chapter 10

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  1. antitrust law
    This type of law's purpose is to protect the competition to ensure consumer choice in health care.
  2. battery
    Earlier cases were based on this concept that states that this occurs when a physician touches an individual without their permission.
  3. common law
    As the judiciary system interprets previous legal decisions regarding a case, they are creating this.
  4. defensive medicine
    Providers order more tests and provide more services than necessary to protect themselves from lawsuits.
  5. express contract
    This is merely a mutual agreement between a patient and provider.
  6. false claims act
    This Act was passed in 1863 to protect the federal government against fraudulent defense contractors during the Civil War.
  7. informed consent
    Patients' right to make an informed and educational decision regarding their medical treatment
  8. job lock
    This occurs when employees are afraid to change employment because they are afraid of losing their medical coverage.
  9. market division
    This occurs when one or more organizations decide which services will be offered at each organization.
  10. medical malpractice
    Improper or negligent treatment of a patient by a provider which results in injury, damage, or loss.
  11. monopolies
    Organizations that are so large that they control a market, which does not allow consumers to choose.
  12. patient bill of rights
    Also called the Patient Self-Determination Act of 1990
  13. physician self referral laws
    These laws prohibit physicians, including dentists and chiropractors, from referring patients for services where they have a financial interest.
  14. price fixing
    A group of healthcare organizations decide amongst each other to collaborate with price raising, lowering, etc.
  15. rules and regulations
    These are created by administrative agencies to interpret law.
  16. sole proprietorship
    The simplest method of establishing a business.
  17. Introduction
    -Law is a body of rules for the conduct of individuals and organizations which is often interpreted differently and may change over time. Law is created so there is at least a minimal standard of action required by individuals and organizations. There is law created by federal, state and local governments.
    -As the judiciary system interprets previous legal decisions regarding a case, they are creating common law.
    • The minimal standard for action is federal law although state law may be stricter.
    • -Legislature creates laws which are called statutes.
    • -Both common law and statutes are then interpreted by administrative agencies by developing rules and regulationsthat interpret the law.
    -There are five common types of legally formed structures that may be used in the health care industry:
    • 1) nonprofit and for profit corporations,
    • 2) partnerships,
    • 3) limited liability companies,
    • 4 )sole proprietorships,
    • 5) joint ventures .
  19. A corporation is a legal entity, separate from the owners. This means that it can file suit, be sued, hold and sell property, engage in business. • Corporations are established through a corporate charter, or articles of incorporation, established in a state of their main headquarters.
    • -Corporations are usually formed to protect the stockholders or owners from unlimited liability. Their liability is limited to their investment in the corporation.
    • - Stockholders are normally not required to use their personal assets to protect the corporation
  20. - Many smaller organizations may structure themselves as “subchapter S” or professional corporations.
    - A PC or PA affixed to a dentist, doctor, or attorney, means their practice has been set up as a professional corporation
    • -Although state definitions vary, the term applies that the owner requires a license to practice.
    • - Although this corporation does not protect the owner from malpractice or liability, the corporation protects the owners from each others’ liabilities.
  21. -For-profit and not-for-profit organizations are common legal structures for the health care industry.
    -Most physician practices and skilled nursing facilities are traditionally structured for profit. They are privately owned by investors, provide goods and services to maximize profits, and pay taxes.
    • -They have limited obligation to provide care for the needy.
    • -Nonprofit corporations may also use the term “charity” for their organization. Their profits cannot be given to individuals
  22. -There are two types of not-for-profit health care organizations are: business oriented (private) and government-owned organizations and public corporations. They are required to provide care to the needy.
    - The business-oriented not-for-profit is private with no ownership interests. They operate based on fees from services and goods. Many religious affiliated hospitals are structured as not-for-profit.
    • -Government-owned are often hospitals that are tax exempt and often have federal or state funding. They often serve the uninsured and have a research and training component.
    • - Public health clinics are also legally structured as a non-forprofit organization.
