New regs could implicate innocent physicians
Feds seek to eliminate corporate shield’ loophole in National Practitioner Data Bank regulations
A proposed change designed to close a major loophole in the National Practitioner Data Bank (NPDB) reporting requirements could increase litigation, raise health care costs, and turn malpractice insurers into fraud investigators, some physician groups claim.
The loophole in question governs who gets named in malpractice lawsuits and subsequently reported to the NPDB, which is maintained by the Health Resources and Services Administration (HRSA), a division of the Department of Health and Human Services. (HRSA also will oversee the controversial new fraud database, the Healthcare Integrity and Protection Data Bank. See Physician’s Compliance Hotline, March 1).
Established nine years ago, the NPDB has long been a lightning rod for criticism by physicians, many of whom have argued it should be dismantled. Mandated by Congress in the mid-1980s, the NPDB was supposed to make it easier for peer review and credentialing organizations to keep track of incompetent physicians who move from state to state seeking to cover up a shoddy record of performance. About 75% of the records in the data bank concern malpractice settlements and judgements, and about 19,000 new reports are filed with the data bank each year.
The problem, say government administrators, is that many physicians have successfully avoided being listed in the data bank because of a "corporate shield" loophole in the original NPDB regulation. Basically, federal officials claim, physicians are frequently dismissed as defendants from malpractice lawsuits as a condition of settlement. Instead, the only named party is the organization — the practice group, health maintenance organization, or other entity. So the individual physicians whose actions triggered the malpractice suit in the first place get off with their reputation unsullied and no NPDB files taking note of their track record.
"All we’re trying to do [with the rule change] is make it easier to identify the appropriate practitioner," says Thomas C. Croft, director of the Bureau of Health Professions division of quality assurance, the arm of the HRSA that administers the data bank.
Croft stresses that forcing entities to report the specific physicians involved in a malpractice case is fairer to smaller, self-insured practitioners. "Many practitioners have their own individual malpractice insurance policy," he says. "If a payment gets made out of that policy, the insurer has little recourse but to report [the individual provider]. But if the payment is made out of a policy that insures a group practice, or insures a network or an HMO, then that presents an opportunity to use this kind of corporate shield."
Lawrence Smarr, president of the Rockville, MD-based Physician Insurers Association of America (PIAA), agrees that "evasion of the reporting requirement" is wrong but complains that HRSA’s proposed remedy would "replace judicial resolution with investigation by the insurer, thereby increasing liability costs and health care costs in general." Smarr also argues that the rule change would create an adversarial relationship between providers and their liability insurer.
"[The rule] turns insurers into investigators, policemen, judges and juries," agrees Paul A. Gitman, MD, vice president of clinical care and resource management at Long Island (NY) Jewish Medical Center. "You get the feeling that they are going to turn in everyone who is involved in a case. That doesn’t make for an environment that is open and conducive to cooperation."
The American Medical Association in Chicago also has criticized the rule change, arguing in a prepared statement that it is "ill-advised, raises serious due process questions and places an unfair burden on physicians and other practitioners who are not parties to an action or claim." The AMA also argues that the rule change would force physicians to spend more time challenging false or questionable reports filed with the NPDB.
Another concern is that the rule change could make physicians and other health care entities less willing to settle malpractice claims out of court, thus driving up the cost of litigation, Gitman says.
Gitman, who reviews all agreements and settlements made at Long Island Jewish, says the rule change largely addresses a problem that doesn’t exist, or at least is less significant than the government thinks. "Most of the time, when a physician is let out [of a suit], it’s because the physician either wasn’t party to the mistake, or there wasn’t a mistake at all but it makes financial sense to settle a case," he says. "If it’s going to take at least $75,000 to bring a case trial but you can settle it for $25,000, many insurers are going to go ahead and settle purely on a financial basis." Under that scenario, money-conscious insurers might be willing to report innocent physicians to the data bank — an action that could trigger a whole new round of litigation.
The proposed rule change is expected to take effect by fall.
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