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| AGG Latest Issues in The Industry |
We have added this guide to Latest Issues to enhance its utility. We now group developments by topic area and link to the relevant place in the Latest Issues discussions. Topics include (1) Quality (61 entries); (2) HIPAA and Data Issues (8 entries); (3) Compliance, Stark and Fraud and Abuse (56 entries); (4) Reimbursement (29 entries); (5) Medical Staff Issues (25 entries); (6) Contracts, Antitrust and Other Issues (22 entries); and (7) PROMETHEUS Payment® Model (7 entries). Developments still appear in reverse chronological order with the most recent listed first. Some developments may appear under multiple topics because they have multiple implications.
3. Compliance, Stark and Fraud and Abuse
6. Contracts, Antitrust and Other Issues
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The fraud and abuse
liabilities which lurk in inadequate quality performance have been
highlighted on this website since 2003
with an AGG Note and
later her article in The Journal of Health Care Compliance, “Doing
What Matters.”
From Jim Sheehan’s first public statements on his priorities
regarding quality enforcement,
to the first OIG settlement based on quality
failures,
to Sheehan’s 2006 PowerPoint enumerating
the many ways in which quality will be the foundation for fraud enforcement,
the weight of punitive attention is increasing. Now, with the OIG's
published statements regarding
Board
responsibility for quality in hospital, Recognizing the need for a far better appreciation of these risks in the hospital community, Jim Reinertsen and Jamie Orlikoff invited Alice to provide the core content for a webinar to elucidate the context for quality fraud and, more importantly, to provide practical guidance on coping with this new compliance imperative. She identifies specific implications for physician groups. A recording of that program is now available. Click here. First convened in December 2004
as a disparate group of experts intending to design a new payment
model, PROMETHEUS Payment® Inc.,
has now been awarded a $6.4
million grant from the Robert Wood
Johnson Foundation,
to develop a scorecard, refine the concepts and most importantly
test the program in four pilot sites across the country. Having modeled
its first Evidence-informed Case Rates™ for actual implementation
beginning in 2009, the results are quite stunning. In her plain language
article, “Making
PROMETHEUS Payment® Rates Real: Ya’Gotta’ Start Somewhere With her study of the current identified
effects of P4P, traditional compensation models within physician groups,
survey of groups which do
compensate on
quality and consideration of the legal issues in doing so, Alice
opened
the door to focusing on this aspect of motivating quality improvement.
In her article, “Compensation
for Quality: The Next Inevitable Step The regulations now referred
to as “Stark III” have
added to the complexities of Stark compliance, but do not require
major reorganization of business or delivery relationships. There
are many opportunities for hospitals to help physicians with their
business case, including paying for quality performance, which
is particularly intriguing in light of the widespread emphasis on
measured
hospital quality improvement. In her two part article “Stark
III: Refinement Not Revolution”, Alice first identifies issues
associated with Stark
as applied within physician groups The challenge of engaging physicians in quality
initiatives at the hospital often falls most heavily on the shoulders
of the
medical leadership in the C-suite, whether the chief medical officer
or the VPMA or the chief of staff. In their article directed to
these folks, “Finding Common Cause
in Quality: Confronting The Physician Engagement Challenge A case recently decided in the Commonwealth Court of Pennsylvania has taken the quality-payment nexus further without any “never event”, or a finding of fraud, or even a bad outcome to the patients involved. In Pinnacle Health System v. Department of Public Welfare (2008 WL 140985) the hospital appealed from payment denials affirmed by the Bureau of Hearings and Appeals. The Medicaid agency denied payment for psychiatric hospitalizations where the patients were not seen by a psychiatrist on a daily basis. The hospital argued there was no regulation requiring it. The agency argued that this failure caused care to fall below the regulatory requirement that care be rendered in accordance with "accepted medical treatment