This Policy Information Notice (PIN) supplements existing
guidance of the Bureau of Primary Health Care (BPHC)
regarding malpractice liability protection by the Federal
Tort Claims Act (FTCA) for sections 329, 330, 340, and 340A
grantees (termed "health centers" in this document). This
guidance also applies to all health centers funded under
section 330, as amended by the Health Centers Consolidation
Act of 1996 (Pub.L. 104-299) and has been reviewed by the
HHS Office of the General Counsel and the Department of
Justice.
The Federally-Supported Health Centers Assistance Act
(FSHCAA) of 1992 and the FSHCAA of 1995 (Pub.L. 102-501 and
Pub.L. 104-73, respectively) extended the availability of
malpractice liability coverage under the FTCA to health
centers and their officers, board members, employees, and
certain contractors since January 1, 1993. Periodically,
clarification of BPHC policies and procedures is needed to
assist health centers in the implementation of the program.
Only acts and omissions related to activities within the
scope of the approved Federal project, as defined in the
Notice of Grant Award are covered. BPHC PIN 96-14, June 3,
1996, outlines the core elements of the scope of the project
and the procedures for updating the scope of the project.
An accurate account of the scope is important since the HHS
Office of the General Counsel or Department of Justice may request a copy of the grant application or other pertinent
documentation to verify that a particular activity was
within the scope of the project.
BPHC PIN 96-7, issued April 23, 1996, stated that dual
malpractice liability coverage (both FTCA and private
malpractice insurance covering the same activities) would
not normally be an allowable cost to the PHS grant. The
BPHC acknowledged that there may be situations where
temporary dual coverage during a phase-in period would be
financially beneficial to the health center and the Federal
Government. For example, dropping private policies for one
half the physicians 1 year and the remainder the next, may
be necessary if the cost of tail insurance is too high for
the health center to pay all in one year. In this case, by
phasing-in its providers, the health center receives some
savings the first year and realizes full savings once all
providers are under the FTCA.
However, the BPHC is concerned that some deemed health
centers may still be at a point of deciding whether FTCA
coverage would be beneficial to the health center. More
than 6 months has elapsed since BPHC initially notified
grantees regarding the need to review their malpractice
liability protection needs and determine the best means to
satisfy that requirement. Dual coverage does not allow
health centers to reduce the expenditure for malpractice
insurance and use the saving for health services delivery.
Therefore, deemed health centers must terminate any private
malpractice insurance policies which create dual coverage by
February 28, 1997. If the health center is unable to make a
decision or obtain any required gap or wrap-around insurance
by this deadline, the health center should request
withdrawal of their deemed status and consider reapplication
at a later date. Of course, a malpractice claim based on
acts or omissions that occurred during the time period the
health center was deemed remain covered by FTCA.
Any deemed health center that requires continued partial
dual coverage due to phase-in or other issues, shall request
approval in writing, with adequate justification, to the
Director, BPHC, through the Regional FTCA Coordinator at its
respective HRSA Field Office in order to avoid a
disallowance.
Deemed health centers interested in maintaining FTCA
coverage will be required to re-apply using the application in PIN 96-7, issued April 23, 1996, at the end of their
project period (i.e., submitted with the competitive PHS
grant application) starting in FY 1998.
The BPHC receives numerous requests for verification of
coverage under the FTCA for individual health care
practitioners. Since FTCA coverage is conveyed to the
individual practitioner by virtue of employment or certain
contractual relationship with the health center, the name of
the health center would expedite these requests. The health
care practitioner should write the name of their employing
health center on the "Release of Information" form provided
by the hospital, managed care organization, etc.
The BPHC is aware that many managed care organizations,
State/local governmental entities, etc., insist upon "hold
harmless" clauses in contracts with potential providers.
However, there is no statutory basis for extending FTCA
coverage to those other entities in such situations. Health
centers should be very cautious in entering into such
agreements. Section 7 of the FSHCAA of 1995 which requires,
under penalty of losing Medicare and Medicaid reimbursement,
managed care plans to accept FTCA as meeting whatever
malpractice coverage requirements such plans require, should
assist the health center in resolving any such matters.
On-going risk management is essential to the provision of
quality health care services. Private malpractice insurance
companies have traditionally provided risk management
services ranging from minimal to comprehensive. As deemed
health centers have migrated to FTCA coverage as the means
of malpractice liability protection, there has been concern
of the potential loss of risk management services. The BPHC
is committed to assuring that health centers continue to
have the availability of risk management services. However,
the BPHC is unable to bear the full burden of cost and
expects, as health centers begin to realize savings in
malpractice insurance costs due to coverage under the FTCA,
re-investment of some of the savings to target risk
reduction.
Although the BPHC is aware that the majority of private
malpractice insurers are bundling risk management services
with "gap or wrap-around" policies sold to health centers as
a companion to FTCA coverage, the following are some
specific steps being taken by BPHC:
- The BPHC is entering into an Interagency Agreement with
the Armed Forces Institute of Pathology, Division of
Legal Medicine, for the dissemination to all health
centers of their periodical named the "Open File".
This document, which is published once a year, is
devoted solely to the discussion of risk management
issues and offers five credits of continuing medical
education.
- Individually tailored risk management assessment and
assistance is available, on a limited basis, through
the BPHC Technical Assistance program. Specific
requests should be relayed to the Division of Health Service Delivery in the appropriate HRSA Field Office.
- The BPHC has provided funding to the National
Association of Community Health Centers to provide
health centers with: (1) risk management training and
education and (2) limited risk management consultation
services via telephone.
- Support, as an allowable cost, the purchase of separate
private risk management services on the open market by
health centers.
Issued January 13, 1997 - Last reviewed November 22, 2006 |