  23. -The sole proprietorship is the simplest method of establishing a business. The business, for example, a single practice office, is owned solely by the individual.
    -The sole proprietorship of a business would have unlimited liability which means the liability extends beyond the scope of their business. Their personal assets can be attacked as well. It would be unusual for a health care provider to establish his or her practice as a sole provider because of the unlimited liability issue .
  24. -The partnership is a legal entity formed by two or more individuals to operate a business. Two physicians may form a partnership to operate a practice. It is a simple structure to implement eliminating many legal procedures which are needed to establish a corporation.
    -However, like a sole proprietorship, the liability to the partners is unlimited.
    • -There may also be issues with the partnership which could include personality conflicts, opposing views on how to manage the business, and differing views on the mission of the business.
    • - Although partnerships can be very successful, there is the issue of unlimited liability which means the owners, like the sole proprietorship, would be responsible for all debt and problems of other partners.
  25. -Limited partnerships have one or more general partners who have unlimited liability but other partners who have limited partnerships which means they have limited liability.
    -The limited liability company is a fairly new type of organization which is popular because it offers the liability protection of a corporation but easy to form like a sole proprietorship.
    There can be an unlimited number of owners or a single owner. Owners are taxed on the percentage of income received from the company. • The LLC designation is included after the name of the company. This type of organization would be a possibility for providers to establish their practice. It does protect the providers more from liability issues
  26. Joint ventures are legal structures formed between two separate structures such as two health care organizations or a physician’s practice and a hospital that contractually form an organization to achieve a common goa
    The original entities share the revenues, costs and control of the joint venture
    A physician can establish a relationship with a patient in three ways:
    • 1) establishing a contractual relationship to care for a designated population,
    • 2) establishing an express contract with a patient under mutual agreement,
    • 3) establishing a relationship under an implied contract .
  28. -A contract to care for a designated population is indicative of a HMO or managed care contract. A physician is contractually required to care for those member patients of a managed care organization.
    - An express contract is a simple contract is merely a mutual agreement of care between the physician and patient. They physician may define the limitations of the contract which would include the parameters of their care
    - An implied contract can be implied from a physician’s actions. If a physician gives advice regarding medical treatment, there is an implied contract.
  29. -The relationship between a patient and hospital, a contractual right to admission, can be considered a contract if a hospital has contracted to treat certain members of an organization, like a managed care organization, they are required to treat them
    -A second example of this type of contractual right to admission is if governmental hospitals such as county hospitals are required to provide care for patients regardless of ability to pay
  30. How Does a Relationship with a Provider End?
    -If a patient can withdraw from the relationship with the providers; the physicians no longer have a duty to provide follow up. That is one way to end a provider relationship.
    -Also, if medical care is no longer needed, the relationship naturally is completed.
    - If a patient is transferred to another provider, the provider then establishes a relationship with the new patient.
    • -However, a physician could withdraw from a relationship by giving sufficient notice of their withdrawal or providing their patient with a referral.
    • -However, if a physician withdraws from a relationship without sufficient reason, the provider may be liable for breach of contract
    -Civil law focuses on the wrongful acts against individuals and organizations based on contractual violations.
    - Torts, derived from the French word “wrong”, is a category of wrongful acts, in civil law, which may not have a preexisting contract. To prove a civil infraction, you do not need as much evidence as in a criminal case
    • -Criminal law is concerned with actions that are illegal based on court decisions.
    • - Examples of criminal law infractions would be Medicare fraud, illegal abortions,
  32. -There are several different types of violations that can apply to health care. There are two basic health care torts:
    • 1) negligence which involves the unintentional act or omission of an act that would contribute to the positive health of a patient and
    • 2) intentional torts such as assault and battery or invasion of privacy
  33. In the health care industry, negligence must be proven by:
    1) the person found negligent of action or lack of action who must have had a duty to the other party,
    2) there must be a lapse of breach of duty,
    3) damages occurred as a result of the person, or
    4) there must be a causal link established between the parties.