standards." Both sides had experts -- the hospital's testifying to the fact that daily visits were not medically necessary, the agency's that daily visits were the standard of care. While the standard of judicial review for administrative purposes was whether the determination by the agency was supported by substantial evidence, the court held that even though the standard of ‘accepted medical treatment standards’ was general, it was not improperly vague and did put providers on notice of what was expected of them. Considering (1) standard managed care contract language regarding treatment in accordance with accepted standards of care, (2) the burgeoning expectations that American health care should be provided at higher levels than it is, (3) increasing fraud and abuse liability for quality failures and (4) that malpractice caselaw which addresses the standard of care has imposed as the standard of care treatment regimens not widely applied, the Pinnacle case offers a tightening view of the quality imperative. Without a finding of malpractice, fraud, or a “never event” payment denial for failure to deliver services properly is a new reason to do the right thing at the right time in the right way. Pay for performance is sweeping the country. Despite equivocal data as to success and impact, most payors regard it as inevitable, and most physicians are resigned to its arrival soon at a theater near them, if they are not already confronting it. Medicare’s ‘pay for quality reporting’ initiative really is “pay for whatever I did” because it is the completion of the form, not the quality of the care, which gets the payment bonus. CMS was met with a tepid enrollment of 17% of potential participants. And that program is not limited to physicians, but includes other non-physician practitioners as well. While these initiatives continue to be touted as ‘payment reform,’ on the other side of the ledger, both CMS and many health insurance programs are adopting no pay for no performance programs by denying payment for never events -- mishaps of such an egregious nature that they never should have occurred in the first place. Hospital associations have stepped forward to say their members will not bill for such events including wrong site surgeries, retention of foreign objects after surgery, death or disability associated with wrong type blood transfusions. First promulgated by the National Quality Forum in 2002, the list of the initial 27 “never events” is not without controversy, since a range of the conditions cited include matters which may have been present on admission (decubitus ulcers). Medicare has proposed to add conditions to those it already requires to be reported and on which it will not pay for the care devoted to treatment of the event or complication. There is some question as to whether this approach will be applied to physicians. In the PROMETHEUS Payment® model, a readmission for something related to myocardial infarction within thirty days of discharge is considered a potentially avoidable complication for both the physician and hospital. The antikickback statute has been enforced for the most part in settlements between the government and those alleged to have violated the rules. Most of the cases brought to date have entailed fact patterns where there have been actual payments for referrals or clear in-kind benefits flowing between one provider and another. Now in a novel whistleblower case out of Ohio, the government has intervened in a case which turns on the alleged preferential allocation of heart station service slots to one large cardiology group over others. The issue of interpretations of diagnostic studies performed on unassigned patients, most of whom come through the emergency department, is one which has been at a slow boil on many hospital campuses for years. Because cardiology is one of the most important specialties to most hospitals, finding ways to keep peace in the cardiology valley is always a challenge. Where one very large group dominates the staff, tensions can arise. Here, a retired cardiologist is the whistleblower. The real implications, though, are that if assignment of unassigned patients on a heart station rotation schedule is a potential benefit susceptible to fraud enforcement, then so are the clinical privileges which hospitals seek to restrict through their loyalty oaths and economic credentialing exclusions. In a very different spin on ‘quality’,
this year marks the 20th anniversary edition of the Health Law Handbook.
