At the Intersection of Health, Health Care and Policy Cite this article as: William M. Sage, Thomas H. Gallagher, Sarah Armstrong, Janet S. Cohn, Timothy McDonald, Jane Gale, Alan C. Woodward and Michelle M. Mello How Policy Makers Can Smooth The Way For Communication-And- Resolution Programs Health Affairs, 33, no.1 (2014):11-19 doi: 10.1377/hlthaff.2013.0930

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Communicating About Errors By William M. Sage, Thomas H. Gallagher, Sarah Armstrong, Janet S. Cohn, Timothy McDonald, Jane Gale, Alan C. Woodward, and Michelle M. Mello

How Policy Makers Can Smooth The Way For Communication-AndResolution Programs Communication-and-resolution programs (CRPs) in health care organizations seek to identify medical injuries promptly; ensure that they are disclosed to patients compassionately; pursue timely resolution through patient engagement, explanation, and, where appropriate, apology and compensation; and use lessons learned to improve patient safety. CRPs have existed for years, but they are being tested in new settings and primed for broad implementation through grants from the Agency for Healthcare Research and Quality. These projects do not require changing laws. However, grantees’ experiences suggest that the path to successful dissemination of CRPs would be smoother if the legal environment supported them. State and federal policy makers should try to allay potential defendants’ fears of litigation (for example, by protecting apologies from use in court), facilitate patient participation (for example, by ensuring access to legal representation), and address the reputational and economic concerns of health care providers (for example, by clarifying practices governing National Practitioner Data Bank reporting and payers’ financial recourse following medical error). ABSTRACT

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xperiencing harm from medical care is especially traumatic for patients when it is unexplained. Communication-and-resolution programs (CRPs) follow a simple plan: Tell patients and their families what happened, try to put things right, and improve safety for the future.1 CRPs are generating increasing interest among health care institutions, in part as a result of federally funded demonstration projects. CRPs’ timely, proactive approach is very different from the “deny and defend” mentality that is common among hospitals facing malpractice claims. That mentality leads hospitals to respond to aggressive lawyers but not to needy patients; to release information only when forced to do so; and to wait until the eve of trial to offer any settlement. From the 1950s through the 1990s, malprac-

tice suits so galled the medical establishment that the pendulum swung away from openness. Providers acknowledged that patients had an interest in knowing the facts.2 However, providers often said little to patients about adverse events because of shame, advice from risk managers, and uncertainty about how to navigate difficult discussions.3 A movement toward greater transparency began in earnest after the Institute of Medicine’s startling 2000 report on medical error,4 and it has found receptive audiences among health care professionals and institutions. Silence and secrecy are increasingly considered ethically and legally unacceptable responses to medical injury. If patient autonomy requires physicians to tell patients about things that might happen before care commences, to obtain informed consent, surely physicians should tell patients about things that did happen when care was provided. J a n u a ry 2 0 1 4

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10.1377/hlthaff.2013.0930 HEALTH AFFAIRS 33, NO. 1 (2014): 11–19 ©2014 Project HOPE— The People-to-People Health Foundation, Inc.

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William M. Sage (wsage@law .utexas.edu) is the James R. Dougherty Chair for Faculty Excellence at the University of Texas School of Law, in Austin. Thomas H. Gallagher is a professor in the Department of Medicine and the Department of Bioethics and Humanities, University of Washington School of Medicine, in Seattle. Sarah Armstrong is a visiting scholar at the University of Washington School of Law and an affiliate assistant professor at the University of Washington School of Nursing, in Seattle. Janet S. Cohn is executive director of the New York Stem Cell Science Program/ NYSTEM, New York State Department of Health, in Albany. Timothy McDonald is chief safety and risk officer for health affairs at the University of Illinois at Chicago. Jane Gale is director of risk management at Ascension Health, in St. Louis, Missouri. Alan C. Woodward, an emergency medicine physician, is past president and chair of the Committee on Professional Liability of the Massachusetts Medical Society, in Concord. Michelle M. Mello is a professor of law and public health in the Department of Health Policy and Management, Harvard School of Public Health, in Boston, Massachusetts.

