February 1, 2002 News

Malpractice Premiums

Managed Care



Hospital Physician Errors

Health Screening


Malpractice Premiums

In a study commissioned and ballyhooed by the Pennsylvania Trial Lawyers with $150,000, there was no problem with the tort laws as the cause for the high malpractice premiums in the state.  The study believes the problem is with the insurance industry.  The insurance companies attempted to gain market share in the 1990s by under pricing the policies.  One of the interesting things was that 2% of the state's physicians are responsible for 41% of the payments by the CAT.  These physicians need to scrutinized carefully and possibly have their license suspended.  Of course, no one should believe any conclusions of the report since a consultant gives the client what they want in a report paid for by the client.  If they didn't they would get no more business from the client.   

The Philadelphia Inquirer states in a story that the malpractice crisis in Pennsylvania is at the top of the heap when the legislature reconvenes.  They also state the Trial Lawyers have begun their radio and  telemarketing to warn the public against the physicians wanting to take away their legal rights.  The physicians and hospitals have also spent money to get their side noticed.  The main issue is the threatened closure of trauma centers and emergency departments. 

The Philadelphia Business Times in an editorial backs the physician and hospital stand for tort reform.  They state that only a few states have failed to update their malpractice tort laws in 25 years and Pennsylvania is one of those few.  They list the reforms that should be passed including a cap on non-economic damages.  As far as the trial lawyers commissioned study, their retort was "enough said."

The Philadelphia Inquirer reports the  package for the malpractice insurance problem in the state will be ready for signature in mid- February.  The House plan is a shortening of the statute of limitations, a cap on non-economic damages, awards paid over time and not as a lump sum, and the filing in the county where the alleged event occurred to stop forum shopping.  The trial lawyers are not happy and are going with the tired comment, "All of the tort reform is at the victim's expense."

In the next issue of the Inquirer the bill had passed the House, but it was only a bill to pass to get the issue to the Senate.  This is where the real lobbying and real bill will emerge.  The conservative organization ACLU does not believe the tort reforms are constitutional.  How much money are they getting from the Trial Lawyers?

In West Virginia the new Board of Insurance plan for malpractice insurance is to be about 10% more costly than the costliest private malpractice insurers that are left in the state. They will also charge an additional 50% for those considered high risk. They also expect premiums to rise for at least the next two years.  This will deter almost all physicians from the plan.  To date 10 have enrolled.   Almost the same number of Wheeling physicians have announced they are leaving the state or practice due to the premiums.  The state still need to pass tort reform.  There can be no meaningful and successful physician's mutual insurance company until this has occurred.     

Continuing with West Virginia, Charleston Medical Center, the only Level I trauma center in southern West Virginia, almost lost it's status.  The Center did not have enough orthopedic or plastic surgeons on it's on call roster.  The physicians were able to renew their St. Paul malpractice insurance and therefore stay on the roster.  However, there are virtually no orthopedic surgeons in other parts of  south West Virginia.  this means patients with non-trauma type orthopedic injuries need to be sent to Charleston.  This creates an overload of the Orthopods and the hospital wants to send these non-trauma orthopedic cases to other hospitals.         

Not to be left out, the physicians at Boca Raton, Florida are requesting an end to the hospital requirement of malpractice insurance. The lawyers would not like this since if there is no deep pocket the attorneys won't make much.  Florida law allows physicians to go bare as long as they post signs stating the lack of insurance and post a bond or a letter of credit for $250,000. Florida physicians are sued at a rate of one of every six physicians.  This is twice the national rate. 

Nevada is also feeling the pinch.  With the departure of St. Paul Insurance Company, the physicians are getting hit with several hundred percent premium increases. The legislature does not meet for another year unless the Governor calls them into special session.  Nevada has not tort caps.  A defense attorney states that attorneys as far away as Florida are moving to Nevada to take advantage of the no cap situation.  He stated one can not turn on the TV or radio without hearing their ads.

The Long Term Care industry has gotten it together faster than the medical community.  The Florida industry has formed its own insurance company to offer insurance to those that meet its quality standards.  This will make it much more difficult, if not impossible, for the high risk homes to find the required insurance.  These may and probably will go out of business.        

