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Ethics, Regulation, and Law Chapter Objectives After reading this chapter, you should be able to 1. Preserve ethical principles, patient rights, and bioethics within a healthcare organization. 2. Follow the regulatory and legal requirements targeted at the healthcare system. 3. Identify and eliminate forms of fraud and abuse in healthcare. 15 © SEGUIN TEDDY/BSIP/SuperStock Ethics in Healthcare Chapter 15 Concepts regarding the nature of “right” and “wrong” form the basis for discussions regard- ing ethics . Complications and controversies over these terms occur when various parties use dif - fering sources to determine the nature of what constitutes right or wrong. Moral reasoning can be built on a variety of foundations, including religious ideology, philosophical reasoning, and the application of natural law.

In the field of healthcare, sensitivities regarding what should be considered ethical or moral increase due to the delicate nature of the topics involved. As a simple example, in the field of marketing, ethical concerns arise in discussions of what constitutes “puffery,” or false praise. An advertisement stating that a product or service is the “finest” will be considered as legal, accept - able puffery, in most instances. But would the same criterion apply to an advertisement for a hospital that states, “Our physicians are the finest in the region”? From a legal perspective, a com - peting medical organization might complain that some tangible form of evidence, such as recov - ery or mortality rates, should be used to define finest or that the hospital should stop making such a claim. Others would argue that such a term includes subjective compo - nents, such as compassion, and is therefore impossible to measure effectively. Another group might express concerns that such a claim displays disrespect to other medical professionals in the area. Marketers may disagree, explaining that the statement only constitutes puffery.

Medical advertising and puffery illustrate the complex relationships between ethi - cal considerations and legal requirements.

Courts and judges are often presented with serious disagreements about how a govern - ment should respond to specific medical actions, activities, and decisions, including those regarding end-of-life decisions and women’s health issues. For example, the courts have heard cases on the legalities of taking one’s own life in assisted suicide and when to withhold medical treatment or nutrition for a person in a vegetative state, as well as debates over contra - ception and abortion.

This chapter investigates the ethical and legal implications associated with the healthcare indus - try. The first section examines the foundational principles that healthcare managers should con - sider in the area of ethical decision making. Next, legal and regulatory requirements that apply to the field of healthcare receive attention. Finally, methods of identifying and eliminating various forms of fraud and abuse in healthcare are examined.

15 .1 Ethics in Healthcare Given the complexity of the human interactions with the healthcare industry, medical profes - sionals are frequently faced with difficult decisions and judgment calls. In broader terms, ethi - cal concerns extend to issues such as privacy, the allocation of medical resources, criteria for transplant recipients, the potential use of genetic alterations, the legal and ethical implications of © iStockphoto/Thinkstock ▲ ▲ A complex relationship exists between ethical consider - ations and legal requirements. Ethics in Healthcare Chapter 15 some forms of stem cell research, and many other medical protocols and decisions that inspire considerable debate. It is not possible to resolve or even completely describe all the nuances of any one of these controversies in the pages of an introductory textbook. Instead, individuals in the healthcare industry can study basic principles and ideas to apply to the situations they encounter.

Ethical Principles Ethicists rely on basic principles to guide their reasoning processes. The basis of any discussion or evaluation of a moral issue begins with a foundation of some sort. Many times, these basic ethical principles were transmitted by a unit as small as an individual family—for example, parents teach children and provide examples by their actions. Then religion, philosophy, and other starting points frame and refine most ethical debates. In the medical profession, five ethical principles are often used to guide healthcare decisions: patient self-determination, fiduciary duty, beneficence, nonmaleficence, and justice.

Patient Self-determination and Autonomy The basis of patient self-determination or autonomy resides in the concepts of a person’s right to make informed decisions regarding his or her healthcare and that such care will only be pro - vided when the individual provides consent. To respect this principle, healthcare providers should inform patients of their rights regarding decisions about their own medical care.

In 1990, Congress passed a measure that included specific provisions related to self- d etermination.

The language in the Patient Self-Determination Act requires healthcare organizations, includ - ing hospitals, nursing homes, home health agencies, hospice providers, and health maintenance organizations, to provide certain information to adult patients as part of their admission to a healthcare facility. Specifically, the law states that patients must be provided with written notice of their decision-making rights and of policies pertaining to advance healthcare directives in their state and in the provider organization. This means that patients have the right to direct and facilitate their own healthcare decisions; to accept or refuse medical treatment; and to prepare advance healthcare directives, or instructions specifying what actions should be taken in the event of incapacitation or illness resulting in one’s inability to make decisions related to one’s own health. Furthermore, medical facility employees must inquire whether the patient already has an advance healthcare directive and make note of the response in the patient’s medical records.

Healthcare organizations are also required to educate staff members and affiliates about advance healthcare directives, and they cannot discriminately admit or treat a patient based on whether the individual has or does not have an advance healthcare directive.

The concept of self-determination and autonomy creates two ethical responsibilities. First, each person becomes responsible for his or her own healthcare. Second, individual organizations must respect and honor the individual’s wishes. Although the Patient Self-Determination Act does not apply to individual physician practices, its principles can be applied to those settings as well.

Fiduciary Duty A second guiding ethical principle, fiduciary duty, expresses the obligation of a healthcare orga - nization to provide the best possible care to individuals who have placed their trust in it. Core principles include treating each person with dignity and in a professional manner. Fiduciary duty also extends to a variety of activities within healthcare:

• Protecting patient information • Meeting requirements for licensure Ethics in Healthcare Chapter 15 • Serving as patient advocates • Protecting the healthcare organization’s assets An exchange constitutes the essence of a fiduciary relationship. The patient exchanges money for quality care to be provided by healthcare professionals and organizations. For this exchange rela - tionship to be effective, the patient holds the ethical responsibility for trying to understand the nature of the care to be provided; giving correct information about his or her medical condition; providing evidence that he or she is able (or unable) to pay for treatment; and following directions pertaining to medical care, such as taking medicines as prescribed and attending follow-up care (e.g., physical therapy).

The medical organization’s part of the exchange includes the ethical responsibility to practice in the most professional manner possible. Patients should not be unduly influenced by profession - als urging them to undergo unnecessary treatments (e.g., facelifts) or risky procedures in which medical benefits do not merit the potential cost. In simple terms, the medical provider should not violate the patient’s trust.

Beneficence The principle of beneficence establishes a moral obligation to act for the benefit of others. In healthcare, such benefits include kindness, compassion, and altruism. Consequently, beneficence includes four components for those in the healthcare industry. First, they should not inflict evil or harm. Second, they should seek to prevent evil or harm. Third, they should always try to remove evil or harm. Fourth, they should do or promote good. Although not all acts of beneficence are obligatory, this principle does assert the obligation to help others further their interests.

Applications of beneficence require a balance. A patient’s treatment often results in an evalua - tion of benefits versus costs or risks. As an example, a computed tomography scan exposes the patient to drastic amounts of radiation. The healthcare professional should be convinced that the benefits of the diagnostic procedure outweigh the risks. As another example, a patient who has a moral objection to certain forms of reproductive medicine or to the use of blood products should have the right to refuse certain treatments, even as concerns for that patient’s health mount.

Nonmaleficence Nonmaleficence offers a companion set of principles to beneficence. Nonmaleficence establishes the ethical responsibility to do no harm. This principle can guide physicians to refrain from providing ineffective treatments or acting with malice toward patients. Often, however, medical treatments that create benefits also impose risks (Pantilat, 2008).

In clinical terms, physicians are admonished to avoid providing ineffective treatments to patients when the treatment creates risk with no possibility of benefit, thus harming the patients.

Physicians should never do anything that would purposely harm patients. Unfortunately, many medications, procedures, and interventions cause harm even as they provide benefits, which may mean that the principle of nonmaleficence is not explicitly clear. The principle becomes most helpful when balanced against beneficence. In that context, nonmaleficence means that the patient understands and accepts the risks of treatment (harm) in light of the potential benefits.

