July 1, 2002 News

Managed Care

Boutique Practice

AMA Changing

Unique Employer Identifier

Malpractice

Hospital Sends Out Warning

People's Republic of Massachusetts

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Managed Care

YOU GET WHAT YOU PAY FOR!  The June 19, 2002 Wall Street Journal talks about Kaiser of Northern California and Cigna both refusing to allow its members to have nerve sparing prostatic cancer surgery at institutions with high rates of excellent results in this difficult procedure, but are not on the preferred list of the HMO. One patients in the article paid for the surgery on his own with good results. The other one is scheduled at Stanford in the near future. The plans state that they have physicians that can perform the procedure but the plans have no statistics on the results.  They may be able to perform the surgery, but only badly for all anyone knows.  The Kaiser HMO handbook nor the physicians did not tell the patients that there was something called a nerve sparing procedure which if successful will lead to impotence only 15-30% of the time and almost no urinary incontinence.  This is contrasted with a statistically much higher rate of impotence and incontinence when done without nerve sparing or by urologists who are not well trained in the procedure and/or do only a few a year. Kaiser and Cigna both stated correctly that "there is no legal or contractual requirement that the Health Plan send their members to an academic medical center or to an out-of-plan physician who has performed more procedures than a qualified physician". They don't state what is a qualified physician.   Again, I reiterate, "you get what you pay for."  How much is your life or your quality of life worth?

A new UCLA study states that healthcare premiums will rise in 2003 by 20%.  This is not good for the employers who will need to re-look at their health plans.  I would not be surprised if many went to more defined contribution employee payments and less HMOs. The physicians will not see any of this increase as they remain the cheapest aspect of healthcare.     

The University of California at Davis has curried the favor of Blue Shield.  Davis had been told to sit in a corner for having the audacity of charging more than Blue Shield thought was reasonable (read cheap). Blue Shield put Davis on the bottom rung of their tier system but have now elevated them after they began to take more than cost, which Davis did not lower, into their equation.  Davis is the most expensive since they have an all RN staffing system.  Blue Shield also had a slight problem.  They are one of two HMOs with a CalPERS contract.  If they didn't have the only major referral hospital in their fold there might have been a significant back-lash.  

Blue Shield has heard the WORD.  The business coalition has taken Blue Shield to task for their lack of quality and only costs in their tiered payment plan.  Blue Shield will now take into account for all hospitals both quality and cost.  However, if the cost is too high the hospital will not make the favorites list only on quality.  Blue Shield will have the groups of 300 or less pay either an additional $200 co-payment or 10% of the hospital bill each time they are admitted to a non-preferred hospital.  CalPERS has decided not to join the ranks of the two tier system for now.  Blue Shield is one of two HMOs CalPERS has selected for 2003.  

A seven person seventy year old medical group in San Rafael, California is breaking up.  One physician is retiring and the others are splitting in half.  Three are going to continue in the office but be members of Kaiser Permanente.  The other three are moving to a new location.  This is interesting as it is the second group Kaiser has taken in recently.  The other a much larger group in Alameda, California almost cost that hospital its business.         

Blue Cross Blue Shield of North Carolina has stopped directly paying physicians that have dropped out of their plan. This is a proviso in their plan documents with all physicians but they only enforce it with those physicians who have left the plan. Instead, they are paying the patient who may or may not realize they are receiving a check and who may or may not use the money to pay the physicians.  This is illegal in North Carolina and the state will go after the organization who is willing to challenge the state in court. The state law gives the state the power to fine the insurer $1000 per claim.  It would be nice to see it happen.  

Also, in North Carolina the Department of Insurance has stated that patients who go to out of plan physicians do NOT have to pay up front for care.  The physicians may bill the insurance company their full fee for the service.  This means that physicians will not have to join plans to be paid a small amount of their fee.  They may not join and paid their full fee. This came up because the executive director of the North Carolina Association of Health Plans made a fatal error.  He requested a clarification from the Department of Insurance and got what he asked for.  The plans will appeal and if necessary go to court to overturn the decision.

The Nashville Academy of Medicine is considering joining the Tennessee Medical Association in suing HMOs for their bundling and breach of contract. 

As was reported last time the Health Plan of the Redwoods declared bankruptcy under Chapter 11.  Now CalPERS has announced they are dropping the plan.  This means that 11,000 state workers that were with Redwoods will need to go to Blue Shield or Kaiser, both of which are more expensive.    

A Los Angeles HMO, Universal Care, is withdrawing from CalPERS as a protest to CalPERS only using Kaiser and Blue Shield HMOs for their patients. Universal Care has contracts with 345,000 patients.

