PBJ – Liability Implications

Sharks are Circling

Payroll-Based Journal Reporting system should lose a star

• “I'm with the government, and I'm here to help.“

• Sense a little irony in that statement?

Some Background

• For the past five years, the Centers for Medicare & Medicaid Services has provided a one-to-five star rating for nursing homes that participate in the government programs.

• The rating system gives nursing homes a rating in three important categories: nurse staffing, annual inspection results, and quality measures. The facilities then receive a composite rating combining those categories.

Critics of the system noted that nursing homes had been allowed to self-report much of their data, and some facilities may have goosed their ratings.

Congress passed “The Improving Medicare Post-Acute Care Transformation Act,” or IMPACT, which, among other things, requires nursing facilities to use staffing data based on “payroll and other verifiable and auditable data” for the rating system, and send the data electronically to the Department of Health and Human Service.

Issue’s this Presents

• Nursing homes, however, may have difficulty determining what constitutes payroll and staffing data. – utilize temporary staff– use of salaried administrative personnel in direct

care nursing roles

Back to the Sharks

• inadequate staffing is a claim in many negligence and wrongful death lawsuits against nursing facilities, some litigation addresses insufficient staffing directly as the sole issue.

Case Study

• Defendants limited the number of staff on duty and rendered the facilities incapable of delivering the Basic Care that residents needed.

• The profound difference between the amount of services that Defendants promised and claimed to provide and the amount of services that the Defendant Nursing Facilities could have provided is at the heart of this case

Case Study …..continued

• The Complaint identifies “the very human toll of understaffing . . . cost residents their dignity and comfort, and jeopardized their safety” and “degraded residents and increased their risk of serious negative health consequences.”

• The services “were not provided or were “fundamentally worthless”

Case Study …..continued

• To quantify the amount of time available for Basic Care, the OAG used the staffing data reported by defendant facilities

• “to calculate the nursing labor supply, or number of nursing hours, available to each resident on a daily basis.”

Case Study …..continued• Using data sets, the OAG quantified omissions of care – “a

significant disparity between the nursing staffing hours required to provide the Basic Care services claimed by Defendants in the MDSs of residents and the actual staffing hours available.”

• The state alleges, “The needs of residents for Basic Care routinely overwhelmed the limited staff at their facilities, making it physically and mathematically impossible for the Defendant Nursing Facilities to provide the Basic Care that was promised, required, and paid for by the State and consumers.”

Case Study …..continued

• “Defendants improperly billed for care that was not provided,” citing complaints by residents, families, and their own employees to demonstrate that “Defendants knew that their staffing practices compromised the delivery of Basic Care services.”

• MDS forms included false certifications. CMS paid for care that was not provided, was not compliant with requirements, & did not meet professional standards of quality.

Case Study….continued

• The Complaint includes five claims for relief:• Count I: Recovery of state funds.• Count II: Recovery of excess Medicaid

payments • Count III: Violation of the Unfair Practices Act• Count IV: Breach of Contract. • Count V: Unjust Enrichment.

What are Liability Carriers Underwriting?

PBJ & Liability

• KEY UNDERWRITING CONSIDERATIONS– State surveys as a frontline underwriting tool. This

provides data including but not limited to occupancy rates, staffing levels, deficiencies and complaints.

– Occupancy rates can be viewed as a sound indicator of a facility’s reputation.

– Star Rating can be viewed as an indicator of care quality or lawsuit potential

PBJ & Liability

• Staffing Reviewed– Does the facility meet or exceed the state

average? This is an indicator as to how management approaches the fundamentals of the facility. Are there financial issues which are causing the facility to cut corners via staffing? Do they have enough staff to properly care for the residents?

PBJ & Liability

• Additional attention is paid to any deficiencies identified in State surveys, questions that arise from these include: – Are these are recurring problems or one off

issues? – Are these life safety issues or care issues? – How are these addressed and corrected? – How long does the facility typically take to correct

a deficiency?

PBJ & Liability• Complaints are considered as important. Carriers typically

seek clarification as to whether the facility has had complaints lodged by family members of residents, the residents themselves, or by employees – these complaints may indicate that there are potential issues of resident abuse, resident neglect, falsification of records, etc.…?

• If these complaints are substantiated, it is more difficult to find a competitive insurance partner for the facility until the facility shows or can demonstrate an improvement in this area and have no further substantiated complaints

PBJ & Liability

• When considering a Skilled Facility, carriers can access relevant data through a reporting service to obtain an OSCAR or CASPER report.

• If the facility is an Assisted Living or Intermediate Care facility the majority of the relevant data can be obtained from the latest state inspections.

Basic Insurance UnderwritingFacilities should be professionally managed by

individuals who are experienced in the operations of nursing homes.

Adequate and competent staffing should be available on all three shifts

Facilities must be financially stable (Financial Statements are requested)

Homes must meet physical plant/patient safety requirements

The facility must be historically profitable

Basic Insurance Underwriting

• Financial Stability• A review of the financials is done in part to

access the probability of staffing cuts and/or a reduction in services provided.

• Financial stability would also be relevant in maintaining the physical components of the facility such as housekeeping and general maintenance.

Basic Insurance UnderwritingREVIEW OF STAFF EXPERIENCE - STAFFING LEVELS INCLUDING

ADMINISTRATOR & MEDICAL DIRECTOR

• Review of employment application to ensure steps are taken to verify each employment applicant’s qualifications, licensure status, references, and claims history to screen for potential problems

• Training - It is critical that formal, ongoing skill assessments and training be conducted for all staff providing care to residents. It is especially crucial for new hires to ensure that they are capable of caring for the residents they are assigned

Basic Insurance Underwriting• Job Descriptions - Ideally, written job descriptions should be maintained for all

positions. It is another indicator of a well-run, organized facility. Job descriptions define what duties each person is expected to perform, and what the boundaries are regarding designated tasks.

• Turnover Rates - Nurse and aide turnover is a concern for the entire long term care industry. It has recently been estimated that the average annual nurse and aide turnover rates are 80 percent countrywide. The more turnover, the more management systems are tested. Job candidate screening, orientation, training, and clearly articulated policies and procedures become even more important.

• Medicare requires that skilled care facilities have a physician medical director to coordinate, supervise and monitor medical services at the facility. It is required that all skilled care facilities employ or contract a medical director with a current, unrestricted medical license. For small skilled care facilities, a part-time or contracted director instead of a full-time employed director is acceptable.

IMPLICATIONS

• PBJ Requirements Effect– Additional Regulatory Compliance– Star Rating Indicator– Financial Implications

• Reputation, Liability Premiums, Occupancy, Reimbursement

PBJ Reporting – Will it help defense or will it help plaintiff

CNA Insurance Aging Services Claims Report 2014

Aging Services Claims Report 2014