December 15, 2001

Demise of Managed Care

AMA Problems

AMA Wants to Help

Physicians

New Radiology Technology

Edgewater Hospital Folds the Tent

St. Paul Stops Malpractice Insurance

Penn. Plastic Surgeons Threaten to Stop Surgery

Florida Physicians Going Bare

Mississippi Doctor's with Malpractice Insurance Problem

Meanwhile, Back in W. VA.

Florida's Answer to the Problem of Chads

Value of Privacy vs. Stupidity

Demise of Managed Care

The squeaky wheel lives.  Those that believed their HMOs died.  This is part of the story in the NY Times.  Leroy Richmond was a postal worker in the Brentwood facility that was hard hit by Anthrax. He became ill and went to the employee nurse who told him it was nothing serious.  He then went to the HMO physician who told him he did not seem very sick. Mr. Richmond didn't believe him and went to the ED at Inova Hospital.  He was examined by the ED physician who heard wheezes and took an x-ray.  The x-ray had minor changes but the physician had just come back from vacation and had heard all bout the Anthrax problem.  She found out he was a postal worker and hospitalized him for possible Anthrax. He was started immediately on IV Cipro.  That diagnosis was confirmed the next day.  During his hospitalization he developed a decreased platelet count and started to bleed.  The physicians treated him by the seat of their pants with steroids and plasmaphoresis, a replacement of the bodies plasma. It worked.  He is one of the few luck ones that made it but a month later is still weak and not with full lung function.  The moral is be the squeaky wheel.

In Santa Rosa, California a six month dispute between the local IPA and HMO has been resolved with the IPA not accepting any capitation contracts.  This is what the argument was about in the first place.  The physicians hope to increase their income by 10% and have less insurance hassles due to the change.  The HMO states that employers will be charged more.

In Colorado the Insurance Commissioner is taking heat for not putting pressure on Aetna's pullout of the HMO from the small business market.  Colorado law allows any health insurer to stop a product statewide and not in only a re-lined area.  Colorado has itself to blame, as do most states that try to regulate supply and demand.  Colorado had passed a law giving immunity to small businesses (those under 50 employees) with high risk higher rates than new companies. Other health insurers have done the same thing in the past.  Maybe the law needs to change to market rates.                   

In Massachusetts the health plans are going to start charging a premium to utilize the more expensive major medical centers.  This will lessen the available patient load for the teaching hospitals and may threaten their existence from a fiscal and/or accreditation viewpoint.  The HMOs will charge more per admission to a teaching hospital and will charge the patient a per diem rate as well.  I need to say that this begins to happen in California with PacifiCare on 1/1/02. The difference is that instead of giving no co-pays to those that do not use teaching hospitals they will give the deal to those who use the hospitals that give the HMO cheap rates. About 1/3 of PacifiCare's contracting hospitals have agreed to the deal.  These are the chain hospitals.  The prestigious stand alone hospitals have not joined. The choice of which hospital the patient goes to is up to the patient and there may be a trade-off between convenience and quality versus cost.

In the beginning of the year two large Medicare HMOs will begin to charge a per dialysis surcharge of $25.  When one gets dialysis three times a week that adds up.  This is on top of increased premiums and lower pharmaceutical benefits the HMOs are going to get.  The two HMOs are Secure Horizons (PacifiCare) and Blue Shield.  Those with renal failure have two choices staying the course or traditional Medicare.  Under traditional Medicare the cost is 20% of $138.72 or $27.74.  Secure Horizons originally wanted to put a $50 per session cost.  If the patient can not afford the co-pay, they may be eligible for Medicaid.  A possible solution to the problem is if the patient is a veteran, he/she can get free care if they have a service connected disability or they are below a certain income level ($24,000).  If they don't pass either of the above, the cost is $50 per visit.    

As all know the government has increased payments to HMOs.  This has led to more HMOs leaving the program since the raise wasn't enough.  For the usual organization the raise was $16 per person per month on top of a base $415.  With the providers finally realizing the HMOs need them and not vice versa, the HMOs were forced to pay more to keep the providers in their organizations and not on extra benefits for the consumer.  In fact most plans have increased co-pay dramatically and cut benefits at the same time.  The Democrats are considering putting no more money into the failed HMO experiment.  