As an example, a physician may be asked to treat a dislocated shoulder with a painful procedure that returns a bone to its socket. The patient knows that the procedure will hurt but will be of Ethics in Healthcare Chapter 15 benefit thereafter. Likewise, many injections and medicines are painful and lead to side effects, yet the patient understands that such treatments may be worth the discomfort involved.

An ethical dilemma arises when a medical professional tries to balance beneficence and nonma- leficence. To do so, the physician should provide informed consent to the patient, which gives the individual the information necessary to understand the scope and nature of the risks and ben - efits. Then the person can make a choice based on that information, thereby creating a positive partnership with the medical professional.

Justice Issues of integrity, fairness, propriety, and honesty should undergird all medical actions taken in clinical, administrative, and support departments. Procedural justice means that the process by which decisions are made and actions are taken meets standards of fairness and is equally applied to every person. Procedural justice pertains to issues such as making decisions about who from a waiting list will receive an organ for transplant. The selection process should be impartial and fair.

Distributive justice is concerned with the fair and equal distribution of resources and rewards.

Healthcare disparity in society violates the principle of distributive justice. The same holds true for disparity in employment opportunities for those in a community. If systematic discrimination exists in any form, distributive justice cannot take place.

The principles of patient self-determination, fiduciary duty, beneficence, nonmaleficence, and justice guide the development of moral judgments in the healthcare field. Applications of those principles may be found in the areas of patient rights and bioethics, as well as other medical circumstances.

Patient Rights Patient rights include a series of principles as identified by the World Medical Association (n.d.) and other organizations. Primary patient rights include self-determination and autonomy, privacy and confidentiality, truthfulness (veracity), fidelity, competency, respect, and capable guardian - ship. Achieving and maintaining such rights involves a series of actions and decisions by persons within and outside the medical community.

Self-Determination and Autonomy As has been suggested throughout this book, persons in the United States and some other coun - tries have access to a variety of choices regarding medical care, ranging from the use of herbs and other products not tested or approved by government agencies, to over-the-counter medicines, to various forms of medical practice. The concept of self-determination and autonomy as a patient right implies that an individual should be able to make choices free from compulsory directives by others, except for in more extreme circumstances, such as psychological incompetence due to certain illnesses.

Autonomy works best only when individuals have access to quality information regarding health - care choices and alternatives. Physicians who respect the principle of autonomy provide liberty, which means the patient is not unduly influenced by controlling forces and factors, and agency, or the recognition that the patient has the capacity to make reasoned choices about his or her Ethics in Healthcare Chapter 15 healthcare. In essence, a physician who truly respects patients adheres to the principle of auton- omy. For self-determination and autonomy to be fully recognized, family members must also respect the patient’s wishes.

One document that implies the principle of autonomy is the Patient’s Bill of Rights (Healthcare.

gov, 2013), which argues that patients should have access to information, should be able to under - stand what they encounter, and should then be able to make informed decisions about their care.

Consequently, patients should only delegate consent to someone else when it has been deemed by an appropriate agency or governing body that they are unable to provide informed consent on their own.

Informed consent means that a physician must obtain a patient’s permission before providing treatment. Informed consent includes the requirement to notify patients of any risks or dangers associated with a medical treatment. The patient must then consent to or decline the medical treatment after being informed of those issues.

A second method of consent, implied consent, can be more difficult to interpret or establish, because the patient does not expressly grant permission. Implied consent generally occurs when a person makes and keeps an appointment with a physician, thereby implying that he or she wishes to receive medical care. If a doctor said, “I am going to do this, but it will hurt,” and the patient nodded in agreement, the case could be made that the patient granted implied consent.

From an ethical perspective, self-determination and autonomy may conflict with some of the driving ethical principles of medical care—most notably, beneficence. This could occur when a patient rejects a medical treatment or procedure that would be in his or her own best inter - est. When a patient refuses to grant informed consent, the physician or medical professional is blocked from delivering what may be the best possible care.

Privacy Among the more revered aspects of medical practice is the concept of privacy. At the most gen - eral level, privacy should be respected in order for a patient to make medical choices undisturbed by others and free from public attention or scrutiny. Table 15.1 displays forms of privacy in medi - cal care.

Table 15.1 Forms of privacy in healthcare Privacy type Description Relational Only authorized family members or friends are privy to medical decisions and choices.

Physical Medical tests, consultations, and treatments should be provided in a space in which the patient is not observed or heard by others.

Decisional Personal choices should not be disclosed to others.

Informational The patient should be protected from others accessing information regarding his or her status and medical options.

Proprietary The patient should be informed of the potential risks of treatments.

The patient’s right to evaluate the cost-effectiveness of pharmaceuticals, surgical proce - dures, and other medical interventions.

Source: American College of Physicians, 2013; Beauchamp & Childress, 2009. Ethics in Healthcare Chapter 15 As was noted in Chapter 10, the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule protects the privacy of individually identifiable health information, as enforced by the U.S. Office for Civil Rights. Electronic health information must remain confidential, as cov- ered by the HIPAA Security Rule (U.S. Department of Health and Human Services, n.d.-a).

Additional privacy issues arise when an individual participates in a medical research project as a subject. The World Medical Association (n.d.) provides substantial guidance about patients’ right to privacy and other rights as research subjects.

Confidentiality Many times, a patient (or confide) receives information about a medical condition from a phy - sician (or confider) that the individual does not wish to share with anyone else. A confidential relationship occurs when such information is kept secret from all others. The principle of con - fidentiality suggests that any and all patient information should be held as a secret, whether the patient implies or explicitly states such an understanding.

A breach of confidentiality means that someone within the medical system (e.g., physician, nurse, staff member) discloses information without first obtaining permission from the patient to do so or fails to protect such information. Confidentiality and privacy are closely related. Privacy occurs when the individual receives information without others being present; confidentiality is maintained when no one discloses privately given information about the patient to others. These protections extend to all electronic medical records, as directed by HIPAA regulations. Failure to protect confidential information and privacy constitutes a violation of beneficence and of the organization’s fiduciary duty to the patient. Deliberate disclosure of such information creates harm and violates the principle of nonmaleficence.

Truthfulness (Veracity) Patients in the healthcare system should be able to expect that providers of healthcare will always tell the truth. Relationships built on honesty constitute an important ethical property. Without veracity, relationships between medical professionals and patients become distrustful, strained, and potentially counterproductive.

Ethical debates often revolve around the relationship between the requirement of complete and full disclosure of medical information to a patient and acting in the patient’s best interests, which may include not telling the individual about his or her medical condition under certain circum - stances. This distinction again expresses a potential tension between self-determination/auton - omy and beneficence. The primary example occurs when a person has a terminal condition, and the physician must decide whether it is in the patient’s best interest to inform him or her about that looming outcome. Some argue that it may sometimes be more humane to withhold the information, whereas others reason that the patient always has the right to know.

Fidelity Fidelity can be defined as being faithful, honest, or loyal. Fidelity in healthcare involves the will - ingness to honor commitments, such as an insurance company’s ethical obligation to pay for care provided for in it policies. Physicians express the concept of fidelity through the Hippocratic oath, which states that the doctor will be committed to act in the patient’s best interest. This commit - ment supersedes other interests, many times including those of the family. Fidelity as a principle meshes with the concepts of beneficence and nonmaleficence. It also pertains to the ethical prin - ciple of justice with regard to required payments for care by payers, such as the government and insurance agencies, as noted in the fiduciary duty of payers and healthcare organizations. Ethics in Healthcare Chapter 15 Fidelity, or faithful devotion to duty, also plays a major role in professional nursing and many other aspects of healthcare. For example, fidelity encompasses the nurse’s responsibilities to patients. The American Nurses Association’s (ANA’s) ethical code contains nine provisions, including those related to the concept of fidelity. Major attributes of fidelity include commitment or devotion to patient care in terms of expectation or prognosis, action or medical intervention, and outcome (or the patient’s recovery).