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Communicating About Errors Today’s CRPs have a complex ancestry. The Veterans Affairs hospital in Lexington, Kentucky, adopted a disclosure and apology policy in 1987. In 2001 the Joint Commission began requiring a limited form of disclosure as a condition of facility accreditation. Medical associations and quality improvement organizations, including the National Quality Forum, subsequently endorsed the disclosure of serious events,5 and a few states passed laws requiring it.6 In the early 2000s the University of Michigan and a handful of other academic medical centers and liability insurers began combining disclosure and apology with proactive compensation. Sharing information about errors came to be seen as a continuing process, not a single event.7 Published data suggest that such practices lowered the number of malpractice claims, accelerated settlements, reduced legal expenses, and allowed hospitals to redirect resources toward safety improvement.8–11 The Institute of Medicine, the Joint Commission, and others offered policy proposals advocating disclosure as a key element of patient safety and dispute resolution. A few political leaders embraced the idea, including Hillary Clinton, then a senator from New York, and Barack Obama, then a senator from Illinois.12 Yet concrete action at the federal level to support communication-and-resolution initiatives remained elusive.

Federal Demonstration Projects During debates over federal health reform, medical malpractice was a logical issue to use to encourage bipartisanship. In a 2009 speech to Congress, President Obama signaled his willingness to consider malpractice reform and promised to fund demonstration projects that had been proposed by the Institute of Medicine in 2002.13 The White House gave the Agency for Healthcare Research and Quality (AHRQ) the task of fulfilling the president’s pledge. In 2010 AHRQ awarded $23.2 million for projects combining patient safety improvement with innovations to reduce liability costs.14 Communication-and-resolution approaches are being tested in five of nine funded demonstrations (in Illinois, New York, Texas, and Washington and nationally by Ascension Health, a large nonprofit hospital system),15 as well as in connection with smaller planning grants in Massachusetts16 and Utah. For detailed information about the AHRQ demonstration projects, see the online Appendix.17 Only two studies have examined legal barriers to or facilitators of the communication-and-res12

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olution approach.18,19 Legal changes have been less of a focus for CRPs than for prior malpractice reforms because disclosing errors and offering early compensation are strategies that health care providers can pursue to improve the liability environment on their own, without intervention from legislatures, regulatory agencies, or courts. Indeed, the AHRQ projects were explicitly designed to test approaches that did not depend on altering existing law. If legislators and regulators wish to encourage risk-averse organizations to try CRPs, however, legal changes can help smooth the way.

Liability Reforms At their heart, CRPs should be governed by the ethical imperative to cause no harm. They are not merely risk-management strategies to counter potential lawsuits. In the contentious world of litigants and lawyers, however, perceptions of the liability environment can impede CRP implementation. Consequently, changes to malpractice law and procedure might play a useful role in convincing providers and insurers to adopt CRPs. Providers and insurers must be sufficiently motivated to do something but not too fearful to undertake transformative change. Lack of motivation is a greater risk in states such as Texas and Washington that have less malpractice litigation; risk aversion is a bigger problem in states with more and more costly litigation, such as New York, Alabama, and Illinois. Damages Caps Institutions have sometimes shied away from using CRPs because of the belief that disclosing errors and proactively offering compensation would be too expensive. Because settlement negotiations are shaped by possible outcomes at trial, such worries are more pronounced in states that have not instituted damages caps for malpractice cases (Exhibit 1). Some plaintiffs’ attorneys may advise claimants to reject early offers when similar cases have generated higher awards in traditional malpractice litigation. More than half of the states cap damages in malpractice cases, usually the noneconomic—or “pain and suffering”—component of damages, with the strictest limits set at $250,000. CRPs in Michigan and California report that their states’ damages caps have been helpful in establishing an upper bound for what each case is worth.20 In contrast, hospitals in the AHRQ demonstration project in New York, a state with no damages cap, were reluctant to routinely make early settlement offers because they felt that patients would pursue litigation anyway.21 These New

