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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 62, No. 9 September 2006


British patients with coronary artery disease or diabetes and blood pressure greater than 150/90 or 145/85, respectively, or with a stroke or TIAs and cholesterol greater than 193 mg/dL, may be a threat to their doctor's financial well-being.

These are some of the 146 quality indicators in 10 clinical domains in the British National Health Service (NHS) pay-for- performance (P4P) contracts with family practitioners. Such contracts were introduced in 2004 after a series of national initiatives said to be "associated with marked improvement in the quality of care" (N Engl J Med 2006;355:375-384).

The program was intended to increase family physicians' incomes by up to 25%. Physicians hired more administrators and nurses, established chronic-disease clinics, increased use of electronic medical records (EMRs) and quadrupled prescriptions for lipid-regulating drugs. A study of data from 8,105 family practices in England showed an unexpectedly high rate of achievement (83.4%) in the first year. There were significant costs, and authors noted that "[b]udget neutral programs would face greater resistance from family practitioners" (ibid.).

The attempt to transform the NHS comes with a sustained annual increase in cost of 7.3% above inflation more than double the average in previous decades and unprecedented for the NHS. After 5 years of tightening the command-and-control structure, the Labour government is trying to use incentives in a "mimic market." One new regulator, the Monitor, is intended to insulate ministers from exposure to political pressures. Another, the National Institute for Clinical Excellence (NICE), is supposed to substitute technical criteria for political decisions about rationing. It is hoped that payment by results will spur efficiencies. So far, the outcome is a budget "hiccup" of more than $1 billion, and a doctors' sense that "their status and autonomy [are] threatened by a regime of inspection and regulation" (N Engl J Med 2006;355:409-415).

It is feared that a "focus on efficiency may raise skepticism among providers that saving money is the real goal of government" (N Engl J Med 2006;355:406-408).

Of course, in the U.S. saving money is an explicit goal of P4P, and negative incentives are already in place.

This fall, hospitals participating in the Centers for Medicare and Medicaid Services (CMS) P4P program will incur a 1 to 2% penalty if they fall below the baseline for 34 "quality" measures. While the penalty may not sound like much, "if you're the hospital where half your revenue is [derived from] people with those conditions, then this can come out to huge amounts of money," stated Susan L. Freeman, chief medical officer at Temple University Hospital in Philadelphia (Healthcare Strategic Management 8/11/06).

The CMS grand plan for restructuring physician payments was announced by Administrator Mark McClellan, M.D., Ph.D., in July 27 congressional testimony. The goal is to "realign Medicare's physician payment system" to achieve high quality "without increasing overall Medicare costs" instead of increasing expenditures as volume of services grows.

"Performance payment may be earned if actual Medicare spending for the population assigned to the physician group is below the annual target," McClellan said [emphasis added].

CMS anticipates a minus 5.1% physician fee "update" in 2007 under the sustained growth rate (SGR). Citing a need to get out of the "vicious cycle of rapid growth in utilization and spending," McClellan did not propose a change in the SGR.

It seems doubtful that the AMA anticipated this outcome when it cut a secret deal with Congress last December (see News of the Day 2/21/06). Instead of a trade-off, it is likely to get both cuts and P4P.

P4P needs interoperable EMRs to support the "automated collection and reporting of consensus measures." Additionally, the American Health Information Community (AHIC) is discussing how crucial it is to embed Clinical Decision Support (CDS) software in health information technology (IT), reports AAPS Public Affairs counsel Kathryn Serkes.

Insurers are already using a computerized decision system called Colossus, she reports, to guide adjustors through options and come up with a low-ball settlement offer.

Physician resistance is the biggest barrier to P4P. To overcome doctors' fear that they will be rated on measures over which they have no control, because of team management or patient variables, hospitals must collect data on process rather than outcome, suggests Robert Marder, M.D., vice president of The Greeley Company (HC Strategic Mgt 7/17/06).