Competency Patients have the right to competent care. Physicians and medical organizations hold a moral obligation to ensure that medical professionals have been sufficiently trained, are correctly licensed, and have demonstrated the ability to provide quality care. The principle extends to all three aspects of a healthcare organization’s activities: clinical, administrative, and support. It also applies to the right to cultural competency (see Chapter 3) in healthcare organizations that serve minority patients.

Respect Ethical dictates include a patient’s right to be treated with dignity. Those working in the medical profession hold the moral responsibility to treat each person with respect. Instances of discrimi- nation, harassment, objectionable language, judgmental comments, and other acts of incivility violate the moral imperative to treat patients with respect.

Capable Guardianship At times, a patient loses the capacity to make informed decisions about his or her own care. The principle of capable guardianship implies that the government, healthcare organizations, health - care professionals, and family members should all strive to make decisions in the patient’s best interests. This includes helping to create medical directives before they would apply, such as when heroic measures should not be used. Cardiopulmonary resuscitation is a primary example of a heroic measure; by compressing the person’s heart, the patient may endure broken ribs and other pain, yet the procedure can save the person’s life. A person who has signed do not resuscitate (DNR) orders has requested, in advance, that such a procedure not be used. Capable guardian - ship means that these wishes will be respected.

Capable guardianship also applies to financial concerns. The guardian’s ethical responsibility is to use the patient’s resources in a responsible fashion. This includes avoiding personal gain at the patient’s or healthcare organization’s expense.

Thus, capable guardianship expresses the princi - ple of ethical justice in clear, practical terms. Bioethics Obligations to confer benefits, to prevent and remove harms, and to weigh and balance the pos - sible goods against the costs and possible harms of an action are central to bioethics, which involves the ethical decisions and actions taken in medi - cine and biological research. In 1996, the National Institutes of Health (NIH) and its Department © iStockphoto/Thinkstock ▲ ▲ Bioethics involves ethical decisions and actions taken in medicine and biological research. Ethics in Healthcare Chapter 15 of Bioethics (http://w w w.bioethics.nih.gov ) established three primary areas of concern, each of which is discussed further in this section:

• Protection of human subjects • Genetics • Health policies Protection of Human Subjects Medical research takes place in stages. The final step, in many instances, involves the clinical evaluation of a drug or procedure with human subjects. Often these experiments involve random selection processes in which some patients receive the treatment or drug, while others are given a placebo. The potential for abuse and unethical decisions has led to a series of guidelines designed to protect human subjects who voluntarily agree to participate in medical research. The U.S.

Department of Health and Human Services has conducted a series of philosophical and appli - cation analyses related to human subject protection. Over the past several decades, the depart - ment’s conceptual and empirical work on the ethics of clinical research has focused primarily on the following areas related to human subjects:

• Risk and risk assessment (versus potential benefits) • Evaluation and improvement of oversight systems and protections • Recruitment, payment, and undue inducement of human subjects • Research ethics consultation • Public health • Chemoprevention • Ethical issues in multinational research • Ethical issues in research with special populations • Informed consent • Surrogate decision making These areas of concern reflect the ethical foundations and notations regarding patient rights described earlier in this section. Healthcare officials within and outside of the U.S. federal gov - ernment continue to study, debate, and revise such standards as issues arise. WEB FIELD TRIP Take a closer look at human subject research by watching a brief video at the Office of Human Research Protections website: http://www.hhs.gov/ohrp/index.html .

In the left-side navigation bar, click on “Education,” then select “Training.” Under “Training Videos and Webinars,” click on “Please visit our educational video page for more information.” Watch minutes 2:28– 6:15 of the video entitled “Research Use of Human Biological Specimens and Other Private Information.” Then answer the following questions.

• How does an individual become a human research subject?

• What is a human biological specimen?

• When does a research study not involve a human subject? Ethics in Healthcare Chapter 15 Genetics As a recent report to the National Institutes of Health (n.d.) notes, the past several decades were based on a “targeted genetic research paradigm.” Among the ethical issues that arose during that period were the following:• Informed consent • Stigma—or being judged or labeled in some way as a result of genetic test results • Privacy—both individual and group • Concerns regarding health insurance availability and discrimination based on genetic status In genetic research, informed consent becomes critical. A person submitting to genetic testing must consent to the procedure and to being informed of the results. For example, a woman who is tested for potential breast cancer would agree to the test and to finding out whether she may be prone to the disease.

Stigma might result from a patient being told he or she is predisposed to alcoholism or to a men - tal affliction. If this information were not kept private, educational institutions, employers, and possibly the government might label such an individual a high risk or some other label.

Privacy concerns are basically the same as for any other medical procedure. The individual retains the right to keep results confidential, without disclosure to other entities. Furthermore, the individual should not be identified as a participant in any type of study without first granting his or her permission.

During the period studied, health insurance companies were able to exclude persons from cover- age due to preexisting conditions. Genetic testing might identify an individual with a marker that indicates the likelihood of developing a disease. This result, if disclosed to the insurance provider, could be construed as a preexisting condition, and the person would not be able to purchase health insurance coverage. Such an outcome would reduce the willingness of individuals to par - ticipate in studies.

More recently, there has been a transition into a new phase of research that focuses on the genome as a whole. As genetic sequencing becomes increasingly affordable, the next generation of research can commence. According to the National Institutes of Health (n.d.).

The ethical concerns previously associated with targeted genetic research are ampli - fied by the volume and types of information generated by large-scale genomic sequenc - ing. Ethical concerns that had been rare now are becoming more prevalent and more complex, especially in the area of cloning research and applications. Institutional review boards are often called upon to review the ethics of research involving the use of these emergent, cutting edge technologies in research with human subjects prior to the devel - opment of consensus and ethical guidance about the use of these technologies.

Health Policies As Dr. Carolo Petrini (2010) argued, If public health is “the science and art of preventing disease, prolonging life and promot - ing health through organized efforts of society,” and if ethics is theoretical reflection on the nature of the good and on what we ought to do, then public health ethics—determin - ing what we ought to do in pursuit of the good of public health—is unavoidable. Ethics in Healthcare Chapter 15 Ethics in public health concentrates on three primary elements: • Descriptive • Theoretical • Normative The descriptive element seeks to identify what is right or good in a health policy. The theoretical component explains the justifications for what is right or good. The normative debate centers on how government and other organizations can act in accordance with what is right or good (Baier, 2001).

The normative aspect includes three elements that form the basis of many ethical judgments:

means, circumstances, and ends. Consequently, an ethically sound health policy should be prac - tical and effective (Petrini, 2010).

In more concrete terms, governments, insurance providers, medical organizations, and influence groups establish healthcare policies. The first goal of a health policy is that it should be practi- cal —that is, measures can be reasonably and affordably applied. As an example, administration of annual flu shots to seniors provides a practical solution to what can be a widespread problem, such as an epidemic. The second goal of the policy is that it will be effective. Although flu shots can be less effective than officials would hope, they still offer effective protection to a vast popula - tion each year. As a result, many organizations provide free or reduced-cost shots to employees and others, as a practical and effective means of limiting the illness.

In summary, this brief explanation of ethics in medicine should be used as a framework for analyzing ethical issues and dilemmas. No single answer is available to questions of ethics, so reason and judgment will always be part of ethical debates and moral decisions. Note that ethi - cal debates, which often boil down to personal moral choices, including those made by medical professionals who provide care, are not always the same as the legal requirements that apply to the healthcare industry. The law often does not compel a physician to perform any specific medical act or provide any specific medical treatment, even as the physician feels an ethical and moral obligation to do so. The following section examines the regulatory and legal requirements targeted at the healthcare system. CASE Ethics and Stem Cell Research Over the past decade, a tension has grown between the scientific community and the world of politics. At issue is the use of certain types of stem cells for medical research. Some indications have suggested that research using stem cells might lead to the treatment or cure for some diseases, including Alzheimer’s and Parkinson’s (Reaves, 2001).

