The Auto Insurance Anti-Fraud Task Force appointed by the Ontario government has now completed its work and provided the Minister of Finance with its final report. One of the key sets of recommendations made by the Task Force involves the licensing of health care and assessment facilities operating in Ontario's auto insurance sector.
Why is licensing needed?
There are 21 health regulatory colleges in Ontario, with another 5 colleges about to come online in 2013. As many as 30,000 health professionals work in the auto insurance sector in some capacity. Although most professionals are regulated, the facilities in which they work are not.
Health care facilities treating and assessing auto insurance claimants range from sole practitioners to publicly traded companies, from public hospitals to private offices, from regulated professionals to unlicensed providers. Little is known about these service providers other than the number of facilities that have registered with Health Claims for Auto Insurance (HCAI) and the number of providers working in the facilities.
Although the 2010 reforms have reduced costs in Ontario, premiums remain the highest in Canada and there is ongoing concern about how sustainable those reforms will be over time. Fraudulent or questionable business practices of clinics have contributed to the high cost of auto insurance in Ontario. These abuses have been well documented and include: billing for services not provided, identity theft and involvement in staged accident rings.
What are other jurisdictions doing?
There is no Canadian jurisdiction that has developed a health facility licensing system for their auto insurance sector. There are few examples of health care facilities that are required to meet additional licensing and regulatory requirements beyond the regulatory requirements of an individual professional's regulator college.
In the U.S., state governments are responsible for licensing both health professions and health care facilities. The U.S. regulators are primarily focused on protecting the public and quality of care. Typically, facilities in many states are licensed, regulated, inspected, and/or certified by a number of public and private agencies at the state and federal levels.
Many state governments also operate some form of fraud bureau usually under the auspices of the state Department of Insurance. The state fraud bureaus' mandate is to detect, investigate and prevent insurance scams. Most fraud bureaus deal with all insurance fraud, but some investigate only certain types, such as workers compensation or auto insurance. The largest type of insurance fraud in the U.S. is health care fraud.
Florida is the only state where a separate licensing regime has been created for facilities that receive auto insurance (referred to as personal injury protection or PIP) payments. Clinics are licensed by the Agency for Health Care Administration. However, many providers, such as clinics affiliated with medical schools, don't need to be licensed. These requirements were introduced during the most recent legislative session and are effective July 1, 2012.
Only licensed clinics are allowed to receive PIP reimbursements. Many of the so-called "pain clinics" taking on PIP claims were unlicensed, and law enforcement officials have demonstrated the link between unlicensed providers and staged accidents
Two Florida counties have gone even further in an effort to combat fraud. Hillsborough County passed an ordinance in September 2011 and Miami-Dade County in February 2012 imposing additional licensing requirement on facilities operating in those jurisdictions. The National Insurance Crime Bureau reports a significant drop in fraud following the introduction of licensing requirements in Hillsborough County.
Features of a possible regulatory system
1. Barriers for facilities that wish to operate in the Ontario auto insurance system to ensure that business activities are conducted with high standards of market practice and integrity.
2. Those that fail to conduct themselves within acceptable standards should be subject to sanctions. Depending on the type and severity of non-compliance, sanctions would range from warnings to a prohibition from operating in the Ontario auto insurance sector.
3. A regulator (most likely FSCO) with appropriate powers to oversee the market conduct of facilities.
4. Develop HCAI into a regulatory tool to support FSCO. HCAI should only register facilities that have been licensed by FSCO and only licensed facilities should be able to bill auto insurers.
5. Improve the transparency of health care and assessment facilities in terms of ownership, the cost of services and conflicts of interest. An oversight model would include new disclosure requirements for facilities and their owners.
6. The health regulatory colleges would continue to be responsible for maintaining the clinical practice standards of the regulated health professionals employed by theses facilities.
7. Licences should be valid for one year and should be renewed by submitting an acceptable Annual Information Return.
Who should be licensed?