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Exhibit 1 State Tort Reform Laws Relevant To The Implementation Of Communication-And-Resolution Programs Type of reform

Description

Damages cap

Limits the amount of money that a plaintiff can receive as damages for noneconomic losses (known as pain and suffering) in a malpractice suit; may apply to the plaintiff, limiting the amount he or she may receive, or to each defendant, limiting the total amount for which each may be liable

Pre-suit notification law

Requires prospective plaintiffs to give defendants advance written notice (typically of a few months) that they intend to file a malpractice suit The doctrine of charitable immunity limits the amount of tort damages for which not-for-profit organizations and other entities pursuing charitable work can be held liable The doctrine of sovereign immunity holds that a government cannot be sued for a tort without its consent; statutes provide procedures through which state and federal governments allow tort suits but usually limit the damages that plaintiffs may recover Eliminates a traditional rule that if an injured plaintiff receives compensation for his or her injury from other sources, such as health insurance, that payment should not be deducted from the amount that a defendant who is found liable for the injury must pay

Legal immunities for providers

Collateral-source rule reform

SOURCE Adapted from Mello MM. Medical malpractice: impact of the crisis and effect of state tort reforms [Internet]. Princeton (NJ): Robert Wood Johnson Foundation; 2006 May [cited 2013 Dec 9]. (Research Synthesis Report No. 10). Available from: http://www.rwjf.org/content/dam/supplementary-assets/2006/05/15168.med malpracticeimpact.report.pdf.

York hospitals also confined their CRP to a single area (general surgery) because they feared that offering proactive compensation more generally might increase their exposure in obstetrical cases to what they considered to be out-ofcontrol juries. However, the University of Illinois has operated a successful CRP for years, although the Illinois Supreme Court has struck down as unconstitutional any damages caps that the legislature passed. And Washington State participants in CRPs have not perceived the absence of a cap to be a deterrent to implementing the communication-and-resolution approach. Institutions and providers also can be risk-averse irrespective of tort reform. In Texas some physicians have resisted disclosing errors because they believe it might help trial lawyers find a legal loophole that would enable them to circumvent the state’s cap. Worrying about how state law on damages may affect settlement negotiations also indicates a misunderstanding of the compensatory goal of CRPs, which is not to approximate jury awards but to assess and provide what the patient or family needs. Moreover, a substantial proportion of the injuries to which CRPs respond are too minor to generate damages above state caps. Implementing a damages cap, therefore, should be seen as a reform that facilitates the use of CRPs, but the absence of a cap is not an insurmountable barrier to implementing a CRP. Pre-Suit Notification Laws By promptly engaging patients and families in discussion, providers using CRPs hope to avoid formal litigation. Because a lawsuit can damage a physi-

cian’s reputation, laws in about a dozen states require malpractice plaintiffs to give defendants advance notice that they plan to file suit. These advance notices create cooling-off periods intended to give both parties time to resolve their dispute in other ways, and they can help maintain the spirit of cooperation needed for CRPs to operate well. To facilitate the use of CRPs, Massachusetts implemented a mandatory six-month advance notice in 2012.22 In discussions leading up to the implementation of CRPs in New York, hospitals repeatedly mentioned the absence of a notification law as a hindrance. Washington’s pre-suit notification law was ruled unconstitutional in 2010, although it was resurrected in 2013 for defendants that are public entities.23,24 Nonetheless, the AHRQ grantees in both states created CRPs. Pre-suit notification laws are thus not essential to the implementation of a CRP, but such laws can improve CRPs’ chances for success. For example, Stanford University Medical Indemnity and Trust Insurance Company, which has operated a CRP for more than a decade, regards California’s law as very helpful in creating space for early resolution.20 Optimally, to allow sufficient time for CRP investigations and communications, state law should require notification three to six months before any malpractice suit is filed. This would enable the CRP to complete its investigation and finalize a plan for resolution. Legal Immunities For Providers Some states continue to insulate certain types of health care organizations from malpractice liability through the doctrines of sovereign (governmenJanuary 2014

