State & Federal Legislative Update: Workers Compensation, Managed Medicaid and Patient Safety and Quality Improvement Act of 2005

Transcription

1 Texas Health Law Conference October 24-25, 2005 Austin, Texas State & Federal Legislative Update: Workers Compensation, Managed Medicaid and Patient Safety and Quality Improvement Act of 2005 Elizabeth N. Rogers Vinson & Elkins L.L.P. Austin, Texas

2 TABLE OF CONTENTS I. Workers Compensation Reform Legislation A. TWCC/TDI Transition...2 B. General Structure of Networks...2 C. In-Network vs. Out-of-Network Services...2 D. Network-Carrier Contracts...3 E. Network-Provider Contracts...3 F. Treating Doctors...4 G. Modified Prompt Pay Rules...4 H. Guidelines and Protocols...4 I. Compensability Issues...5 J. Quality Improvement Program...5 K. Evaluation of Networks...5 L. Proposed Rules Definition of Lives Hold Harmless Provision Employee Liability for In-Network and Out-of-Network Care Preauthorized and Verified Services Guidelines and Protocols Non-Compensable Injuries Financial Liability Approval for Modifications to Network Configuration...7 II. ICM Legislation A. Background...7 B. Managed Medicaid Models ICM Model HMO Carve-Out Model PCCM Model...8 C. Assignment of Models to Core Service Areas...9 D. STAR/CHIP HMO Update...9 III. Patient Safety and Quality Improvement Act A. Patient Safety Work Product...10 B. Patient Safety Organizations (PSOs)...10 C. Patient Safety Evaluation System...11 D. Patient Safety Activities...11 E. Patient Safety Databases...12 F. Privileges and Confidentiality Protections, Generally...12 G. Additional Protections Provider Protections PSO Protections Reporter Protections...13 H. Exceptions to Privilege and Confidentiality Protections Exceptions from Privilege and Confidentiality Exceptions from Confidentiality Exceptions from Privilege Continued Protection After Disclosure...15 i

3 State and Federal Legislative Update: Workers Compensation, Managed Medicaid and Patient Safety and Quality Improvement Act of 2005 With each legislative session comes an array of new laws that effect the delivery of health care. The Regular Session of the 79th Texas Legislature and the 1st Session of the 109th U.S. Congress were no exceptions. Among the new laws passed on the federal and state levels are three new laws that focus on the management of health care and information in the interest of lowering health care costs and improving health care outcomes. The 79th Texas Legislature passed new laws that dramatically change the way workers compensation and Medicaid benefits will be delivered in Texas. H.B. 7 brings about the most radical changes to the Texas workers compensation system since its inception by authorizing the delivery of workers compensation benefits through a network model. H.B and S.B introduce the Integrated Care Management (ICM) model a new, non-capitated model for managed Medicaid that is designed to preserve federal UPL matching dollars for public hospitals in urban areas. Both the workers compensation reform legislation and the ICM legislation are tailored towards networks that use clinical guidelines and/or pay-for-performance programs to improve care while cutting costs. On the federal level, the Patient Safety and Quality Improvement Act of 2005 provides a platform for sweeping protections for a hospital s peer review and other patient safety activities. This new federal law establishes broad privilege and confidentiality protections designed to encourage medical error reporting and other activities related to patient safety and quality improvement. The following summary highlights some of the key features of these new laws. Many of the details regarding how these laws will be implemented remains to be spelled out in the rulemaking process. Yet it is already clear that each of these new laws holds significant opportunities for both networks and providers to develop new plans and programs designed to improve health care quality and lower health care costs. I. WORKERS COMPENSATION REFORM LEGISLATION This past session the 79th Texas Legislature passed H.B. 7, a comprehensive piece of workers compensation reform legislation, which took effect on September 1, The centerpiece of the legislation is the Workers Compensation Health Care Network Act (the Act ), a new chapter 1305 of the Texas Insurance Code, which implements a managed care HMO model for workers compensation through the creation of workers compensation health care networks ( networks ). On September 2, 2005, TDI published proposed rules implementing the Act. In a public hearing on October 6, 2005, TDI considered the proposed rules along with comments from various stakeholders, including carriers, hospitals, and physicians. The final version of the rules are to be adopted by December 1, Although employers still have the option to purchase traditional, non-network coverage for workers compensation benefits, the introduction of a network product promises to radically change the way workers compensation benefits are delivered in Texas. The following summary highlights some important features of the Act and related features of H.B. 7. It concludes with a

