August 1, 2004 Legislation

Universal Health


Medical Marijuana


Electronic Medical Records


CMA Letter to OIG on Credentialing 


Universal Health

In the last edition of under this heading I spoke about the city of San Francisco Board of Supes voting and now passing a November ballot initiative on allowing all citizens of the city to belong to the same city insurance as the employees at no cost.  There was nothing in the bill on how it was going to be paid. By the by, even if approved by the voters, there is nothing that can be done to require the city to comply with the initiative.  

 Now the People's Republic of Massachusetts has come up with a similar plan.  The legislature has taken the first step by passing a state constitutional amendment that all the citizens of the state will be covered under some yet to be determined plan at a yet to be determined cost and paid for by a yet to be determined tax. This needs to be voted on again in two years and then passed by the voters. I will commend the state legislature.  They have learned from the founding fathers who had a tea party in the state's main harbor.  The citizens will be able to vote on the measure to see how much tax they want to pay.  San Francisco never had that history and will not have the citizens vote on how to tax themselves for the proposed universal health.        Top


Never let it be said the is behind the times.  I have been saying for years that the JCAHO is doing a poor job and is too close to the hospitals it surveys.  Now the government agrees.  The GAO has reported that the organization has failed to find 167 of 241 serious deficiencies in a survey of 500 hospitals (a .346 batting average-about the same as Barry Bonds).  Senators Stark and Grassley are introducing legislation to allow CMS oversight.  JCAHO's O'Leary didn't like and does not take criticism easily.  The Joint in its recent publication argues that the way they do things is not contrary to their charge.   Although with an organization like this, he should have a thicker skin.

The beauty of the matter is that about the same time as the Joint defended itself, one of their recently accredited hospitals, Drew/King has been accused of not counting instruments pre and post surgery in hundreds of instances besides the recent one where a clamp was left in the abdomen.  The counting of the instruments was part of hospital policy. 

The ever changing Joint has announced its new priorities for next year.  These are to replace the 2004 goals.  They are that critical test results, whatever the hospital says they are, are communicated to someone promptly, identify and take action on look or sound alike drugs, assess each patient's risk for falling and address the risks and develop a process to obtain a full list of home meds and then get that information to the next provider.  They have bowed to their financial masters and rescinded the implementation of bar coding by 2007 and the installation of bed alarms to prevent falls. 

JCAHO failings are shown in their loss of income and surveys.  In 2003 the Joint lost $1.5 million on its surveys.  Most of the loss was from the decrease in surveys in the long term arena where the institutions were given a choice of being surveyed by the Joint or the State.  The State is winning.  The trend has been fewer surveys each year for the past four years.  The Joint is considering a price increase for the 2005 surveys, which will probably cost them more surveys.  Arizona hospitals are leading the way to flee the Joint and their restrictive policies.  More Arizona hospitals are using the State for Medicare accreditation.   Of course not all is bad.  The Joint has reserves of $62 million and continue to pay their high muckety mucks 12% raises in 2002.  In 2003 the base salaries went down but the Joint also changed its accounting to put in expenses into base pay therefore allowing more money into the benefit package.  For those that don't know the organization has a fully owned subsidiary called Joint Commission Resources (JCR). The JCR makes alot of money.  In 2003 it made 28% of the revenues and all the profit of the combined organizations.  The JCR is responsible for the publications, educational seminars, technical assistance and international accreditation activities.   

This is a busy time for the Joint.  They have just issued another in their yearly Sentinel Event Alerts.  This one is to review with the usual drill down any newborn over 2,500 grams who has a non-congenital permanent loss of function or perinatal death.  The recommendation (edict) states that hospitals conduct formal team training session for the OB team, use care guidelines, develop clear procedures for fetal monitoring, make sure key players are available for emergencies, check to make sure that neonatal resuscitation equipment is working.    Top

Medical Marijuana

In California, as many cities have endorsed the use of medical marijuana, Rocklin has voted to have a permanent ban on dispensaries of the possibly legal drug.        Top


The US Senate has approved a bill to set up confidential reporting system of medical errors by hospitals and physicians. The reports would go to "Patient Safety Organizations". The organizations would analyze and report the data back to determine how to make the system safer.  The bill needs to be reconciled with a similar bill passed several months ago by the House.  