At the basis of the political side of the issue is the abortion debate. Some stem cells come from embryos, which creates a difficulty, because, according to some beliefs, an embryo is a human life.

Embryonic stem cells come from the inner cell mass of a blastocyst, which is the scientific term for an egg four days after it has been fertilized for conception. (continued) Regulation and Law Chapter 15 15. 2 Regulation and Law Ethical reasoning often begins with a single individual who has been influenced by a variety of entities, including family, friends, and others. In contrast, the legal systems established by government entities create standards of practice that apply to individual medical professionals, as well as many healthcare organizations. The legal system governing healthcare in the United States, or in any other nation, combines various laws, regulations, and agencies with the objective of making the system safe, fair, and free from fraud and abuse. Several elements combine to form For years, most stem cells provided for research had been taken from discarded or nonused embryos stored at in vitro fertilization clinics. When potential parents decided not to use a fertil- ized embryo, scientists were able to ask those parents to consider donating the unneeded embryos to research. If the embryos were not used in that fashion, many were simply discarded. In a more controversial method, however, researchers have pulled stem cells from aborted fetuses. To obtain these cells, the researcher asks for a signed consent from a patient who has decided to terminate a pregnancy. This procedure has drawn the most attention from pro-life activists, some of whom compare using embryonic stem cells for research to what Nazi doctors did during World War II.

Researchers argue that embryonic stem cells hold the greatest promise for millions of patients. The cells are undifferentiated, which means they have not yet become a certain type of cell, such as a blood cell or a kidney cell. With the emergence of new techniques, researchers believe it will be possible to direct the cells into becoming whatever type cell is needed for a certain procedure or treatment. This, in turn, might make it possible to use the cells to replace damaged or sick cells in a patient with an injury or degenerative disease.

Opponents of embryonic stem cell research argue that other means of culling stem cells are avail - able. But scientists reply that none of those methods yield stem cells with the same vitality and versatility as those taken from embryos. Although adult stem cells taken from the blood or organs of healthy adults demonstrate some adaptability in lab experiments, the cells are less useful to sci - entists because they do not hold the same potential as those taken from embryos. Still, tests using embryonic stem cells have yielded few positive results when compared with trials using stem cells from other sources.

Proponents note that stem cell research continues on some level, no matter what the government dictates, because private foundations, clinics, and drug companies that are unaffected by govern - ment funding continue to use them. In addition, much of the research takes place in countries other than the United States.

Some new techniques for gathering stem cells are already in development. For example, news orga - nizations discovered that scientists at a privately funded Virginia fertility clinic were growing human embryos with the intent of harvesting stem cells (Reaves, 2001). The debate that emerged over that clinic centered on the ethical implications of a systematic cell harvesting procedure. The controversy over the difference between using stem cells from discarded embryos and purposefully creating an embryo only to use it in research continues to inspire intense debate.

Controversies between science, religion, and political actions are not new. The stem cell debate inspires great passions on both sides of the issue. With emerging new medical technologies, new arguments are likely to ensue.

1. Which religious, philosophical, or other moral guidelines apply to this controversy? 2. Which ethical principles apply to this controversy? 3. Which interpretations of patient rights apply to this controversy? 4. Which issues related to bioethics apply to this controversy? Regulation and Law Chapter 15 the regulatory system that applies to healthcare activities, including those provided by federal, state, and sometimes local constitutions, legislatures, administrative agencies, judicial systems, and executives.

Federal and state constitutions outline basic principles for the legal system. Legislatures enact statutes that regulate various activities and industries, including healthcare. Administrative agen- cies may enact policies and procedures that take on aspects of regulations and administer policies and procedures as required by law. Judicial systems interpret laws and make judgments regard - ing whether a law is constitutional. Executives, most notably the president of the United States, can write executive orders that mandate various policies. Many times, state laws further influ - ence healthcare delivery in specific ways. For example, some state legislatures have created laws designed to limit implementation of various parts of the Affordable Care Act.

The U.S. legal system includes three interacting concepts that form the regulatory environment over time: common law, interpretive justice, and the establishment of precedents. Common law results from judicial decisions that examine and interpret previous precedents. For example, it has been a well-established precedent for years that a person should not operate a motor vehicle while “impaired.” An ambulance driver, therefore, should not be under the influence of alcohol, narcotics, or any other substance that might impair his or her ability to drive safely. Interpretive justice establishes the right of a judge to apply any law related to a specific circumstance, which in this case would apply to driving while impaired. Thus, more recent cases built upon such concepts would be related to driving while using a mobile phone, texting, consuming energy drinks, or being sleep deprived. The University of California at Berkeley (2010) defines precedent as meaning “the judicial decisions that have already been made in similar cases. These precedents are maintained over time through the records of the courts as well as historically documented in collections of case law known as yearbooks and reports.” Judicial authority would set precedent when a law has not clearly been written in order to cover a specific circumstance. A great deal of legal authority emerges from applications of common law.

Criminal and Civil Law The criminal law system contains a body of rules and statutes that define conduct prohibited by the government. A crime occurs when an action that violates a legal statute threatens or harms public safety and welfare, even when the act has been directed at a single individual. Criminal law establishes punishments to be imposed for the commission of such acts. Levels of punishment are identified for misdemeanors and felonies, depending on the seriousness of the action that has been outlawed. Criminal law applies to medi - cal fraud and abuse, as described in the final sec - tion of this chapter.

Civil law offers a legal way to resolve noncrimi- nal disputes—for example, disagreements over the contracts, property ownership or damages, divorce, and child custody. Civil law cases are heard in a civil court, which is a place where people can peacefully solve problems with others.

Sometimes civil law is based on a state or federal statute; other times, it is based on a court ruling. © Carlos Osorio/Associated Press ▲ ▲ Common law, criminal law, and civil law all play roles in the healthcare system. Regulation and Law Chapter 15 A key element of civil law is a tort. To r t s include wrongful acts that are not viewed as a breach of a contract or trust but that result in injury to another’s person, property, or reputation. The injured party who receives a judgment will be entitled to compensation for the wrongful act. Tort law, which strongly influences the healthcare system, applies to three primary areas within the healthcare system: negligence, intentional torts, and the infliction of mental distress.

Negligence has a specific meaning in the healthcare system. Various conditions must be met in order for a tort to apply. Three forms of negligence are misfeasance, malfeasance, and nonfea - sance. Misfeasance occurs when a healthcare professional attempts to perform the correct action but fails to do so, and an injury results. An example of misfeasance is when a surgeon attempts to repair a knee injury but incorrectly performs the procedure and causes additional damage to the knee. Malfeasance takes place when a person performs an unlawful act, such as supplying a person with unneeded drugs for recreational as opposed to medical use. Nonfeasance involves the failure to act when a clear need to do so—a duty—infers that a reasonable person would have taken action. For example, nonfeasance occurs when a patient reports a certain set of symptoms, such as the inability to breathe, a heavy cough, a fever, and other symptoms that would normally clearly dictate that a test for pneumonia should be given. For these actions to rise to the level of a tort in which compensation is in order, the four conditions displayed in Table 15.2 must be present.

Table 15.2 Four factors required to indicate negligence Factor Description Duty The negligent party has a duty, including exercising the appropriate level of skill, to treat the injured party, such as in a physician–patient relationship.

Breach of duty The medical provider fails to administer the appropriate level of care.

Causation The breach of duty must be directly related to the injury that occurred.

Injury/damages The person suffers a detectable injury, and damages are appropriate.

Negligence can take place by physicians, nurses, laboratory technicians, and others who are expected to render appropriate medical care. Intentional torts only occur when some form of harm results from a deliberate action. The most common intentional tort claim is one in which a physician performs a surgery on an unconscious patient without consent, and the result is an injury or damage. The deliberate action, performing surgery, created harm that otherwise would not have occurred, because the patient was unable to express his or her wishes regarding the surgery.