4 brief description of the key issues related to workers compensation health care networks that have emerged during the rulemaking process. A. TWCC/TDI Transition H.B. 7 abolished the Texas Workers Compensation Commission ( TWCC ) and created a new Division of Worker s Compensation (the Division ) within the Texas Department of Insurance ( TDI ), as of September 1, The Division is headed by a Governor-appointed Commissioner of Workers Compensation with executive authority, including rulemaking authority, over the traditional workers compensation system under the Labor Code. 2 However, the Commissioner of Insurance will have executive and rulemaking authority over networks. The Commissioner of Insurance is also charged with developing and implementing policies that separate the respective responsibilities of the Division and TDI with regard to the administration of the reformed workers compensation system. 3 B. General Structure of Networks Workers compensation health care networks must be certified by the Commissioner of Insurance through an application process that is similar to, but more abbreviated than, the Certificate of Authority process for HMOs. 4 However, unlike HMOs, networks are not riskbearing entities. Although networks must be established by or contract with workers compensation carriers, carriers are prohibited under the Act from transferring risk to networks and networks may not transfer risk to providers. 5 C. In-Network vs. Out-of-Network Services Workers compensation health care networks are closed-panel products. Employees that live within the service area of a network contracted with or established by the employer s carrier generally must receive treatment for compensable injuries within the network once the participating employer has notified the employees of the network requirements. 6 For services provided outside the network, carrier liability is limited to: (1) emergency care; (2) care provided to employees who do not live within any service area of a network contracted with or established by a carrier; and (3) care provided pursuant to a referral from the injured employee s treating doctor. 7 Reimbursement to in-network providers is at the rate negotiated by the network and the provider, while reimbursement to out-of-network ( OON ) providers is at the amount in the Division s fee schedule. 8 1 TEX. LAB. CODE Id (a). 3 Id. 4 TEX. INS. CODE Id Id (b). 7 Id (1) (3). 8 Id (a), (c). 2

5 D. Network-Carrier Contracts Workers compensation health care networks may only provide health care services to employers through a written contract with a carrier. 9 Generally, carriers and networks may negotiate which functions will be delegated to the network, except that the network must contract with providers and perform functions related to the operation of a quality improvement program and credentialing. 10 The carrier is ultimately responsible for functions delegated by a carrier to a network and must supervise the provision of such delegated functions. 11 If a network delegates functions to a third party as authorized by the Act, the third party must still comply with the Act and its regulations and is subject to oversight by both the carrier and the network. 12 The Act sets forth a number of mandatory provisions that must be included in networkcarrier contracts. Among these mandatory contract terms are a number of provisions related to the oversight of delegated functions. Specifically, carrier-network contracts must include: (1) a contingency plan for resumption of the delegated functions by the carrier; and (2) pass-through obligations, including requirements that entities performing delegated functions (a) provide carriers with the information needed to comply with the Act s network notice requirements and (b) allow TDI to examine relevant information at any time. 13 The Act also requires carriers who become aware of information indicating that any entity performing a delegated function is not complying with the network-carrier contract to notify the network and request a written explanation of the apparent noncompliance or hazardous condition, and to notify TDI. 14 A network must respond to such a request within 30 days and cooperate with the carrier to correct any noncompliance or hazardous condition. 15 E. Network-Provider Contracts Networks must arrange for health care services except for emergency care and OON referrals by entering into written contracts with providers. 16 Under the Act, provider contracts must include the following mandatory terms: (1) a hold-harmless clause; (2) a statement that the provider will follow the network s treatment guidelines; (3) a continuity-of-care clause that obligates the network to reimburse the provider at the contracted rate for up to 90 days for care of employees with life-threatening conditions or acute conditions for which disruption of care would harm the employee if the provider requests continued care; and (4) a clause regarding appeal by the provider of termination of provider status and written notification to employees of provider terminations. 17 The Act also authorizes the Commissioner of Insurance to establish additional provider 9 Id (a). 10 Id. 11 Id (c)(5). 12 Id (c)(12). 13 Id Id (a). 15 Id (c). 16 Id (a). 17 Id (c). 3