The book was identified as unique, even in the annals of Thomson
Publishing Company, the parent of WestGroup, which now publishes
the book – having been the purchaser of the big fish that ate
Clark Boardman which first put it out in 1989. WestGroup noted the
longevity of the book, and the challenge of having one author for
all 20 editions. Under the auspices of the Office of the Governor, North Carolina has launched a statewide program to implement evidence-based care guidelines for five chronic conditions. Health plans and providers have agreed to provide consistent services to patients regardless of their health insurance coverage. The initiative was apparently a year in its development. Involving collaborative efforts among physicians, quality experts and insurers, it is part of an effort “to fundamentally restructure the delivery of health care in North Carolina” in accordance with best practices. Interestingly, none of the press stories reveal the chronic, traditional anxiety-driven provider arguments with respect to potential malpractice liability which could emerge from the adoption of these guidelines. Perhaps we are finally getting to the enlightened understanding that doing the right thing will actually potentially prevent both malpractice claims and exacerbated illnesses --- the point of standardizing care in the first place. When the privacy regulations were first adopted back in 2003, there was considerable anxiety among the provider community, and particularly physicians, with regard to the administrative burden of compliance and intrusion in the doctor-patient relationship that would come from the empowerment of patients to complain to the Office of Civil Rights regarding violation of their right to privacy. The OCR has now published data regarding enforcement of HIPAA privacy complaints and there can be no doubt that the number of complaints has indeed gone up substantially. In 2004, the first full year of the program, there were 6500 complaints filed. By 2007, that number had increased to more than 8100. But this is the grand total of all complaints received from all sources throughout the United States of America! Hardly a tsunami of privacy violations. The data on the website reports complaints filed by state and their resolutions. Although the ratios have changed slightly, more cases are determined to have no violation today, than four years ago. By far, most of the complaints are resolved on investigation and review and do not proceed further (69%). Of the cases that proceeded to investigation, last year produced almost 1500 ‘corrective actions’ (type unspecified) and a larger number (750) than before were found to have no violations. Medicare has paid for services ‘incident-to’ physician services since the advent of the program in 1966. As the complexity of medical office practice has increased, there are many more types of clinicians who might interact with a patient in the office setting. The application of ‘incident-to’ principles has proven ambiguous, confusing and daunting to many physician practices. Now, similar to their purchased services debacle, a 23 page Transmittal that would have been effective June 2, 2008 has been rescinded. It imposed new documentation requirements and many aspects of the delivery of care left to carrier discretion in accordance with unarticulated standards. “Incident-to” remains in effect. The ‘incident-to’ rules offer an additional topic to be carefully incorporated into all physician practice compliance programs. The ability to get proper on call coverage for the hospital emergency
department is a growing challenge for community hospitals as documented
by the Center for
Health System Change.
Specialist physicians have become increasingly fearful of serving
on the on-call rotation given increased liability and larger numbers
of indigent and uninsured patients. Medical staffs around the country
have reduced the requirements for physicians on the medical staff
to perform this function, which long was seen as the physician’s
professional responsibility, which in earlier times they fulfilled
without much complaint. To cope with this problem, hospitals have
developed a range of strategies which the center identifies in their
report. Now, for the first time, the OIG
has issued an advisory opinion Clinical integration is a technique
by which independent physicians and group practices can relate to
one another for quality
and still
bargain collectively over price with managed care plans. Cited by
the FTC in virtually every settlement with IPAs and combinations
that bargained collusively over fees, the indicia of proper clinical
integration have not been well defined. Some settlements and one
Advisory Opinion, now
almost six years old, have staked out some of the turf, but most
of what the government has reviewed, it has always seemed, were activities
that have been motivated more by price than quality improvement.
The lack of clear guidance has led the American
Hospital Association to call on the FTC and DOJ for greater specificity The recent change in the JCAHO Medical Staff Standard 1.20 to require that the medical staff bylaws be an integrated document has created a firestorm of controversy that should be less than a tempest in a teapot. Prediction of expensive disasters in redrafting bylaws, and arguing over what is process versus what is procedure, is absurd and fomented by a cadre of law firms who have made significant income from advising medical staffs and hospitals that the bylaws should be divided up into five different sections so that they may be more easily amended. The Medical Staff Bylaws are the Constitution of the Medical Staff and should be amended about as easily as the US Constitution is amended. We have written and advised on medical staff bylaws for more than 100 medical staffs all around the country over the last 30 years, and this is not all we do, as it is for some firms. We have never advised a medical staff to disaggregate their bylaws. The other noteworthy change adopted by the JCAHO for 2009 is that the medical staff should have the right to propose medical staff bylaws changes directly to the board. This should be non-threatening unless you have a renegade medical staff or a renegade medical executive committee where the representative function of the MEC has broken down. It would be the board’s responsibility to sort this out if the medical staff asked for changes, not recommended by the MEC, that were not in the best interests of the hospital. Everyone should calm down about these feared power struggles and focus on the real purpose of the medical staff, which is to be responsible for quality in the institution. When organizations do that effectively the medical staff can become more galvanized for a far better purpose than internal turf and power struggles. In October 2007, the US Attorney in New Jersey entered
into deferred prosecution as well as settlement agreements with six
device manufacturers
who had paid physicians purportedly to advise them regarding the
development
of new devices.