Infliction of mental distress involves mental harm to a patient. For example, if a person’s illness were disclosed without consent and he or she suffered mental consequences as a result, then distress would be present. Invasions of privacy represent a common form of infliction of mental distress in healthcare.

Malpractice Medical malpractice law deals with legal claims against medical care professionals when the care provided, or the lack thereof, results in some form of damage, injury, harm, or loss to the patient (HG Legal Resources.org, n.d.). Malpractice law—a subset of personal injury law—often overlaps with litigation law. Regulation and Law Chapter 15 Malpractice includes any improper or injurious practice, unskillful and faulty medical or surgical treatment, or negligent treatment of a patient by a physician, resulting in injury, damage, or loss.

Common types of medical malpractice, include negligence, a bad diagnosis, substandard care, lack of informed consent, and a breach of doctor–patient confidentiality As noted earlier, medical negligence is generally attributed to the professionals responsible for a patient’s diagnosis, medi- cal care, or treatment, including managed care organizations, medical corporations, or clinics and hospitals. Any of these may be sued for the actions of their employees.

When a person believes he or she has been injured by a physician or some aspect of a healthcare organization’s operations, proof of negligence must be provided, as is the case with all personal injury claims. A tort of negligence contains four elements. First, a duty of care was owed. Second, a medical care professional or group violated the required standard of care, which indicates negli - gence. Third, the professional’s negligence caused harm or injury. Fourth, compensable damages occurred as a direct result of the harm or injury suffered.

Malpractice issues constitute a major challenge for healthcare providers. Individuals and organi - zations purchase expensive malpractice insurance to protect themselves from claims. The costs increase charges to patients. Those who favor tort reform argue that remedies should be limited in size. In the case of medical malpractice, many states have now placed caps on the amounts of monetary damages that injured parties can receive (American Medical Association, 2011).

Additional Laws Regulating Healthcare Table 15.3 repeats information provided in Chapter 1, which outlined many of the laws and agencies that hold jurisdiction over some aspect of healthcare. Chapter 2 described the essential elements of Medicare and Medicaid. Chapter 9 detailed licensure issues. This section presents additional laws and regulatory elements that affect healthcare, including the Healthcare Quality Improvement Act, antitrust regulations, and contract law.

Table 15.3 Laws and agencies affecting healthcare Laws and agencies Affect on healthcare Medical malpractice/liability laws Patient protection Quality of medical services U.S. Social Security Administration Medicare Disability payments Medicaid/Children’s Health Insurance Program Access to healthcare Payment to providers Food and Drug Administration Legality and delivery of medical products Fair labor practices Equal Opportunity Employment Commission Civil Rights Act of 1964 Equal Pay Act of 1963 Americans with Disabilities Act of 1990 Rehabilitation Act of 1973 Hiring, pay, and promotion discrimination (continued) Regulation and Law Chapter 15 Laws and agenciesAffect on healthcare National Labor Relations Board Other national labor laws (e.g., Taft-Hartley Act) Union activities, including bargaining and grievances Environmental Protection Agency Disposal of medical waste Oversight of use of radioactive material Health Insurance Portability and Accountability Act of 1996 Patient privacy Patient safety Occupational Safety and Health Administration Safe work practices for all employees Genetic Information Nondiscrimination Act of 2008 Employee protection Patient protection Family and Medical Leave Act of 1993 Employee assistance Healthcare Quality Improvement Act (HCQIA) Congress enacted the Healthcare Quality Improvement Act (HCQIA) of 1986 in response to an increase in medical malpractice lawsuits during the 1970s and 1980s. At that time, concerns were raised that incompetent physicians were able to move from state to state without disclosure or discovery of their previous damaging or incompetent performance. HCQIA seeks to reduce med - ical errors and protect the public by reducing the occurrence of medical malpractice, improving the quality of medical care, restricting incompetent physicians from moving from one state to another, and remedying the problems through effective professional peer review.

HCQIA created a national tracking system of physicians with a history of medical malpractice payments or adverse actions. The National Practitioner Data Bank collects and releases certain information relating to the professional competence and conduct of physicians, dentists, and other healthcare practitioners. The system also lists records of malpractice payments, licensure actions, and healthcare entity adverse action reports. A physician, dentist, or other healthcare practitioner may dispute the accuracy of information in the data bank.

One reason for the increase in malpractice lawsuits in the 1970s and 1980s was that some physi - cians were reluctant to engage in peer reviews. HCQIA addressed the issue by creating the oppor - tunity to conduct effective peer reviews by providing immunity from civil money damages to those who participate in peer review, except for damages relating to civil rights actions. Immunity from damages is also not available to anyone who knowingly provides false information to a professional review body. Civil penalties may be charged if a person does not report information to the data bank.

Following an investigation of a healthcare professional or entity, a professional review body identifies an action or makes a rec - ommendation. The action or recommen - dation will be based on an assessment of © Wavebreak Media/Thinkstock ▲ ▲ HCQIA creates boards that conduct peer reviews of various medical practitioners. Regulation and Law Chapter 15 the competence or professional conduct displayed by the individual physician. When the care is deemed to be incompetent or unprofessional, the physician’s clinical privileges or membership in a professional society may be adversely affected. A professional review should discover whether the physician may have clinical privileges or membership, determine the scope or conditions of such privileges or membership, or make a change that modifies such privileges or membership.

Antitrust Regulations Over the years, antitrust laws have been enacted in an effort to protect companies against unfair competition and business practices by other companies. One primary law, the Sherman Act of 1890, created a system of criminal and civil sanctions against organizations that act in concert and against multiparty anticompetitive arrangements. The key factor in the Sherman Act is the phrase “unreasonable restraint of trade,” which can be achieved through the use of contracts, conspiracies, or creation of a monopoly.

The Clayton Act of 1914 prohibits price discrimination, tying arrangements, or any merger or acquisition that has the effect of substantially lessening competition. The 1914 Federal Trade Commission (FTC) Act identifies “unfair methods of competition” and deems them to be illegal.

The FTC and the Department of Justice (DOJ) enforce these laws.

According to the American Medical Association (n.d.-a), in the field of healthcare, especially in the context of managed care, mergers and expansions of health facilities, integrated delivery systems, and physician participation in joint ventures, among other endeavors, all fall under the coverage of antitrust laws. For example, if all physicians that provide a specific form of care in a community, such as dermatology, work for a single enterprise that charges unreasonable prices, antitrust laws would apply. In general, the factors that might invite antitrust scrutiny aimed at a health provider include the following:• Significant market share • Joint action with other actors • Denial or limitation of professional privileges of other practitioners • Involvement in a merger, acquisition, joint venture, provider network, or other integrated delivery system For years, the AMA has worked diligently to refocus enforcement initiatives toward the relatively powerful health insurance industry and away from physician ventures.

Contract Law Contracts apply to a variety of arrangements within the healthcare system, from contracts for supply materials and equipment, to contracts with insurance companies, to contracts between various medical providers. Four elements must be present for a contract to exist: offer, accep - tance, the intention to create a legal relationship, and consideration.

At the most basic level, a person making an appointment at a doctor’s office establishes two par - ties in which one offers to provide a service (medical care) and the other (patient) accepts the offer. The relationship will remain legal as long as the physician has appropriate licensure. In this case, consideration takes the form of payment for the service. Two concepts apply to this contrac - tual arrangement. First, both parties (patient and doctor) must be deemed as competent , which means they are of sound mind and body, are of legal age, and are not acting under conditions of duress (or being forced to do something against either one’s will). Second, the contract may or may not be in writing; many contracts are merely verbal agreements. Regulation and Law Chapter 15 Many highly intricate relationships exist in healthcare contracts. The legal system becomes involved when a breach of a contract takes place. A contract breach occurs when one or more parties to a contract fails to complete the obligations that they have agreed to perform. A mate- rial breach occurs when one party does not receive the substantial benefit for which the person or organization has contracted, such as when a company pays for supplies but the supplies are not delivered. A nonmaterial breach occurs when one party receives the substantial benefit of the contract but lesser deviations or nonperformance aspects continue to exist. An example of a nonmaterial breach is when a physician and an electrician agree to have the electrician wire the physician’s office with white wire, but the electrician instead uses blue wire. The breach is non - material because the color of the wire is not the key component in the contract, and this minor deviation does not affect the wire’s functionality.