6 contract requirements by rule. 18 The proposed rules, which were published by TDI on September 2, 2005, mandate certain additional provider contract terms, including: (1) a statement that network providers agree to abide by the network s preauthorization requirements; (2) a clause prohibiting retaliatory action by the networks against providers for reasonable complaints, appeals or requests for independent review of an adverse determination; (3) a statement that billing by and payment to the provider will comply with certain workers compensation prompt payment provisions; and (4) the inclusion of a fee schedule for payments to the contracting provider. 19 F. Treating Doctors If an employer selects network coverage for workers compensation, employees who live within the network s service area must choose their treating doctor from a list of network treating doctors. Unlike the old system, which permitted any physician on the Approved Doctor List (ADL) to serve as treating doctor, networks have authority to designate which specialties and providers may serve as treating doctors. 20 An injured employee may choose his/her existing primary care physician (PCP) under an HMO plan to serve as the treating doctor if the employee selected the PCP prior to the injury and the PCP agrees to abide by the terms of the network s participating provider contract and the Act. 21 Treating doctors serve as gatekeepers for employees compensable injuries. Treating doctors make all necessary referrals to network providers and request referrals to OON providers. Referrals to OON providers must be approved by the network if medically necessary services are not available in network. 22 G. Modified Prompt Pay Rules Under the old system, carriers were required to pay, deny or reduce medical claims submitted by health care providers no later than 45 days after receipt of the bill. In the case of audited claims, the carrier had to pay 50 percent of the charge to the provider up front. The new law retains the 45-day pay, reduce or deny timeframe, but requires carriers to pay 85 percent of the contracted rate for in-network claims or 85 percent of the Division s fee guideline amount for OON claims if the carrier intends to audit the bill. 23 Carriers must complete an audit and pay additional amounts no later than 160 days after the carrier receives the bill. 24 Failure by a carrier to comply with these requirements constitutes an administrative violation under the Labor Code. 25 H. Guidelines and Protocols 18 Id (c)(5) Tex. Reg (2005) (to be codified at 28 TEX. ADMIN. CODE 10.42(b)) (proposed Sept. 2, 2005) [hereinafter Proposed Rules] 20 TEX. INS. CODE (a). 21 Id (a),(b). 22 Id (e). 23 TEX. LAB. CODE (b). 24 Id. 25 Id (c). 4

7 Another key feature of the Act is its emphasis on standardized treatment guidelines. The Act requires networks to adopt treatment guidelines, return-to-work guidelines, and individual treatment protocols that are evidence-based, scientifically valid, and outcome-focused. 26 Providers must contractually agree to comply with the treatment guidelines adopted by the network. 27 Networks may elect to use guidelines developed by the Division or may use other guidelines so long as they meet the statutory standards. In any event, care may not be denied solely on the basis that the treatment is not specifically addressed in the guidelines used by the network or carrier. 28 I. Compensability Issues A key feature of workers compensation insurance products is a determination by the carrier that an injury is compensable (i.e., work-related) and therefore covered by the product. Under the Act, a carrier must notify a provider in writing if it contests compensability and may not deny payment based on compensability until the required notice has been given. 29 In addition, payment for medically necessary services provided prior to the written notification is not subject to denial, recoupment, or refund from a network provider based on compensability; provided however, if the carrier successfully contests compensability, the carrier s financial liability for services provided prior to notification is capped at $7, J. Quality Improvement Program Workers compensation health care networks must also develop a quality improvement program similar to the type currently required for HMOs, which must include return-to-work and medical case management programs. 31 A network s quality improvement program must provide for a formal peer review action procedure for providers. 32 The medical case management program must include certified case managers that work with treating doctors, referral providers, and employers to facilitate cost-effective care and return to work. 33 K. Evaluation of Networks The Act also includes a number of provisions designed to monitor and evaluate the performance of networks, both individually and collectively. TDI is required to evaluate and compare the cost and quality of medical care provided by each network biennially and create consumer report cards that are available to the public. 34 At the end of each even-numbered year, TDI must report to the governor, lieutenant governor, and house speaker regarding the impact of the Act on the affordability and availability of workers compensation insurance in Texas, including the projected premium savings realized, the impact of the Act on the percentage of 26 TEX. INS. CODE Id (c)(2). 28 Id Id (e). 30 Id. 31 Id Id (i). 33 Id (j). 34 Id ,