Physician "leaders" must help overcome their colleagues' pushback against the change from self-directed practice to "an industry model with increased standardization" (ibid.).

The process is to use federal buying power to force the desired outcome, which appears to be central control of medicine: "Playing for the test" is not only expected, but is "the entire point of the exercise" (JAMA 2006;295:2780-2783). The level of improvement called for by the Institute of Medicine report on medical error (see p. 2) is but a pretext; there is no evidence that it could be achieved in this way. Process measures in acute myocardial infarction, for example, explain only 6% of variations in hospital mortality (JAMA 2006;295:1912- 1920), notes David McKalip, M.D., of Florida.

Stakeholders include government and insurers, who hope to save, and vendors of IT, professional standards, and recommended drugs and devices, who hope to profit.

As for patients, the process of giving statin drugs might might not achieve the U.S. national outcome of an LDL < 100 and BP < 140/80 perhaps while killing cells in the left ventricle (BioFactors 2005;25:146-152). But it's not the life of the patient, but the death of medicine that is the ultimate end.

To Err Is Human Six Years Later

"The IOM study was a trumped-up mess designed to stir up public panic and pave the way for yet more government regulation," writes Linda Gorman. "It should have been killed in the cradle and in more responsible times would not have made it past review, let alone into the media canon as received truth." Even the author of the original study said that the 173 deaths in the Harvard Medical Practice Study extrapolated to 44,000 to 98,000 deaths per year were used inappropriately by the IOM. It was not determined whether these deaths were actually caused by medical error (see AAPS News, April 2000).

Uncritically accepted by the AMA and other influential groups, the IOM report has "profoundly changed" thinking. One effect was to give new life to the "decades-old stalled discussions" on the EMR. Also, write Lucian Leape and Donald Berwick of Harvard, it showed the need to "change the culture" in ways that "professionals easily perceive as threats to their authority and autonomy." Instead of a "professional fragmentation and a tradition of individualism," we need a systems-oriented approach, in their view. We need something stronger than the threat of decertification, which can produce "evanescent, compliant behavior." P4P might work in conjunction with "strict, ambitious, quantitative, well-tracked national goals" (JAMA 2005;293:2384-2390).

Will the safety movement make patients safer? Computer systems may improve practitioner performance (or compliance with guidelines), but cost-effectiveness or effect on patient health are still unknown (JAMA 2005;293:1223-1238).


Tracking Diabetics

New York City has taken the unprecedented step of requiring laboratories with electronic reporting capabilities to report all hemoglobin A1c measurements within 24 hours. Health officials plan to use the information to intervene directly in patient care by contacting physicians and patients (N Engl J Med 2006;354:545-548).

"This is really a recipe for the invasion of privacy," stated Sue Blevins, president of the Institute for Health Freedom. "Under the law, personal health information can be shared without consent for many purposes. All it takes is the click of a mouse" (Wash Post 1/11/06).


Prescription Monitoring Vetoed in Maryland

Gov. Robert Ehrlich, Jr., vetoed Senate Bill 333 Prescription Drug Monitoring Program, which would have required a central program to electronically collect and store data on prescriptions for controlled drugs.

In a letter to the Senate, Gov. Ehrlich wrote: "The provisions of this bill may exacerbate untreated or inadequately treated pain management. Unfortunately, even after numerous amendments, this bill focuses on law enforcement, not treatment." He also referred to an argument presented by AAPS member James E. Kelly, D.O., of Easton, MD, a psychiatrist: "Although the Legislature removed the prescriber's diagnosis code from the database, many prescription medications are commonly linked to certain ailments. Unfortunately, there are stigmas associated with certain diseases." The bill would have opened confidential patient-physician information to nonmedical individuals, as it did not specifically state who was an authorized recipient.


Massachusetts Mandates

According to Linda Gorman's reading of the legislation, "the state is in complete control of the plans that will be offered.... The plan is structured so people mostly have group plans or Medicaid clones." Employers who sign up with the Connector are prohibited from simultaneously offering competing plans with similar benefits.