  34. -An example of negligence would be if a provider does not give the appropriate care or withholds care that results in damages to the patient such as poor health.
    -In the health care industry, intentional torts such as assault and battery would be a surgeon performing surgery on a patient without consent.
    -Invasion of privacy would be the violation of patients’ health records. Privacy issues relating to patient information is a major issue in the health care industry
  35. -medical malpractice is the “Improper or negligent treatment of a patient by a provider which results in injury, damage or loss”.
    -Medical malpractice results in approximately 80,000-100,000 deaths per year.
    -Disputes over improper care of a patient have hurt both the providers and patients.
    • -Patients have sued physicians because they feel their provider has not provided them the level of care compared to the standard of care in the industry.
    • -Studies have indicated that patients on average wait five years to receive payment from malpractice cases…most patients are not compensated as a result of a medical error.
  36. medical malpractice is the
    “Improper or negligent treatment of a patient by a provider which results in injury, damage or loss” (p. 1060). According to the Institute of Medicine’s landmark report To Err is Human, medical malpractice results in approximately 80,000-100,000 deaths per year. Disputes over improper care of a patient have hurt both the providers and patients. Patients have sued physicians because they feel their provider has not provided them the level of care compared to the standard of care in the industry. Studies have indicated that patients on average wait five years to receive payment from malpractice cases…most patients are not compensated as a result of a medical error
  37. Tort Reform
    -As a result of the number of malpractice claims in the United States, malpractice insurance premiums have increased which has resulted in some states no longer offering malpractice insurance which means there are fewer physicians in needed areas.
    - Some states have tried to facilitate the unavailability of malpractice insurance by developing a state system of subsidizing a portion of the premiums
    • -As a result of the recent malpractice insurance crises over the past decades, more and more states have adopted statutory caps on monetary damages that a plaintiff can recover in malpractice claims.
    • -According to the National Conference of State Legislatures, in 2005, there were 48 states which considered malpractice reform legislation with 30 states adopting law
  38. Recommendations for Tort Reform
    Because trial costs can be lengthy and costly, other resolutions have been recommended such as:
    • 1) alternative dispute resolution (ADR) methods,
    • 2) neo no fault insurance and
    • 3) Model Medical Accident Compensation System
  39. Alternatives to Litigation
    -Alternative dispute resolution (ADR) is a non judicial process that has been employed over the last 30 years in employment claims.
    - ADR can be accomplished through different methods such as conciliation, mediation, and arbitration.
    • 1) Conciliation consists of bringing the two parties together to discuss their situation,
    • 2) mediation is bringing the two parties together and suggest possible solutions, and arbitration which is the most formal, consists of holding a hearing where the cases are presented and an award is made.
    • 3) Arbitration can be a binding decision which means they have to legally abide by the decision.
  40. Neo-no-fault insurance
    Neo-no-fault insurance is to encourage early out of court settlement for the actual losses by using the money for litigation and related expenses to pay for adequate compensation
  41. The Model Medical Accident Compensation Act
    -The Model Medical Accident Compensation Actapplies worker compensation principles to medical injury compensation. This administrative process focuses on prompt and limited compensation for injured individuals.
    - This process would occur on an individual basis applying the standards of care and are examining the medical errors associated with the case. Funds are provided by a state fund
    The Hill Burton Act of 1946
    -The Hill Burton Act of 1946 was passed which authorized federal grants for hospital construction.
    -If a hospital has received federal funds from the Hill Burton Act, they have agreed to a community service requirement so any person residing in the area of the hospital, cannot be denied treatment to that portion of the hospital financed by the Hill-Burton
    -Inability to pay cannot be a basis for denial when the person needs emergency services that the hospital can provide.
  43. Emergency Medical Treatment and Active Labor Act
    Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986, enforced by the Center for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG), require Medicare participants to receive emergency care from a hospital or medical entity that provides dedicated emergency services
  44. Cihildren's Health Insurance Program
    -The State Children's Health Insurance Program (SCHIP), enacted under the Balanced Budget Act of 1997, and is Title XXI of the Social Security Act that is jointly financed by federal and state funding and administered by the states.
