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SUBCHAPTER B. INSURANCE CODE, CHAPTER 5, SUBCHAPTER B Division 9. Best Practices for Risk Management and Loss Control for For-Profit and Not-For-Profit Nursing Homes 28 TAC §§§5.1740 - 5.1741

The Commissioner of Insurance adopts new Division 9, §§5.1740 - 5.1741 concerning best practices for risk management and loss control for for-profit and not-for-profit nursing homes. The new sections are adopted with changes to the proposed text as published in the October 19, 2001, issue of the Texas Register (26 TexReg 8322).

The new sections implement legislation enacted by the 77th Legislature in Senate Bill (SB) 1839. SB 1839, among other things, adds Article 5.15-4 to the Insurance Code which requires the Commissioner of Insurance to adopt best practices for risk management and loss control that may be used by for-profit and not-for-profit nursing homes. Article 5.15-4 further provides that a nursing home´s adoption and implementation of these best practices may be considered by an insurance company or the Texas Medical Liability Insurance Underwriting Association (JUA) in determining rates for professional liability insurance applicable to a for-profit or not-for-profit nursing home. The best practices adopted pursuant to Article 5.15-4 do not establish standards of care for nursing homes applicable in a civil action against a nursing home. Rather, in accord with the legislative focus, these best practices concentrate on procedures to minimize insurance claims. Quality of care issues, although related to the new rules, are not the subject of these rules. Pursuant to SB 1839, quality of care issues are the responsibility of other health and human services agencies. In developing the best practices for risk management and loss control, Article 5.15-4 also requires the commissioner to consult with the Texas Health and Human Services Commission and a task force appointed by the commissioner that is composed of representatives of insurance companies that write professional liability insurance for nursing homes, the JUA, nursing homes, and consumers. By Commissioner´s Order No. 01-0809 dated August 23, 2001, a task force was appointed consisting of the General Manager of the JUA and three representatives of each of the other categories of entities set forth in Article 5.15-4. Based on input from consultations and meetings with the Health and Human Services Commission and the task force and on review of various treatises and publications in the field of risk management and loss control, such as Mehr and Hedges, < U>Risk Management, Concepts and Applications and MMI Companies, Inc. (St. Paul Insurance Companies), "Long Term Care," Clinical Risk Modification Program, the department establishes initial best practices for risk management and loss control that set forth guidelines to handle and respond to the following nursing home risk exposure areas: falls, resident abuse, pressure ulcers, nutrition and hydration, medication management, restraints [if used], infection control, burns and scalds, and elopement. The task force helped to identify these nine key risk exposure areas for attention by nursing home loss control programs and reached a consensus on the guidelines, which were also reviewed by representatives of the Health and Human Services Commission. Due to the individual characteristics of each nursing home and ongoing research and development in nursing home care, the task force consensus was that the best practices would outline a basic structure for risk management and loss control as a starting point for a nursing home. Accordingly, the new rules contain this basic structure which over time may be subject to further refinement.

Based on the comments, the department has made certain editorial and clarifying changes to the text of the rules. Specifically, based on a commenter’s suggestion, the department has defined "risk management and loss control" consistent with Insurance Code Article 21.14-1. Further, the department has re-formatted §5.1741 by placing the reference to the nine key risk exposure areas at the beginning for a clearer focus and has made further refinements in the wording of the elements regarding documentation and modify/improve as suggested by a commenter. Also in response to comments, the department has made clarification changes to the definition of "resident abuse" by adding the words "or pain" and has substituted "individual needs or clinical condition" for "special dietary needs" in the definition of "nutrition and hydration."

Adopted §5.1740 describes the purpose and scope of the sections. Adopted §5.1741 sets forth the enumerated best practices for risk management and loss control that may be used by for-profit and not-for-profit nursing homes and that may be considered by an insurance company or the JUA in determining a nursing home’s rates for professional liability insurance.

