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

Christy Schmidt, Executive Coordinator
Regulatory Reform Initiative
Office of the Assistant Secretary for Planning and Evaluation
200 Independence Ave. S.W., Room 344G
Washington, D.C. 20201

Re: Regulatory Reform, Federal Register, Jan. 4, 2002, pp. 599-600

Dear Ms. Schmidt:

The Association of American Physicians and Surgeons was founded in 1943 to preserve private medicine and traditional medical ethics. We represent thousands of physicians nationwide in all specialties. We are almost entirely supported by membership dues. We receive no income from government or from business interests, such writing codes required by regulations or selling compliance information.

The burden of regulation has grown to be monstrous; it is impossible to know where to begin to detail ways in which costs are increased and quality and access to care are compromised.

The trend is toward constant expansion of complex, asinine, punitive government intrusions into medical practice. Physicians are obligated to invest great chunks of their time-and staff time-in studying how to fill out forms, change their administrative and clinical procedures, create more job titles for compliance purposes, and write more bureaucratic manuals. All this time and energy is taken from patient care. The morale of medical professionals is dangerously low.

A few tweaks here and there will be of no significance. They will be simply more details to learn about and adjust to. The mere existence of 132,000 pages of regulations-for Medicare alone-shows that a radical change in the process and the culture of the regulatory regime is overdue.

Regulatory Assessment

It is critical for HHS to establish-and follow-a consistent, scientifically valid methodology for gauging regulatory effects. If statutory reform is needed to implement this methodology, then it is the responsibility of HHS to inform Congress and to help in drafting such legislation.

It is a statutory requirement to estimate the costs of regulation and any presumed savings. However, these estimates are based upon assumptions, limited data, and extrapolations. There is no accountability for minimizing costs or exaggerating benefits. In fact, there is little if any effort to compare the estimates with actual experience (or even to determine the actual costs, especially those borne by the private sector), either for the purposes of regulatory reform or to refine the methodology for future estimates. There are instances in which a statutory requirement to do studies-for example, the impact of the Clinical Laboratory Improvement Act (CLIA)-is simply ignored.

Cost estimates are narrowly defined. They do not include unintended consequences such as bankruptcies, foreclosures, and withdrawal of goods and services with consequent inconvenience, higher cost, or loss of access. The cost in human lives resulting from the diversion of resources from more beneficial use or the substitution of inferior technology is never considered. For example, due to CLIA, many physicians ceased doing laboratory studies. A recent survey by the Pima County Medical Society in Tucson, Arizona, showed a high level of physician dissatisfaction with available laboratories, with respect to both quality of testing and customer service. The small number of surviving, very large providers are well aware of the lack of competition and the difficulty of market entry, owing in large part to regulatory hurdles.

The Regulatory Flexibility Act-as well as simple justice, the concept of equal protection of the laws, and good economics (recognizing the critical importance of small business)-requires recognition of the disparate impact of regulations, and action to afford relief.

It is the Constitutional responsibility of the Executive branch to remain with the strict boundaries of the law-including the Regulatory Flexibility Act-and not use the law as the pretext for huge expansions of bureaucratic authority: as in the attempt to impose translation requirements on physicians and other small businesses, or the expansion of the Privacy Rule under the Health Insurance Portability and Accountability Act (HIPAA) from electronic to all medical records and from consent to disclose to consent to use any medical information to diagnose or treat a patient.

Thus, regulatory assessment also needs to have a legal dimension as well as an economic one. Agencies need to determine whether they have the constitutional and the statutory authority to promulgate and enforce a particular rule. Rules lacking this foundation should be rescinded outright.

Agencies also need to examine the enforcement process for basic fairness: did the regulated entity have adequate notice of the rule? Clear guidelines? Warnings with an opportunity to change questionable procedures prior to the imposition of ruinous fines or to criminal investigation? One criterion for clarity might be the ability of the enforcers to demonstrate that they themselves can do whatever is expected of the regulated entity, with the same degree of expected accuracy. No rule should be enforced if government officials themselves cannot understand it and apply it consistently and unambiguously.

The assessment methodology needs to answer two basic questions: (1) Does the benefit exceed the cost, in reality, not just theory? (2) Does the overall situation become better or worse as a result of the regulation? Objective, reproducible data must be gathered and submitted to public scrutiny.

