Epidural denial leaves hospital at risk for lawsuits, bad publicity

Anesthesiologist charged with denying pain relief to poor

A California hospital is under fire for an alleged practice that almost everyone says sounds abhorrent - denying epidural pain relief to mothers in labor unless they could produce a cash payment up front. And even though one doctor is at the forefront of the criticism, risk management experts say the hospital is facing significant exposure from the charges.

The charges should remind risk managers that there may be things going on in your facilities you would find shocking and assume are prohibited by hospital policy and medical ethics. If you don't take the necessary steps to find and stop those activities, you may only find out about them when an attorney hands you a lawsuit or government investigators come and ask for your records.

In the California case, the hospital is exposed not only to numerous lawsuits from patients but also to regulatory consequences and intensely negative publicity, says Murray Edge, ARM, BBA, BA, CSSD, director of risk management at University of Tennessee Systems in Knoxville and a past president of the American Society for Healthcare Risk Management. Edge says he would be appalled to hear of such a practice at his own facilities, both for humanitarian reasons and because of the liability exposure. "I don't want to say this is fraud, but in the back of my mind, I'm not sure that it's not," he says. "I think it's awful. It smacks of fraud, along with lots of questions about morals and ethics."

Federal, state, and county officials are investigating the childbirth practices at Northridge (CA) Hospital Medical Center, where two mothers have told the media they were denied epidural pain blocks during childbirth because they could not come up with the $400 in cash demanded by the anesthesiologist. Hospital President Roger Seaver released a statement recently confirming the hospital had been charging Medi-Cal patients extra for epidurals to make up for low reimbursement from the state agency that pays for medical treatment for the poor. The hospital recently ended the practice.

But in addition to the hospital policy of seeking that payment, there are charges that anesthesiologist Lori Berke, MD, refused epidurals for at least seven patients when they did not have the $400 payment in cash. Patients reportedly begged for epidurals during childbirth and offered every form of payment besides cash, but Berke refused to provide the pain relief.

The hospital and the anesthesiologist already are being sued by at least one patient, Ozzie Chavez, who is seeking an unspecified amount for pain and suffering. Chavez claims in court documents that she offered Berke a credit card, a check, and a Western Union confirmation number for cash, but the anesthesiologist refused and said she would only accept cash.

The lawsuit alleges the hospital and the anesthesiologist had two standards of care, one for poor patients and one for other patients. Medi-Cal pays $57 for the initial epidural and $14 for each 15 minutes the anesthesiologist must monitor the patient. Sources tell Healthcare Risk Management that private third-party payers reimburse $175 to $300 for the initial epidural and then $35 to $60 for each 15 minutes of observation. The California Department of Health, which is responsible for overseeing the Medi-Cal program, has issued a statement that it is illegal for hospitals or doctors to demand payment from Medi-Cal patients beyond the Medi-Cal scale.

Because of the Chavez lawsuit, Northridge Hospital Medical Center is under fire from many directions. Los Angeles County is investigating the hospital's admitted practice of charging Medi-Cal patients for epidurals, and the county is expanding its investigation to include other hospitals in the Los Angeles area. State Medi-Cal officials also have indicated they will be examining Northridge Hospital Medical Center's records to see how many patients were affected by the policy of demanding additional payment.

The federal Health Care Financing Administra tion (HCFA) will work closely with state and county officials to determine whether any federal rules were broken, according to HCFA spokesman Chris Peacock. In particular, HCFA investigators are interested in whether the epidural policy amounted to "patient dumping," a strictly prohibited practice of turning down patients in need of medical care but unable to pay. Peacock says the policy also could jeopardize federal Medicaid funds, which account for about half the funds used for Medi-Cal.

In addition, the California Medical Associa tion's chief executive, Jack Lewin, MD, says the practice is "unethical" and that doctors frustrated with Medi-Cal's low reimbursement rate should take up the matter with the Medi-Cal rather than making patients suffer.

HRM placed several calls to the attorneys representing Berke and Chavez, as well as a spokesman for the hospital. None returned the calls.

Hospital may be liable

The hospital has admitted publicly it had a policy of charging Medi-Cal patients more for epidurals than other patients, but Edge says there would be tremendous exposure for the facility even if this were a case of anesthesiologists demanding payment without the hospital's knowledge. Juries and regulators always will see the hospital as responsible for what goes on within its walls, he says. "Wherever there is exposure for the physician, there is exposure for the facility. The hospital does have a dog in that hunt. Those are the hospital's patients, and it does have a responsibility for their well-being and care."