Comment: One commenter stated general support for the proposal to improve nursing home risks in the high loss areas identified by insurers and nursing home representatives, and further stated that these rules are a positive step toward reducing risk in the nursing home industry and decreasing insurance rates. The commenter also stated concerns regarding whether nursing homes will receive information about the program and how it will benefit their industry and suggested that it would be useful for the department or one of the other entities involved in the process, such as the Health and Human Services Commission, the Department of Human Services, or the nursing home associations to develop an outreach component to ensure that nursing homes know about the rules and how to use them for possible rate reductions.

Agency Response: The department appreciates the comment and agrees that it is important for nursing homes to receive this information. The department has already worked with several associations and nursing home-related groups to make known the rule proposal and will continue these notification efforts concerning the adopted rules. The department intends to share these comments with the other entities for use in any outreach programs they may choose to pursue.

Comment: A commenter stated that the section of the law implemented by these rules is intended to ensure a safer environment for nursing home residents, and therefore it is important to monitor incentives insurance companies use to promote nursing home compliance with the best practices set out in the rule. The commenter further recommended that the department, for the purposes of reporting to the legislature, include underwriting guidelines in its data call to insurance companies to determine the extent to which the rules have been integrated into insurance company practices and how they are utilizing the new rules. The commenter further stated that a review of the guidelines may reveal other concerns that need to be addressed in the future by altering or expanding these rules to determine eligibility for insurance as well as rates.

Agency Response: The department will perform all appropriate monitoring to determine whether insurers writing professional liability insurance policies for nursing institutions are passing along savings to those institutions as a result of reduction in risk from the new legislation and to study the effect of the legislative changes in fostering the development of a competitive market and improving the availability and affordability of professional liability insurance for nursing institutions. Regarding the commenter’s statement concerning expanding these rules to determine eligibility for insurance as well as rates, the department notes that Article 5.15-4 is specific in its reference only to rates.

Comment: Two commenters stated their belief that there should be more consultation with the insurance industry on this subject and that there was not enough participation by the industry in order to get their ideas on the subject.

Agency Response: The department notes that insurance industry representatives participated in each task force meeting and reiterates that these are initial best practices; therefore, the opportunity exists for future consultation with the insurance industry as well as other groups.

Comment: One commenter suggested several editorial and clarification changes concerning defining risk management and loss control, which the commenter based on the definition of risk manager in Insurance Code Article 21.14-1; placing the reference to the nine key risk exposure areas at an earlier point for a clearer focus; and refining the wording of the elements of the best practices.

Agency Response: The department agrees to define risk management and loss control (within the "Best Practices for Risk Management and Loss Control" section), to re-format the placement of the nine key risk exposure areas (albeit at the beginning of the section rather than within the five elements of the best practices), and to refine the wording of the elements regarding documentation and modify/improve. The department disagrees with inserting the commenter’s suggestion regarding identifying "all" hazards in the loss prevention/mitigation element, as the department feels that the current wording is clear. In addition, the rule already states that the list of the risk exposure areas is not inclusive and that additional areas may be determined to be risk exposures.

Comment: One commenter suggested changes to the terms "adverse event," "near adverse event," "event response," and "assessment" and further suggested changes to some of the definitions of the nine key risk exposure areas. The commenter stated that these changes are intended to minimize unintended duplication of efforts and to provide consistency in terminology commonly used in nursing home operations.

Agency Response: The department agrees in part and disagrees in part. The department has made clarification changes to the definition of "resident abuse" by adding the words "or pain" and has substituted "individual needs or clinical condition" for "special dietary needs" in the definition of "nutrition and hydration." The department has not made the other suggested changes. Based on the discussions with the task force and representatives of the Health and Human Services Commission as to the appropriateness of these terms as they are used in the risk management and loss control process and the possibility for confusion with the terms suggested by the commenter, the department believes that the current terms are acceptable. For example, the task force noted that an "incident report" means something different in the nursing home context than in the insurance context; therefore, the department selected and defined the term "adverse event" to establish a term consistent with the risk management and loss control process that would not be confused with nursing home terminology used for other purposes.

