The Potential Impact of PPACA on Nursing Home Professional Liability Exposures
The Patient Protection and Affordable Care Act (PPACA), enacted in March 2010, is designed to revamp the U.S. healthcare system. Many of the legislation’s provisions come into effect over the coming years through to 2020. At this point there is still a great deal of debate over the legislation and its impact is uncertain. In the meantime, the insurance industry is taking a look at how the legislation may affect professional lines in the medical field, including those in the nursing home sector.
Under the PPACA, a number of new rules exist with an objective of preventing elder abuse,
neglect and exploitation, including some provisions that regulate the reporting of suspected violations at eldercare or nursing home facilities. The law also creates reporting requirements regarding nursing home closures. These rules directly correlate to Errors & Omissions coverage, which may respond to allegations of negligent treatment of patients, along with potential Directors & Officers implications for failure to properly report violations and impending closures.
For example, under PPACA § 6113, “Notification of Facility Closure”, “skilled nursing facilities and the nursing facilities administrator must provide written notice of a voluntary closure to the Human Health Services (HHS), state long-term care ombudsman, residents, and legal representatives 60 days in advance of the closure. Advance notice of a termination will be at the discretion of HHS. The administrator must ensure that no new residents are admitted after the date that written notice of closure is provided. The notice of closure must include (1) a plan (approved by the state) for the transfer and adequate relocation of all residents and (2) assurances that the residents will be transferred to the most appropriate facility or other setting in terms of quality, services, and location, taking into consideration the needs, choice, and best interests of each resident. The HHS may continue payments until all residents are successfully relocated. An administrator who fails to comply with these requirements may be subject to a CMP of up to $100,000 and may be excluded from federal payment programs.” Violation of this provision could precipitate a D&O claim against the facility.
It’s important that the professional liability coverages for a nursing home are examined carefully so that the facility is properly insured today and into the future as the law’s provisions come into effect. For insurance brokers, the enactment of PPACA provides an opportunity to go over theses new rules and the effect they may have on your clients’ insurance programs. We can assist you with your nursing home clients in providing both sound insurance solutions and risk management strategies. Caitlin-Morgan provides a myriad of coverages designed for nursing homes, including Professional Liability and Directors & Officers Liability (with employment practices). Give us a call at 877.226.1027.