Unfortunately, many of these were apparently no show jobs. But in
reading the settlements and corporate integrity agreements, while
the manufacturers agreed to cease what the government found to be
illegitimate relationships with physicians, the government did recognize
that paying no more than $500 an hour to physicians to perform real
services advising these companies would be permitted. This specifically
acknowledges that device manufacturers do have a legitimate need
for input from practicing physicians who might use their products.
There are many myths about how device manufacturers and physicians
may relate to each other. In “Physician
Investment in Start-Up Device Companies: Debunking The Myths”, The last five years have heard
a relentless call for information technology dissemination to improve
quality and lower costs in health
care. Electronic health records (EHR) have been touted as the first
and most important step to a real technology revolution. For physicians,
though, the cost of EHR implementation has often proven prohibitive.
The Stark and anti-kickback protections for donated medical records
was expected to jumpstart this effort. Not so fast. In his consideration
of downstreamed
EHR licenses Alice Gosfield and James Reinertsen
MD have been working on techniques to help physicians and hospitals
work better together
to improve
quality. In their white
paper for IHI Pay for performance programs
show no signs of abating in popularity, yet their impact remains
equivocal. Whether quality would be better
if physicians within groups also paid themselves based on quality
performance is unknown. If the incentives of P4P are to have impact,
how are those monies distributed to the individual physicians once
the group gets paid? There is virtually nothing in the literature
on point. In “Physician
Compensation for Quality: Behind The Group’s Green Door The most astonishing
reimbursement development of 2007 was a major change in the rules
regarding the
prohibition
on the markup of diagnostic testing. CMS has defined whether a service is subject to the prohibition on markup by reference to the location where it is provided. It doesn’t matter who owns the equipment, who employs the personnel, whether they are full-time, part-time, W-2 or independent contractors or even if they have reassigned on an 855R! To avoid the markup prohibition the service must be provided in office space of the billing physician organization where the group or the physician provides substantially the full range of services offered by the organization. Unless the service is ‘purchased’ (still undefined) the claim must show the lower of the fee schedule amount or the actual acquisition charge, whichever is less. Where there is no per click charge, the billing practice must determine the ‘net charge’ to submit to Medicare. CMS has steadfastly refused to give any guidance on how to calculate it, saying the burden is entirely on the billing entity. CMS suggests, though, that one might want to consider figuring out the net charge by dividing up the technician’s pro rata salary or hourly rate across the number of studies done. Of course, since these rules pertain to all diagnostic testing including Stark DHS, this approach would vitiate the centralized building opportunity under the Stark statute. Unless the group has co-located offices where they do substantially the full range of services they do, the services are subject to the prohibition on markup even if they own the building, the equipment, the tech and/or the physicians! CMS first proposed exactly the same standard under Stark and then ended up using the hourly co-location for shared facilities. Until January 1, 2009., pending their 12 months to study the issue, the current Stark rules will work just fine. Many mobile arrangements where specialists lease their equipment and technicians to primary care practices can work well under both sets of rules. Many other arrangements where specialists lease space in the same building as referring physicians would have to be changed under the pending rules because those transactions create a study subject to anti-markup unless the group provides substantially the full range of services at the off-site location. Although they are now delayed, the rules would not prohibit arrangements. They simply take the fee schedule based reimbursement system that Congress created in 1992 and turn it into a cost-based system. The rules are only about pricing and not about anything else. The Social Security Act has long had on the books a provision which states that an entity may be excluded for charging Medicare ‘substantially in excess’ of its usual charge. Many people think this is a provision which requires that all charges to all payors be the same as Medicare charges, which is not true. The statutory provision made some sense in the old reasonable charge reimbursement days when the Medicare allowable amount was calculated on the basis of reference to the ‘usual, customary and reasonable’ charge. With the advent of RBRVS and the Fee Schedule, Medicare no longer calculates ‘usual charges’. Almost four years ago in September, 2003, the OIG proposed regulations which attempted to interpret the statute. They had major problems, and the only thing good in them was that they took the position the provision did not apply to charges for physician services. The OIG has now withdrawn the proposed regulations with no plans to reissue them. Even so, they state an intention to continue to monitor “individuals and entities” for violations, impliedly recasting the specter of evaluating physicians against this standard. The statutory provision remains on the books, available for interpretation by the government with no guidance to the industry. As a practical matter, the provision comes into play when physicians and other providers enter into discounted relationships which become a significant portion of their revenue stream. When that happens, the statutory exclusion could be triggered. So, while we have no standard for what constitutes a ‘usual’ charge, but by definition it entails something relatively frequent. Our standard advice has been that when your discounted business (by comparison with what you charge Medicare) rises to 45% of your payor mix, your discounted charge is approaching something ‘usual’. As to “substantially in excess”, the proposed rules used 120% of the Medicare charge, but that has now been withdrawn. Beginning in 1999 and completed by 2006, CMS has gradually
transferred the responsibility for detecting and deterring fraud
and abuse in Medicare from carriers and fiscal intermediary fraud
units to Program Safeguard Contractors (PSCs). If you get a letter
from one of these entities, look carefully at the bottom. It will
appear to come from CMS but it will not have the name of your usual
carrier or fiscal intermediary. The OIG has recently evaluated
the performance of these entities Virtually undiscussed in the literature is
a recent (April 2007)
GAO
report on how a focus by Medicare on physician
practice patterns could lead to greater “program efficiency”.