When the courts determine that a material breach has occurred, a remedy will be applied. A remedy is a means of enforcing a right or of preventing or redressing a wrong. Remedies that are generally available to healthcare professionals include specific performance and monetary dam - ages. Specific performance means the party who breached a contract is compelled to perform the contract as promised (U.S. Legal, n.d.). Monetary damages are categorized into the types displayed in Table 15.4.

Table 15.4 Types of monetary damages for a breach of a contract Damage type Description Compensatory (or actual damages)Damages that place the injured party in a same position that they would have been in had the contract been fully executed, including compensation for gains (profits, revenues) prevented or for losses sustained .

Consequential Damages suffered by one party that the breaching party should have known might take place.

Liquidation Monetary damages decided and agreed upon by the various parties prior to signing the contract that represent a reasonable and fair amount.

Nominal Symbolic damages or damages sought on principle in which the award is usually $1.00.

Punitive Those associated with a tort.

In the healthcare system, contracts are generated between individuals, companies, and govern - ment agencies. Most of the time, the terms of the contract are discharged without incident. When they are not, the legal system becomes involved.

In summary, the vast legal and regulatory system creates a complex environment in which health - care managers, professionals, government officials, and others must operate. The system affects the clinical, administrative, and support systems in every type of healthcare organization, from a single physician’s office to major hospitals. At the same time, healthcare laws apply to health insurance companies, drug manufacturers, suppliers, medical equipment companies, and others.

The next section discusses methods that healthcare managers can use to identify and eliminate forms of fraud and abuse in their organizations. Fraud and Abuse Chapter 15 15. 3 Fraud and Abuse At times, activities that are deemed as illegal are also equally unethical, as is the case in the area of medical fraud and abuse. At the most general level, fraud occurs when an entity makes a false statement or misrepresents material facts in order to obtain a benefit or payment that the entity is not entitled to receive. Fraudulent acts are committed for an individual’s benefit or to benefit some other party. The essence of a fraudulent act is to obtain something of value through mis - representation or concealment of material facts. Fraudulent schemes include individual acts and operations by larger groups or institutions (U.S. Department of Health and Human Services, 2012).

The criminal act of healthcare fraud occurs when an entity files a dishonest healthcare claim in order to turn a profit (Cornell University Law School, n.d.). Fraudulent healthcare schemes come in many forms, including the examples shown in Table 15.5.

Table 15.5 Forms of healthcare fraud Fraud type Examples Medical provider schemes Obtaining subsidized or fully covered (by insurance) but unneeded prescription pills and selling them on the black market Billing for care that was not rendered Prescribing an unnecessary treatment Filing duplicate claims for a service Altering the dates, description of services, or identities of members or providers Billing a noncovered service as a covered service Modifying medical records Intentional incorrect reporting of diagnoses or procedures to maximize payment by insurers or the government Using unlicensed staff Accepting or giving kickbacks for member referrals Patient or unauthorized individual schemes Providing false information when applying for programs or services Forging or selling prescription drugs Using transportation benefits for nonmedical related purposes Loaning or using another’s insurance card Source: Adapted from Cornell University Law School, n.d.

Current law requires a health insurance company to pay a legitimate claim for a medical service within 30 days. Unfortunately, this rule does not allow agencies charged with investigating poten - tial fraud sufficient time to investigate a suspect claim before an insurer has to pay. The situation frustrates investigators at the Federal Bureau of Investigation, the U.S. Postal Service, and the Office of the Inspector General—all of which have the responsibility of investigating healthcare fraud.

The costs of healthcare fraud are passed along to patients. Some statistics now indicate that 10 cents of every dollar spent on healthcare go toward paying for fraudulent healthcare claims (Cornell University Law School, n.d.). Fraud and Abuse Chapter 15 Medicare Fraud and Abuse Medicare fraud occurs when providers bill Medicare for services or supplies that were not ren- dered. Abuse occurs when doctors or suppliers fail to follow effective medical practices, which results in unnecessary costs to Medicare, improper payment, or charging for services that were not medically necessary (Medicare.gov, n.d.). Medicare notes the following forms of fraud against its system:

• A healthcare provider bills Medicare for services not rendered • A supplier bills Medicare for equipment that was never delivered • A person uses someone else’s Medicare card to obtain medical care, supplies, or equipment • A company offers a Medicare drug plan that has not been approved by Medicare • A company uses false information to mislead people into joining a Medicare plan • A company knowingly alters claims forms or receipts to receive higher payment amounts The U.S. Department of Health and Human Services (2012) reported that organized crime has infiltrated the Medicare Program by masquerading as Medicare providers and suppliers.

Fraud Legislation In response to the many forms of healthcare fraud and abuse, a series of laws have been enacted, with agencies assigned to enforce those laws. Among these laws are the False Claims Act, the Anti-Kickback Statute, the Stark Laws, the Criminal Health Care Fraud Statute, the Emergency Medical Treatment and Active Labor Act, and the Criminal Provisions in the Social Security Act—all of which are summarized below.

The U.S. Department of Health and Human Services (2012) enforces many of the laws that apply to fraud.

False Claims Act The False Claims Act (FCA) serves to pro- tect the U.S. government from being over - charged or being sold substandard goods or services. A person who knowingly submits or causes a false or fraudulent statement to be submitted to the federal government has broken the law and becomes subject to civil liability. The “knowing” standard in the law covers situations in which a person acts in deliberate ignorance or reckless disregard of the truth related to the claim, such as when a physician submits claims to Medicare for medical services that were not provided and is aware that they were not. Civil penalties for vio - lations include fines of up to three times the amount of damages sustained by the government resulting from the false claims. Criminal penalties include fines, imprisonment, or both.

Anti-Kickback Statute The Anti-Kickback Statute defines as a crime willfully offering, paying, soliciting, or receiv - ing remuneration to induce or reward referrals of items or services reimbursable by a federal © iStockphoto/Thinkstock ▲ ▲ A variety of fraud occurs against the Medicare system. Fraud and Abuse Chapter 15 healthcare program. For example, this statute would apply when a physician refers a patient to Medicare or Medicaid and asks for a fee for doing so. Criminal penalties for violating the Anti-Kickback Statute include fines, imprisonment, or both.

The statute does provide some regulatory “safe harbors” that exempt certain activities. This means that certain acts that would appear to violate the statute are not treated as offenses.

The safe harbor regulations are set forth in the Code of Federal Regulations.

Physician Self-Referral Laws The Physician Self-Referral Laws, or Stark Laws, prohibit a phy- sician from making a referral for specifically identified health services to an entity that the physician or an immediate fam - ily member owns or in which a physician or immediate family member holds an investment interest. Furthermore, the entity to which the patient is referred may not have a compensation arrangement with the physician, unless an exception applies.

Penalties for physicians who violate these laws include fines and exclusion from participation in all federal healthcare programs.

Criminal Healthcare Fraud Statute The Criminal Healthcare Fraud Statute prohibits two activities. First, a person or group may not knowingly and willfully execute, or attempt to execute, any scheme designed to defraud a health - care benefit program. Second, no person or group can seek to obtain another person’s money or property or the custody or control of any healthcare benefit program (including payments made by the program) to that person using false means or fraudulent pretenses. In other words, a person who pretends to be someone else for the purpose of receiving benefits from Medicare or Medicate violates this statute. Penalties for violating this statute include fines, imprisonment, or both. Proof of actual knowledge or specific intent to violate the law is not required to establish guilt.