8 employers offering coverage and economic development and job creation, the effects on market competition and carrier solvency, and the extent of participation in networks by small and medium-sized employers. 35 Carriers must submit all data and information necessary for TDI to generate its impact report. 36 L. Proposed Rules On September 2, 2005, TDI published proposed rules implementing the Act. In a public hearing on October 6, 2005, TDI considered the proposed rules along with comments from various stakeholders, including carriers, hospitals, and physicians. The final version of the rules are to be adopted by December 1, At the public hearing, providers, carriers, and other stakeholders voiced concern about a number of details in the proposed rules, including the following: 1. Definition of Lives. An employee who lives within a network s service area generally must obtain treatment for compensable injuries within the network with certain limited exceptions. The proposed rules define lives to include the employee s principal residence or a temporary residence necessitated by employment or taken by the employee for receiving assistance related to a compensable injury. 37 Stakeholders stated that this definition is unclear and will, therefore, potentially create disputes as to whether an employee has the ability to choose among the locations listed for purposes of receiving care under the Act, or if the employee is presumed to live within the network s service area if one or more of these locations is within the network s service area. 2. Hold Harmless Provision. The proposed rules include a broad hold-harmless provision that would prevent a provider from seeking payment from an employee for a compensable injury under any circumstances. 38 Provider stakeholders voiced concern that such a broad provision would leave providers without recourse in those circumstances where employee conduct is the basis for carrier non-liability (eg., the employee did not properly select a treating doctor or comply with the network s referral or preauthorization requirements). 3. Employee Liability for In-Network and Out-of-Network Care. A number of commentators took issue with the proposed rules relating to the content of the formal notice of network requirements that must be provided to employees. 39 Specifically, they argued that the formal notice does not fairly notify employees of all situations where they may be liable for care under the Act, such as in-network care that is not provided by the treating doctor or pursuant to a network-approved referral from the treating doctor, or out-of-network care if the employee fraudulently represents where he/she lives. 4. Preauthorized and Verified Services. The proposed rules allow a provider to request preauthorization, and require a carrier to issue a determination on preauthorization for 35 TEX. INS. CODE art (3)(e). 36 Id. art. 5.55(3)(g). 37 Proposed Rules, 10.2(14). 38 Id (b)(1). 39 Id (e). 6

9 services that expressly require preauthorization. 40 Provider stakeholders expressed concern that the proposed rules do not enable providers to ascertain carrier liability prior to rendering services that do not expressly require preauthorization. 5. Guidelines and Protocols. The proposed rules require providers to seek permission to deviate from network treatment guidelines a requirement that is not included in the Act. 41 Various stakeholders requested that this requirement be deleted on the grounds that it inappropriately restricts a provider s ability to make treatment decisions based on professional judgment. 6. Non-Compensable Injuries Financial Liability. The proposed rules do not address provisions in the Act that require carriers to send a formal notice contesting compensability to providers and set a $7,000 cap on carrier liability for services provided for a non-compensable injury before the notice is issued. 42 Commentators urged TDI to work with the Commissioner of Workers Compensation to address this issue in future rulemaking. 7. Approval for Modifications to Network Configuration. The proposed rules require networks to file applications and obtain approval from TDI before modifying the network configuration. 43 Carrier stakeholders expressed concern that this requirement departs from the industry, noting that HMOs do not have to seek approval of changes to network configuration, even material changes. II. ICM LEGISLATION A. Background The delivery of Medicaid managed care in Texas also was a hot issue this past legislative session. The central debate focused on the financial impact of key Medicaid managed care expansion, especially the proposed expansion of STAR+PLUS, which is a capitated managed care model. Critics of the proposed expansion argued that it would cost the state millions in lost federal upper payment limit ( UPL ) funds. The Integrated Care Management (ICM) model was introduced as an alternative, non-capitated option. The Health and Human Services Commission (HHSC) also proposed a modified STAR+PLUS model (the HMO carve-out model) designed to preserve federal UPL matching dollars by excluding public hospital services from the capitation (the variations of the HMO carve-out option are discussed below). Ultimately, the Legislature approved both models. H.B and S.B both authorize the development of the ICM model by making identical amendments to Chapter 533 of the Government Code. At the same time, the final budget act, S.B. 1, included a special rider 40 Id (d) 41 Id TEX. INS. CODE (e). 43 Proposed Rules,