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Communicating About Errors tal) and charitable immunity (Exhibit 1). These laws bar suits against or limit damages awards that might be assessed against public and nonprofit health care providers, respectively. Such selective immunities pose an obstacle to the use of CRPs because they change the dynamics of hospital-based malpractice cases and accentuate differences in interest among defendants. Hospitals with immunity have less incentive to try new approaches to responding to medical injuries, while physicians may resist transparency because they become the “deep pocket” from which the plaintiff in any lawsuit hopes to collect damages. Massachusetts recently modified its charitable immunity law to increase the limit on nonprofit hospitals’ malpractice liability from $20,000 to $100,000, which is still a small amount.25 In interviews that a group of researchers19 conducted with stakeholders before the increase, the state’s near-total charitable immunity was the most frequently mentioned barrier to the widespread adoption of CRPs. Massachusetts hospitals are moving forward with CRPs. However, it is too early to gauge their or their liability insurers’ willingness to cooperate with physicians in cases of severe injury by making settlement offers above the amounts for which they could be liable in traditional litigation. The principles of the communicationand-resolution process suggest that they should make such offers if an amount greater than the charitable immunity cap is needed to fairly compensate the patient for his or her losses. Sovereign immunity has proved relevant to AHRQ’s demonstration project in Texas, which focuses on care provided by the University of Texas (UT) System, a governmental entity. Texas caps malpractice damages for all providers, but malpractice claims against government entities in Texas are subject to lower caps than other claims—which affects patients treated by UT physicians or at UT-owned hospitals. In addition, malpractice claims against government entities are permitted only in cases of injury caused by the “use or misuse of tangible personal property.”26 Plaintiffs used to circumvent these caps by suing government employees individually, but an amendment adopted in 2003 requires that suits be filed instead against the government unit, even if that entity can invoke full or partial immunity.27 These limitations in Texas law create dilemmas for CRPs. A patient negligently injured by a surgeon’s scalpel (considered to be tangible property) has a limited claim against UT, while a second patient equivalently harmed by a negligently missed diagnosis has no claim at all. It seems unfair for a CRP not to offer the second 14

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patient as much compensation as the first, but doing so runs counter to the intent of state law and arguably wastes taxpayer dollars. To foster the growth of CRPs, lawmakers should consider modifying charitable immunity laws and government tort claims acts to create a more level playing field among health care providers. Apology Protection Laws Physicians worry that statements made during the disclosure process could be introduced as evidence against them in a subsequent malpractice suit. Such statements are often admissible, notwithstanding the general prohibition against the use of hearsay evidence, under exceptions for admissions made by an adversary party, present sense impressions (statements describing how a person perceived an event at the time it occurred), excited utterances, or statements showing the speaker’s emotional state. About three-quarters of the states have adopted apology laws to address this concern,28 but most of the laws protect only the “I’m sorry” element in such statements.6 None protects the full scope of information that patients report needing when an unexpected outcome arises: a preliminary explanation of what happened; an expression of sympathy; an admission of responsibility; and a final analysis of the causes and consequences of the event, with information about remedial actions taken to prevent such incidents in the future.6,29,30 In project team discussions and interviews,19 AHRQ project participants in both New York and Massachusetts cited the absence of apology protections as a potential barrier to adopting CRPs. Although Massachusetts had protected statements of regret since the 1980s, it enacted a stronger law in 2012 after the state’s CRP planning project found that stakeholders perceived this degree of protection to be insufficient. The new law expands protection to all statements and conduct expressing sympathy or acknowledging responsibility—although not to factual matters regarding the medical care provided— unless such evidence is used to rebut a physician or expert who offers contradictory testimony under oath.31 Apology laws are reassuring to providers, especially if the standard of care has been met but an expression of compassion might be misinterpreted as a confession of fault. However, the laws seem more important to the adoption of new CRPs than to the operation of existing ones. Plaintiffs’ attorneys seldom introduce apologies into evidence at trial because doing so would contradict their narrative of uncaring physicians. Moreover, since CRPs work hard to settle claims, cases handled by CRPs very rarely reach juries.When they do, it may be to determine only