    -Administered by the Center for Medicare and Medicaid Services, the purpose of this program is to provide coverage for low-income children under the age of 19 who live above the income level of Medicaid. They cannot be eligible for Medicaid or be covered by private health insurance.
    Approximately 10 million children who were uninsured and ineligible for public assistance will be positively impacted by this program.
  45. Benefits Improvement and Protection Act
    -The Benefits Improvement Act of 2000, formally called the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act, modifies Medicare payment rates for many services.
    - It also adds coverage of preventive and therapeutic service. It increases federal funding to state programs.
    -From a health care consumer aspect, it protects Medicare beneficiaries by granting them the ability to appeal provider termination of services.
    -Employee Retirement Income Security Act of 1974 (ERISA)
    • -This act regulates pension and benefits plan for employees including medical and disability benefits. It protects employees because it forbids employers from firing an employee so they cannot collect under their medical coverage.
    • - An employee may change the benefits provided under their plan, but cannot force an employee to leave so they would not have to pay their medical coverage
  47. -The Pregnancy Discrimination Act of 1978 is an amendment to Title VII of the Civil Rights Act of 1964. --This act protects female employees that are discriminated against based on pregnancy-related conditions, which constitutes illegal sex discrimination
    • -The Equal Employment Opportunity Commission is responsible for monitoring and enforcing any violations of this law.
    • -This law applies to employers with 15 employers or more, employment agencies and labor organizations and the federal government.
  48. -The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), an amendment to ERISA, was passed to protect employees who lost or changed employers to they could keep their health insurance if they paid 102 percent of the full premium.
    - The Act was passed because at the time, people were afraid to change jobs which resulted in the concept of job lock
    Although it does provide an opportunity to keep their coverage while they were changing jobs, there may be individuals who cannot afford the premiums so they may end up uninsured anyway
  49. COBRA
    - COBRA also included provisions requiring hospitals to provide care to everyone who presented in an emergency department, regardless of their ability to pay. Fines were accrued if it was determined that hospitals were refusing treatment .
    -This component was very important because many individuals were refused treatment because they could not pay for the services or were uninsured.
  50. HIPAA
    -The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was passed to promote patient information and confidentiality in a secure environment. The amount of information released is controlled by the consumer.
    - HIPAA was an amendment to the ERISA and the Public Health Service Act HS) to increase the ability for health care coverage when employees changed jobs.
    • It also guaranteed that individuals could purchase health insurance for a preexisting condition if they
    • 1) have been covered by a previous employer program for a minimum of 18 months and
    • 2) have exhausted any coverage through COBRA,
    • 3) are ineligible for other health insurance programs, and
    • 4) were uninsured for no longer than two months.
    • -HIPAA also prohibited employers from stating pregnancy as a preexisting condition. Employers cannot charge higher premiums to employees according to health status
  51. The HIPAA National Standards to Protect Patient’s Personal Medical Records of 2002 further protected medical records and other personal health information maintained by health care providers, hospitals, insurance companies, and health plans.
    It gives patients new rights to access of their records, restricts the amount of patient information released, establishes new restrictions to researchers’ access, and increased criminal and civil sanctions for improper use
  52. The Americans with Disability Act of 1990, This Act applies to employers who have 15 employers or more.
    - The Act was passed to ensure that those individuals who had a disability but who could perform primary job functions were not discriminated against.
    -According to the Act, disabilities included: learning, mental, epilepsy, cancer, arthritis, mental retardation and AIDS, asthma and traumatic brain injury.
    • Alcohol and other drug abuses are not covered under ADA.
    • If an employer could make reasonable accommodations to a disabled individual without suffering financial hardship were requested to hire a disabled individual.
    • - From a health care standpoint, a nursing home cannot refuse to admit a person with AIDS that requires a nursing service and that has that type of service available
  53. -The Family Medical Leave Act of 1993 (FMLA) requires employers with 50 or more employees within a 75-mile radius who work more than 25 hours per week and who have been there more than one year, to provide up to twelve work weeks of leave, during any twelve month period to provide care for a family member or the employee itself.