10 that reduced appropriations for Medicaid managed care based on anticipated savings and established conditions upon the use of various models for the aged, blind and disabled population (i.e., the STAR+PLUS population). 44 The S.B. 1 rider identifies various options for the STAR+PLUS population., including primary care case management ( PCCM ), ICM, and HMO carve-out. It also authorizes HHSC to determine the model to be implemented in each service area, except Dallas County and Harris County. In Dallas County, HHSC has been directed to develop a pilot ICM project, while in Harris County the existing STAR+PLUS model is to be converted to the HMO carve-out model. As a result, there are three models for Medicaid managed care delivery to the aged, blinded and disabled population ICM, HMO carve-out, and PCCM. Additionally, the STAR and CHIP HMO programs continue for the remaining Medicaid and CHIP populations. B. Managed Medicaid Models 1. ICM Model. The ICM model is a non-capitated, enhanced PCCM model that uses managed care principles to assure proper utilization of acute care and long-term care services. It includes many mandatory components, including but not limited to the assignment of recipients to a medical home, utilization review to assure appropriate access and utilization of services, disease management for recipients with chronic illnesses, and various incentives to reduce inappropriate utilization and improve patient outcomes and care coordination. HHSC has announced that is in the process of fully developing the details of this model. To implement the ICM model, HHSC is authorized to contract with one or more administrative services organizations (ICM Contractors). Moreover, the new laws allow HHSC to hold ICM Contractors accountable for meeting contractual cost and performance goals. 2. HMO Carve-Out Model. The S.B. 1 rider prohibits HHSC from expending funds to expand any capitated model that would eliminate existing federal matching payments to local public hospitals under federal UPL regulations. Although this prohibits the planned expansion of STAR+PLUS, it does not prohibit expansion of the STAR+PLUS model in a modified form the HMO carve-out model. The HMO carve-out model involves a capitated arrangement for private physicians and providers, but excludes public hospital services from the capitated payment. By excluding public hospital services, the HMO carve-out model does not affect federal UPL matching payments and, therefore, does not run afoul of the S.B. 1 rider. During its evaluation of each service area, HHSC considered three variations of the HMO carve-out model public hospital carve-out, disproportionate share hospital carve-out, and all hospital carve-out. As discussed below, HHSC has decided to implement only the last variation. Presumably, this option was chosen over the other two to avoid the possibility that HMO carve-out contractors would steer members to non-capitated hospitals, resulting in inappropriately high utilization of non-capitated services. 3. PCCM Model. Prior to the legislative session, the PCCM model had been implemented for the aged/blind/disabled population in some of the Core Service Areas (Bexar, Dallas, El Paso, Harris, and Lubbock) as well as the Southeast Region. On September 1, 2005, 44 S.B. 1, art. II, Special Provisions, Sec