Medical Savings Accounts (MSA) are a superb vehicle for those self employed people or those with 50 or less people on the payroll.  Thus spake the Dayton Business Journal.  I agree.  I have had one for several years and believe the benefits are terrific.  One gets to put a significant amount of money each year into another tax deferred vehicle, as one would an IRA, and either use it for medical expenses tax exempt or roll it over into equities.  Then one purchases a high deductible medical insurance policy to cover above the MSA amount. The downside is the requirement of depositing 75% of the total deductible and that the pilot project of allowing these is due to expire at the end of this year.  Most insurance brokers will not tout them as they get little commission from this vehicle. The IRA ruled this week that defined contribution health plans that are becoming commonplace throughout the country will be treated like MSAs and be able to be rolled over year to year tax free.  Top

Boutique Practice

The AMA House of Delegates has stated that the practice of boutique medicine is both legal and proper but only questionably ethical. This of course holds no water as no one pays attention to the AMA (see story below).  The actual wording was "The council finds no evidence that special physician-patient contracts adversely impact the quality of patients' care or the access of any group of patients to care."  It must be legal since a US Senator has introduced a bill to outlaw the practice.  This would not be necessary for an illegal procedure. 

A physician is the Bay Area is started a medical practice focusing on preventive care.  He has opened a 9000 square foot facility in Los Gatos, California.  The center will have a six person staff including nutritionists, specialists, personal trainers and exercise physiologists.  There will be many preventative tests available on site including the whole body CT scan.  The cost to the patient is expensive.  The cost for all the tests will be about $6000 and the year long correction program $18,000.  He currently has 20 initial clients that can afford and wish these services.  He wants to counter the managed care system of giving a pill instead of the longer counseling process.  This preventive process seems to be far ahead of managed care states a physician from the Stanford Center for Research and Disease prevention.

AMA Changing

The staid old horse the AMA is achangin.  It is losing money and membership, down to about 28% of the eligible physicians.  The House of Delegates has approved a committee to come up with a business plan to change from a membership based organization to an organization of organizations.  The state and specialty organizations would pay money to the AMA.  This would allow the AMA to speak for more than the current minority of physician members.  There is nothing decided what the member organizations would get for their money, except a large lobbying organization.          Top

Unique Employer Identifier

The Centers for Medicare & Medicaid Services (CMS) has announced a new rule for employers.  this will give each employer an individually identifiable number that will be used for all their health care filing and processing of claims.  This is a major improvement since in the past they might have had multiple numbers depending on which insurance company they were with,  This should simplify and save money for the employers.  The rule goes into effect July 30, 2002 and all must be in compliance by August 1, 2005.        Top

Malpractice

In the past several years 31 neurosurgeons have dropped their emergency room coverage in Jackson, Mississippi due to malpractice concerns. Also 17 malpractice carriers have left the state but continue to write policies in other states.  In many smaller cities and towns family practitioners and OBs have stopped delivering babies.  This means trips of over an hour in some cases to get to a hospital that has the capability to deliver.  EMTALA does not cover physicians in hospitals where the services are not available.    

A patient went to the ED in Corpus Christi, Texas with a rapid weight gain but four weeks pregnant.  The physicians found the problem was her kidneys but no one would do a renal biopsy citing malpractice concerns.  She had to go to a remote community for the needed treatment.  The problem is the long statute of limitations.  In Texas the statute runs until the child is twenty years old.  The city's hematologists and nephrologists have refused to see pregnant patients.  One group of five pulmonologist have refused to take pregnant patients.  The other group of pulmonologists in town have stopped taking any patients from the ED of Corpus Christi medical Center. Corpus Christi has lost eight OBs and gained three new ones in the last three years.  Several more are now giving up OB.  Three of the six neurosurgeons have quit with another stopping all ED work.  No one is interested in coming to town.  

The State, a South Carolina newspaper, ran an article indirectly about the malpractice problems in the state. The article stressed the secrecy behind settlements, which means the "people's right to know" has been compromised.  I agree there is a fine line between the secrecy and judicial economy.  If there were not secrecy, most if not all cases would be tried.  These cases a usually complicated and tie up court dockets for a significant time.  The patient also has an interest that must be considered.  The problem is how much information to give and how much they can understand without mass confusion.  It also has never been shown that the knowledge of a physician's malpractice suits or the money paid is correlated with the degree of negligence.  Bad baby cases are notorious high payors but this is due in many cases to future medical care and loss of future income, not how bad the care was.  The other problem is how these cases are classified.  If one uses the rhetoric from the pleadings by trial lawyers, all physicians are the scum of the earth.  If one looks at the reports of the state, the inflammatory remarks have been removed and only the important things remain.  This still does not address the confidentiality of settlements. These are reported to the state but the state keeps them confidential.  If the malpractice is bad or repeated the state then takes action against the physician, even if the underlying action is confidential.  The action against the physician's license after the investigation is complete should not be confidential.  Here's where the "public's right to know" may be in harmony with the physician's right of privacy. 