That phrase is redolent of the commercial payor movement to tiered
networks, episode treatment groups (ETGs) and other ways to determine
which providers are the cheapest
at rendering appropriate care.
The GAO focused on outlier generalist physicians who treat a disproportionate
share of overly expensive patients. These physicians saw similar
numbers of patients as others but, by comparison with their peers,
were more likely to admit to the hospital, more likely to generate
multiple admissions per patient and were more likely to have used
home health services but less likely to have been admitted to a skilled
nursing facility. The GAO explicitly looked at how ten private health
care purchasers are tracking efficiency, reporting that all compared
actual spending for physicians’ patients to expected spending
for the same patients, given their clinical and demographic characteristics.
The GAO called for legislation to give Medicare the ability to deploy
incentives used by other purchasers --- from steering patients to
more efficient physicians, to excluding inefficient physicians. As
Medicare is now implementing a widely criticized and administratively
burdensome ‘pay for reporting’ (not even pay for performance)
program,
it can be expected that efficiency measurement will make its way
into the Medicare toolkit as well.
This current expectation
should translate into an even greater motivation to pro-actively
prepare for better clinical collaboration such as that motivated
by the PROMETHEUS
Payment model®. With the announcement of an initiative to launch September 2007, CMS will seek information from 500 hospitals nationwide about physician investment in them. Of broader significance, however, they will also be asking hospitals for disclosure of hospital-physician compensation relationships under Stark. Half of the hospitals are those who did not respond to a voluntary request for data. The others will be chosen at random. In the announcement of the now mandatory reporting, the government makes it clear that the information can be used by them for any legitimate purposes including enforcement. While this announcement is a good reason for hospitals and physicians throughout the country to review all such relationships for compliance, it is not well understood that the Stark regulations offer both flexibility and some opportunities for hospitals to pay physicians directly for work they do for the hospital’s benefit. The Phase II regulations made it clear that compensation for physician personal services provided to the hospital has safe harbors which are specified in the definition of ‘fair market value’. At the same time, the preface to the regulations explicitly states that paying outside of the 50th percentile of MGMA does not necessarily violate the law, although safety is not guaranteed there. Paying physicians for their time in helping the institution improve
its quality performance is increasingly important, as physicians
struggle against lowering reimbursement and higher overhead expenses.