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the amount of damages, not whether the provider is at fault. Other laws to encourage out-of-court resolution of claims, such as mediation shield laws (Exhibit 2), also confer some protection. In addition, procedural rules in both state and federal courts declare “compromise offers” inadmissible in subsequent litigation (Exhibit 2). Legal Representation Of Claimants Ensuring that patients have access to lawyers is an unexpectedly important issue for CRPs. The convention in personal injury suits is for plaintiffs to be represented by attorneys who receive a contingent fee of 30–40 percent of any monetary recovery. This fee is justified by the length, complexity, and uncertainty of the litigation process. When CRPs work as they should, they reduce all of these factors. Arguably, then, lawyers representing CRP claimants deserve smaller fees and should be paid on a preset or hourly basis. This might be unpalatable to many attorneys. It might seem that CRPs would function optimally without lawyers, but formal representation may be advisable, at least during the transition from traditional litigation. Some hospitals and liability insurers are accustomed to negotiating with lawyers, are apprehensive about dealing directly with patients, or harbor secret hopes that unrepresented claimants will just go away. In addition, complaints from distressed patients and their families can lack the clarity of a lawyer’s presentation. This has been a challenge in Texas,

where tort reforms have made medical malpractice litigation less profitable for attorneys, and, as a result, injured patients often cannot find private lawyers willing to represent them. Most important, CRP administrators worry about being accused of doing something improper in settling cases directly with patients.32 Patients and families often need guidance during the process, and assistance provided by potential malpractice defendants may be judged untrustworthy. Moreover, a settlement and release from liability in which the patient has not had legal representation are vulnerable to subsequent review for fairness by a court and might be invalidated. CRPs may therefore require assistance from state courts, legislatures, and bar associations to develop low-cost alternatives to traditional legal representation. The AHRQ project in Washington State, for example, assembled a task force of attorneys, patient advocates, and risk management experts to explore models of hourly legal representation for CRP patients.

Health Care Regulatory And Payment Issues Not all legal barriers or facilitators derive from CRPs’ acting as a substitute for conventional medical malpractice litigation. Some important legal issues arise from the ways in which CRPs interact with general regulations concerning

Exhibit 2 Evidentiary Privileges Relevant To The Implementation Of Communication-And-Resolution Programs Type of privilege

Description

Apology protection law

Creates a privilege that eliminates or restricts a plaintiff’s ability to introduce into evidence at trial statements or gestures by the defendant expressing apology, sympathy, or compassion May also apply to statements of fault or explanations of how an injury occurred Protects communications between litigants and their attorneys

Attorney-client privilege Attorney work-product doctrine

Protects materials prepared in anticipation of litigation, including materials prepared by nonattorneys Sharing results of an internal investigation performed in anticipation of litigation waives the privilege

Peer review privilege

Prevents plaintiffs from obtaining or introducing into evidence the proceedings or reports of a medical organization’s peer review committee

Quality improvement privilege

Provides protections akin to peer review protections for the work product of quality improvement, credentialing, and patient-safety bodies Many laws also make evidence that a defendant took steps to correct a dangerous condition inadmissible as proof of negligence

Patient safety work-product privilege

A federal privilege that protects certain documents, data, analyses, and written or oral statements that could improve patient safety and that are assembled or developed with the intent of reporting to a body qualifying as a Patient Safety Organization under federal law A federal and state privilege that prevents parties to litigation from introducing into evidence “compromise offers” (proposed settlements) and related statements Mediation shield laws prevent parties from introducing into evidence statements made during structured mediation proceedings or other forms of alternative dispute resolution

Settlement negotiation and mediation privileges

SOURCE Authors’ analysis.

