably priced, members-only insurance plans, including life, disability, and office overhead expense coverage.2 For more information, please call (888) 424-2308. Notes: An applicant can obtain a copy of his or her own MIB report for US $8.50 by writing to: MIB Information Office, PO Box 105, Essex Station, Boston, MA 02112 (617-426-3660). In Canada, write to: 330 University Avenue, Suite 403, Toronto, ON M5G 1R7 (416-587-0590). Or visit the web site at www.mib.com. The Term Life, Disability Income, and Office Overhead Expense Plans are underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.

Options for Long Term Care

Limits of Liability

By Kimberly Wittchow, JD, OMIC Staff Attorney

Digest, Spring 2004

Press coverage of the industrywide rise in medical malpractice claims frequency and severity is abundant. This has many insureds questioning whether their current limits of liability are adequate for the increasingly litigious environment in which they practice. To help insureds assess their coverage limits and needs, this article will address what is meant by limits of liability, how to select limits, and how changing limits affects coverage if a claim arises.

Your limits of liability are the maximum dollar amounts of indemnity OMIC will pay on your behalf as a result of covered claims. Indemnity is the amount of damages awarded in a lawsuit or agreed to in a settlement between the parties. OMIC will pay your reasonable defense costs in addition to your liability limits.

All OMIC insureds have two separate limits: the per claim, or “medical incident,” limit and the aggregate limit. The per claim limit is the maximum amount of indemnity OMIC will pay per insured for all damages caused by any one medical incident, or by any series of related medical incidents involving any one patient, regardless of the number of injuries, claimants or litigants, or the number of claims (notices, demands, lawsuits) that result. The aggregate limit, on the other hand, is the maximum amount OMIC will pay per insured for all claims made and reported  during the policy period.

How to Select Limits

There are several factors to consider when selecting limits of liability. The limits you require may vary with changes in your state’s malpractice liability climate, the procedures you perform, and the makeup of your practice. Therefore, you should continually assess your current needs and corresponding coverage.

First, review the claims statistics for ophthalmologists. For example, as of February 2004, OMIC’s average indemnity payment was $130,166 and its largest indemnity payment was $1.8 million.

Second, consider your state’s risk relativity. When OMIC looks at risk relativity, it compares the number of insureds, the number of total claims, and the average indemnity paid per claim in each state. Under this analysis, due to the fact that OMIC has a large number of insureds in these states, OMIC’s highest claims activity is currently in California, Texas, and Illinois. For selecting limits, however, a better way to look at risk relativity might be to compare the average rate of claims per insured per state. OMIC insureds in Louisiana and Michigan currently experience the highest claims frequency.

Third, find out what liability limits your peers are carrying. The majority of OMIC insureds (65%) carry $1 million per claim/$3 million aggregate limits. Higher limits of $2 million per claim/and either $4 million or $6 million aggregate limits are selected by 21% of insureds. OMIC’s lowest offered limits of $500,000/$1.5 million are carried by 6% of insureds, while 4% select the highest limits OMIC offers, $5 million/$10 million. The remaining 4% of insureds carry other combinations of limits, including lower limits available exclusively to physicians who participate in their state’s patient compensation fund.

Fourth, consider the risks related specifically to your practice. Is your subspecialty one in which there is high claims frequency (e.g., cataract surgery) or large damage awards (e.g., neonatal care)? Do you share your coverage and limits with any ancillary employees or your sole shareholder corporation? On the other hand, have you ceased performing most surgical procedures or limited your practice to part time?

Fifth, assess your level of risk aversion. Would higher limits make you feel more secure because of the large indemnity cushion or less secure because of the “deep pockets” potentially discoverable by the plaintiff?

Finally, check with your hospital and state licensing board because they may specify the minimum amount of coverage you must carry. Also note that OMIC generally requires all OMIC-insured physiciansin practice together to carry the same liability limits. The practice’s legal entity cannot be insured at higher limits than those of the physicians.

Which Limits Apply to a Claim?

