Hospice offers compassionate care for terminally illpatients, providing services that separate it from other healthcareorganizations. Reimbursement, outcomes, medication managementissues, ethical questions and the relationship with patients andfamilies are different that traditional healthcare solutions.

Medical malpractice insurance also is different. When writingthis essential coverage for hospice, consider that emotions oftencomplicate communications between families and caregivers, leadingto more frequent allegations of malpractice and greater severity ofmalpractice claims.

This is no small concern, as this industry has grown rapidlysince its start just 40 years ago. The first hospices in the U.S.were opened in the mid-1970s by nurses who were inspired by thework of Dame Cicely Saunders. She effectively founded the hospicemovement in 1967 with the opening of St. Christopher's Hospice inLondon.

The National Hospice and Palliative Care Organization (NHPCO)estimates that 1.58 million people received hospice care in 2010,growing from 1.3 million who received hospice care in 2006. NHPCOalso estimates that in 2010, 41.9 percent of all deaths in the U.S.were under the care of a hospice program. There were 5,150 hospiceorganizations in operation in 2010, up from 4,500 in 2006, withreimbursement to hospices under the hospice Medicare benefit nowexceeding $10 billion per year.

Related: Read the article “Nonprofit/CharitableOrganizations: Big Business, Big Risks” by William R. Henry,Jr.

Today, the most severe liability claims against hospice arisefrom errors in medication administration and documentation, andfrom patient accidents caused by wandering and smoking. The mostfrequent claims are caused by employees and volunteers when theyare driving personal vehicles while performing duties forhospice.

Changing Role of the Medical Director

Along with the growth of hospice care over the years have comechanges in the role of medical directors and other physicians intoday's hospice care team—changes that require that liabilitycoverage be structured in specific ways that differ from coverageneeded by other healthcare organizations.

The interdisciplinary team, while not unique to hospice, is usedeffectively in the hospice setting. Each patient's team includesnurses, social workers, clergy, nutritionists and therapists whomeet regularly to create, document and, if necessary, change a planof care.

The leader of the interdisciplinary team is aphysician who signs off on the plan of care and acts as aconsultant to the other members of the team. Traditionally, thephysician has been a medical director, paid or volunteer, who workspart time advising the team, setting protocols and signing off whena physician's signature is necessary. That role ischanging.

Today, many hospices have a medical director who leads a team ofphysicians who are contracted or employed on a full-time basis. Inaddition to the administrative role of the traditional medicaldirector, these physicians can be hands on with patients.

See the sidebar “Additional Insureds andProfessional Services.”

When patients are referred to hospice, family physicians oftenwithdraw from the patient and a hospice team physician becomes theattending physician, visiting patients and sometimes performingprocedures to relieve pain and manage symptoms.

The Centers for Medicare and Medicaid Services (CMS) in 2011changed the rules related to hospice patient certification,requiring recertification after 180 days and examination by thehospice physician in a face-to-face encounter. The physician mustcertify that the patient is terminally ill and in need of hospicecare. Previously the medical director could perform this withoutseeing the patient.

Covering Clinical and Administrative Duties

Because physicians have more hands-on clinical responsibilitiesin hospice than ever before, it's no longer good enough to providea low level of malpractice coverage for the hospice entity and addan endorsement to cover the administrative duties of the medicaldirector.

Agents and brokers should include both professional and generalliability coverage in the same policy, but at a minimum write bothwith the same insurance company so there are no disputes over whichcoverage applies to a particular incident. Occurrence coverage isavailable for hospice and claims-made coverage works well, as longas agents pay attention to retroactive dates and extended reportingperiods when changing carriers.

Related: read the article “As Social-Service GroupsLook for Alternative Revenue Streams, Insurance Risks Grow” byBonnie Cavanaugh.

One of the most important points to consider is that medicalmalpractice coverage for physicians must be provided for clinicalduties as well as administrative duties. First, while some of thephysicians who work for hospice have their own practices and theirown malpractice coverage, insurance agents have no way of knowingwhether the policy covering the physician's practice excludescoverage for hospice work. Also, many hospice physicians areemployed by the hospice and have no coverage other than what theiremployer can provide.

Many professional and general liability policies for hospicesspecifically exclude physicians, and many others include limitedmedical director coverage for administrative duties only. Suchcoverage is not sufficient because there can only be one medicaldirector, and many hospices have 10 or 20 or more physicianscontracted or employed. The limitation of coverage toadministrative duties leaves physicians bare for the many clinicalduties they perform.

If physicians are excluded, some insurancecompany underwriters may be willing to add them by endorsement foran additional premium. That can work as long as the coverage is notlimited to administrative duties only. The best option is to findblanket coverage for physicians, either built into the policy or asa blanket endorsement. That way it is less likely a physician willbe missed because of a clerical error at the hospice or theinsurance agency.

Most hospice professional and general liability policies havephysicians share the policy's limits with the entity and all otheradditional insureds. This option works well if the limits are highenough. If physicians want their own individual policy limits andthey have enough clout with the hospice to insist, the only optionis to purchase a separate physician malpractice policy. That willlikely be much more expensive and create the need to excludephysicians from the hospice's policy while keeping vicariousliability for the hospice to cover their liability for the acts ofthe physicians while the physicians are performing administrativeand clinical duties on behalf of the hospice.

Finally, there is the issue of physicians coming and going. Somephysicians retire from hospice and others leave to continue theircareers somewhere else. Because much of the hospice liabilitycoverage in-force is on a claims-made basis, there needs to be someextended reporting provision for physicians who leave.

Related: Read the article “PIAA President: Changesin Procedures Helping Medical-Liability Industry to Improve” byArthur D. Postal.

One option is to provide an individual extended reporting periodto each physician when he or she leaves the hospice. A betteroption is to negotiate an endorsement with the insurance companythat continues coverage on a blanket basis for all physicians wholeave as long as the entity continues to be covered by thatinsurance company.

Selling Coverage Over Price

Coverage is more difficult to sell than price. That has beenparticularly true in recent years when underwriters have had somuch excess capacity and clients have had reduced revenue. Hospicerevenue continues to be under pressure because of competition, cutsin Medicare hospice benefits and government audits of theirbillings to Medicare. When auditors find a billing error,reimbursement can be held up for extended periods of time.

Reduced revenue makes hospice administrators even more costconscious than they already are inclined to be, and insurance isone of their big cost drivers. Insurance agents, serving more asadvisors than order takers, have to push back when hospiceadministrators want to cut costs at the expense of coverage.Hospices have a big, noble mission to provide people who havelife-limiting illness with the best that mankind has to offer. Weowe it to them to sell them on purchasing the best coverage ourindustry has to offer.

Often the quality of the coverage you can get for your hospiceclients depends on the quality of your submission to the insurancecompany or program manager. If you fill out one company'sapplication and only answer half of the questions and then send thesame application to several companies, you won't get a very goodproposal from any of them. Because different insurance companiesuse different exposure bases to rate hospice liability coverage,you need to make a complete submission to each insurance companyusing that company's specific application. The most accuratemeasure of hospice liability exposure is patient days, whichmeasures the number of patients multiplied by each patient's numberof days in hospice care. Hospices are reimbursed by Medicare on aper-diem basis for each patient. Because it is the biggest sourceof their revenue, hospices have very accurate records regardingpatient days.

If we are going to be advisors and sell our hospice clients thequality coverage they deserve, we need to make the effort toprovide each company or program manager who is going to make aproposal with the information they need to give us the bestproposal they can offer.