The above may be OK for the industry but the insurance rates are tripling for the long term care physicians.  This will stop physicians from seeing their own or others nursing home patients.  The lack of physicians will close the homes unless the physicians are covered under the home's insurance.  The homes are required to have insurance but some are still going bare.  Any physicians working in those homes are asking for bankruptcy.   

It is very possible that the attorneys are killing the goose that laid the golden egg.  As more states get the malpractice blues more states will pass tort reform.  This is not the cycle they want to see but one that is vogue currently.  Once passed into law and given the blessings of the State's high court the attorneys will have to find another patsy.   Top

Managed Care

Six health insurers that cover about 1/3 of patients in California are planning to pay IPAs, not individual physicians, extra for doing the right things right.  Any bet as to how much trickles down to the physician from the functionally bankrupt IPAs? This is different from rewarding providers for holding down costs.  The extra money will come for doing preventive medicine, care of the chronic illness and patient satisfaction.  The extra money will be about 5%.  The question is, where is that money coming from?  Is it coming out of the HMO pockets?  One doubts that.  Is it coming from the payors? One doubts that?  Is it the old switcheroo where the money comes from the payments from other physicians?  This is the most likely scenario.   

Gee, what a surprise!  The AMA has found that physicians have steered their sickest patients to non-capitated plans where they get paid fee-for-service and their healthy patients to capitated plans.  This is not only due to money but also because of the managed care capitation rationing of care.    

In yet another surprise, there is a marked increase in emergency room visits.  The Advisory Board Company has stated that their study showed that the cutbacks in federal funding and managed care rationing has decreased the hospital funding and the ability of hospitals to admit patients.  They base this on the inability of the medical offices to see more patients and the patients use of the ED in lieu of the office. 

California Blue Shield has followed the PacifiCare lead and come up with "A" and "B" lists of hospitals based on cost not quality.  The patients will get more of their per diem bill paid by the insurer if they go to a "A" hospital. If they go to a tier "B" hospital they will need to pay between $100 and $300 per day out of pocket. Since this is based only on cost it should be interesting if those businesses that profess that quality is their concern continue with these insurers. Potentially this will also cost their employees  many thousands of dollars out of pocket and make them very un-happy campers for their employers.

The California Department of Managed Care has lost a case regarding the fining of an HMO for not covering a weight loss medication to an obese subscriber.  Blue Shield was to be fined $270,000 for refusing to participate in an independent review to allow Xenical to be prescribed to an obese subscriber.  The court one year ago told the state that they could not fine Kaiser for refusing Viagra.  Blue Shields' contract explicitly excluded any weight loss medications. Blue Shield is paying for the medication for this patient and states it will continue to do so since the case is likely to continue.    

Georgia has fined Humana for the second time for violation of the state's prompt pay law.  This fine was $400,000.  This is the largest of 12 fines levied by the Insurance Commissioner.  Humana was fined $15,000 last year for the same thing and then placed on quarterly claims reporting.  As usual, the insurer states the problem was with an updated computer system.  It is always a computer problem and never a policy problem. 

Texas physicians testified before the legislature as to the continuation of late payments by insurers.  The insurers also testified that providers were filling out claims improperly, delaying payments.  The Texas law states if there is an unclean claim filed the insurers are to pay 85% of the claim and continue to investigate.  The providers state the insurers ask for medical records looking for pre-existing conditions or other reasons not to pay the claim.  This will cease by April 14, 2003, when HIPAA takes effect.  The law will not allow MCOs to obtain records without obtaining patient authorizations which are specific and time limited.  This will cost the companies more than the claim.

Minnesota's Attorney general is attempting to get HMO reform on the docket of the next state legislature.  He is trying to get a second opinion if the patient is denied coverage and allow suit against HMO in state court if the patient can show harm from denied physician recommended coverage.  In one of the most unique things I have heard of the physician who denied the care would have to explain the decision by phone directly to the patient.  If this type of care is so wonderful why does the state and federal government have to put in so much regulation.  RATIONING of health care for monetary gain.    

