The Long-Term Care Facility Improvement Act
Posted July 30, 2001
Out of the 67 bills filed relating to nursing homes, 28 passed. The most significant piece of legislation is Senate Bill 1839.
Senate Bill 1839 was named the Long-Term Care Facility Improvement Act. It incorporated much of other previously filed legislation into one bill. We are providing a summary of this bill for your convenience.
Article 2 — Exemplary Damages. If exemplary damages are awarded under Chapter 41, Civil Practices and Remedies Code against an institution or an officer, employee, or agent of an institution, the court notifies TDHS. TDHS will maintain the information contained in the notice in the records of the department relating to the history of the institution. This section is effective September 1, 2001 and applies to awards of exemplary damages in a cause of action that accrues on or after September 1, 2001.
Article 3 — Admissibility of Evidence. Surveys, complaint investigations, incident investigations and survey reports may be introduced into evidence in a civil action, enforcement action, or related proceeding if the record is admissible under the Texas Rules of Evidence. A surveyor or investigator may testify in a civil action as to observations, factual findings, conclusions, or violations of requirements for licensure or for certification that were made in the discharge of official duties if the testimony is admissible under the Texas Rules of Evidence, http://www.courts.state.tx.us/publicinfo/TRE/Toc.htm. This section applies to a civil action, enforcement action or proceeding that is commenced on or after the effective date of this act. Effective September 1, 2001.
Article 4 — Data Reporting by Liability Insurers. Insurance companies who write policies to insure nursing facilities in Texas must provide certain information to the Commissioner of Insurance. The Commissioner shall assemble information and take measures to assess and evaluate changes in the marketplace resulting from the implementation of other measures contained in the bill. Effective September 1, 2001.
Article 5 — Availability of and Coverage Under Certain Professional Liability Insurance. For-profit nursing homes are now governed by Art. 5.15-1. Professional Liability Insurance for Physicians and Health Care Providers. The policy shall not cover exemplary damages.
The commissioner of insurance shall adopt best practices for risk management and loss control that may be used by for-profit or not-for-profit nursing homes. Insurance companies may consider whether the nursing home adopts and implements the best practices in determining rates for insurance. In developing or amending best practices for nursing homes, the Commissioner of Insurance shall consult with HHSC and a task force appointed by the Commissioner composed of insurance companies, nursing homes, Texas Medical Liability Insurance Underwriting Association (TMLIUA), and consumers. The best practices established for risk management and loss control do not establish standards of care for nursing homes applicable in a civil action against a nursing home.
The rates applicable to professional liability insurance provided by the association that cover nursing homes that are not-for profit must reflect a discount of 30 percent from the rates for the same coverage provided to others in the same category of insureds.
A separate stabilization reserve fund is created for not-for-profit and for-profit nursing homes, separate from the physicians and health care providers fund. Policy holders shall pay a fee annually to the stabilization reserve fund. Collection of the reserve fund charge shall continue only until the net balance is not less than the projected sum of premiums for nursing homes to be written in the year following the valuation date.
Exemplary damages are not covered by a policy written by the Association (TMLIUA).
Bonds shall be issued to provide a method to raise funds to provide professional liability insurance through the association for nursing homes. Bonds are paid by a surcharge fee assessed against the insureds and the association. Applies to insurance policies delivered, issued for delivery or renewed on or after January 1, 2002.
Article 6 — Mandatory Liability Insurance for Nursing Institutions. To hold a nursing facility license, an institution must maintain professional liability insurance coverage against the liability of the facility for a health care liability claim. The minimum amount of insurance shall be $1 million per occurrence and $3 million aggregate. The cost of maintaining this insurance is an allowable cost for reimbursement under the state Medicaid program. The policy written must be on a claims-made basis. Effective September 1, 2001.
Article 7 — Training and Continuing Education Related to Certain Long Term Care Facilities. TDHS shall require surveyors to complete a basic training program before the surveyor inspects, surveys or investigates a facility. The training must include observation of the operations of a long term care facility unrelated to the survey process for a minimum of 10 working days within a 14-day period. The Department shall semiannually provide training for surveyors and providers on subjects that address at least one of the 10 most common violations. A surveyor must receive a minimum of 50 percent of the professional’s required continuing education credits in gerontology or care for individuals with cognitive or physical disabilities, as appropriate.