Comment: Several commenters commended the commissioner and the department in the development of the best practices for risk management and loss control and in the openness of the process. One commenter stated that the commissioner took a very difficult issue and made it look easy. Another commenter committed to getting the word out to nursing homes concerning these best practices and also stated his concerns about nursing homes not being able to obtain insurance.

Agency Response: The department appreciates the comments and also commends the task force for its efforts in facilitating the development of these best practices. The department appreciates the comments concerning the availability problems and believes that implementation of best practices for risk management and loss control may contribute to better loss experience and premium stability, thus hopefully enhancing market availability and eventually lowering rates.

For: Office of Public Insurance Counsel and Texas Association of Homes and Services for the Aging.

For with changes: American Association of Retired Persons, Texas Health Care Association, and Texas Advocates for Nursing Home Residents.

The new sections are adopted pursuant to the Insurance Code Article 5.15-4 and §36.001. Article 5.15-4, as enacted by the 77th Legislature under SB 1839, requires the Commissioner of Insurance to adopt best practices for risk management and loss control that may be used by for-profit and not-for-profit nursing homes and further prescribes the consideration and use of such practices. Section 36.001 authorizes the Commissioner of Insurance to adopt rules for the conduct and execution of the duties and functions of the Texas Department of Insurance as authorized by statute.

§5.1740. Purpose and Scope. These sections implement Insurance Code Article 5.15-4, concerning best practices for risk management and loss control that may be used by for-profit and not-for-profit nursing homes. A nursing home’s adoption and implementation of these best practices may be considered by an insurance company or the Texas Medical Liability Insurance Underwriting Association in determining the nursing home’s rates for professional liability insurance. The best practices for risk management and loss control adopted pursuant to these sections do not establish standards of care for nursing homes applicable in a civil action against a nursing home. The elements identified in the risk management and loss control program are designed to be feasible for implementation by the typical nursing home and to lead to a reduction in exposure to loss causing incidents. The anticipated benefits of implementing these risk management practices are reductions in the number of claims and mitigation of the severity of claims that do occur. The establishment of a risk management and loss control program in a particular risk exposure area or areas does not supplant or replace any other nursing home initiative established to address quality assurance and assessment (whether statutorily mandated or otherwise), but instead supplements and supports it.

§5.1741. Best Practices for Risk Management and Loss Control.

(a) A nursing home’s adoption and implementation of the best practices for risk management and loss control set forth in this section should focus on the following risk exposure areas, which are exposure areas that appear often in claim lists and claim prevention materials published by leading nursing home insurers, and any additional areas as may be determined to be risk exposures. The list is not inclusive and the descriptions are illustrative only, but a nursing home focusing initially in these areas may be more likely to succeed with its program.

(1) Falls - Slips and trips by a resident in or about a nursing home.

(2) Resident Abuse - Infliction of injury or mistreatment with resulting physical harm or pain or mental anguish.

(3) Pressure Ulcers - A clinical risk, also referred to as bedsores or decubitus ulcers, that is a result of unrelieved pressure on a part of the body.

(4) Nutrition and Hydration - Providing adequate and nutritious food and liquid to nursing home residents, including attention to individual needs or clinical condition.

(5) Medication Management - Prevention of drug-related problems including but not limited to over- or under-prescribing; improper drug selection; and over-dosage.

(6) Restraints [if used] - Physical restraints such as manual methods or physical devices that restrict freedom of movement or access to a resident's body. Chemical restraints can be described as psychotropic or behavior modifying drugs used to prevent a resident from exhibiting behavioral symptoms.

(7) Infection Control - Preventing, containing, and treating infections within a nursing home facility.

(8) Burns and Scalds - Injury due to exposure to heat, sun, or chemicals.

(9) Elopement - To slip away or run away from a facility. For risk management purposes this includes wandering or movement away from the usual or normal place within the nursing home facility.