The Colorado Medicaid HMOs are suing the State for back pay and higher rates.  They have already won in the trial court and the court of appeal.  The case is now before the Colorado Supreme Court. The premise is that the rates were not sent in on actuarially sound principles. If the state needs to pay the higher rates they will not have realized any savings by the use of the HMO model.     Top


A Colorado company is in the for profit business of assessing physician competency.  They have three day long tests and hope that physicians in this day of reduced reimbursement will refer themselves.  The only referral they get are from some medical boards who are too lazy to do their own.  The company, who I will not name, has looked at Canada who audit physician's offices and find 10% are not doing what is considered best for their patients.  They do not state by what criteria these audits are based.  Is it by an ivory tower type or one in the trenches?  The fact is that physicians need to keep up better than they currently do.  How to do this is not known and is probably different for each physician.  Is it reading the journals, attending hospital conferences, or going to your specialty meetings?     

Speaking of keeping up, the pharmaceutical industry has for many a year attempted to detail physicians about their old and new products.  This gave the physician some information even though it might be biased. The major problem with the detailing was the potential for bribery.  Merck has announced that they will scale back on the Broadway tickets and sporting events to get physicians to use or at least think about their products.  The reps at Merck feel this might put them at a competitive advantage since they get paid on commission.  Recently Eli Lilly took physicians to an expensive NY restaurant and then paid them %500 to boot.  This was to listen to a presentation on a drug now under development.  Forest Labs gave physicians a night at the Plaza Hotel plus paid them $500 to listen to a presentation on Celexa, an anti-depressant.  I would think there would be no depressed doctors after that night. The companies state these are physicians working as consultants.  Yeah, and it don't rain in Indianapolis in the summertime.  When I was a practicing physician I was invited to many dinner meetings and sporting events.  I even had a great weekend in Carmel.  One company paid for a resident from all programs every year to attend the national specialty meeting plus multiple dinners or lunches. I do miss that!!       

An article in the Puget Sound Business Journal tells of physicians refusing to take new and in some cases even old Medicare patients due to the 5.4% cut in payments.  The article states a truth, there needs to be pressure on Congress by their constituents prior to any significant movement by that body. The primary care physicians state that the cost of caring for the Medicare patient is now more than they are receiving. 

A follow-up article in the Seattle Times states that 57% of physicians are limiting or dropping Medicare patients due to low fees.  Also an increasing percentage of physicians are opting to drop Healthy Options patients.  

The problem with hospitals owning physicians is that they need to be better at overseeing the billing and collection.  This includes the chart documentation.  If the doctor doesn't chart the way the hospital wants for maximum reimbursement, the doctor will be admonished and then terminated.  This happened in Indiana at St. John's in Madison County. The hospital then got hit with a racial discrimination suit along with the bad publicity that entails.  The hospital and the physician have now made up.  The doctor will be allowed to remain in her office and the hospital will assist her in setting up a private practice.  

Does anyone remember the infamous Dana Farber chemotherapy overdoses.  The physician, Dr. Lois Ayash, the overseeing physician of the breast cancer program, was terminated from the hospital without the physician-in-chief, Dr. Livingston, hearing her side of the incident.  This is acknowledged in testimony in the defamation charge by Ayash against Dana Farber.  He did meet with the two physicians who actually ordered the overdoses.  One was disciplined and had his license revoked by the state.  the other one was not disciplined since he "was absolutely straight with us" and was leaving the following week for a job in New York.  Ayash was interviewed by another doctor to start the investigative process against her.  Ayash then submitted written documents to the various disciplinary committees. Ayash was rumored to have covered up the overdoses.  This was printed in the Boston Globe, which has been already found guilty of libel by not revealing their sources. The hospital investigation showed no cover-up but gave Ayash an oral reprimand for not checking the doses after the patients were injured.  Livingston wanted a written reprimand but was rebuffed by the hospital president.  Livingston is no longer physician-in-chief.  Top