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Communicating About Errors health care quality and payment for medical services. Malpractice Reporting Requirements Fears regarding the public reporting of CRP payments have surfaced in all of the AHRQ projects. Physicians’ concerns about the spread of negative information about themselves are pervasive. Malpractice data raise particular anxiety among physicians about damage to reputation, difficulties in obtaining or maintaining practice privileges at hospitals, and hikes in malpractice insurance premiums. Federal law requires liability insurers to report malpractice payments made on behalf of health care practitioners to the National Practitioner Data Bank (NPDB),33 a database created in the 1980s to prevent practitioners from concealing their malpractice and disciplinary histories as they moved from one state to another. In many states, boards of medical licensing, departments of health, or both also mandate the reporting of malpractice payments by licensed practitioners or facilities (or, as in New York, of all claims filed against them).34 Unlike the NPDB, some state databases grant online public access to reports indexed by physician name. Moreover, state regulators can limit a provider’s license to practice. For example, the Washington Medical Quality Assurance Commission has adopted a policy requiring sanctions in all reported cases of surgery involving the wrong site, procedure, or patient.35 Staff at existing CRPs asserts that reporting payments to the NPDB makes physicians less willing to participate. For example, Massachusetts providers and insurers interviewed by AHRQ-funded researchers19 in that state identified reporting as a barrier to statewide adoption of CRPs. Physicians worry that CRPs will offer compensation when the physician was not at fault, either as a compassionate gesture or because the hospital or insurer deems it prudent to settle, and that, as a result, physicians will be reported to the NPDB more often. Physicians also object to being named in NPDB reports when the underlying incident was actually caused by a system failure instead of an individual’s error. Some organizations might be able to structure their CRPs to avoid NPDB reporting. For example, CRPs should not require patients to make claims in writing because written demands trigger an obligation to report any subsequent settlement. Similarly, settlements limited to reducing or forgiving medical bills might be construed as a waiver of an outstanding debt and not a reportable “payment.”36 A new law in Oregon, for example, emphasizes oral rather than written communication and declares CRP compensation 16

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to be “not…resulting from a…claim or demand.”37 A strategy sometimes used by health care facilities that insure their physicians is for CRPs to settle claims on behalf of the facility only. No federal report is required when a facility does not identify the individual practitioner or where a practitioner is dismissed from a lawsuit prior to settlement.38 Some academic health centers take this approach when they determine that the injury was caused by faulty systems and not negligent individuals. These strategies for avoiding physician reporting are not the best solution. They will not fit all states and all programs; their compliance with federal law has not been established conclusively; and the public may view them as attempts to sidestep regulations designed to promote patient safety, a perception that undercuts CRPs’ trustworthiness. A better solution lies in addressing the tension between reporting requirements and CRPs at a policy level. The NPDB and many state reporting laws were crafted to detect individual “bad apple” physicians. In contrast, CRPs incorporate error disclosure and compensation into patient-safety practices at the organizational level. As a result, medical care at an institution with a CRP may well be safer than care elsewhere, even if it generates more reportable events. One example of a policy solution to the problem posed by reporting requirement comes from Washington State. The AHRQ project’s leaders are partnering with regulators to implement a pilot program in which state boards will presume that no disciplinary action is needed if a case was handled by the statewide CRP. A panel unconnected with the patient and facility involved in the case will be created, consisting of a patient advocate, a plaintiffs’ attorney, a risk manager, a physician quality expert, and a physician with experience in medical regulation. The panel must certify that all elements of the communication-and-resolution process— early reporting, disclosure, resolution, and learning—have occurred. With respect to the NPDB, some commentators have suggested creating a protected domain for CRP payments in which reports cannot be accessed unless a practitioner accrues multiple reportable incidents.39 This approach is consistent with current credentialing and disciplinary practice, which tends toward forbearance unless negligence is gross or likely to be repeated. Peer Review And Quality Improvement Privileges In addition to helping resolve individual cases, communication-and-resolution processes intersect with other ways in which health care providers oversee professional and

