Vaccinating your facility against the Y2K bug.

LIMITING YOUR LEGAL LIABILITY

There's still time - but have you taken these steps yet?

It's New Year's Eve and the new millennium is bearing down on you and your facility. The weather is bad outside, staff have called in sick, families are being demanding, and you were supposed to have left the building two hours ago. You ask yourself if it can get any worse.

Of course the answer is yes. The facility elevator stops between floors, IV pumps stop for no apparent reason, heart monitor alarms go off without cause and the facility's fiscal intermediary's computer just began rejecting all of your Medicare claims. Physicians can't be contacted for emergencies, the pharmacy is not delivering all of the necessary prescriptions, and you still haven't bought your last holiday gift.

Could this nightmare happen? Maybe. Unfortunately, no one knows the full extent of the crisis that Y2K could bring us. It could be the biggest nonevent of the century, or it could test the nation's healthcare infrastructure. The answer probably lies somewhere between these two extremes.

Do nursing home and long-term care facility operators need to be concerned about Y2K? If recent data concerning the industry's preparedness are any indication, the answer is a resounding yes. A recent study by the Office of the Inspector General found that the readiness of nearly 80% of long-term care facilities to deal with Y2K issues is unknown. While this lack of knowledge of the industry's readiness does not guarantee a crisis, other figures indicate that providers should be concerned. A recent survey conducted by Rx2000 found that 62% of all healthcare organizations nationwide have already experienced Y2K problems. A recent Senate report found that 60% of hospitals and 90% of physicians had done nothing to prepare for Y2K issues.

The lack of interest on the part of healthcare providers is certainly not caused by a lack of information. The media, consultants and Congress have been warning of a coming crisis in healthcare for the past 18 months. Even the Health Care Financing Administration (HCFA) went so far as to send 1.1 million letters to hospitals, doctors, nursing homes and other providers regarding Y2K issues. HCFA also sponsored several Y2K conferences throughout the country and set up an 800 hotline to provide advice on fixing computer systems. Unfortunately, only 2% of the estimated 10,000 providers invited to the conferences attended (at a recent conference in Las Vegas, only 25 healthcare providers attended, with only one long-term care provider among them), and fewer than 1% of providers have actually used the hotline.

Perhaps a crisis-management mentality prevents providers from taking the Y2K threat too seriously - or it could be that providers are so used to getting bad news from the federal government about programs that end up being implemented two years late that no provider can believe that Y2K will show up on schedule. Despite providers' malaise, HCFA has taken significant steps to address the Y2K issue, including spending more than $200 million to test mission-critical systems, both in-house and the intermediaries'. In one test of an intermediary and more than 400 providers, HCFA encountered problems with 28% of the claims. HCFA now claims that it has completed its work and everything looks fine. Joseph Broseker, HCFA's Y2K coordinator, recently stated "If providers get claims to us, they will get paid." Broseker also stated that claims processing "should be no worse than what you have normally experienced over the years." So if HCFA has its house in order, how does yours look?

While January 1, 2000, is right around the corner, there are still many steps you can take to reduce your liability and eliminate potential headaches. Your first responsibility is to identify where potential problems can arise. For long-term care providers, these problems fall into three areas: facility infrastructure, patient care and reimbursement. These areas overlap and impact each other and, just as a problem in one area will negatively affect another, a contingency plan in one area will often benefit the others.

Facility Infrastructure. One scenario that consultants and analysts have suggested as a possibility is a loss of power and support services. Is your facility prepared to operate without outside power, phones or other support? For many facilities a loss of power is the easiest to address, since most facilities are required to maintain an emergency generator that must be tested regularly. A full review of your emergency power capabilities now might save you some pandemonium in January. Key questions providers should ask are:

If your facility has an emergency generator, what systems are tied to it?

Are all critical support systems tied into the emergency power source, or is a reconfiguration necessary?

What devices or equipment must continue to receive power? All staff should be aware of this critical equipment.

Do you have cellular phones in the facility in case your phone system is knocked out? Would staff know who has such a backup?

Do physicians and other providers know the cell phone number in case communication becomes absolutely necessary?

Can your dietary department continue to provide adequate nutrition under emergency power? If not, what changes do you need to make to ensure that they have that capability?

Conducting emergency power drills with your staff will help you identify additional issues and problems to address. These issues can then be handled through your contingency plan. All staff should be familiar with the contingency plan.

Patient Care. Patient care will be the most important issue providers will face when the Y2K bug hits. Not only can problems with the infrastructure affect patient care, but Y2K glitches with outside vendors might also impact resident care. Problems with your pharmacy's computer can result in medication issues. The failure of clinical lab equipment can result in improper test results. Failures of some equipment have already been reported, including the failure of a ventilator, which resulted in the death of a resident. Providers need to review all of the components in the patient care delivery system to identify potential problem areas. Vendors should be contacted to ensure that they will be able to deliver goods and services uninterrupted.

Orders should be entered and clarified in advance of New Year's Eve. Because outside offices and services might also experience problems, appointments should be scheduled around this period. Facilities should ensure that alternative manual equipment is available in case of equipment failure (e.g., IV systems, infusion pumps). Issues regarding patient care should be integrated into the contingency plan to ensure that patient needs will be met in the event of an emergency.