In my last (1/15/02) recent news, I spoke about multiple problems at Palomar Hospital in the San Diego area.  One of the problems was the refusal of Orthopedic surgeons to participate in the trauma program until certain conditions had been met.  This orthopedic refusal led to the temporary closing of the only trauma center in their part of the county.  This closing lasted for the first 15 days of January.  The two sides have now agreed to a long term arrangement.  The six orthopedic surgeons increased their base pay for trauma call significantly plus received the ability to bill patients plus an additional $400 per day to be on call for regular emergency patients.  This call can be at the same time as their trauma call.  The original contract contained language stating the surgeons were to pay the hospital $60,000 if their tardiness to show up caused the hospital an EMTALA penalty.  This was changed to the physician paying the hospital's expenses to find a replacement. There was also a gag clause in the original contract that was also removed.  Another contract provision deleted was giving administration the ability to set the call schedule.  These clauses were obviously thorns and could not be signed by any physician. The attorney and administrator who came up with these should be replaced.        

Marshall Hospital in rural California is not happy.  Some of their physicians are planning to build a physician owned ambulatory surgical center in competition with the hospital.  The hospital is considering a law suit to stop the center, which they would lose, to threatening the health plans not to send their patients there, potential antitrust action. The health plans are always attempting to save money and an outpatient center without hospital red-tape will save many hundreds or thousands of dollars on each case. This might have been avoided if any hospital involves the physicians in the governance and monetary aspects of the center on a 50-50 basis.  When the hospital wants control, this is the result.   Top

Hospital Physician Errors

At Rhode Island Hospital nobody followed their own procedures and a neurosurgical patient had the wrong side of the head operated upon.  The policy not followed was not marking the patients area of surgery and not paying attention to the x-ray markings.  A resident put up the x-ray backwards and then instructed the operating room personnel to change from the correct right sided surgery to a left sided set-up.  No operating room personnel questioned the conflict or did they follow their own procedures to re-check the correctness of the patient and the surgical site.  One year earlier at the hospital a child scheduled for eye surgery got a T&A instead.  

Next door in Connecticut, two women died at Hospital of Saint Raphael. A meter to control the flow of oxygen was wrongly connected to nitrous oxide.  The two women were both getting cardiac catheterizations.  The first one was very ill and therefore the death was not surprising.  The second patient was not as ill and when her oxygen saturation levels started to drop, the oxygen flow was increased leading to a further decrease and death.  An investigation then ensued and the error found.  The State is now investigating the hospital.   

In a new study by Leapfrog, a self-appointed body for hospital safety, at least one of the three arbitrary criteria for good care are being utilized by 53% of the hospitals.  The three criteria are the number of times a hospital is performing a high risk procedure, a computer program to reduce medication errors and the use of ICU specialists.  When they asked the St. Louis Hospitals to volunteer, only one of the 31 did.  This does not allow any meaningful statistics.       Top

Health Screening

What to do?  Should Americans that want to know about their health undergo routine CT scans or not.  The plus is that they may find out they have an undetected problem.  The minus is the cost, radiation and potential false positives.  No insurance pays for these self referred tests as they are for prevention and not treatment.  The radiation is equivalent to between 30 and 100 times that of an chest x-ray. However, living in Denver at a mile high is also like having a yearly chest x-ray.  The College of Radiology is not in favor of these screenings but how much of that is due to pressure from those that do traditional CT exams is not known. There are also those who believe that the tests should not be done due to a creation of a two tier medical system.  These same socialists are the ones who believe that all should be treated medically alike.  They believe all should have the same car for the same price and those who can afford more should not be allowed to purchase more.  Many people don't agree and therefore these imaging centers continue to flourish and more boutique medical practices are appearing.        Top


In another major corporate misdeed, the University of Minnesota has breached the privacy of about 400 patients.  They told the kidney organ recipients who the donors were.  This is the same organization that three months ago inadvertently blurted the mental records of children on a web site.  This organization needs some rapid outside help to fix their security problems.

Say it ain't so. Thieves stole credit card information from the Yale-New Haven Medical Center and began a buying binge.  One person was caught and stated he got the information from an inside source.  Yale-New Haven says it ain't so after an investigation.  An affidavit states that the employee "Tracy" has been fired from the Center for privacy violations.  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.