Florida has put competing measures for the state constitution on the ballot for November.  The trial lawyers have put on a measure that would remove the license of any physician that loses three malpractice suits, require physicians to charge their lowest negotiated fee to all patients and provide patients with the right to see the record of physician errors.  This would lead to the cessation of peer review and the mass exodus of physicians from a state with high malpractice rates and no ability to charge more.  However, it may make the physician drop all managed care contracts so they may charge their own prices.  The other measure by the physicians cap the amount that attorneys may get in any award ala California.  

The Florida trial attorneys have dropped the amendment to force all physicians to have no one pay more than their lowest payor.  

The Florida measure that would cost the license of those physicians who had 3 malpractice judgments would today be 7% of the of the 33,000 practicing physician.  The Board has disciplined 13 physicians three or more times and six are still practicing medicine.  This measure would lead to settlements so there could be no judgment as well as the decrease in those who do high risk medicine.

The state has fined two hospitals who failed to notify them when they lost neurosurgeons due to the malpractice crisis.  Columbia Hospital in West Palm Beach and West Boca Hospital have each been fined $10,000 for not notifying the state prior to eliminating their emergency neurosurgery. 

The Wyoming Legislature has voted 48-12 in the House and 21-9 in the Senate to allow a constitutional amendment for non-economic med mal caps.  The vote will come in the November election.    

The Pennsylvania House and Senate Judicial Committees put an end to the required second consecutive session where a constitutional amendment must pass prior to being put on the ballot.  The issue will come up again year after year.  

Oregon will get the vote this fall on a constitutional amendment for a $500,000 cap, indexed for inflation on non-economic damages in med al cases.

The Illinois legislature has adjourned without passing any requested med mal reform.  The Governor may call the legislature back into special session to obtain some reform.  Top

Electronic Medical Records

The Government has a national IT Coordinator, David Brailer.  He has announced the formation of a panel of experts to delve into medical records and to report no later than this fall.  The panel is attempting to standardize the hard and software to be used and will especially focus on small and rural providers. To date three groups have agreed to work on the panel.  They are American Health Information Management Association, the Healthcare Information and Management Systems Society and the National Alliance for Health Information Technology, all in Chicago. The problem to date has been the large expense for the provider, especially the small office, and the lack of recoupment of that expense for many years.  Most of the initial benefit goes to the insurance companies and the hospitals.  This will be a hard sell to the physician, unless they are just starting out in practice and can set up an electronic medical record from the beginning.  HHS Secretary Tommy Thompson wants the hospitals to put in the electronic record using either grants or low interest loans.  He did not mention the 700,000 physician's offices.          Top   


The FTC and the Justice Department have unleashed a blockbuster statement "DISBAND CON LAWS."  The organization has held hearings  several years ago and come to the conclusion that competition is the way to go, not regulations.  They also endorsed specialty hospitals, pay for performance and expanded state license boards to increase quality and decrease costs.        Top

CMA Letter to OIG  on Credentialing

The following is a recent letter from the California Medical Association to the OIG:

July 23, 2004 

 Re: Comments on the OIG Draft Supplemental Compliance Program Guidance for Hospitals, 69 Fed. Reg. 32012 (June 8, 2004) 

On behalf of the California Medical Association (CMA) and its member physicians, I am submitting these comments relating to the June 8, 2004, Federal Register publication of the Draft Supplemental Compliance Program Guidance (CPG) for Hospitals. In addition, I am resubmitting our comments (see attached letter dated February 21, 2003) to the earlier OIG solicitation on the same topic. The specific section of the draft CPG to which we would like address these comments is Paragraph 2f, page 32023, concerning medical staff credentialing. Specifically, Paragraph f states: 

Certain medical staff credentialing practices may implicate the anti-kickback statute. … On the other hand, a credentialing policy that categorically refuses privileges to physicians with significant conflicts of interest would not appear to implicate the statute in most situations.

