Quality Control on the Back-End via the ACA and on the Front-End via Tort Litigation

By Vickie J. Williams

I am back after a brief hiatus for the Jewish holidays. L’Shanah Tova to all my readers who have just celebrated the Jewish New Year.

The first Monday in October is, of course, a special day for all of us legal eagles–the Supreme Court is back in session. The other significant thing about October 1 for those interested in health law is that hospitals will now be fined if too many of their Medicare patients are readmitted within 30 days of discharge due to complications. As reported by the Associated Press, this is part of the Affordable Care Act’s push to incentivize quality improvement while trying to save taxpayers money. Right now, admissions for only three medical conditions are subject to the penalty: heart attacks, heart failure and pneumonia. Penalties are held to a maximum of 1% of the hospital’s Medicare payments for now, but will rise to a maximum of 3% of Medicare payments over several years. This attempt to control quality of care on the back-end constitutes a marked contrast with the way reimbursement policy has worked over the last several decades to discourage hospitals from keeping patients in beds for “social” reasons, such as having nobody to care for them at home if they are discharged. Many Medicare hospital readmissions are due to non-compliant behavior by fragile patients with few resources to help them once they leave the hospital, something that is not really subject to the hospital’s control, and says nothing about the hospital’s quality of care for the patient. For decades, Medicare payment policy, which generally pays hospitals the same amount for caring for a patient regardless of how long he or she is in the hospital, has encouraged speedy discharges. This is touted as a way to save costs. Apparently, the new policy on payments for readmission is an acknowledgement that there is both a financial and a human cost to treating medically and socially fragile people in the express lanes of health care. It remains to be seen whether the penalties result in better quality care, or significant savings, but surely they will result in increased work for hospital social workers and discharge planners.

And as we look at incentivizing hospitals to provide good quality care through post-discharge financial penalties, a recent decision from the Washington State Supreme Court should give hospitals every incentive to ensure that they credential only well-qualified physicians and health care professionals on the front-end. In a case involving birth injuries, The Court unanimously held that the state’s peer review and quality improvement privileges do not apply to records documenting a hospital’s initial credentialing and privileging of a staff member. The Court also construed the quality improvement privilege narrowly, holding that in order to be privileged, documents must be created specifically for, collected, and maintained by, a quality improvement committee, as opposed to any other committee or hospital authority. Although this decision seems like it will encourage better quality care by incentivizing hospitals to be vigilant in credentialing, it could have a chilling effect on internal quality improvement efforts, based on the fear that candid assessments of care by peers will be discoverable in subsequent litigation. Hospitals need to ensure that they have clearly designated a quality improvement committee, and that all peer review activities are conducted through that committee, if they want to refrain from assisting the plaintiff’s medical malpractice bar in its endeavors.

[Cross-posted from HealthLawProf Blog]

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