Emergency Medical Treatment and Active Labor Act In 1986, Congress enacted the Emergency Medical Treatment and Labor Act (EMTALA) to ensure public access to emergency services, regardless of a person’s ability to pay. Also known as the Anti-Dumping Act , the statute requires Medicare-participating hospitals that offer emergency services to provide a medical screening examination when a request is made for examination or treatment for an emergency medical condition, including active labor, regardless of an indi - vidual’s ability to pay. The statute outlaws “dumping,” or simply moving the patient to another provider, when the hospital finds out the patient is unable to pay for treatment. When a person is shown to have an emergency condition, hospitals are required to provide stabilizing treatment for those patients. When a hospital’s staff cannot stabilize the patient or if the patient requests one, an appropriate transfer should be implemented. An organization that violates the EMTALA statute is subject to financial penalties (Centers for Medicare and Medicaid Services, 2013a).

Criminal Disclosure Provisions of the Social Security Act The Criminal Disclosure Provisions of the Social Security Act serve to ensure that a medical provider is legally bound to disclose overpayments of funds so that the government can initiate © iStockphoto/Thinkstock ▲ ▲ The Anti-Kickback Statue prevents paying for referrals to any federal healthcare program. Fraud and Abuse Chapter 15 collection efforts. A series of circumstances are covered by these criminal disclosure provisions, including the following: • A person knowingly and willfully makes, or causes to be made, any false statement or representation of a material fact as part of an application for any benefit or payment under a federal healthcare program.

• A person knowingly and willfully makes, or causes to be made, any false statement or rep - resentation of a material fact for use in determining rights to such benefit or payment.

• A person knows of an event that negatively affects his or her initial right to receive benefits or payments or the continuing right to receive payments after completing an application.

• A person conceals or fails to disclose an event that affects the individual’s right to benefits with the intent of fraudulently securing benefit or payments either in an amount that is greater than what is due or when no such benefit or payment is authorized.

• A person makes an application to receive a benefit or payment for the use and benefit of another and, having received it, knowingly and willfully converts such benefit or payment or any part thereof to personal use rather than for the use and benefit of the other person.

• A person presents or causes to be presented a claim for a physician’s service for which pay - ment may be made under a federal healthcare program and knows that the individual who furnished the service was not licensed as a physician.

• A person receives a fee for knowingly and willfully counseling or assisting another per - son to help the individual dispose of assets, including by any transfer in trust in order to become eligible for medical assistance under a state plan. (Social Security Administration, 2013) A successful prosecution of a healthcare provider that ends in a conviction can have serious consequences. The healthcare provider faces incarceration, fines, and possibly loss of the right to practice in the medical industry. CASE The Blame Game David Burns was about to go “cold turkey.” After years of substance abuse, a broken marriage, and an unstable career, he knew it was time. As a college student, David had had trouble sleeping. He began taking extra pills from his mother, who used hydrocodone for pain relief, but he did not use her full prescription each month. It was not long until David learned how to “Doctor Shop,” which involved getting more than one physician to prescribe the medication for him. He lived near a state line, mak - ing it possible to purchase the drug at pharmacies in two different states. At that point, individual states had only rudimentary systems for tracking multiple drug purchases and only within each state.

Soon after, he developed sources from suppliers who used various means, including medical iden - tity theft, to obtain pills to sell on the black market. The market was lucrative, because any addicted person would take increasing amounts of the drug over time. These pushers were then able to sell more pills at a higher price to an increasingly desperate addict.

When David’s addiction began to affect his family and marriage, he sought help. His employer at the time offered health insurance. Using the program, David sought help from an addiction “expert.” The physician prescribed a substitute medication designed to help David through the first (continued) Fraud and Abuse Chapter 15 Medicare and Medicaid Fraud Prevention Healthcare professionals can help prevent various forms of fraud. To do so, cooperation must take place between the federal government, state governments, healthcare providers, insurance companies, individual citizens, and the law enforcement community. Medicare identifies four entities that can assist in detecting and preventing fraud (see Table 15.6).

Table 15.6 Agencies protecting against healthcare fraud AgencyDescription The Affordable Care Act (U.S. government) The act provides powerful steps in the fight against healthcare fraud, waste, and abuse. Government enforcement programs have recovered more than $10 billion in the past three years (2010 –2012).

Healthcare Fraud Prevention and Enforcement Action Te a m (H E AT ) HEAT creates a joint effort between the Department of Health and Human Services and the Department of Justice. The team consists of senior officials who lead Medicare strike force teams to fight healthcare fraud.

Senior Medicare Patrols The Medicare administration has provided new funding for Senior Medicare Patrols. Senior citizen volunteer groups educate peers to identify, prevent, and report healthcare fraud.

Public– Private Partnership to Prevent Healthcare FraudThis groundbreaking partnership unites public and private organizations to help prevent healthcare fraud. The voluntary, collaborative partnership combines the efforts of the federal government, state officials, leading private health insurance organizations, and other antifraud groups.

Source: Medicare.gov, 2013a. several weeks of not taking hydrocodone. In this case, however, the physician did not prescribe the other aspects of addiction recovery from such a powerful drug, including individual counseling and advising on treatment for the other withdrawal symptoms that would occur, such as anxiety and depression. Instead, the treating physician simply continued to prescribe the transition drug. David became dependent on that drug to overcome the desire to take hydrocodone. Eventually he lapsed, and the cycle began again. This process continued over time. Meanwhile, the physician prescrib - ing the medication, which cost nearly $500 per month, received a generous “thank you” from the drug’s manufacturer—an all-expenses paid trip to Hawaii.

Four years passed, and David, no longer able to stay awake through an entire work shift, lost one job after another. Eventually he became more permanently unemployed. His marriage disintegrated, and he was left asking for help from family and friends to continue the transition drug rather than moving toward total sobriety.

Recognizing that he had no insurance coverage for a more reputable dependency program, David decided to take matters into his own hands. He knew about the depression and anxiety, as well as other physical symptoms, such as diarrhea, that would occur as he endured withdrawals from both hydrocodone and the recovery drug. So he locked himself into his apartment and let the trauma begin.

1. What primary medical ethical principles were violated in this case? 2. What patient rights were violated in this case? 3. What laws were potentially violated in this case? 4. What form of healthcare fraud is present in this case? 5. What individuals and groups are responsible for this outcome? What should be done to prevent a similar situation from occurring in the future? Fraud and Abuse Chapter 15 One additional organization, the Centers for Medicare and Medicaid Services (CMS), administers and oversees the Medicare and Medicaid programs. CMS, which is within the U.S. Department of Health and Human Services, partners with other entities and law enforcement agencies to prevent and detect fraud and abuse (see Table 15.7).

Table 15.7 Centers for Medicare and Medicaid fraud prevention groups Enforcement groupGroups Program safeguard contractors Program Safety Contractors/ Zone Program Integrity contractors Medicare Drug Integrity contractors State and federal law enforcement agencies Federal Bureau of Investigation Department of Justice State Medicaid Fraud Control Units Medicare beneficiaries and caregivers Senior Medicare patrol program Physicians, suppliers, and other providers Medicare carriers Fiscal intermediaries Medicare administrative contractors, which pay claims and enroll providers and suppliers Others Accreditation organizations Recovery Audit Program Recovery auditors Comprehensive Error Rate Testing contractors Source: U.S. Department of Health and Human Services, 2012.

Individual medical organizations also assist in fraud prevention. Violators can be detected through a hospital or other organizational control system, and quality accounting audits reveal improprieties. In addition, individual healthcare professionals, through personal vigilance, may identif y inappropriate activities and actions.