She notes out that the plan ignores the contribution of illegal aliens to uncompensated care and Medicaid: "In a particularly dishonest move, the law prohibits reimbursements to hospitals for `health services provided to residents of other states and foreign countries.' Hospitals have to treat everyone, but the state isn't going to pay."

State Rep. Harriett L. Stanley, one of the Legislature's foremost authorities on health and fiscal policy, told a Boston newspaper: "We don't yet know what it's going to cost us or where we're going to get the money from. To some extent you might call it a Hail Mary pass" (CURE Bulletin, July 2006).

According to a Cato analysis by Michael Tanner, "the Connector will eventually squeeze out any outside market," eventually becoming a monopsony purchaser like the community pools envisioned in the Clinton health care plan of 1993. Additionally, inability to price products by risk will result in "an overprovision of services to the healthy and an underprovision to the sick" (Cato Briefing Papers No. 97, June 6, 2006, www.cato.org).

One of the 370,000 uninsured working adults in Mass., Ryan Crosby is thinking of moving away. "What if I get a job and I start having to pay several hundreds of dollars for health insurance just because I come out of making a low income. Sometimes I think the state does things that encourages [sic.] people to stay poor" (Boston Business Journal 6/12/06).

The Connector is already talking about how to restrict access to care by defining provider networks that mandate which hospitals patients can use (Consumer Power Report #37).


Clinical Trials: a Stacked Deck

A serious flaw in evidence-based medicine is reliance on drug trials: "They answer only questions they want to answer. They ignore evidence that does not fit with their story. They set up and knock down straw men" (Nature 2006;440:270-272).

While outright deception is said to be rare, "finances and career motives decide what gets published," stated Peter G tzsche, director of the Nordic Cochrane Centre.

"Phantom papers," showing ambiguous results, may languish in filing cabinets. GlaxoSmithKline paid $2.5 million to avoid the cost of litigation on allegations that it had suppressed data showing an increased suicide risk in young patients taking the antidepressant Paxil.


AAPS Calendar

Sep 13-16. 63rd annual meeting, Embassy Suites, Scottsdale, AZ.

The National Provider Identifier (NPI)

AAPS members are receiving threatening communications, as from HealthCare Compliance Solutions, Inc., stating that "federal law requires your practice to have an NPI number," and that they will be unable to refer patients or have claims paid or prescriptions filled unless they have an NPI and know how to use it. The company helpfully offers to send an NPI Implementation Guide for $110.

In fact, according to the CMS web site, federal law only requires HIPAA-covered entities to use the NPI for HIPAA standard transactions. Medicare will start requiring an NPI on both paper and electronic claims after April 2007.

It is possible that private entities such as hospitals or pharmacies may demand your NPI as a condition for having staff privileges or doing business. Private insurers may require it in order to reimburse your patients. Simply obtaining an NPI does not make you a HIPAA-covered entity.

If you decide to obtain an NPI, you can download an application free from www.cms.hhs.gov (search on "NPI"). You can print or type the information and send it by mail to: NPI Enumerator, PO Box 6059, Fargo, ND 58108-6059. You must certify that you are aware of a 5-year prison term and fines of up to $500,000 for falsifying information, and you must notify the NPI Enumerator of changes in information, such as a change of address, within 30 days. You can also submit on-line, but AAPS members may feel more comfortable having the entire form in front of them in black and white at once.

If you work for a professional corporation, both you and the organization may need an NPI. Your group practice may also need one.

At present, a fee is not required to obtain a number. CMS has considered charging physicians a "maintenance fee" to help defray the cost of what will be a huge government database.

69 Federal Register 3434 (Jan 23, 2004):

It is important to note that not all health care providers who are eligible to receive NPIs will necessarily be required to comply with HIPAA regulations. This is because some health care providers are not covered entities under HIPAA. The fact that a health care provider obtains an NPI does not impose covered entity status on that health care provider. Only those entities that (1) meet the definition of health care provider at 160.103, and (2) transmit health information...in connection with a transaction for which the Secretary has adopted a standard (a covered transaction) are covered health care providers and are considered "covered entities" under HIPAA. As noted above, we add a definition of "covered health care provider" at 162.402.

