Patient Safety Organizations: Challenges and Rewards for Health Care Industry

Reprinted the article with the permission of the Rhode Island Bar Journal where it was first published in the Journal’s September/October 2011 issue, Volume 60, Number 2.

… a brief overview of the legal challenges and industry benefits of Patient Safety Organizations to aid health care providers and attorneys navigating the legal implications of legislation compliance.Patient Safety Organizations (PSOs) have been the subject of much discussion since the enactment of the Patient Safety and Quality Improvement Act (PSQIA) in 2009. The goals of the PSQIA are to improve the safety and quality of health care, promote learning about the risks and harms in the delivery of health care and improve patient safety by encouraging voluntary and confidential reporting of adverse events that can ultimately be shared amongst providers for their mutual benefit. This article provides a brief overview of the legal challenges and industry benefits of PSOs to aid health care providers and attorneys navigating the legal implications of legislation compliance.

What are Patient Safety Organizations?
PSOs are organizations designed to collect, aggregate and analyze confidential information reported by health care providers. With responsibility placed on health care providers to voluntarily comply with the legislation, many health care professionals and attorneys alike are seeking answers about PSOs from both a practical and a legal standpoint.

Which types of organizations are allowed to form a PSO?
Organizations eligible to become PSOs include: public or private entities; profit or nonprofit entities; and provider entities, such as hospital chains, that establish special component organizations that can seek PSO status. Certain organizations, however, are not eligible to become a PSO, including health insurance issuers, regulatory entities and agencies to which healthcare providers are required to report data by law or regulation. An entity seeking initial listing by the u.s. Department of Health and Human Services (HHS) as a PSO must certify compliance with fifteen statutory requirements, as well as three additional statutory criteria that component organizations must attest they meet.

PSO Privacy and Confidentiality
The PSQIA provides federal privilege and confidentiality protections to information that is reported to or developed by a PSO. The PSQIA significantly limits the use of this information in criminal, civil and administrative proceedings. Subject to several well-delineated exceptions, the PSQIA ensures that providers will not be penalized for the free exchange of information. The PSQIA also requires providers to comply with the requirements of the Health Insurance Portability and Accountability Act (HlPAA) when making permissible disclosures of Patient Safety Work Product (PSWP) that includes protected information. Civil monetary penalties can reach up to $11,000 per violation for knowingly or recklessly divulging PSWP.

Challenges for health care providers
The PSQIA has been in effect for nearly two years, yet participation continues to move unhurriedly. One major milestone since the enactment of the PSQIA was the passage of the Patient Protection and Affordable Care Act (PPACA) signed into law by President Obama in March 2010. Unfortunately, the PPACA does little to encourage the growth of PSOs, as it does not provide incentive for the PSO creation, nor does it provide for federal funding. This is a significant setback when one considers that the cost to start a PSO is estimated at between $100,000 and $200,000, excluding the continued cost of operation.

Apart from financial constraints, providers must be willing to dedicate the time to designate responsibility to someone within their organization for understanding the PSQIA and the regulations implementing the law. Further, providers need to dedicate the time to establish and document policies and procedures relating to the organization’s Patient Safety Evaluation System (PSES) (the process that manages the collection and analysis of information for reporting to a PSO), as well as define and document what constitutes PSWP. Most importantly, providers need to promote an environment that rewards the widespread internal reporting of adverse events and errors.

Are PSOs effective?
In January 2010, the U.S. Government Accountability Office (GAO) issued a report to Congress on the effectiveness of the PSQIA. In essence, the GAO indicated it was premature to comment on the effectiveness of PSOs. The GAO noted that sixty-five PSOs were listed as of July 2009. However, at that time, few of the PSOs selected for interviews had entered into contracts to work with providers or had begun to collect patient data.

The GAO further stated that it could not assess whether, and to what extent, the PSQIA has been effective in encouraging providers to voluntarily report data on patient safety events and to facilitate the development and adoption of improvements in patient safety. One promising bit of information is the GAO believes if the entities that have created PSOs remain on schedule, the Network of Patient Safety Databases (NPSD) could begin receiving patient safety data from hospitals by February 2011.

The Patient Safety Act is a monumental stride towards further improving patient safety and the quality of care and treatment to patients. Congress has provided an opportunity to otherwise ambivalent healthcare providers to report, study, analyze and maintain patient information that would otherwise be kept guarded for fear of legal discovery, in an effort to further improve the quality of care in the United States. However, there is more that could be done to encourage the implementation of PSOs. A lack of federal funding, legal precedent and an incentive-based system, as well as a large commitment of time and resources, has likely provided an element of uncertainty to the long-term success of PSOs. According to the GAO, however, many PSOs are still in the early stages and it may be too early to gauge their success.

Government Acconuntability Office, Report to Congressional Committees, January 2010,


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