11 HHSC expanded the PCCM model to the remaining 197 counties not previously covered by any managed care model. As stated below, however, HHSC plans to withdraw the PCCM model from the Core Service Areas where it had existed in favor of either the ICM or HMO carve-out options. C. Assignment of Models to Core Service Areas After the legislative session, HHSC consulted with officials and stakeholders and conducted an overall analysis of the three delivery options (ICM, HMO carve-out, or PCCM) in each of the service areas that were targeted for STAR+PLUS expansion (the Bexar, Dallas, El Paso, Harris, Lubbock, Nueces, Tarrant, and Travis service areas or the Core Service Areas ). On September 30, 2005, HHSC assigned each Core Service Area to a model, along with the projected caseload and savings for each Core Service Area. After the necessary federal waivers are obtained, the HMO carve-out model will be implemented in the Bexar, El Paso, Harris, Lubbock, Nueces, and Travis service areas, while the ICM model will be implemented in the Dallas and Tarrant service areas. HHSC is also moving forward with the planned withdrawal of the PCCM model from the Bexar, Dallas, El Paso, Harris, and Lubbock service areas. D. STAR/CHIP HMO Update The condition in the budget rider that prohibits expansion of a capitated HMO model is limited to funds appropriated under the STAR+PLUS program for the Medicaid aged/blind/disabled population. Thus, the STAR and CHIP HMO models, and the planned expansion of those models, was not affected by the recent legislation. On July 7, 2005, HHSC announced expansion awards for STAR and CHIP in the following service areas: Bexar: Aetna, Community First Health Plans, Superior HealthPlan Dallas: Amerigroup Texas, Inc., Parkland Community Health Plan, Unicare Health Plans of Texas, Inc. El Paso: Amerigroup Texas, Inc., El Paso First Health Plan, Superior HealthPlan Harris: Amerigroup Texas, Inc., Community Health Choice, Texas Children s Health Plan, Molina Healthcare of Texas, Inc., UTMB Health Plans, Inc. (CHIP only), Evercare of Texas, LLC (STAR only) Lubbock: FirstCare, Superior HealthPlan Nueces: Amerigroup Texas, Inc., Driscoll Children s Health Plan, Superior HealthPlan Tarrant: Aetna, Amerigroup Texas, Inc., Cook Children s Health Plan Travis: Superior HealthPlan, Seton Health Plan (CHIP only), Amerigroup Texas, Inc. (STAR only) Webb: Mercy Health Plans 9

12 III. PATIENT SAFETY AND QUALITY IMPROVEMENT ACT On July 29, the President signed into law the Patient Safety and Quality Improvement Act of 2005 (the Act ), 45 which provides a platform for sweeping protections for a hospital s peer review and other patient safety activities. The Act encourages, but does not require, medical error reporting and other patient safety activities by establishing broad protections for patient safety work product. Some key terms and concepts under the Act, as well as the privilege and confidentiality protections created by the Act, are described below. A. Patient Safety Work Product Patient safety work product is defined broadly in the Act to include any data, reports, records, memoranda, analyses (such as root cause analyses) or written or oral statements which: (1) are assembled or developed by a provider for reporting to a patient safety organization (PSO), are reported to a PSO, and could result in improved patient safety, health care quality of health care outcomes; (2) are developed by a PSO for the conduct of patient safety activities and could result in improved patient safety, health care quality of health care outcomes; or (3) identify or constitute the deliberations or analysis of, or identify the fact of reporting pursuant to a patient safety evaluation system. 46 Each of the italicized terms above are more fully discussed below. The Act also distinguishes between identifiable and nonidentifiable patient safety work product. Identifiable patient safety work product either (1) identifies the provider that is the subject of the work product, (2) is individually identifiable health information within the meaning of HIPAA, or (3) allows identification of the individual reporting the information. 47 Identifiable patient safety work product is more thoroughly protected under the Act by providing civil monetary penalties for knowing or reckless disclosure of identifiable patient safety work product in violation of the Act. 48 Providers and PSOs, however, are free to disclose nonidentifiable patient safety work product. B. Patient Safety Organizations (PSOs) A PSO is a defined under the Act as a public or private entity, or its component, that is certified by the Secretary. 49 PSOs act as repositories, safe-keepers, and managers of identifiable patient safety work product. Reports to a PSO and reports by a PSO both qualify as patient 45 Patient Safety and Quality Improvement Act of 2005, Pub. L. No , 119 Stat. 424 (2005) (to be codified at 42 U.S.C. 299 et seq.) (amending Title IX of the Public Health Service Act). Section cites throughout correspond to the Public Health Service Act [hereinafter, PHS Act ]. 46 Id. 921(7). 47 Id. 921(2). 48 Id. 922(f)(1). 49 Id. 921(4). 10