Increasingly, hospitals are already paying for medical staff leadership
and committee service. As the activities for which physicians are
paid expand, the fundamental problem is that they can primarily be
paid for their time --- the one dear commodity they have little to
spare. There are, however, a host of things hospitals can provide
which benefit physicians and enhance both of their business cases,
while improving quality --- all without making cash payments to the
physicians. These are issues we have addressed in our articles in
Hospitals
and Health Networks Online (Part
1, Part
2), the Journal
of Oncology Practice On December 5, 2006, Health Affairs published a web exclusive series of articles offering some fascinating perspectives on hospital-physician relationships which are particularly relevant to physician engagement with hospitals around quality. Berenson, Ginsburg and May observe that physicians have increasingly become competitors of the hospitals which were formerly their most valued “significant others”. Fischer, et al. argue that hospital quality results should be measured to include the “extended hospital medical staff” which would take in physicians who refer to the facility but never set foot in it. Wilensky, Wolter, and Fischer present a new spin on gainsharing as a way to meet the ever elusive goal of “aligned incentives”. Smithson and Baker contend that the medical staff organization itself is a moribund anomaly and not worth accommodating at all. Goldsmith offers a view of the medical staff as a Darwinian coral reef with predators and prey; while Cortese and Smoldt claim that legally integrated hospital-physician entities are the only hope for the future. The provocative juxtaposition of these articles reflects the intensity of interest in the intersection of physicians’ economic behavior with the hospital’s status as an institution where most of the activities are driven by physician orders. All acknowledge that improved medical staff-hospital relationships are indispensable in today’s world. Our work takes the position that the structure of these relationships
is not the issue at all. Too much time of lawyers and accountants
is spent constructing financial transactions that will bond the physicians
to the hospital by generating revenue for them. There is no question
that paying them for some activities is useful. Rebuilding trust
where it has broken can sometimes begin with a good business deal.
But, from the IHI
program and white
paper The increasing emphasis on quality
as a basis for fraud and abuse enforcement is now clear. Yet many
compliance officers are not integrated
into the quality activities of the organizations they serve. In her
viewpoint on “Doing
What Really Matters: The Compliance Connection to Quality Among the many strategies for closer alignment between hospitals
and their physicians are the proliferating joint ventures and financially
driven exercises, including gainsharing, that are intended to capture
with more revenues the loyalty of the medical staff members who are
involved. In an editorial in a recent issue of the Journal of Oncology, “Physician-Hospital
Partnerships: What Really Counts? The PROMETHEUS Payment® model is designed
explicitly to reward clinical collaboration among otherwise independent
providers. Since 30% of
any provider’s scores will turn on the performance of all the
other providers treating the patient for that condition, and scores
determine the totality of the payment a provider can receive, there
is a real reason to pay attention to the web of referral relationships – from
whom you take referrals, to whom and where you refer. Even when the
optimal moment for referral occurs would be an important point for
agreement among clinicians – whether primary care to specialty,
vice versa or among specialists. In fact, much of what PROMETHEUS
Payment® would reward, providers should be doing anyway. In her article “ The interest of federal prosecutors in quality
has never been as intense as it is today. As a dramatic manifestation
of prosecutorial focus on board responsibility for hospital quality
generally and “the quality we are paying for,” attached
is a PowerPoint presentation In the late 1970’s, the concept of independent physiology laboratories (IPLs) was created by an Attorney General opinion to permit otherwise unrecognized providers to bill Medicare for the delivery of non-invasive diagnostic services that did not qualify as clinical laboratory services. Over the years, IPLs proliferated with virtually no quality controls over them. In 1997, HCFA published regulations creating independent diagnostic testing facilities (IDTFs) with quality controls to make sure Medicare beneficiaries would not be harmed. From 2000-2006, in California alone there was a forty percent (40%) increase in the number of IDTFs and a four hundred percent (400%) increase in the provider numbers billing for these services. As a result, the government has now established almost a dozen performance standards for IDTFs. Since physician practices may hold numbers both to submit as physicians and as IDTFs all should evaluate the new requirements. Interestingly, in addition to relatively standard types of controls such as maintaining liability insurance, assuring that equipment is at a physical location, answering beneficiary complaints, posting regulatory standards for patients to see, testing and calibrating equipment, and disclosing with regard to ownership, the standards now say that physicians supervising may not supervise more than three IDTF sites and the IDTFs may only provide services upon an authorized practitioner’s request. Patient Self-referred services are not covered. This change represents an increasing attention by the government to the appropriateness of care both in terms of efficiency and quality. With the crisis regarding the Sustainable Growth Rate (SGR) creating a significant reduction in physician reimbursement under Medicare for 2007, Congress enacted the Tax Relief