CMS Issues Deadlines for Providers Compliance with Version 5010 Standards

The Centers for Medicare & Medicaid Services (CMS) has issued a reminder to healthcare providers, health plans, clearinghouses, and vendors about the approaching compliance dates for a new generation of diagnosis and procedure codes and updated standards for electronic healthcare transactions.

Beginning in January 2011, entities covered under the Health Insurance Portability and Accountability Act (HIPAA) should be ready to test with their trading partners the functionality of the entities’ practice management and/or other related software featuring Version 5010 standards. Use of the Version 5010 standards for HIPAA electronic healthcare transactions—including claims, remittance advice, eligibility inquiries, and referral authorizations—will be mandatory on Jan. 1, 2012. The Version 5010 standards also provide the framework needed to use the revised medical data code sets (ICD-10-CM and ICD-10-PCS) that must be implemented on Oct. 1, 2013.

A fact sheet describing the two regulations governing the ICD-10 code set and Version 5010 electronic transaction standards is available on the CMS website.

Malpractice Insurance Coverage; Personal & Group Exposure

If you take a job with a medical group and the employment contract states that the entity will purchase malpractice coverage for you, it sounds like you’re all taken care of, and you don’t need to worry about anything, right?

Not necessarily.

In a recent New Jersey Appellate decision, the court held that a physician-employee was responsible for purchasing her own “tail” coverage on her medical malpractice insurance policy when she terminated her employment — even though the tail coverage would have covered the time when she was working at the job. The employer medical practice had a contractual obligation to “provide and pay the premium for malpractice insurance coverage covering Employee,” but the contract did not specifically address extended reporting period (tail) coverage. Thus, the doctor was not entitled to recover any of the $146,000 she paid for tail coverage.

Group Exposure

While there is substantial risk placed on the employed physician by a poorly worded employment agreement, there may be even greater risk for the medical practice. Notwithstanding the appellate decision discussed above, a medical practice can have significant exposure when a former employee has a gap in malpractice coverage since, under a legal theory known as vicarious liability, an employer is ultimately responsible for the acts of its employees.

So, even if your contract explicitly and unambiguously states that employees are responsible for their own tail coverage, a practice may still be liable for claims that are not covered, if the employee fails to obtain that coverage. Contractual terms between a medical group and a physician-employee generally have no impact on a plaintiff, and ordinarily will not negate vicarious liability. Consequently, good contracts should spell out who is responsible for purchasing a tail, and address the contingencies in case the employed physician or the employing practice breaches that duty.

For example, a contract that requires an employee to purchase her own tail could also give the employer the right to purchase a tail on that physician’s behalf if she fails to do so on her own. A clause to that effect would give the practice the ability to purchase a tail on behalf of the physician, then seek payment from her for the cost of the premium. Another issue can arise when a physician insured on a claims-made policy leaves a group and transfers coverage to a new claims-made policy. The risk in this instance may not present until years later when the physician may cease practice and again have the need to buy a tail. If the tail is not purchased and coverage lapses, any lawsuit brought that involved the timeframe that the physician was employed by the practice would not be covered.

These issues can be avoided if the medical group secures occurrence coverage, which automatically includes a tail. When occurrence coverage is not a viable or practical option though, good employment agreements are essential. As always, practices should retain specialized attorneys to draft employment agreements so that all contingencies are addressed.