Tip of the Month: Electronic medical records can never be destroyed or fully erased, as there are always backup copies. Electronic records last forever and are always vulnerable to subpoenas, leaks, theft, and misuse. People are already careful about what they say in email for this reason. In contrast, paper records can easily be returned to the patient or destroyed without any backup copies. Access is limited and well-defined. Patients who care about their privacy are more comfortable with paper records, for good reason, despite probably self-interested claims that electronic records are more secure.


The Ongoing Criminalization of Medicine

Reporting Requirements. Failure to report operational changes, such as pivotal personnel changes, on Medicare enrollment form 855 can trigger extra audits or a site visit from the Office of the Inspector General (OIG). Of 218 independent diagnostic testing facilities (IDTFs) that it audited, the OIG found that 191 had not fulfilled reporting requirements, raising suspicions that they were "billing mills" (MCA 8/7/06).

Pain Management. Despite its claims to prosecute only a small fraction of its registrants, the Drug Enforcement Administration has hired hundreds of new drug diversion investigators. In fiscal year 2004, 737 prescribers were investigated by federal agents; this threat alone chills prescribing: "All it takes is one investigation for your livelihood to go down the drain," stated Will Rowe, executive director of the American Pain Foundation. Actual convictions from DEA investigations totaled 24 in FY 2004 and 39 in FY 2005 (Medical Economics 6/4/06).

Identity Theft Victims May Be Guilty. Physicians need to carefully protect their identification number. Even if a physician wrongfully suspected of fraud is cleared because he is a victim of identity theft, he may be guilty of a HIPAA violation. Additionally, physicians who have a legitimate relationship with a patient whose number was compromised could be implicated in a billing fraud investigation. Doctors are warned to have patients review EOBs carefully, and also to compare their 1099s with the office ledger, looking for evidence that their number is being misused, with improper checks being sent to another location (MCA 6/12/06).

Off-Label Drug Use. Psychiatrist Peter Gleason was surrounded by six agents, handcuffed, and arrested in a Long Island train station for giving seminars in which he advised that a narcolepsy drug (Xyrem) could be used to treat pain or depression. He was accused of conspiring with the drug manufacturer, which paid his speaking fees, to circumvent rules against promoting a drug for non-FDA-approved indications. Jazz Pharmaceuticals is leaving him to face the indictment on his own (NY Times 7/22/06).

Prosecutors Focus on Quality Data. The new quality reporting standards in the Medicare Modernization Act of 2003 provide new data for law enforcers about hospitals' compliance with federal health requirements. Reporting inaccurate quality data can give rise to False Claims Act liability. This is a new area of interest for federal prosecutors, said Associate U.S. Attorney James G. Sheehan (BNA's HCFR 8/2/06).


Investigative Tactic Ruled Unfair

In the first court decision ever to criticize the U.S. Department of Justice for overly broad and draconian prosecutorial techniques, New York Federal District Judge Lewis Kaplan ruled it was unconstitutional to threaten to indict an entire health care organization if it covers the legal bills of an employee accused of fraud. He explained that prosecutors forced KPMG, one of the world's largest accounting firms, to choose between going out of business or declining to pay employees' legal bills. Without company support, employees often cannot afford to defend themselves, Judge Kaplan said (MCA 7/24/06; BNA's HCFR 7/5/06).


High-Velocity Practice. In certain specialties, "churning" has become so pervasive that we may need a board- certification examination for it. Some of the highest volume churners I met worked in a hospital emergency room. The ER doctors frequently did a cursory exam and ordered a totally inappropriate neurologic consultation. For example, in one patient referred to me at 2 a.m. for "altered mental status," I found the blood sugar to be 30. One ER doc admitted that because payment was the same regardless of the time spent, the goal was "throughput." In the third-party game, patients are hot potatoes that must be tossed along as quickly as possible lest the doctor who touches them get burned. The loser in the game is the doctor who ends up having to provide the care.