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission (2013) sug - gests five actions that will assist a healthcare organization in complying with healthcare regu - lations and avoiding even the appearance of potential fraud. First, managerial leaders should create an atmosphere that emphasizes conscientiousness among employees, including a sense of discipline and structure. Second, top management should assess the organization’s level of risk associated with individual activities and determine whether those risks are at an acceptable level. Third, the control system should ensure that managerial directives are followed. Fourth, the organization’s communication system should help identif y all information that assists employees in successfully and accurately completing their duties. Fifth, and finally, a monitoring system should be in place to make sure that the organization’s system performs effectively over time.

The U.S. Office of the Inspector General (OIG, n.d.) prescribes eight elements that are associ - ated with compliance and that include several key organizational components. First, all pertinent areas should be covered by written policies, procedures, and codes of conduct. Second, larger organizations should employ a compliance officer. Third, organizational training systems should be established to ensure that new members follow procedures and protocols. Fourth, quality communication systems should allow all members to provide information, ask questions, and Chapter Summary Chapter 15 make sure that no inappropriate risks are being taken. Fifth, clear enforcement procedures should be in place. Sixth, internal monitoring systems should be established. Seventh, stringent correc- tive action methods should be established. And eighth, a carefully worded fraud and abuse plan should be widely available to all publics.

The essence of the COSO and OIG approaches includes several key concepts: top management involvement, transparency, and methods for detecting and correcting potential problems. Such approaches not only provide for legal compliance, they also become part of an ethical and moral climate for the healthcare organization.

Chapter Summary Concepts regarding the nature of “right” and “wrong” form the basis for discussions about the nature of ethics. Ethicists rely on basic principles to guide their reasoning processes. The basis of any discussion or evaluation of a moral issue begins with a foundation of religion, philosophy, or some other starting point. In the medical profession, five ethical principles are often used to guide healthcare decisions: patient self-determination, fiduciary duty, beneficence, nonma - leficence, and justice. Patient rights include autonomy, privacy and confidentiality, truthfulness (veracity), fidelity, competency, respect, and capable guardianship.

The legal system governing healthcare in the United States combines various laws, regulations, and agencies, all of which have the objective of making the system safe, fair, and free from fraud and abuse. The elements that combine to form the regulatory system that applies to healthcare activities include constitutions, legislatures, administrative agencies, judicial systems, and execu - tives. Common law results from judicial decisions that examine and interpret previous prec - edents. A great deal of legal authority emerges from applications of common law.

The criminal law system contains a body of rules and statutes that define conduct prohibited by the government. A crime occurs when an action that violates a legal statute threatens or harms public safety and welfare, even when directed at a single individual. Criminal law establishes punishments to be imposed for the commission of such acts, such as medical fraud and abuse.

Civil law seeks to resolve noncriminal disputes, such as disagreements over the meaning of con - tracts, property ownership, divorce, child custody, and personal and property damage. A key element of civil law is a tort, which includes wrongful acts that are not viewed as a breach of a contract or trust that result in injury to another’s person, property, or reputation. The injured party who receives a judgment will be entitled to compensation for the wrongful act. Tort law, which strongly influences the healthcare system, applies to three primary areas within the health - care system: negligence, intentional torts, and the infliction of mental distress. One subset of per - sonal injury law and tort law—medical malpractice law—deals with legal claims against medical care professionals when the care provided, or the lack thereof, results in some form of damage, injury, harm, or loss to the patient. Other laws that influence the medical profession include the Healthcare Quality Improvement Act, antitrust regulations, and contract law.

Fraud occurs when an entity makes a false statement or misrepresents material facts in order to obtain a benefit or payment that the entity is not entitled to receive. The criminal act of health- care fraud occurs when an entity files dishonest healthcare claims in order to turn a profit. The costs of healthcare fraud are passed along to patients. A series of laws have been enacted, with specific agencies assigned to enforce those laws. The laws include the False Claims Act, the Anti- Kickback Statute, the Stark Laws, the Criminal Healthcare Fraud Statute, the Emergency Medical Additional Resources Chapter 15 Treatment and Active Labor Act, and the Criminal Provisions of the Social Security Act. These acts are designed to identify and outlaw various forms of healthcare fraud. Numerous govern- ment and private groups work together to detect and prevent healthcare fraud.

Ke y Te r m s bioethics the ethical decisions and actions taken in medicine and biological research civil law a regulatory system that seeks to resolve noncriminal disputes, such as disagreements over the meaning of contracts, property ownership, divorce, child custody, and personal and property damage common law a regulatory system that results from judicial decisions that examine and inter - pret previous precedents contract breach what occurs when one or more parties to a contract fails to complete the obligations they have agreed to perform criminal law a regulatory system that contains a body of rules and statutes that define conduct prohibited by the government ethics concepts regarding the nature of “right” and “wrong” fraud what occurs when an entity makes a false statement or misrepresents material acts in order to obtain a benefit or payment that the entity is not entitled to receive medical malpractice law a system that deals with legal claims against medical care profes - sionals, when the care provided, or lack thereof, results in some form of d amage, injury, harm, or loss to the patient remedy what occurs when the courts enforce a right or prevent or redress a wrong tort wrongful act that is not viewed as a breach of a contract or trust but that results in injury to another’s person, property, reputation, or the like Additional Resources Affordable Care Act http://w w w.healthcare.gov American Nursing Association Code of Ethics http://nursingworld.org/codeofethics Centers for Medicare and Medicaid h t t p : //www.cms.gov Committee of Sponsoring Organizations h t t p : //www.coso.org Healthcare Quality Improvement Act h t t p : //www.hcqia.net Stark Law h t t p : //w w w. s t a rk l aw.org Stop Medicare Fraud h t t p : //w w w.stopmedicarefraud.gov U.S. Office of the Inspector General h t t p : //w w w.oig.hhs.gov World Medical Association http://w w w.wma.net/en/10home/index.html Critical Thinking Chapter 15 Critical Thinking Review Questions 1. Define ethics. 2. Name the five principles that can be used to examine medical ethical issues, as explained in this chapter. 3. Describe the concepts of informed decisions and consent. 4. Describe procedural justice and distributive justice. 5. Identify the medical patient rights described in this chapter. 6. What are the three primary areas of concern with regard to bioethics? 7. What elements combine to create the legal or regulatory system that addresses healthcare concerns? 8. Describe the nature of common law. 9. Describe the nature of criminal law. 10. What is a tort or tort law? 11. What four elements must be in place for negligence to occur in medical tort law? 12. Define medical malpractice law . 13. Explain the purposes of the Healthcare Quality Improvement Act (HCQIA). 14 . What are the primary purposes of antitrust laws? 15. What four elements must be present for a contract to exist between two parties? 16 . Define fraud. 17. What forms of medical care fraud are present? 18. What laws apply to medical care fraud? 19. What primary agencies seek to detect and prevent medical care fraud? Analytical Exercises 1. How might religious origins of ethical principles differ from philosophical reasoning with regard to medical ethical and moral issues? 2. A type I error (or false positive ) occurs when a person concludes that a thing or relationship exists when it actually does not. A type II error (or false negative ) occurs when someone concludes a thing or relationship does not exist when it actually does. Explain how these concepts would, or would not, apply to each of the following:

• Misfeasance • Malfeasance • Nonfeasance • Beneficence • Nonmaleficence Critical Thinking Chapter 15 3. Explain how the patient rights described in this chapter might apply to the following cir- cumstances. (If you are unfamiliar with any of the controversies, use the Internet to study the issues associated with each.) • End-of-life choices • Contraception • Surrogate motherhood • Heroic measures • Medical care disparity 4. Genetic testing can be conducted to determine whether a fetus will experience various dis- eases and other disadvantages. How would the topics of informed consent, stigma, privacy, and health insurance availability apply to a situation in which a test confirms that a newborn might experience genetically determined problems? 5. Explain how the patient rights described in this chapter apply to circumstances in which misfeasance, malfeasance, or nonfeasance take place. 6. Are antitrust laws based on ethical issues? Explain your answer. 7. Should the primary responsibility for preventing and detecting medical care fraud be held by the government or by those in the medical profession? Defend your position.