Providers should expect HCFA and state survey teams to examine facilities' preparations for Y2K issues. And remember, facilities with a comprehensive plan will have a stronger defense against malpractice claims relating to poor care.

Reimbursement. Medicare and Medicaid reimbursement are particularly susceptible to Y2K problems because of their heavy reliance on computers for the filing and processing of claims. Even if HCFA's system is ready to process claims on January 1, 2000, many providers' systems might not be. Providers should test their computer systems to ensure that they can process the new eight-digit dates required by Medicare, as well as properly transmit vital billing information, such as MDS data. Billing staff also need to be aware of how to handle billing emergencies, including switching to paper documentation in the event of a computer failure.

Failure to properly document the justification for claims could result in either excessive delays or nonpayment. Providers should also document all conversations with representatives of fiscal intermediaries, Medicaid representatives and other payer sources.

14 Steps to Reduce Liability

1. Have a contingency plan in place. The plan should address loss of power and standard telephone lines. Conduct a facility drill under your contingency plan. Make sure your entire staff is familiar with the contingency plan.

2. Have all physician orders clarified and entered into the patients' charts prior to December 31, 1999.

3. Avoid scheduling outside service appointments from December 28, 1999, through January 7, 1999, if possible.

4. Check with the facility vendors to see if they are Y2K-compliant. Confirm that they guarantee continued delivery of services (payroll, linens, therapy, medications, etc.). Consider requesting additional stock to cover a three-week period. Have a list of backup vendors prepared in case of an emergency.

5. Ensure that you have sufficient medications for your residents.

6. Check your software. Have data input with eight-digit dates. Some computers will automatically default 2000 dates to 1900. Identify these issues and contact the vendor for possible solutions.

7. Back up your electronic information in early December. If your system seriously malfunctions, this backup could be critical to rebuilding your system.

8. Check FDA's Web site on medical devices at www.fda.gov.cdrh/yr2000/year2000.html to determine if your facility utilizes devices that might be noncompliant. Repair or replace those devices that are noncompliant.

9. Review your insurance policies regarding general liability and interruption of business (editor's note: see sidebar, p. 42). Note any requirements regarding the submission of claims. Report all potential claims in accordance with the policy.

10. Be careful of the Y2K assurances you give other parties. Promising full compliance might result in a lawsuit if things go wrong. You could be better off letting others know what steps you have taken to ensure compliance and what contingency plans you have in place to deal with emergencies.

11. Document all of your efforts at addressing Y2K issues. Evidence of these measures can later be used in a lawsuit to show that the facility was taking reasonable steps to address the issues.

12. Be prepared to switch to a paper-and-pen system, at least for a short time. Have a system in place for documenting claims. While HCFA assures providers that the electronic submission of claims will be uninterrupted, providers should be prepared for the worst.

13. Document all problems that arise as a result of Y2K issues. Documentation should include the nature of the problem, whether it involved third parties, steps taken to address the problem and the associated costs. This documentation might be critical for reconstructing claims or could serve as the basis of a lawsuit. Train all of your staff regarding the proper documentation of Y2K issues.

14. Consider having extra staff available to deal with potential Y2K issues.

Other Web sites of interest

U.S. special Senate Committee on the Y2K technology problem:

www.senate.gov/y2k

The President's Council on Year 2000 Conversion:

www.y2k.gov

HCFA's Hotline for Y2K issues

[phone]

RELATED ARTICLE: Y2K and Insurance

by Lon G. Grayson

Most of us have been listening to and reading about the Y2K issue. Prudent business people everywhere are testing and retesting computer hardware and software to ascertain whether their companies will be able to function properly on January 1, 2000. Then why are we still so concerned? The answer is because no one really knows for certain exactly which "systems" are dependent on computer chips, and how these chips will react to the new millennium.

The insurance industry has also been busy. Not only do insurance companies have to make sure their systems are compliant, but they have to try to anticipate the potential financial losses they would incur if they provided coverage to their customers. After much study, the insurance companies have apparently decided that they cannot predict the potential downside to providing coverage, so most have been issuing endorsements to existing policies that specifically exclude coverage for claims relating to Y2K issues.

While there have been a few insurance companies that will not exclude coverage, the premiums they want to charge for the protection are unaffordable for most businesses.

The only exception to the Y2K exclusions appears to be the Directors & Officers (D&O) policy. D&O insurance policies protect directors, officers and owners for "wrongful acts" that cause financial loss to their company or to others'. D&O underwriters are requiring clients to complete a Y2K questionnaire, and if the underwriter feels the client has an internal Y2K policy and is currently compliant, or will be compliant before the year's end, the insurance company will not endorse an exclusion.

This means if owners, officers and directors (and, in many cases, all employees) are sued because their company wasn't Y2K-compliant, and because this lack of compliance subsequently resulted in a financial loss, there might be coverage under the D&O policy. There are, however, exclusions restricting the types of losses the D&O policy will respond to.

The moral of the story is, if business people are taking the Y2K-compliance issue lightly, expecting the insurance industry to run to their aid if something goes wrong, they risk severe disappointment come January 1.

Lon G. Grayson is vice-president of operations at Hirsch Wolf & Co., Inc., Brooklyn, New York. For more information, phone [phone].

Matthew Murer is an attorney with the firm of Duane, Morris & Heckscher, Chicago, Illinois. Contact Mr. Murer at [phone]; fax [phone]; or email at: [e-mail].