The best patients in managed care are the worried well who have a diagnosed but nonexistent medical problem. One "successful" doctor touted the advantages of managed care at a medical staff meeting: "They actually pay us for doing nothing!" The successful operator of a volume fraud mill (VFM) must think in terms of a Reverse Emperor's New Clothes: He must convince people that they are really naked and need the high-priced duds he is selling.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


The P4P Pretext. If ophthalmology is any guide, the "leaders" in managed care gain access to a patient pool by being the low-cost provider (I doubt that we should call them physicians) per diagnosis. After gaining control of the patient pool, the provider hires an aggressive stable of diagnosticians (e.g. optometrists), who exaggerate diagnoses. Each such diagnosis triggers mandatory fees under P4P. Each fee may be small, but collecting a large number of fees, say 10,000, for exaggerated diagnoses is better than collecting 100 big fees for taking care of the truly sick. Canada has a similar system. Doctors "see" 80 patients a day, most of whom don't need care. Doctors go home refreshed after churning well patients and referring sick ones to the emergency room.

Insurers play games with doctors, who, in turn, play games with insurers. Whatever happened to patient care?
Robert P. Gervais, M.D., Mesa, AZ


The New Standard. The "standard of care" is becoming whatever is reimbursed. So physicians bring insured patients back to their office more often than is warranted to churn their insurance. One of my patients sees her cardiologist every 3 months to check her cholesterol, even though her level is good on no treatment. Medicare pays, so why not? If the patient had to pay, I suspect she would never have it checked again the course that I recommended to her.

But lots of insured patients don't get the kind of care they want, or can't get it in a timely fashion so they come to see me. I think that as long as it is still legal to serve patients and not sign contracts with the Beast, physicians will always have work. No country with universal health coverage has ever been able to guarantee prompt, high quality care.
Robert S. Berry, M.D., Greeneville, TN


Quality. The quality issue is constantly being addressed in medicine. It is the reason that quality has improved so much over the last 300 years. But most improvements take place in small steps out of the public eye: hospital designs that make infection control easier; lighter casts; surgical staples that reduce time under anesthesia; disposable needles. The problem is that regulatory walls often prevent changes by distorting incentives or imposing ridiculous costs for small changes.

I'm hoping someone can tell me of a de novo quality diktat, as opposed to a regulation ratifying already existing practice, imposed from on high, that has ever unambiguously improved medical quality. Regulations to correct messes created by previous regs don't count. I'll even take regs from foreign governments, such as the U.S. Supreme Court.
Linda Gorman, Independence Institute, Golden, CO


Insurance and Rationing. Will we ever recognize that health insurance is the problem, not the solution, except for catastrophic events? Care is rationed by whoever pays for it. Public and private insurance deprives patients of the important privilege of rationing their own medical care. Ironically, the care is still paid for by the insured, directly or indirectly.
Francis Kendrick, HealthBenefitsReform Group


A Profitable Myth. The generally accepted myth, no doubt generated by the single-payer crowd as well as the insurance industry, is that people are incapable of making medical purchase decisions themselves (not smart enough, not enough information, etc.). Moreover, they couldn't possibly afford to purchase care on their own. Thus, the only way is to give the money, plus overhead and profit, to the government or insurers and let them buy all the care.
James G. Knight, M.D., San Diego, CA


Let People Talk. How much better informed will people be with P4P generated by providers or consumers, or by media advertising? Let people talk to their neighbors, workmates, friends, church members, PTA acquaintances, 6-pack buddies. I believe it will work out just as well. We are all becoming slaves to systems that profess accuracy and promise utopia. Can people handle HSAs, or do they need paternalism?
Robert Hamilton, M.D., Godfrey, IL