You should consider how changing your limits will affect the amount of indemnity available to you if a claim should arise. The limits of liability that apply to a claim are those limits that are in effect as of the date the claim is first made against you and first reported in writing to OMIC.  In other words, if you increase or decrease your coverage after you’ve reported a claim made against you to OMIC, the limits that you carried when you reported the claim, not the new limits, will be applied to the claim.

Subject to underwriting review and approval, you may increase or decrease your limits of liability at any time during the policy period (although OMIC typically does not consider requests to change policy limits while a claim is pending). If you are in group practice, discuss this desired change with your practice administrator and partners. Your OMIC underwriter can provide you with the most recent OMIC data to help you determine which limits are appropriate for you. However, OMIC representatives are not in a position to offer you advice. If you need further assistance, please consult your personal attorney.

Unnecessary Laser Surgery for Diabetic Macular Edema

By Randy Morris, JD, OMIC Claim/Risk Management Associate, Digest, Fall 1998

ALLEGATION: Unnecessary panretinal photocoagulation for proliferative diabetic retinopathy.

DISPOSITION: Case settled on behalf of insured ophthalmologist.

Case Summary

A 63-year-old diabetic woman presented to the insured with complaints of decreasing distance vision. Laser surgery previously had been performed on her left eye for diabetic macular edema but not on her right eye. The insured diagnosed neovascularization elsewhere superior to the macula of the right eye and instructed her to return in one month for a fluorescein angiogram and panretinal photocoagulation (PRP).

A month later when the insured performed the fluorescein angiogram, he found progressive neovascularization elsewhere as well as perimacular and neovascular changes, hard extradites, a vascular loop and edema. Based on his interpretation of the angiogram, the insured performed PRP on the right eye. When the fluorescein angiography report came back after the surgery was performed, there was no mention of either neovascularization of the disc (NVD) or neovascularization elsewhere (NVE).

Twelve days post-op, the patient complained of loss of peripheral vision and severe pain in the right eye. The cornea was clear with no neovascularization. Visual acuity was 20/30 in the right eye. The insured reassured the patient that postoperative pain was normal. Over the next two months, visual acuity improved to 20/20 although the patient continued to complain of visual field loss and hazy central vision in the right eye. At her last visit, the insured referred the patient to a retina specialist. Visual field testing a year later by another physician showed significant visual field loss and a decline in visual acuity to 20/100 in the right eye.

Analysis

Defense experts were split on the issue of whether the patient exhibited enough signs of proliferative diabetic retinopathy to warrant treatment with PRP. One opined that the patient was a candidate for focal treatment of macular edema, but not PRP because she did not meet the criteria established by a 1976 diabetic retinopathy study, i.e., NVD greater than a 1/4 or 1/3 disk diameter or NVE. The other defense expert found signs of progressive PDR warranting PRP and supported the insured’s choice of spot size, macros and number of applications.

One of the plaintiff’s experts opined that the retinal photos and angiography taken by the insured did not reveal signs of diabetic retinopathy requiring treatment; therefore, it was below the standard of care to perform PRP in the absence of these objective findings and before reviewing the fluorescein angiogram results. This expert did admit that a fluorescein angiography is not required prior to performing PRP if the indications for the treatment are visualized prior to surgery as the insured had testified. However, there was no documentation of the insured’s findings prior to the angiogram and no mention of the angiogram findings to support the need for surgery. The plaintiff’s expert went on to say that even if the procedure had been indicated, the visual field loss was more than one would expect from a properly performed PRP. The patient had retained only 10% of her visual field.

Risk Management Principles

The insured’s failure to document any of his findings from the fluorescein angiogram was a major factor in the decision to settle this case. Although the defense expert made an excellent witness, it became clear during his deposition that this would be an extremely difficult case to defend. He was forced to admit, first, that neither the insured’s chart nor the fluorescein angiogram showed any documentation of either NVD or NVE and, second, that based on the color photographs in the insured’s chart, it was below the standard to perform PRP. Consequently, the only justification and support for performing PRP lay in the insured’s deposition testimony given one year after the operation.

In a busy practice it is often difficult to document the clinical interpretations and impressions that motivate medical decisions. This case exemplifies how taking just a few moments to record findings and interpretations, even those that seem trite or obvious, can save hours of litigation time and considerably bolster the defense should the practitioner’s care be called into question.