The Managed Care Lobby disagrees and states all would be right with the world if Congress would only give us a blank check.  Get with it!  It ain't agoin to happen.   

William Mercer has reported that health care costs rose 11.2% this year.  This five times the inflation rate.  They also expect the increases to continue with more technology and new drugs.  Even northern California with its HMO penetration has been hit due to the hospitals and physicians finally getting their acts together.  The article states that a new increase is because of the expanding coverage for domestic partners from 12% in 2000 to 16% in 2001. It does not mention the losses the insurance companies have had in their investment portfolios.  If the market comes back, do you think the premiums will come down? Sure, and it doesn't rain in Indianapolis in the summer time.

Another article, this one in the Chicago Tribune are talking about the defined contribution plan and the offer by Definity Health.  The plan give employees a fixed amount of money in an account that the patient controls.  The employee uses the money to purchase care and if any money is left over it is carried over to the next year.  The patient may go over that amount and then pay a deductible followed by a insurance plan.  This is the new wave especially with young healthy people. 

I reported in the November 1 edition that Kaiser of Northern California had a bunch of money and were going to spend that money on new clinics and a new hospital.  The December 7 San Francisco Business Times has a story that Kaiser will build new clinics and possibly a new hospital in Antioch, California.  That should be a real interesting move since John Muir/Mt. Diablo is putting a new clinic and possibly a subsidiary hospital in Brentwood, five miles away. Antioch already has a hospital, Sutter Delta.   Top  

AMA Problems

The New York Times discusses Michael Maves, MD, the new CEO of the AMA.  The article states that the organization is not the organization it was when membership was mandatory.  Currently, only one in four physicians belong and may not be relevant to today's practice of medicine.  It seems that most physicians belong to their own specialty society for political clout.  The current problems have been mainly related to the stupid Sunbeam deal in 1997.  This cost the AMA almost $10 million in damages and attorney fees.  This led to the hiring of Dr. Anderson who last year filed a breach of contract suit against the AMA and states that the AMA knew about the Sunbeam fiasco and had approved it.  He states the AMA's attorney has a memo that will prove his allegations and it was for that reason he could not fire the attorney in a botched real estate deal. The final straw was the censorship and firing of the respected Dr. George Lundberg.  To add fuel to the fire of stupidity the AMA also attempted to enter the abortion debate and maybe worst of all started the infamous E&M codes.  Dr. Maves is looking forward to the challenge of his new position.

In another article the Chicago Tribune writes that the AMA is hiring outside consultants to evaluate its leadership and governance structure.  This includes a decision as to who is to be in charge, the board or the CEO.  The AMA is also hemorrhaging money and subscribers.  The organization is projecting a $2.9 million loss on operations for the current year as opposed to a profit of $2.7 million for last year.  They expect a 6% decrease in revenue this year from member dues with an additional 7.5% drop in the coming year.  The AMA claims they have about 290,000 members.  They do not break it down into how many of those are residents and non-practicing physicians.    Top

AMA Wants to Help

The AMA is beginning the fight to get antitrust limitations for physicians lifted.  They have heard anecdotal evidence of the terrible things MCOs do to physicians.  Now they want to document it and need your help to do so.  If you have had any MCO hassles ranging from poor payment to refusal to authorize please go online to the AMA and go to their complaint site to fill out the short form.                Top

Physicians

The Tampa, Florida physician who was summarily suspended by Oak Hill Hospital for allegedly making an un-American remark on 9/11/01 has been reinstated. A follow-up story stated that about 2% of the nurses at the hospital signed a petition to not let the physician back.  The second story also said that he was allowed back by the medical peer review judicial process that took 45 days.  Usually a summary suspension by the CEO must be validated within 3 days.  If validated then the physician can have a peer review hearing.  I hope he will file suit for defamation of character and emotional distress as well as loss of income.  This hospital and CEO needs to lose money and prestige. What that hospital  did was the un-American thing. 