The Commission shall adopt procedures to review (1) citations or penalties considering the number of violations by geographic region, the patterns of violations in each region and the outcomes following the assessment of a penalty or citation and (2) the performance of duties by surveyors relating to complaints received by the commission or any standards or rules violated by surveyors. (Rather than set up a separate internal affairs department within HHSC to report surveyor abuse, rules shall be adopted setting out procedures for HHSC to receive and review complaints against surveyors.)
The IDR process shall be completed at HHSC, and cannot be delegated. This means a third party (HHSC) will review all IDR requests. Rules shall be developed by HHSC for implementing this process. HHSC is also directed to develop rules to adjudicate claims in contested cases including those unresolved by the informal dispute resolution process. (It appears that if a facility does not receive the necessary changes to a survey as a result of the IDR process, now at HHSC, there will be a second process set up to resolve claims outside of SOAH. For this reason, the IDR process becomes even more significant and possibly more cost effective for clients.)
TDHS shall establish an Early Warning System to detect conditions that could be detrimental to the health, safety and welfare of residents. The early warning system shall include analysis of financial and quality-of-care indicators that predict the need for the Department to act. There shall be regional offices with quality-of-care monitors to monitor facilities including nights, evenings, weekends and holidays. Monitors shall not be part of the survey team and may not interfere with surveyors’ duties. Monitors shall provide their findings both orally and in writing and may recommend to the facility procedural and policy changes and staff training to improve the care of facility residents. Monitors shall report conditions that create an immediate threat to the health or safety of a resident to the regional office supervisor for action.
The Department shall create a rapid response team to visit facilities identified through the early warning system. The rapid response team may not help a long-term care facility before the 60th day after an exit interview following an annual or follow-up survey. Effective January 1, 2002.
(The bill does not clearly define how the Quality of Care Monitors or the Rapid Response Team shall function, and for what purposes. This system is left up to TDHS to develop by rule.)
Article 8 — Amelioration of Violations. The Department is required to offer amelioration to facilities if the Department determines that the violation does not constitute immediate jeopardy. Amelioration does not apply when the facility is given a right to correct the deficiency before administrative penalties are imposed. Amelioration is offered to a facility not later than the 10th day after the date the facility receives final notification of assessment of administrative penalties that is sent to the facility after an IDR process but before an administrative hearing. The facility has 45 days to file an amelioration plan with the agency. In submitting the plan, the facility agrees to waive their right to an administrative hearing. The Department may require an amelioration plan propose changes that would result in conditions that exceed the requirements of the rules under 242 Health and Safety Code. The Department shall approve or deny an amelioration plan not later than the 45th day after the date the Department receives the plan. On approval of a plan, the Department shall deny a pending request for a hearing.
The entire amount of the administrative penalty can be ameliorated. Amelioration does not apply to administrative changes. The Department cannot offer amelioration to a facility more than three times in a two-year period or more than one time in a two-year period for the same or similar violation. Effective September 1, 2001.
Article 9 — Quality Assurance Fee. A quality assurance fee shall be imposed on a licensed facility. The fee is an amount not more than 6% of the facility’s total annual gross receipts in the state. The fee is subject to a prospective adjustment as necessary. The fee is payable monthly. The amount of the fee is determined using patient days and gross receipts reported to the Department and covering a period of at least 6 months. The fee is an allowable cost for reimbursement under the Medicaid program.
Each facility shall file not later than the 10th day after the last day of a month a report with HHSC or TDHS stating the total patient days for the month, and not later than the 30th day after the last day of the month, pay the quality assurance fee. Failure to pay the fee may result in an administrative penalty not to exceed one-half of the amount of the outstanding fee or $20,000, whichever is greater. The quality assurance fee, in combination with federal matching funds, shall support an increase in Medicaid reimbursement for facilities. Effective September 1, 2001.
Article 10 — Rates Paid for Nursing Home Services. HHSC shall ensure that the rules governing the determination of rates paid for nursing home services improve the quality of care by providing incentives for increasing direct care staff and direct care wages and benefits and, if appropriated funds are available, providing incentives that incorporate and use a quality of care index, a customer satisfaction index and a resolved complaints index.
Effective September 1, 2003.
All information in this article is informational only and is not legal advice. Should you have any questions or a situation requiring advice, please contact an attorney.
Copyright 2004 by Garlo Ward, P.C., all rights reserved
Austin, Texas 78752-3714 USA