Illustrations Using Particularly Troublesome Rules

EMTALA (Emergency Medical Treatment and Active Labor Act of 1986)

Monetary Costs:

  1. Hospital legal consultations related to EMTALA
  2. Increase in uncompensated care provided in emergency rooms
    a. For true emergencies
    b. For assessments or care that could have been provided elsewhere at lower cost
  3. Lost income to physicians forced to interrupt remunerative activities to provide uncompensated care, plus physician overhead and value of physician time for care provided "free"
    a. Cost related to true emergencies
    b. Cost incurred solely because EMTALA did not permit integrating care into work flow
  4. Hospital personnel salaries for activities solely related to EMTALA requirements; training costs
  5. Time spent by physicians and their office staffs in EMTALA compliance
  6. Increased insurance premiums and fees for patients to whom the cost of uncompensated care is shifted whenever possible
  7. Fines imposed on facilities and physicians

Other costs:

  1. Prolonged delays for other patients due to requirement to give priority to EMTALA-related activities and to diversion of staff to such activity
  2. Loss of specialist coverage for all patients because of physicians resigning from staff
  3. Closure of emergency rooms or entire hospitals
  4. Delays in needed transfers occasioned by bureaucratic requirements, with poorer patient outcomes
  5. Less-than-optimal care received by patients who should have been transferred to better qualified physicians or better equipped facilities; increased malpractice liability by physicians performing procedures for which they are not well qualified
  6. Deterioration in overall quality of hospital care because of resources diverted to EMTALA

Benefits:

  1. Possibly better outcomes in some patients who might otherwise have been transferred inappropriately

Is the situation better or worse?

Objective, countable or measurable criteria before and after EMTALA:

  1. Waiting times in emergency rooms
  2. Number of physicians available on call
  3. Number and capacity of emergency facilities
  4. Frequency of ambulance diversion
  5. Number of deaths and other serious adverse outcomes in patients, with or without ability to pay, transferred to referral facilities
  6. Number of deaths and other serious adverse outcomes in patients, with or without ability to pay, NOT transferred

Clinical Laboratory Improvement Act

Monetary Costs:

  1. Salaries and expenses of auditors, investigators, clerks, and other personnel involved in enforcement
  2. Physician and staff time involved in compliance activities
  3. Certificates and related fees

Other Costs:

  1. Prolonged turnaround time for tests
  2. Unavailability of tests that physicians formerly did that cannot be done or simply are not done by distant referral labs (e.g. wet mounts, Gram stains)
  3. Loss of innovation in low-cost, rapid, reliable tests that can be done by minimally trained personnel (such as Streptococcal screens that can be reliably done by elementary schoolchildren from written instructions)
  4. Loss of physician and staff skills in performing tests they refrain from doing because of regulatory hurdles
  5. Increased costs and insurance premiums due to decreased competition with referral labs
  6. Inferior patient outcomes because of delays in testing, or testing forgone due to inconvenience or cost

Benefits:

  1. Possibly improved accuracy in certain laboratory results, either with or without clinical significance

Is the situation better or worse?

Objective countable or measurable criteria:

  1. Average cost of laboratory tests
  2. Average turnaround time
  3. Number of tests performed
  4. Number of functioning laboratories
  5. Level of patient satisfaction and physician confidence in results (semi-quantitative)
  6. Number of patient deaths or other serious adverse outcome due to laboratory error
  7. Number of patient deaths or other serious outcome due to delay or unavailability of laboratory tests

Communications

Communications with beneficiaries and physicians are totally under the control of CMS and can be fixed immediately. The problems are obvious.

  1. Medicare policies related to "noncovered" services: Definitions are inconsistent, even when made by the same carrier. Moreover, a service with a reimbursement of $0 should be considered "noncovered." This is not the same thing as "medically unnecessary" or not beneficial, and CMS should not imply that it is.
  2. Communications with beneficiaries: Carriers or CMS should under no circumstances tell patients that a physician is guilty of a crime (such as billing for more than the limiting charge) before a definitive determination is made. Carriers who have so informed patients erroneously, thus destroying patient-physician relationships, should send a clear explanation and apology.
  3. EOMBs (Explanation of Medicare Benefits): An EOMB should be sent for all services, thus making fraud (such as billing for fictitious services from P.O. boxes) self-revealing. The notices should be timely, in plain English (not code), and in readable type.

Conclusions

A scientifically valid protocol should be developed prior to the implementation of a new regulation. The effects should be tested in a limited area first before being imposed nationwide. The test must be meaningful in that a negative result means that the regulation will not be imposed, at least not without significant modification and retesting.

Since it is too late for a pilot study of regulations already imposed, an alternative would be to lift the regulations in a defined area, study the results, and present them to Congress and the public.

Those regulations that do not have clearly defined statutory and constitutional authority should simply be lifted immediately, and the effect of this relief on cost, quality, and access to care measured as outlined above, in order to direct future governmental interventions. Both methodology and results must be accessible to public scrutiny and evaluation by independent consultants.

The burden of proof must be on the regulator to show an objectively demonstrable benefit of magnitude sufficient to justify the burdens imposed on American citizens. Such costs are unfunded mandates or taxes, with highly disparate impacts, and must be recognized as such.

Respectfully submitted,

Jane M. Orient, M.D., F.A.C.P., Executive Director