(b) The Commissioner of Insurance establishes the following best practices for risk management and loss control that may be used by for-profit and not-for-profit nursing homes. Risk management and loss control in this section mean the examination, assessment, and evaluation of risks and an advice process for the reduction of risks. The following elements are essential to a loss control program.

(1) Personnel Responsible for Program Operation. The nursing home should create an organizational structure that delegates authority to specific personnel for the day-to-day operation of a loss control program and which functions to ensure the program is established and implemented correctly. The nursing home can show it has met this element by:

(A) Appointing a program lead or leads to be responsible for the administration of the program in one or more exposure areas as identified in subsection (a) of this section. The designated program lead(s) should report to the administrator or the administrator’s designee, such as the risk manager. The program lead(s) should have the authority to recommend and take immediate action upon observing a potential hazard, and this authority should be recognized in the program lead’s job description. A program lead(s) should have available assistants and responsible parties to assist during off-hour periods.

(B) Appointing a Risk Management/Loss Control Committee.

(C) Appointing training instructors for new employees and in-service training.

(2) Loss Prevention/Mitigation. The nursing home should make a proactive effort to identify hazards and prevent losses before they occur. This element can be demonstrated by:

(A) Establishing and implementing policies and procedures to mitigate losses.

(i) Conducting ongoing analysis of actual and potential hazards in each individual exposure area. Policies and procedures should be created that will prevent situations that could give rise to an adverse event, which is defined as an occurrence that has the potential to produce a claim, including a minor event or situation with accident causing potential.

(ii) Conducting ongoing assessment to identify residents that may be susceptible to events occurring in each exposure area.

(iii) Establishing facility maintenance and inspection procedures that allow for preventive maintenance and inspections to be conducted on a regularly scheduled basis, such as daily, weekly, or otherwise.

(B) Establishing and implementing policies and procedures for responding to an adverse event.

(i) Establishing policies and procedures that allow for the family and/or guardian to be informed as soon as possible in the event of injury.

(ii) Including documentation in the resident’s or other appropriate record by noting interventions, injury, and prevention measures, and filing an adverse event report with the program lead(s).

(C) Establishing and implementing policies and procedures for conducting an investigation of an adverse event. The investigator will document the event and recommend prevention efforts for the resident and report the recommendation(s) to the Risk Management/Loss Control Committee and any other committee responsible for quality assurance and assessment.

(D) Establishing and implementing policies and procedures for training.

(i) Establishing a policy to orient new residents and families to the facility and to each exposure area prevention program.

(ii) Establishing a training program for new hires and conducting periodic in-service training to refresh and supply new information gathered through the risk management/loss control tracking and trending process.

(3) Documentation. The nursing home should maintain documentation of its risk management and loss control program, which documentation should include but not be limited to the following:

(A) The Risk Management/Loss Control Committee should record minutes of meetings and document any actions recommended or taken by the committee or a program lead(s).

(B) Inspection/safety reports should be sent to the respective program lead(s) and the facility manager.

(C) All individual and in-service training should be documented.

(D) Individual resident or other appropriate records, such as a resident care plan, should be documented.

(E) Adverse events should be recorded as well as a follow-up in risk management program records.

(4) Monitor Results. The nursing home should monitor the results of the risk management and loss control program to evaluate the effectiveness and overall performance of the program. Monitoring allows identification of problem areas that are not producing desired results and can be demonstrated by:

(A) Tracking adverse events and near adverse events.

(B) Documenting the adverse events and near adverse events through the event response and investigation reports.

(C) Employing tracking methods through charting frequency, location of events by facility area, and by category of event.

(D) Using the tracking process to identify trends in problem areas for correction.

(5) Modify and Improve the Risk Management/Loss Control Program Based on Results. The nursing home should timely modify and improve the program based on monitoring to achieve loss control objectives of the program. This element can be demonstrated by:

(A) Developing and implementing procedures for reporting risk management and loss control improvement suggestions to the Risk Management/Loss Control Committee and any other committee responsible for quality assurance and assessment.

(B) Developing and implementing policies and procedures for examining the event tracking and correction process for improvements in accuracy and utility.


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