and Healthcare Act of 2006. While Congress froze payment rates to 2006 levels, they also created a program to provide bonuses for physicians to report on consensus based quality measures. The first measures would be those used in the Physician Voluntary Reporting Program until the end of 2007. After that the measures will be specialty focused and consensus based, meaning endorsed by a national organization such as the Ambulatory Quality Alliance or the National Quality Forum. The standards apply to physicians, non-physician practitioners, and physical and occupational therapists. The bonus of 1.5% of allowed charges for satisfactory professional service reporting will give physicians more of a reason to pay attention to what their specialty acknowledges as legitimate measures of quality. There are no appeals of the determinations that the Secretary makes on this payment and there will be sampling to validate the program. The system need not be implemented by regulation but may be implemented through program memoranda. These are easily accessed through the CMS website (when it is working). When Congress appropriates $1.35 billion dollars for physician quality improvement initiatives, the federal government is getting serious about quality. Section 204 of the Medicare Improvements and Expansion Act of 2006 created a demonstration project to evaluate the viability of the “medical home” concept sponsored by the American College of Physicians and the American Academy of Family Physicians for primary care physicians to coordinate care on quality issues. At the same time, under Section 203, the OIG was called on to report in two years on “never events” (e.g. amputating the wrong leg, operating on the wrong patient) which the National Quality Forum has identified as errors that should never happen. The issue for the government is how to avoid paying for these events and to what extent payment is denied. For example, if the wrong leg is amputated, should only the hospital not be paid or also the anesthesiologist and the surgeon who participated? These questions have no answers yet, but the Congressional focus on these issues brings Medicare far more in line with the direction private industry has been moving, and much faster than has typically been the case. Implementation of the PROMETHEUS Payment® model
is progressing. With sponsorship from the Commonwealth Fund to model
Evidence-informed
Case Rates™, the program expects to launch in the latter part
of 2007. To make it real, there are contractual issues that must
be addressed including what is appealable and what is not. In her
2007 Health Law Handbook chapter Alice provides “The
PROMETHEUS Payment® Program: A Legal Blueprint” Quality is increasingly
becoming part of the basis on which providers compete. While advertising
about quality really
began with managed care organizations, it has now spread to many
hospitals and increasingly will be of interest to physicians. The
issues associated with physician advertising, including trademark,
liability and branding concerns, are addressed by Daniel Shay in
his 2007 Health Law Handbook chapter “Four
Out of Five Doctors Need to Know: Legalities of Physician Advertising.” One of the critical challenges for hospitals and physicians looking to successful futures is their ability to work together to meet their patients’ needs. The internationally renowned Institute for Healthcare Improvement has, under the leadership of James L. Reinertsen, M.D., launched its first ever program oriented around physicians. “Engaging With Physicians In A Shared Quality Agenda” is a two day in-person program first offered September 8-9, 2008 in which Alice Gosfield is part of the four person faculty. It sold out six weeks before its scheduled presentation. A new program has been added to the agenda July 13th and 14th in San Francisco. The program establishes a framework to plan and execute successful physician engagement around quality. Jim and Alice are also available to present their parts of this program outside of the IHI context. The core principle here is that hospitals will fare far better if they organize more around engaging effectively in the physicians’ quality agenda. The Ventura County California hospital-medical staff case generated a firestorm of controversy regarding board involvement in medical staff governance before it was eventually settled. The parties had very intense views regarding the matters at hand. (See the views expressed by the the attorneys representing the physicians). Subject to significant physician advocacy, the California legislature enacted a law establishing the medical staff’s right of self-governance in the most explicit terms ever . Specific topics statutorily reserved to the medical staff include selection of clinical criteria and standards to oversee and manage quality assurance and other medical staff activities, selection and removal of medical staff officers, and the right to retain and be represented by independent legal counsel. In case of any dispute on these issues, the medical staff and hospital governing board are obligated to meet and confer in good faith to resolve the dispute. Astonishingly, though, the statute says that when any person or entity is even about to engage in acts or practices that hinder, restrict or obstruct the ability of the medical staff to exercise its rights, the superior court “on application of the medical staff” may issue an injunction. (West’s Ann. Cal. Bus. & Prof Code §2282.5). While acknowledging the ultimate authority of the hospital board to protect the quality of medical care and competency of its medical staff, the legislature explicitly stated that their final authority may only be exercised with a reasonable and good faith belief that the medical staff has failed to fulfill a substantive duty pertaining to quality of patient care. Many commentators have characterized this legislation as establishing
that the medical staff must be considered an independent legal entity.