    - This benefit can also include post childbirth or adoption. The employer must provide health care benefits although they are not required to provide wages.
    • -This benefit does not cover the organization’s 10% highest paid.
    • -The employer is also supposed to provide the same job or a comparable position upon the return of the employee
  54. -The Mental Health Parity Act of 1996 defines the equality or parity between lifetime and annual limits of health insurance reimbursements on both mental health and medical care.
    - Unfortunately, the Act did not require employers to offer mental health coverage nor did it impose limits on deductibles or coinsurance payments nor did it cover substance abuse.
    • -However it did highlight the issue of parity coverage between mental health issues and traditional medical care.
    • -This federal legislation spurred several states to implement their own parity legislation
  55. -The Genetic Information Nondiscrimination Act of 2008 prohibits U.S. insurance companies and employers from discriminating on the basis of information derived from genetic tests.
    -Specifically, it forbids insurance companies from discriminating through reduced coverage or price increases
    -It also prohibits employers form making adverse employment decisions based on a person’s genetic code nor can employers or insurance companies demand a genetic test
  56. Antitrust Law
    - The purpose of antitrust law is to protect the consumer by ensuring there is a market driven by competition so the consumer has a choice for their health care .
    - There are both federal and state antitrust laws. Examples of antitrust issues would be large mergers which would encourage monopolies in health care and price fixing among competitors
    • -There are two federal agencies that enforce antitrust violations: the Federal Trade Commission and the Department of Justice.
    • -The Sherman Act of 1890 focuses on eliminating monopolies which are health care organizations that control a market so the consumer has a no choice in their health care .
    • -It also targets price fixing among competitors which eliminates the consumer from paying a fair price because the competitors establish a certain price by either increasing or lowering prices amongst themselves to stabilize the market.
    • - Health care facilities may also have an agreement on market division. This illegal action occurs when one or more health organizations decide which type of services will be offered at each organization.
  57. Antitrust Laws – Sherman Act
    -“Tying” refers to health care providers that will only sell a product to a consumer who will also buy a second product from them.
    - Boycotts are also illegal according to this act. When health care providers have an agreement to not deal with anyone outside their group is interfering with the consumer’s rights to choose.
    • - Price information exchange of services between providers can also be illegal.
    • -Health care providers are protected under the Act if it has been determined that hospitals have exclusive contracts with certain providers which excludes other providers from use of the hospital.
  58. -The Clayton Act of 1914 was passed to supplement the Sherman Act, as amended by the Robinson-Patman Act, which issues further restrictions on mergers and acquisitions.
    - With the increasing development of hospital chains, this Act has focused on hospitals. There are no criminal violations of this Act, unlike the Sherman Act.
    - Any organization considering a merger or acquisition above a certain size must notify both the Antitrust Division of the Department of Justice and the Federal Trade Commission.
    • -The Act also prohibits other business practices that under certain circumstances may harm competition.
    • - The Act also allows individuals to sue for three times their actual damages plus legal costs
  59. -The Hart-Scott-Rodino Antitrust Improvement Act of 1976 as an amendment to the Clayton Act, ensures those hospitals and other entities that entered mergers, acquisitions and joint ventures, must notify the Department of Justice and the Federal Trade Commission before any final decisions are made.
    • - This is a requirement for any hospitals with greater than $100 million in assets acquiring a hospital with more than $10 7) million in assets.
    • -The DOJ and FTC will make the final decision on these proposals. This ensures there will not be any type of monopoly within a certain geographic area.
  60. Informed Consent
    The concept of informed consent is based on the patient’s right to make an informed decision regarding medical treatment. It is a legal requirement in all 50 states. It is more than a patient signing an informed consent form—it is the communication between the provider and patient regarding a specific medical treatment.
  61. -To determine what constitutes informed consent, there are two legal standards that are applied.
