Hospices offer compassionate care for terminally ill patients, providing services that separate these facilities from other health-care organizations. Reimbursement, outcomes, medication-management issues, ethical questions, and the relationship with patients and families are different from traditional health-care solutions.

Medical Malpractice insurance is also different. When writing this essential coverage for hospices, consider that emotions often complicate communications between families and caregivers, leading to more frequent allegations of malpractice and greater severity of malpractice claims.

This is no small concern, as this industry has grown rapidly since its start just 40 years ago. The National Hospice and Palliative Care Organization (NHPCO) estimates that 1.58 million people received hospice care in 2010, growing from 1.3 million in 2006. There were 5,150 hospice organizations in operation in 2010, up from 4,500 in 2006, with reimbursement to hospices under the hospice Medicare benefit now exceeding $10 billion per year.

Today, the most severe liability claims against hospices arise from errors in medication administration and documentation as well as from patient accidents caused by wandering and smoking. The most frequent claims are caused by employees and volunteers when they are driving personal vehicles while performing duties for hospice.

COVERAGE NEEDS CHANGE AS HOSPICE TEAM EVOLVES

Along with the growth of hospice care over the years have come changes in the role of medical directors and other physicians in today’s hospice-care team—changes that require liability coverage be structured in specific ways that differ from coverage needed by other health-care organizations.

The interdisciplinary team, while not unique to hospices, is used effectively in the hospice setting. Each patient’s team includes nurses, social workers, clergy, nutritionists and therapists who meet regularly to create, document and, if necessary, change a plan of care.

The leader of the interdisciplinary team is a physician who signs off on the plan of care and acts as a consultant to the other members. Traditionally, the physician has been a medical director, paid or volunteer, who works part time advising the team, setting protocols and signing off when a physician’s signature is necessary.

But that role is changing. Today, many hospices have a medical director who leads a team of physicians who are contracted or employed on a full-time basis. In addition to the administrative role of the traditional medical director, these physicians can be hands-on with patients.

When patients are referred to hospice, family physicians often withdraw from the patient and a hospice-team physician becomes the attending doctor, visiting patients and sometimes performing procedures to manage pain.

Covering Clinical, Administrative Duties

Because physicians have more hands-on clinical responsibilities in hospices than ever before, it’s no longer good enough to provide a low level of Malpractice coverage for the hospice entity and just add an endorsement to cover the administrative duties of the medical director.

Agents and brokers should include Professional and General Liability coverage in the same policy—and write both with the same insurance company so there are no disputes over which coverage applies to a particular incident. Occurrence coverage is available for hospices, and claims-made coverage works well, as long as agents pay attention to retroactive dates and Extended Reporting Periods when changing carriers.

One of the most important points to consider is that Medical Malpractice coverage for physicians must be provided for clinical duties as well as administrative duties.

While some of the physicians who work for hospices have their own practices and their own Medical Malpractice coverage, insurance agents have no way of knowing whether the policy covering the physician’s practice excludes coverage for hospice work. Also, many hospice physicians are employed by the hospice and have no coverage other than what their employer can provide.

Many Professional and General Liability policies for hospices specifically exclude physicians, and many others include limited medical-director coverage for administrative duties only. Such coverage is not sufficient, because there can only be one medical director, and many hospices have 10 or 20 or more physicians contracted or employed. The limitation of coverage to administrative duties leaves physicians exposed on the many clinical duties they perform.

If physicians are excluded, some insurance company underwriters may be willing to add them by endorsement for an additional premium. That can work as long as the coverage is not limited to administrative duties only. The best option is to find blanket coverage for physicians, either built into the policy or as a blanket endorsement. That way it is less likely a physician will be missed because of a clerical error at the hospice or the insurance agency.

Most hospice Professional Liability and GL policies have physicians share the policy’s limits with the entity and all other additional insureds; this option works well if the limits are high enough.

If physicians want their own individual policy limits and they have enough clout with the hospice to insist, the only option is to purchase a separate physician-malpractice policy. That will likely be much more expensive—and create the need to exclude physicians from the hospice’s policy while keeping vicarious liability for the hospice to cover its liability for doctors performing administrative and clinical duties on the hospice’s behalf.

Finally, there is the issue of physicians coming and going. Some physicians retire from hospice care, and others leave to continue their careers somewhere else. Because much of the Hospice Liability coverage in force is on a claims-made basis, there needs to be some Extended Reporting provision for physicians who leave.

One option is to provide an individual Extended Reporting Period to each physician when he or she leaves the hospice. A better option is to negotiate an endorsement with the insurance company that continues coverage on a blanket basis for all physicians who leave as long as the entity continues to be covered by that insurance company.

QUALITY SUBMISSIONS KEY TO COVERAGE

Hospice revenue continues to be under pressure because of competition, cuts in Medicare hospice benefits and government audits of their billings 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 cost-conscious than they already are inclined to be—and insurance is one of their big cost-drivers.

Insurance agents, serving more as advisors than order-takers, have to push back when hospice administrators want to cut costs at the expense of coverage. Hospices have a big, noble mission to provide people who have life-limiting illness with the best care mankind has to offer. We owe it to them to sell them on purchasing the best coverage.

Often the quality of the coverage you can secure for your hospice clients depends on the quality of your submission to the insurance carrier or program manager. If you fill out one company’s application and only answer half of the questions and then send the same application to several companies, you won’t get a very good proposal from any of them. Because different insurance companies use different exposure bases to rate Hospice Liability coverage, you need to make a complete submission to each insurance company using that company’s specific application.

The most accurate measure of Hospice Liability exposure is patient days, which measures the number of patients multiplied by each patient’s number of days in hospice care. Hospices are reimbursed by Medicare on a per-diem basis for each patient. Because it is the biggest source of their revenue, hospices have very accurate records regarding patient days.

If we are going to be effective advisors and sell our hospice clients the quality coverage they deserve, we need to provide each carrier or program manager with the detailed information they need to deliver the best proposal possible.

Editor’s note: A version of this story ran in the July 2012 issue of American Agent & Broker.

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