Cleveland continues to be the home of parochial medicine.  Two hospitals St. John West Shore and St. Vincent Charity? have stated that their affiliation with the University Health System allows them to fire from their hospital staffs all those physicians that work for the Cleveland Clinic.  This is 20 physicians at St. John and 140 from St. Vincent Charity?.  The Clinic has used the firings as a PR opportunity.  they have sent letters to those thousands of patients involved that the University has shown that they are not for freedom or choice but that the Clinic is.  Other University hospitals have done the same dastardly deed in the recent past.

The physicians owned by Duke and UNC are being told to open up their schedules to same day appointments instead of the usual 30-60 day waits.  This includes non-urgent appointments and physicals.  The physicians are supposed to learn how to work more efficiently and to get more done at each visit.  This means they can increase the revenue generated by billing for more complex visits.  This experiment is being backed by a $200,000 grant from Duke.  To date the procedure is working as the experimental physician groups are clearing their backlog of patients.  The physician do however, see more patients in less time per patient under this system.  But, more money is made.       

Two Boston physicians are starting the you pay and we will give you service treatment.  The internists are charging $4000 per patient or $7500 per family annually.  With the People's Republic of Massachusetts and their passion for all for one and one for all, there will be a large amount of people looking for this type of TLC. The Florida company, MDVP is planning to open a practice in Boston in January but for only $1500 per patient per year. These two physicians have been employees of Deaconess Hospital which keeps ratcheting up how many patients the employee providers must see.                       Top

Terrorism, what terrorism?  What if they held a meeting and no one came?  They did and that's what happened.  Florida Hospital in Orlando held a seminar on bioterrorism.  They expected a large amount of people since thousands of physicians were invited and thirty showed up.  Florida Hospital is purchasing the space suits and to date has spent about $100,000.  They are in Orlando, the home of the big eared rodent and may get some type of terrorist attack.  Mickey and Minnie are capitalists pigs.  Oops, I meant capitalist meese. By the way, for an interesting bit of trivia- Karl Marx was born in Trier, Germany.  His birthplace is now a McDonalds.      

Physicians are being paid more by hospitals owners of physicians for meeting targets.  These targets are not the general reduction of ancillary utilization but a specific target such as prescribing less costly antibiotics, not referring out of network or ordering multiple tests when the most definitive one should be done first.  With the new incentives base pay is lowered.  

The Sacramento Business Times has a story regarding physicians talking to patients with regard to the cost of what the patients want for their care.  This is something that physicians have always been poor doing.  Now if physicians talk to the patients many patients will become wary of the physician and their incentive. Top

New Radiology Technology

The major radiology companies, GE, Phillips and Siemans, are starting to sell a new 16 slice CT scanner for about $1.5 million.  This new machine will quickly become the state of the art as it gives unbelievably clear three dimensional detail.  The private radiologists will be buying this machine for the healthy CT scans paid for out of pocket.  Another company is starting to put out a tagging agent for use in virtual colonoscopy.    Top

Edgewater Hospital Folds the Tent

Chicago's Edgewater Hospital that has been hit with major federal fines has decided to close up.  The major physician admitters are guilty of fraud and abuse and have been sentenced to prison for 52 months and a fine of $1.1 million.  The hospital has lost Medicare payments for its role in the fraud.  The former vice-president has been convicted of fraud and sentenced to 61/2 years and $5 million in fines.  The former management company Bainbridge of Merrillville, Indiana is under criminal charges.                Top

St. Paul Stops Insurance

St. Paul has announced it is leaving the medical malpractice field.  Depending on the individual time frame restrictions it will be out of the business in several years.  The nation's largest malpractice insurer will stop renewing the policies as they come do and will not take new applications.         