    • - The reasonable patient standard focuses on the patient’s information needs including the risks and benefits that allow the patient to make a decision
    • -The reasonable physician standard focuses on the standard information that would be given by any physician to a patient contemplating the same procedure or treatment. Most states utilize the reasonable patient standard.
  62. Patient Bill of Rights
    -The Patient Self-Determination Act of 1990 requires hospitals, nursing homes, home health providers, hospices and managed care organizations that provide services to Medicare and Medicaid eligible patients must provide patients upon admission, information on patients’ rights.
    -It virtually applies to every type of health care facility. The facility must provide adult patients with written information under the state law to make health care decisions.
    -Based on the concept of informed consent, in 1972, the Board of Trustees of the American Hospital Association developed a Patient Bill of Rights. The Patient Bill of Rights states that the patient has the right to all information from this provider regarding any testing, diagnoses, and treatments
  63. Physician Assisted Suicide
    -The Oregon Death with Dignity Act of 1994 legalized physician-assisted suicide, a type of euthanasia, by allowing an adult Oregon resident who is terminally ill to request a medication that will take his or her life.
    - The person must have a disease that is considered incurable and will take the person’s life within six months.
    • -Nearly 94% of the patients requested lethal medications because they were afraid of losing their autonomy or ability to make decisions and act for them, 76% were afraid they would no longer enjoy life as they were dying, and 53% were afraid of losing control of their bodily functions..
    • -The state of Washington passed a similar December 2008 to legalize physician-assisted suicide in their state.
    -Advance directives are written directions outlining your wishes if you are in an accident and are unable to make a decision at that time. These wishes must be legally carried out.
    - Examples of advance directives are: living wills, medical power of attorneys /(POA), do not resuscitate order (DNR)
    • -A living will lists which types of medical treatments you will and will not accept such as life-sustaining measures.
    • -A medical power of attorney or durable power of attorney for health care is a person that will represent the consumer in case that person is unable to make a medical decision.
    • -A do not resuscitate order (DNR) is a written directive that does not allow any life saving measures if you suffer cardiac arrest.
    • -An advance directive is not needed for a DNR order. A doctor may place a DNR in your medical chart.
    -The False Claims Act, originally, enacted in 1863, was passed to protect the federal government against defense contractors during the Civil War.
    -The False Claims Act has been amended several times throughout the years, however, in the 1990s, the Act focused on health care fraud, most notably Medicare and Medicaid fraud.
    -The False Claims Act of 1995 imposes criminal penalties on anyone who tries to present fictitious claims for payment to the federal government. It is one of the most powerful government tools to combat civil fraud in health care
  66. -This act also provides financial incentives for whistleblowers that allow employees to blow the whistle about contractor fraud against the federal government. Private plaintiffs fulfilling this role are pursuant to the qui tam provisions of the Act which means “he who sues”.
    - The Deficit Reduction Act of 2005 introduced additional incentives for states to crack down on health care fraud by giving the states additional incentives under their own fraud law
    • -What is controversial about this Act is that whistleblowers may receive between 15 to 25% of proceeds in the case. As a result of the financial incentive program, the federal government has received $12 billion in returned funds.
    • -According to one report, in 2006, nearly 500 hospitals across the United States were the subject of Medicare fraud. The civil fines for each violation can be $5,500 -$11,000. Many health care organizations may have hundreds of fines so their penalties can be huge
  67. -The Stark laws (named after Representative Pete Stark who authored the legislation) also known as the Physician Self Referral Laws or the The Ethics in Patient Referral Act of 1989, prohibits physicians including dentists and chiropractors from referring Medicare and Medicaid patients to or other providers for designated health services in which they have a financial interest.
    -These laws directly prohibit many referrals which may increase a provider or family members’ financial interest
    -Designated health services include clinical laboratory services, outpatient prescription drug services and physical and occupational therapy and imaging services such as MRIs.
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chapter 10
2011-04-05 21:06:35

Basics of the U.S Health Care System
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