Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 5.
PROPERTY AND CASUALTY INSURANCE
Subchapter B. INSURANCE CODE, CHAPTER 5, SUBCHAPTER B
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
and §5.1741 concerning best practices for risk management and loss control
for for-profit and not-for-profit nursing homes. Section 5.1741 is adopted
with changes to the proposed text as published in the October 19, 2001, issue
of the
Texas Register
(26 TexReg 8322). Section
5.1740 is adopted without changes to the proposed text and will not be republished.
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 Number 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, 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 §5.1741. 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.
§5.1741.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.
This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.
Filed with the Office of
the Secretary of State on December 4, 2001.
TRD-200107569
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: December 24, 2001
Proposal publication date: October 19, 2001
For further information, please call: (512) 463-6327
Subchapter T. SPECIALTY INSURANCE LICENSE
Chapter 19.
AGENT'S LICENSING