13 safety work product subject to the privilege and confidentiality protections under the Act. To be certified as a PSO by the Secretary, the PSO must submit an initial certification (and subsequent certifications every 3 years) to the Secretary that states the entity intends to perform patient safety activities and meets other statutory disclosure requirements. 50 In determining whether to accept an entity s certification, the Secretary considers the disclosures made by the entity and makes public findings on whether the entity can fairly and accurately perform patient safety activities. 51 The Secretary must notify the entity of acceptance of certification, or if not accepted, the reasons for denial. 52 The Act charges the Secretary with maintaining a list of entities whose certification has been accepted. 53 The Secretary may revoke acceptance if, after notice, opportunity for hearing, and reasonable opportunity for cure, the PSO fails to meet the certification requirements. 54 PSOs that are a component of another entity are subject to additional certification requirements aimed at ensuring that patient safety work product is kept separate and secure from the larger organization s activities. Specifically, component PSOs must: (1) maintain patient safety work product separately from the rest of the organization; (2) establish appropriate security measures to maintain the confidentiality of the patient safety work product; and (3) not disclose patient safety work product to the rest of the organization in violation of the Act s confidentiality protections. 55 In addition, the Secretary must be satisfied that the mission of the component PSO does not create a conflict of interest with the rest of the organization. 56 C. Patient Safety Evaluation System The Act defines patient safety evaluation system as the process of collecting, managing, analyzing, and reporting information to or by a PSO. 57 The definition of patient safety work product includes the deliberations of, and analysis of, a patient safety evaluation system. Thus, the privilege and confidentiality provisions of the Act, which are more fully discussed below, appear to protect all information in the patient safety evaluation system pipeline, including both the information actually reported to a PSO, as well as the deliberations of a patient safety committee in preparing the report to be submitted to the PSO. D. Patient Safety Activities Patient safety activities is broadly defined under the Act and appears to encompass a number of traditional hospital committee functions, such as quality improvement, infection control, and peer review. Specifically, the Act s definition of patient safety activities includes the following functions: 50 Id. 924(a). 51 Id. 924(c)(3). 52 Id. 924(c). 53 Id. 924(d). 54 Id. 924(e). 55 Id. 924(b)(2)(A)-(B). 56 Id. 924(b)(2)(C). 57 Id. 921(6). 11

14 (1) efforts to improve patient safety and the quality of health care delivery; (2) the collection and analysis of patient safety work product; (3) the development and dissemination of information with respect to improving patient safety, such as recommendations, protocols, or information regarding best practices; (4) the utilization of patient safety work product for the purposes of encouraging a culture of safety and of providing feedback and assistance to effectively minimize patient risk; (5) the maintenance of procedures to preserve confidentiality with respect to patient safety work product; (6) the provision of appropriate security measures with respect to patient safety work product; (7) the utilization of qualified staff; and activities related to the operation of a patient safety evaluation system and to the provision of feedback to participants in a patient safety evaluation system. 58 Reports and other records developed by PSOs in the course of conducting patient safety activities qualify as patient safety work product subject to the privilege and confidentiality protections under the Act. E. Patient Safety Databases The Act also requires the Secretary to facilitate the creation of and to maintain a network of patient safety databases. 59 Providers, PSOs and individuals will be able to voluntarily report nonidentifiable patient safety work product to be included in this national network of databases. The network will have the capacity to accept, aggregate and analyze nonidentifiable patient safety work product and will provide an interactive evidence-based management resource for providers, PSOs and others. 60 F. Privileges and Confidentiality Protections, Generally The Act includes broad privileges and confidentiality protections for patient safety work product. Subject to the limited exceptions enumerated in the Act, patient safety work product is confidential and may not be disclosed. 61 The unauthorized disclosure of identifiable patient safety work product triggers civil monetary penalties under the Act. 62 The Act also establishes a patient safety work product privilege that prevents the use of 58 Id. 921(5). 59 Id Id Id. 922(b). 62 Id. 922(f)(1). 12