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institutional quality of care. Hospitals typically delegate clinical quality control to a voluntary, self-governing medical staff comprising physicians with practice privileges. State laws encourage physicians to serve in this capacity by making peer reviewers immune from lawsuits, requiring investigations to be kept confidential, and designating records of proceedings as privileged (Exhibit 2). However, the strength of this protection varies. In New York, for example, the law preventing statements made at a peer review proceeding from being used in litigation does not apply to testimony by people who were involved in the event being reviewed. This limitation creates a disincentive for physicians or nurses to cooperate with investigators. Participants in several of the AHRQ projects have told researchers that they worry that a hospital could lose peer review or quality improvement protection by participating in a communication-and-resolution process. This mirrors concerns about preserving the confidentiality of attorney-client communications and work product in litigation—privileges that are recognized in all state and federal courts (Exhibit 2). Loss of peer review protections can occur because a provider organization shares information with patients, provider organizations that are collaboratively handling a CRP case share information with one another, or a CRP shares information with other quality review processes in an organization. The Washington State AHRQ project sought advice from outside counsel and was told to keep CRP procedures separate from peer review and quality improvement processes and to label CRP investigation reports as “prepared in anticipation of litigation.” That advice seems out of step with the openness that is supposed to be a core value of CRPs, but it reflects common fears of spillover liability. In Texas, concerns about the admissibility of CRP documents into evidence in a lawsuit were obviated by the fact that under state law, the peer review privilege is not lost unless waived in writing by the peer review committee, even if patients receive protected information or are included in conversations.40 Nor has peer review been an issue in Illinois, where protections are not lost if information prepared in connection with peer review is disclosed in a setting unrelated to peer review.41 Providers’ professional associations in other states should survey existing laws, including the federal Patient Safety and Quality Improvement Act of 2005, and either work with state lawmakers or agree on a CRP design that retains existing protections. Billing And Payment For Health Care Services Being paid for the services they pro-

vide is an unavoidable concern of both physicians and health care organizations, and CRPs can interfere with provider payment in several ways. These include the right of health insurers to recover the cost of care from damages received in malpractice litigation, the legal implications of waiving fees in cases of acknowledged error, and specific “no-pay policies” recently adopted by payers for “never events”—events such as wrong-site surgery and hospital-acquired infections that indicate substandard care. These issues are complicated and in flux, and a detailed exposition of them is beyond the scope of this article. However, they may prove to be critical to the success of CRPs over the long term. Medical expenses arising from injury represent a significant portion of damages in malpractice litigation, and therefore of compensation paid by a CRP (or of forgone clinical revenue). Private health insurers that cover the patient’s medical expenses have a legal right, called subrogation, to recover those amounts from any settlement or award the patient may receive. The Centers for Medicare and Medicaid Services (CMS) and state Medicaid programs also can recapture payments they made to providers relating to injuries that result in a malpractice settlement.42 This process is called “asserting a lien.” CMS’s use of liens is rapidly increasing and is seldom sensitive to the context of individual cases. For example, CMS now requires providers to report all payments made to beneficiaries in connection with medical injuries.43 Aggressive recoupment efforts by payers make early, reasonable settlement offers less attractive. Many cases that are appropriate for compensation by a CRP would not result in litigation in the absence of a CRP—for example, because damages are too low to interest a plaintiffs’ attorney or because the patient seems disinclined to undertake the arduous task of suing. In these cases, providers’ ability to be paid for services related to or necessitated by a medical injury (assuming it is not a specified no-pay event) would not typically be in jeopardy. Because CRP settlements can mean decreased reimbursement, modifying subrogation and recoupment rights and practices might facilitate the growth of CRPs. A related issue involves providers that waive bills for medical care—an approach that is very common in successful CRPs. Because being billed for care following a medical error can anger patients and families, holding or waiving those bills can increase the process’s chance of success. The Seven Pillars program developed by the AHRQ grantee in Illinois, for example, routinely waives all hospital and professional fees for inappropriate care and additional services J a n u a ry 2 0 1 4