For many reasons this would be a disaster, although there are physician
advocates that have long called for this approach in the form of
incorporating the medical staff. Certainly the medical staff counsel
in the Ventura case makes that argument. We do not read the statute
as requiring that the medical staff be seen as an independent entity
and will be keenly interested in how it is interpreted by the courts.
The new possibilities for liability where a medical staff is separately
incorporated are significant: If it will then be able to conspire
with the hospital board under antitrust principles pertaining to
credentialing. It will have its own separate malpractice liability
for negligent credentialing. It would not be protected under the
hospital’s own director and officer’s liability insurance
but rather would have to obtain its own. The full interpretation
of the statutory provision is not yet known; but for medical staffs
which act responsibly to surveil the quality of care in the organizations
to which they direct their attention, the decision to incorporate
should not be lightly taken. While ‘bad cases make bad law’,
the essence of this law is not bad. It’s interpretation in
already difficult circumstances could create serious consequences.
In the last analysis, the extremely critical role of the organized
medical staff for quality assurance and particularly among their
peers, is strongly supported here. How to change the way medical
staffs and hospitals interact around quality is the key challenge
for hospitals of the future and a substantial theme in our work.
(See “In
Common Cause for Quality”, “Engaging
Physicians in a Shared Quality Agenda”, “W(h)ither
Medical Staffs?” The issue of how physicians can collaborate effectively
when two specialties seek to perform the same services has presented
increasing
challenges in many contexts. A classic problem area with regard to
this is the advent of coronary computerized tomographic angiography
(CTAs) performed by cardiologists who generally do not read the full
chest cavity. In contrast, radiologists frequently hold exclusive
privileges at the hospitals at which they practice and are not as
intensely focused on cardiac organs. The American College of Radiology
asked us to provide them with a white paper elucidating potential
reimbursement liabilities associated with splitting these interpretations.
That white
paper Hospitals and physicians have tried to collaborate more effectively through bonding, purchasing, owning and managing. Virtually none of these initiatives has improved quality of care. In addition, the rise in economic credentialing, conflicts of interest policies and disclosure of ‘competing investments’ further entrenches the parties as disparate stakeholders. In her work with hospitals and physicians in common cause for quality, Alice Gosfield has focused on the negative effect of these initiatives. Frequently, overly conservative attorneys contribute to mythologies pertaining to the impact of Stark and the anti-kickback statute on these issues. In an article jointly written with Jim Reinertsen, M.D., for Hospitals & Health Networks Online, they debunk these myths and offer strategies for more collaborative, quality-enhancing relationships. The second part of the presentation describes how PROMETHEUS Payment® can further these relationships by supporting with a different payment system efforts that hospitals and physicians ought to be involved in any way. In the 2007 Medicare Fee Schedule, the interrelationship between the Stark in-office ancillary services exception and the Medicare reassignment rule has been elucidated where the government has emphasized and focused attention on fragmented joint ventures (e.g. “pod” clinical laboratories) structured by attorneys who have not understood that the Stark rules trump the reassignment liberalizations. For any Stark designated health service, no matter what the other reimbursement rules, the Stark rules are the first hurdle for compliance. Consequently, independent contractor relationships that are generally allowed under the liberalized reassignment rules will not meet the definition of in-office ancillary services since an independent contractor is only in the group that is billing when he uses their premises (e.g. radiologists reading off-site from the group providing the technical component). We were not surprised by this position since we believe that is what the rules have said all along. However, the attention to these arrangements in the preface to the Fee Schedule means that the government is becoming increasingly aware of non-compliant creative solutions. Sometimes the answer is “you just can’t do that”. In its Work
Plan for 2007, |
and
a major initiative on nursing home quality performance beginning
with a joint publication with the 
created by James G. Sheehan,
Associate Attorney in the U.S. Attorney’s Office of Philadelphia.
You will note that, as in many prior instances, he is identifying
both
specific cases that will be models for future prosecutions as
well as upcoming new approaches to prosecution. He has always
followed
through on such public statements. All hospitals should take
heed.