The premiums are being raised all around the country.  In Beaumont, Texas there is now only one neurosurgeon due to $175,000 premiums for a $1-3 million policy with the Texas Liability Medical Trust.  When one looks at the total  payment New York is the leader with $632 million followed by Pennsylvania with $352 million.  California with excellent tort reform paid out $200 million and ranks 7th.  Not bad for the state with the most people and physicians.  California's median payout was $55,000 per claim as opposed to New York's $150,000 and Pennsylvania's $192,000.  As one might expect, those states with the lowest population have the lowest total payout.  Alaska is $3 million and N. Dakota is $4 million.  From 1996 to 1999 there was a jump of 76% in jury malpractice awards.  This increase has led to the ordering of many more tests for defensive purposes and the deferment of capitol spending.  The trial lawyers state that large awards are only in the most egregious cases and if there was no malpractice there would be no awards.  They will fight tooth and nail to stop tort reform.   Please see the following stories no the crisis.           Top

Penn. Plastic Surgeons Threaten to Stop Surgery

Following in the footsteps of their brethren orthopedic surgeons, Delaware County Pennsylvania plastic surgeon have threatened to quit doing hospital surgery.  Their malpractice insurance company has left the state and new quotes are a 40-5-% increase.  The loss of the insurance would mean they could still perform office based surgery under local anesthesia for much less in premiums.  The group's decisions are to only insure one or two of their physicians for hospital work or move to Delaware where they are also currently licensed.  The largest Orthopedic Group in the area has also stated they will stop doing surgery next year.  If most physicians would follow suit the legislature and Governor would be forced to act.                              Top

Florida Physicians Going Bare

The malpractice crisis has now spread from Pennsylvania and West Virginia to Florida.  The rates are going up dramatically and since malpractice insurance is not required by the state, some are going bare.  Some but not all hospitals and HMOs require malpractice insurance or the posting of a bond showing the ability to cover a $250,000 award.  The short sighted and chad deficient state does not think.  I mean does not think it is a problem.  They just believe the increase are because the rates have been artificially low for years.  They do not realize even if that is true the physicians have also had artificially low rates due to Medicare, Medicaid and HMOs.  They can not raise their rates.  The legislature is still not that interested but will become acutely interested, and will say we didn't know, when the physicians stop taking patients.   

Connecticut is also being hit hard by malpractice rate increases.  With St. Paul out of the market, the State Medical Society run Connecticut Medical Insurance Co. is raising rates an average of 20% on top of a 20% hike last year.  This will push physicians for higher fees from MCOs.  This may even cause the physicians to take notice of their colleagues in other states with good tort reform and consider the removal of managed care.  This may also spur the employers who pay the premiums to get rid of the costly and ineffectual middle man (HMO) and go to a defined benefit plan.             Top

Mississippi Doctors With Malpractice Insurance Problem

The withdrawal of St. Paul's from Mississippi is being used as a catalyst for the physicians to urge their legislators to pass meaningful tort reform.  The president of the Mississippi Medical Assn. state that "asking a company to write liability insurance in Mississippi is like sticking someone in a gator-infested swamp with a pork chop tied around his neck".                        Top

Meanwhile, Back in W. VA.

Yes, the legislature passed a plan for malpractice insurance.  The problem is it doesn't help some of the older experienced physicians.  If they join the state plan, they well need to continue to practice in order to fund their tail coverage.  This is a two year premium, usually payable at once.  If a doctor goes with a plan outside of the state plan the time needed to build up the reserve for the tail is five years.  This means that some of the older experienced physicians will be forced to retire now or continue to practice for 3-5 years.        Top

Florida's Answer to the Problem of Chads

The University of Florida at Gainesville is starting the first Florida Alzheimer disease research center.   Approximately 400,000 Floridians have the disease.  It is unknown how many voted in the last election.    Top

Value of Privacy vs. Stupidity

In Los Vegas a man with Hepatitis C is on a new drug for the disease, PEG-Intron.  The medication is working but the maker, Schering, is requiring a database for all people on the drug including the patient's doctor and insurance company.  Once this is done he will be provided with a special number that will insure he gets the drug if there is a shortage of the medicine. The information is all private and is not to be shared.  The patient has been told that without the number he can not get any refills.  There is an impasse but the patient is playing Russian Roulette with his life over a principle.  He must be living in Las Vegas because he likes to gamble.        Top

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DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.