In California, an Assembly committee has passed a bill already passed by the full Senate.  The bill, which now goes to another committee, will require the number and amount of all settlements over $30,000 to be disclosed to the public.  Also misdemeanor criminal convictions that could affect the practice of medicine will be listed along with investigations referred to the Attorney General to be prosecuted.  There will also be two new non-physician members added to the board along with an amendment not in the Senate bill to require physicians answer inquiries within 10 days.  

In Nevada the representatives of the insurance, medical and trial lawyers are set to meet.  This is preliminary to any special session of the state legislature.  This panel must agree in the next month for the special session to commence.   

The Los Vegas University Medical Center has denied requests from 21 physicians for a leave of absence.  These private practice physicians were also told that they would need to cover the ED and trauma center.  The problem is the $50,000 cap for the hospital and the full time faculty.  This leaves the private physicians as the deep pocket.  I think the hospital can say good-bye to their private practice physicians, their trauma center and possibly their ED.  

In a follow up article 17 of 18 private physicians plan to resign from the Los Vegas Medical Center rather than put their future on the line.  Wave bye-bye to the all the care, not just the Trauma service.

The day following the above story the Los Vegas Commissioners realized their error and are granting 60 day temporary employee status to all the private physicians working at the hospital.  This will give them only the $50,000 liability that the full time physicians have.  There is a potential problem whether this interjection by the Commissioners will stand up in court. 

Another Pennsylvania hospital is giving up OB.  Mercy Hospital in Philadelphia is closing its OB section due to high malpractice premiums and low reimbursement along with a shortage of OB physicians. 

In Florida the physicians continue their hospital by hospital assault on the mandate for malpractice insurance.  With premiums skyrocketing in the state they want the hospitals to have the same malpractice rule as the state.  Florida requires either malpractice insurance or a pledge of assets to cover a $250,000 award or settlement. Each of the hospital medical staff bylaws will need to be changed to reflect this and then the hospital board will need to approve the change.  If one hospital in a community approves the change and another one doesn't, the one that doesn't will lose its medical staff.     

Even Oregon is feeling the pinch.  The Portland Business Journal reports that OB rates for malpractice have gone from $24,000 for the first six months of this year to $80,000 for the remainder.  Again there is a fight between the physicians and insurers versus the trial lawyers.  The former want tort reform and the latter don't.  The problem was the Oregon Supreme Court the ruled that the Legislature did not have the right to set caps on non-economic damages.  This was also turned down as a state constitutional amendment by the Oregon voters in 2000.  The communications director for the Oregon Trial Lawyers did his usual talking out of both sides of his mouth when he stated that California, with its price caps, are becoming prohibitively expensive.  I believe all who know realize the truth is not what he states. How do you know an attorney is lying?  His lips are moving, usually only on one side of his mouth at a time.  

While in Oregon the largest OB/GYN group in Roseburg is quitting their OB practice.  The group currently delivers 2/3 of the babies at the local hospital.  The remaining three OBs will not be able to carry the slack alone.  In Oregon the average malpractice award since the 1999 Oregon Supreme Court decision to invalidate the cap on non-economic damages has tripled.  

The June 24, 2002 Wall Street Journal agrees that the Oregon Trial Lawyers' spokesperson is not correct.  Their article shows the difference between states with tort reform and those without it.  They also make an excellent point that it is not just the high malpractice awards that are driving up the costs, but also the insurance companies attempting to re-coup their losses from their short sighted greedy attempts to gouge the premiums in the 1990s.  

Georgia hospitals are stating in testimony before the Legislature that their premiums are also doubling.  The hospitals are pushing for the same tort reform as are the physicians.          Top 

Hospital Sends Out Warning

In Pittsburgh the UPMC has sent letters to 4000 patients warning them of potential exposure to Jakob-Creutzfelt Disease.  The warning letter went to patients who had neurosurgery between April 2001 and April this year.  An autopsy done early this year showed a patient operated on at the center died from the disease.  The potential for transmission is almost nil since the CDC has increased the recommended sterilization procedures.        Top 

People's Republic of Massachusetts

The Massachusetts law restricting fees for pharmacies has not even been enacted yet and already there is fallout.  Lincoln Drugs of Milford is closing its doors in five locations.  The pharmacies had good growth but not profits.  The lack of profits were from the low reimbursement rates.  The owner stated the last straw was the bill now in the legislature to reduce further the allowed charges on Medicaid prescriptions plus charging the pharmacy a user fee on each non-Medicaid and non-Medicare prescription they write.  Watch for more pharmacies either closing, reducing hours (overhead) or refusing to fill Medicaid prescriptions.        Top

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Congratulations to all the physicians out there.  You will become rich treating Medicare patients.  Medicare is increasing your pay next year by $43 billion over this year.  This means instead of a 5.4% decrease you got this year, next year you will only get another 4.4% decrease in pay.  This 10% reduction in two years is in keeping with your deflationary malpractice decreases, the decreasing salaries you are paying your staff and your decreasing utilities.  Mazel Tov        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.