There are 22 regulated professions (including social workers) working either in sole practices, group practices or multi-disciplinary treatment facilities.
As of May 2012, there were 8,515 facilities registered on HCAI, although 1,291 had never submitted a document to the HCAI system. These facilities had collectively registered with HCAI a total of 29,537 health providers employed at their facility.
A licensing system should cover all health care facilities and clinics whether they are sole practitioners or multi-disciplinary settings. However, a regulated health professional who is an employee of a facility should not require individual licensing.
Why should assessment facilities be licensed?
Dissatisfaction with the assessment sector has been well documented. There are assessors who are deliberately facilitating a fraudulent claim by falsely establishing causation or impairment and by providing opinions outside their scope of competence or not based on scientific evidence. In some cases, an incompetent assessor may unintentionally be participating in fraud because of poor clinical or business practices. As well, there is a form of "doctor shopping" that occurs by both insurers and the plaintiff bar where clinicians with known beliefs are selected in the expectation of a specific opinion.
These behaviours have put the assessment industry in disrepute. Requiring assessment facilities to be licensed by FSCO will have some impact, at least with respect to business practices.
Business practice standards
Facilities licensed by FSCO should be required to maintain a set of standards developed by FSCO. The standards should relate to the operational side of these businesses and not the clinical practice standard of the regulated health professionals employed by the facilities. Regulated health professionals should continue to be accountable to their health regulatory college with respect to clinical practice standards and professional misconduct.
Business practice standards should be a compilation of licensing requirements, regulatory requirements, HCAI terms and conditions and Superintendent guidelines and directives. The following are a number of proposed business practice standards:
1. No facility owner or clinical director shall have a felony conviction in the five years prior to submitting a licence application.
2. Facility owners must disclose to FSCO all conflicts of interests in relation to other business interests of the owners and their family members as it relates to insurance, health care and legal/paralegal representation.
3. If the facility conducts insurer examinations, all professional staff conducting the examinations shall have at least five years of applicable clinical experience and the clinical director shall attest that the assessors work within their scope of practice.
4. A facility shall cooperate with compliance audits or investigations by a FSCO investigator, law enforcement officer or any other person authorized by FSCO to enforce compliance.
5 A facility shall file all fees with FSCO and shall not invoice for amounts that unreasonably exceed amounts charged by others for similar goods and services.
Sanctions for non-compliance
FSCO should have a range of regulatory tools available to sanction facilities for non-compliance. The tools should include the ability to issue an order to a facility regarding deficient business practices, suspend or revoke a facility's licence for non-compliance, impose an administrative penalty, charge a facility under the Provincial Offences Act and recommend criminal charge when suspected criminal activity is uncovered.
Funding the licensing system
Resources will be required to develop policies and programs, create the registration and licensing system, develop a web-based licence application, set up monitoring and compliance functions and train and develop enforcement capabilities.
Licensing fees be established to fund the system without creating a financial barrier for facilities and practitioners. Licensing fees should be sufficient to cover the majority of the costs associated with the proposed licensing system. But recognizing that the insurance industry will benefit from the new system therefore, the industry should be expected to bear some of the costs through their FSCO assessments.
The size of the rehabilitation sector (over 8,500 facilities are registered with HCAI) is likely the biggest challenge in establishing a licensing system. The rehabilitation sector has been undergoing some contraction and introducing a licensing system may bring about some further contraction. Still, a licensing system for a sector this size will need to be automated.
It is unclear whether auto insurance stakeholders are all supportive of these changes. The cost of doing business for providers will go up while revenues have been falling. Some facilities will welcome these changes if it will eliminate fraudulent operators from the sector.
The political environment may also pose a challenge. Introducing a licensing system will require legislative and regulatory changes. However, the Ontario government is currently going through a period of renewal and it is unclear whether there is political will to see these reforms through.
Willie Handler is a consultant with Willie Handler and Associates, and was involved in researching and preparing the Ontario Auto Insurance Anti-Fraud Task Force's report.