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Communicating About Errors necessitated by inappropriate care. Waiving bills makes subrogation moot but can introduce complexities concerning collateralsource offsets. Collateral-source offsets are a statutory modification of the traditional legal rule that plaintiffs can recover the full cost of medical care necessitated by their injury, whether or not those costs have already been paid by their health insurance. Two-thirds of the states now require or allow any jury award to be reduced by the amount of payments that the plaintiff receives from insurance or other “collateral sources.” In the remaining states, however, plaintiffs often present list prices for medical services to the jury regardless of what they actually paid. A few states, such as Wisconsin44 and Wyoming,45 even allow plaintiffs to receive the reasonable value of medical care for which nobody was charged anything. State law should permit recovery of only those medical expenses that patients actually pay. Finally, as noted above, CMS and several priThis project was supported by the Agency for Healthcare Research and Quality (Grant Nos. R18HS019505, R18HS019531-01, R18HS019565-01, R18HSO19608-01, R18HS019561-01, and R21HS19537-01). The content is

vate insurers have recently adopted policies of nonpayment for “never events.” As currently enforced, these policies seem not to burden CRPs unduly. However, they could do so in the future if payers begin considering an error disclosure, apology, or compensation offer made in a CRP to be a trigger for designating an event as a nopay one.

Conclusion New generations of health professionals are embracing honesty and transparency regarding medical errors, and health care organizations are implementing programs to engage patients and their families and to resolve disputes expeditiously. But health care providers are a diverse group, and the transition to communicationand-resolution principles and practices may be bumpy. Policy makers can help this promising approach succeed by creating a maximally supportive legal and regulatory environment. ▪

solely the responsibility of the authors and does not necessarily represent the official views of the Agency for Healthcare Research and Quality or the New York State Department of Health. The authors are grateful to the

members of the Disclosure-andResolution Program Consortium for contributing to the ideas discussed in this article.

NOTES 1 Mello MM, Gallagher TH. Malpractice reform—opportunities for leadership by health care institutions and liability insurers. N Engl J Med. 2010;362(15):1353–6. 2 Wu AW, Cavanaugh TA, McPhee SJ, Lo B, Micco GP. To tell the truth: ethical and practical issues in disclosing medical mistakes to patients. J Gen Intern Med. 1997;12(12): 770–5. 3 Calman NS. No one needs to know. Health Aff (Millwood). 2001;20(2): 243–9. 4 Kohn LT, Corrigan JM, Donaldson MS, editors. To err is human: building a safer health system. Washington (DC): National Academies Press; 2000. 5 Agency for Healthcare Research and Quality. Patient safety primers: error disclosure [Internet]. Rockville (MD): AHRQ; [last updated 2012 Oct; cited 2013 Dec 4]. Available from: http://psnet.ahrq.gov/ primer.aspx?primerID=2 6 Mastroianni AC, Mello MM, Sommer S, Hardy M, Gallagher TH. The flaws in state “apology” and “disclosure” laws dilute their intended impact on malpractice suits. Health Aff (Millwood). 2010;29(9): 1611–9. 7 Truog RD, Browning DM, Johnson

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