Edge sees several troubling aspects to the way the California case is unfolding. First, he questions how the hospital could have a policy demanding additional payment from Medi-Cal patients, when such a policy would almost always be considered illegal. "When you sign on to any reimbursement arrangement, you accept their reimbursement procedure and methods. I don't know of any doctor who says, `the procedure is worth $100, and I only get $30 reimbursement, so I want the rest from you,'" Edge says. "Something like that would bother me to no end. The same issue applies whether you're talking about Medicare, Medicaid, or a state program or a managed care program."

One possible explanation, Edge says, is that the hospital and anesthesiologists considered an epidural to be optional pain relief, not a procedure that was medically necessary. That argument might make it seem more plausible to deny epidurals to those who couldn't pay, but Edge says it is a weak argument at best. Most providers would consider an epidural to be medically necessary care, and basing the decision on ability to pay undercuts that theory. A record of declaring epidurals "elective" more often for poor patients could be damaging, Edge notes.

Charges for `elective epidurals'?

The exact billing arrangements are in dispute now, partly because the participants have clammed up in response to the pending litigation. An attorney representing the anesthesiology group at the hospital says the incident has been distorted in news reports. The doctors did not charge extra for epidurals performed on Medi-Cal patients, according to Barry Silberman, JD, an attorney in Beverly Hills. He says the doctors used to charge Medi-Cal patients separately for epidurals that were not medically necessary. Those procedures were not charged to Medi-Cal at all, so there was no attempt to make up the difference between Medi-Cal reimbursement and what the anesthesiologist thought was fair payment. If the epidural was necessary for the health of the mother, the procedure was covered by Medi-Cal, and the anesthesiologists accepted the low reimbursement rate, he says.

The anesthesiologists discontinued that practice immediately after Chavez gave birth, saying it was too difficult to manage the two-tiered billing system. Silberman says there was "nothing illegal or in any sense improper" about charging patients for an elective procedure not covered by Medi-Cal. He says he has received calls from attorneys and health professionals all over the country who are concerned that their own staff are involved in similar arrangements, all the result of low reimbursement rates for epidurals.

One risk management expert agrees that risk managers nationwide are likely to encounter this sort of problem. With payers squeezing providers in every possible way, many providers are responding with arrangements such as this one that may be dancing on the edge of impropriety, says William Rogers, CPCU, ARM, CSP, DASHRM, manager of risk management services with The Gleason Agency in Johnstown, PA.

"We're going to see more of this kind of thing instead of less," Rogers says. "I'd want to find out if this sort of thing is going on in my facility. You can very easily see that it could be going on for years and you wouldn't know it."

Rogers and Edge both urge risk managers to take a close look at what is going on within their facilities. If a questionable payment policy such as this one is found, it is the risk manager's responsibility to get the ball rolling on an investigation that will determine how to respond. First, you should determine if any laws or regulations are being violated. As with the California case, the answer might not be clear. Then you need to determine whether the policy violates medical ethics and whether patient care is affected.

The hospital is most at risk when it actively supports such a questionable policy, as North ridge Hospital Medical Center did, but Edge says the hospital still could be liable even if administrators had no knowledge of physicians charging patients an additional fee beyond the standard reimbursement or denying a service that might be considered necessary treatment. Hospital staff should be encouraged to report such overcharging or discrimination through the compliance hotline or by bringing it to the attention of supervisors, he says.

Once administrators receive word of such activity, quick action is the only thing that might deflect some of the potential liability. Rogers notes that the risk manager's investigation might determine the policy does not violate any laws, regulations, or medical ethics or adversely affect patient care. In that case, he says the question becomes less of a risk management issue and more of a business decision for the hospital, focusing largely on the possibility of bad publicity.

"As risk manager at a hospital, I would say maybe this policy isn't strictly illegal or unethical, but boy, if this gets out in the court of public opinion, we're going to lose. You just can't put a positive spin on this publicity," Rogers says. "At that point, you've probably done your job as risk manager, and then your chief executive has to determine whether to take that risk."

He also points out that your malpractice insurance might not cover any resulting lawsuits if the allegation were not considered malpractice. Treatment decisions based on ability to pay could be considered civil rights violations, for instance. That also should affect your decision.

Edge says he would gauge his response by how badly the practice seemed to reflect on the hospital. If it were anything like the California epidural policy, he says he would meet with the hospital's chief executive and chief of staff to determine exactly what was going on and how to end it immediately. And he says there's no doubt he would end such a policy immediately.

"How far could you let this go? Would you let your staff say that managed care only reimburses a certain amount for blood and you're still a pint low after getting the reimbursed amount?" Edge says. "You could extend this to pretty horrendous things. It's a scary premise."