15 patient safety work product in most legal proceedings. Specifically, the Act provides that patient safety work product is not: (1) subject to civil, criminal or administrative subpoena or order, including in a disciplinary proceeding against a provider; (2) subject to discovery in civil, criminal or administrative proceedings, including in a disciplinary proceeding against a provider; (3) subject to disclosure under the Freedom of Information Act; (4) admitted as evidence in a civil, criminal or administrative proceeding, including any such proceeding against a provider; or (5) admitted in a professional disciplinary proceeding against a provider. 63 The patient safety work product privilege, like the Act s confidentiality protections, is subject only to the limited exceptions set forth in the Act. G. Additional Protections In addition to the Act s general privilege and confidentiality protections, providers, PSOs, and individuals voluntarily reporting patient safety work product are afforded special protections under the Act. Specifically, the Act includes particular protections for providers, PSOs and individual reporters as follows: 1. Provider Protections. The Act provides that accrediting bodies cannot take actions against a provider based on a provider s good faith participation in the collection, development, reporting or maintenance of patient safety work product, or require a provider to reveal its communications with any PSO PSO Protections. The Act provides that a PSO shall not be compelled to disclose information collected or developed under the Act unless such information is (1) specifically identified, (2) not patient safety work product, and (3) not reasonably available from another source. 65 In short, this provision protects information that is not patient safety work product in the hands of a PSO. However, this additional protection does not apply in actions against a PSO or in a criminal proceeding. 66 In those cases, only patient safety work product is protected from disclosure. 3. Reporter Protections. Under the Act, providers are prohibited from taking adverse employment actions against an individual who reports in good faith information to a provider with the intention of having the information reported to a PSO, or who reports the 63 Id. 922(a). 64 Id. 922(d)(4)(B). 65 Id. 922(d)(4)(A). 66 Id. 922(d)(4)(A)(ii). 13

16 information directly to a PSO. 67 H. Exceptions to Privilege and Confidentiality Protections The Act establishes three categories of exceptions from its privilege and confidentiality protections. Specifically, the Act includes exceptions (1) from both privilege and confidentiality, (2) from confidentiality only, and (3) from privilege only. 1. Exceptions from Privilege and Confidentiality. The Act provides that its privilege and confidentiality protections do not apply to (and should not be construed to prohibit) the following disclosures of patient safety work product: (1) disclosures of relevant patient safety work product for use in a criminal proceeding, after in camera determination by a court that the patient safety work product contains material evidence that is not reasonably available from another source; (2) disclosures of patient safety work product required to pursue an injunction or other equitable relief under the Act; and (3) disclosure of identifiable patient safety work product if authorized by each provider identified in such work product Exceptions from Confidentiality. This category of exceptions essentially allows providers and PSOs to use and disclose patient safety work product to carry out various operational activities without losing the privilege protection. Under this category, the following disclosures are permitted: (1) disclosures to carry out patient safety activities; (2) disclosures of nonidentifiable patient safety work product; (3) disclosures to carry out research in certain cases to the extent such disclosures would be allowed under HIPAA; (4) disclosures by a provider to the FDA; (5) voluntary disclosures by a provider to an accrediting body; (6) disclosures that the Secretary may determine are necessary for business operations; (7) disclosures to law enforcement authorities relating to the commission of a crime; and (8) disclosures other than to a PSO that do not identify a provider and do not assess 67 Id. 922(e). 68 Id. 922(c)(1). 14

17 the quality of care or describe actions or failure to act by an identifiable provider Exceptions from Privilege. Voluntary disclosures of nonidentifiable patient safety work product are not treated as privileged under the Act Continued Protection After Disclosure. The Act provides for continued protection of patient safety work product after it has been disclosed under one of the Act s exceptions. Generally, the excepted disclosure does not waive the privilege or confidentiality and the privilege and confidential nature of the information also applies to the person to whom the work product was disclosed. 71 However, the confidentiality protections no longer apply to patient safety work product after it has been disclosed in a criminal proceeding and neither the confidentiality nor privilege protections apply to nonidentifiable patient safety work product after it has been disclosed. 72 The author expresses her thanks to Amanda Borichevsky and Leah Stewart for their contributions to this paper. 69 Id. 922(c)(2). 70 Id. 922(c)(3). 71 Id. 922(d)(1). 72 Id. 922(d)(2). 15