We agree with the first part of Paragraph f in which the OIG states that “[c]ertain medical staff credentialing practices may implicate the anti-kickback statute.” However, we urge the OIG to go a step further. The anti-kickback statute is triggered any time a hospital grants or withholds medical staff or clinical privileges in an attempt to improperly influence physician referral patterns payable by Federal health programs. 

The CMA believes that including the sentence beginning with “On the other hand” gives hospitals an unrestrained license to engage in economic credentialing to the detriment of patient care. In order to assure the best quality care is delivered, medical staff privileges must be awarded to physicians based on quality of care measures only. Thus the credentialing process must be protected from outside influences and physicians vetted only by measures used to assess their competence to practice quality medical care. Excluding physicians from hospital privileges for reasons other than a physician’s competence or other quality of care issues constitutes economic credentialing. In addition, allowing for a categorical exclusion, as discussed in this CPG, from medical staff privileges based on the hospital administration’s interpretation of a “conflict of interest” would permit hospitals, by extension, to control patient referrals to that hospital. Membership on hospital medical staffs should be granted and revoked based solely on criteria set forth in the hospital’s medical staff bylaws. 

In no circumstance should a conflict of interest be used as the basis for credentialing or privileging. A policy that constricts a physician’s ability to refer patients to a competing facility intrudes on the physician-patient relationship by adversely affecting a physician’s ability to deliver the best and most appropriate care to patients in the most appropriate location. The CMA urges that the OIG declare a hospital’s categorical refusal to grant privileges to a physician due to a conflict of interest a form of prohibited exclusive credentialing that implicates the anti-kickback statute. 

Though the CPG is a voluntary guidance document, by permitting consideration of conflicts of interest in credentialing and privileging, the OIG will foster an environment geared towards maximizing referrals to the hospital and establishing a medical staff based not on the medical staff’s ability to provide good quality care but rather on the medical staff’s willingness to refer to the privileging hospital. We look forward to further working with you on this important issue. 


Jack Lewin, MD Executive Vice President 

Cc: Executive Committee OMSS Board AMA



Medicare has released it proposed price cuts for certain oncology and chronic lung conditions.  These prices paid to physicians who administer them in the office will drop dramatically.  The government hopes to make up for some of the decreased payments by paying the physicians 6% more on the office payment for administering the drugs.  This will not come close to paying the physicians costs for buying the supplies and hiring the necessary personnel to administer the meds.  I am afraid that after many oncologists see the cost analysis, they will have no choice but to let some of their staff go and send the patients to the hospital for therapy.  This would be a real throwback to the idea of keeping patients out of the hospital environment, where they are more susceptible to infections. The increased hospitalizations is paying from the right pocket instead of the left but paying potentially the same.  I believe the patients will also be paying more with an increased mortality rate secondary to sepsis. With the nublulizers, in 2006, Medicare will pay some for the medications in inhalers.  This will lead to the desired change but 2005 will be tough on both the patients and the physicians. 

Two major respiratory companies, Lincare and Apria,  have warned either Medicare or their patients that they may have to stop their treatments if Medicare continues on their price cuts.  

Medicare has decided that instead of the projected 3.8% drop in payments to physicians, they will actually raise the payments by a whopping 1.5%.  Rural physicians will see a 5% increase.  

A new and great benefit has proposed to be added to Medicare.  They will pay for an initial extensive history and physical with screenings for breast cancer, prostate cancer, diabetes and heart disease.  This procedure would have to be performed within six months of the patient coming into Medicare.  

Under the Medicare Modernization Act passed last year, the proposed patient payments would remain the same but the eligibility for federal help has been clarified.  The asset test for help for those not eligible for Medicaid would include liquid assets and real estate not including the home or family farm.   

In Texas the State Attorney General has overruled the Tarrant County district attorney by stating that public hospital districts are not obligated to provide free non-emergency care to undocumented aliens.       Top


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.