ACO/NPHO: More to worry about
By George F. “Rick” Evans
I know I’m preaching to the choir when I tell you how tough it is to be a doctor today. And just one of the seemingly endless lists of reasons includes changes in the business models by which physicians practice medicine. The latest twist has been the creation of Accountable Care Organizations (ACO) and Non-Profit Health Organizations (NPHO).
Like Texas bluebonnets in the spring time, they have popped up and proliferated almost overnight. Physicians and physician groups are being approached daily to join them as employees. There are perhaps several dozen legal aspects to these organizations, any one of which could have you taking H2 blockers if you knew more about them. That’s not to say there may not be certain advantages to them, but it’s important to understand some of the downsides. One that has become particularly noteworthy in the past six months concerns risk management and liability exposures. The purpose of this article is to focus directly on this one issue so you’ll be better equipped to wrestle with it in the event you’re considering an ACO/NPHO as an option. It’s intended to give you a checklist by which to evaluate any proposed contracts with such an organization from the standpoint of professional liability exposures.
Many contracts cause you to forfeit or abandon rights previously enjoyed and regarding your insurance coverage. More specifically, the contract almost assuredly will authorize the organization (not you) to pick the insurer. On its face, the contract usually puts a positive spin on it by actually portraying this as a benefit. It makes it sound as if they’re doing you a favor by providing free coverage for you. But, when you turn that decision over to somebody other than yourself, here is some of the negative fallout that you may not have anticipated.
Let’s start with the fact the choice of insurer is made by them instead of you. That means you may wind up with a company that is (a) financially questionable, (b) out of state and inexperienced with Texas juries, laws, courts, attorneys, etc., (c) out of state with no local personnel to provide hands on, “boots on the ground” assistance when the chips are down, (d) an insurer that may have experience in hospital or organization defense but not focused on the special needs of physician defense, and (e) all of the above.
Then there’s the question of the terms of coverage. Many insurers who focus on Texas doctors provide a number of value-added benefits. One example is giving the physician the exclusive right to decide to settle or try a case. An exceptionally important benefit is supplying you with a defense not only in lawsuits, but in complaints filed with the Texas Medical Board or a Peer Review Committee. Also, many companies providing coverage only to doctors also provide free help with ongoing legal questions such as when you get a subpoena, or have a disgruntled patient, are asked to give a deposition, or are faced with some other legal issue for which help is needed. Policies and insurers chosen by the organization may not provide any of those benefits.
Then there’s the question of the amount of coverage. Some doctors are situated such that they need high levels of coverage. Other physicians want lower limits for a variety of reasons including the belief that larger limits make them a target. The organization’s contract will likely take that choice from you; you’ll get what they decide. Or worse yet, regardless of whether you like the level of coverage or not, there may be an overall dollar limit which is exhausted by other claims so that when a claim is made against you, there’s no money left for your benefit.
Another big concern arises out of the issue of divided loyalties. If you’re insured by a company who insures just doctors or their groups, and if you get sued, you’re assured that the defense focuses just on you and what’s best for your legal interests. But a policy chosen by an organization may cover you, but also the organization. Many times, conflicts in interest arise between what’s in your interest versus those of the hospital or other health care organization. What is passed off to you as a “harmonized joint defense” can actually result in your interests being compromised, if not outright sacrificed. A real Catch-22 scenario is if the organization itself is subjecting you to peer review or sanction but, at the same time, is supposed to provide you with a defense to any such action. Go figure how that works.
What happens if you decide to leave? Most likely the coverage you had while an employee of the organization isn’t portable. You’ll be “naked” and may find it difficult to find replacement coverage. To add insult to injury, even if you have coverage with your new employer, they may well not provide “tail coverage” to protect you against lawsuits arising out of past events.
Even if all of these concerns are properly addressed in the initial contract, that same contract may allow for unilateral modification of certain provisions such as those pertaining to your insurance protection. Sort of like “bait and switch.” You start off with all of these issues resolved to your satisfaction, but the next year they modify the contract and the protections you thought you had are gone—like the morning dew in the noonday Texas sun.
The only real cure for these woes is to assure that the contract permanently and irrevocably vests all decisions regarding all aspects of insurance coverage in the hands of the doctor(s). Frankly, at the end of the day, it’s your skin so it should be your decision. It’s your license, your assets and your reputation on the line so why shouldn’t you have 100% of the say so in how you want to protect yourself? Any jury verdict, any court judgment, any TMB order, any Peer Review mandate is directed at you personally. Not your employer. So it should be you, not your employer, who makes the decisions that impact your exposure on all those fronts.
ACO/NPHO contracts present many other issues apart from risk management and liability exposure. This article has picked just one but certainly one of the more important ones. And one that has been pretty much under the radar screen to many physicians, particularly when the contract causes insurance coverage to falsely appear as a contract benefit to the doctor when, in truth, nothing could be further from the truth. You can enter into one of these contracts, but they need to be understood for what they are and seriously negotiated to assure that you don’t live to regret it. I’ve yet to see one that is just fine, right out of the box.
George F. “Rick” Evans, Jr. is the Legal Counsel for Bexar County Medical Society. He is one of the recipients of the 2010 BCMS Distinguished Service Award. Rick is in practice at Evans & Rowe and can be reached at (210) 384-3270 or by visiting the website: www.evansrowe.com.