The medical malpractice “crisis” so far has prevented patients from seeing physicians only in a few circumstances and locales. Recruiters still report a healthy overall physician job market despite malpractice-related problems in certain states.

But market participants expect the situation to get worse before it gets better.

Managed Care Week, another AIS publication, reports that commercial insurers’ physician networks remain adequately staffed despite small numbers of practitioners leaving some states because of malpractice issues. Other items in MCW’s report include:

* Philadelphia-based Independence Blue Cross said in December 2002 that it would raise commercial reimbursement rates by 7% and Medicare HMO rates by 5%, for a total annual cost of $100 million. Independence cited higher practice costs, especially malpractice premiums. Southeastern Pennsylvania, where Independence is the top health insurer, is a hotbed of malpractice litigation.

* No other sizable insurer told MCW that a current increase in reimbursement levels is attributable in significant measure to higher malpractice premiums. However, executives at Blues plans around the country expect higher malpractice premium rates to be a significant factor behind physicians’ demands for higher reimbursements, according to a January 2003 BlueCross BlueShield Assn. survey.

* The Blues association pegs 12 states–Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington and West Virginia–as malpractice “crisis” states. These generally are the same states that physician recruiters cite as having malpractice-related job market problems. In these states, 69% of Blues plan executives expect malpractice issues to drive up ob/gyn fees, and 56% say some physicians refuse to perform some high-risk procedures, compared with 49% and 32%, respectively, in other states.

* In Texas–where physicians staged a one-day job action last April to highlight malpractice issues (PCR 5/ 02, p. 6)–some physicians have been forced to drop malpractice coverage altogether. Insurers aren’t dropping such physicians from their networks, but are informing members that the physicians don’t have coverage.

Public Sees Malpractice/Jobs Link

The high cost of medical malpractice insurance and lawsuits–and its connection to physician jobs and access to care–got more national attention during the first half of January than they ever had before.

That the medical malpractice situation could cause some physicians to move out of a state or not move in, or avoid doing certain procedures and reject certain referrals, may appear to be a fairly sophisticated concept for the public to absorb, but there were indications that these ideas sunk in with many people. There were detailed explanations in the popular press that this situation affects physician recruiting and retention, and quality of and access to care, particularly for certain specialties and in certain states.

This flurry of attention began New Year’s Day when about two dozen surgeons in northern West Virginia essentially walked off the job by taking leaves of absence from four hospitals, citing huge increases in their malpractice premiums. This drew coverage in the national press, such as segments on several national television reports and a front-page story in the Washington Post. This attention culminated in an appearance by President Bush Jan. 16 in Scranton, Pa., to highlight the malpractice/care connection. (The West Virginia physicians dropped their action on Jan. 14 in response to proposals for malpractice reform by Gov. Bob Wise (D).)

One small indicator that some people agree was an America Online poll of subscribers on Jan. 17, the morning after Bush’s foray.

The question was: “Are medical malpractice awards out of control in the U.S.?” As of about 5 a.m., 68% of respondents answered “yes,” 17% replied “no,” and 14% were “not sure.” At that time, there had been about 97,000 responses.

However, medical malpractice is a highly partisan issue. At least on the federal level, Republicans are strongly backing action to curb litigation, and Democrats are opposing such action, with fairly few exceptions. One Democratic presidential aspirant, Sen. John Edwards (DN. C.), was a highly successful personal injury lawyer. In the already charged partisan environment, enactment of significant curbs in 2003-04 appears improbable. However, legislative action in “crisis” states may well occur.

When David Zisow learned his medical malpractice insurance premium would almost double next year to $74,000, he said knew it was time to stop delivering babies.

At age 54, the Harford County physician expected to continue working as an obstetrician for several more years, but he has notified his patients he will limit his practice to gynecology beginning Jan. 1.

Zisow and doctors like him all over Maryland say there is a malpractice insurance crisis that threatens to reduce the quality and availability of health care. But Kevin McCarthy, board member of the Maryland Trial Lawyers Association, said the alleged crisis is a fiction created by the health care industry and insurance companies.

There really isn’t a malpractice problem here. The numbers just don’t justify that, McCarthy said.

It’s really disturbing to me that they misrepresent those things, he said. The people that are going to be hit by this and will suffer are the people who were already hurt by the actions of their doctors.

McCarthy said the economy, not malpractice awards, is the reason for premium increases.

Insurance companies make their money by investing money, he said. With the stock market slump and low interest rates, they are earning less on investments and have, accordingly, raised premiums, McCarthy said.

Trial lawyers and the medical profession will be the protagonists in what is expected to be an expensive and bruising battle in the legislature next year over medical malpractice lawsuits.

The health care industry, which has formed the Alliance to Preserve Access to push for changes in tort law regulating malpractice suits, will have an ally in Ehrlich, who plans to make tort reform part of his legislative package for the session.

The trial lawyers’ group responded by appealing to its members to contribute $1 million to finance a lobbying campaign during the General Assembly session.

I hope that more money is raised than that, McCarthy said.

Insurance companies and the health care industry have unlimited resources they can tap into while we have to ask our members to contribute voluntarily, he said.

At a recent news conference to announce the formation of the Alliance to Preserve Access, Steven Larsen, chairman of the group, said Maryland hospitals had an average 37.6 percent increase in medical liability insurance costs in 2002. Medical Mutual Liability Insurance Society, which insures most doctors in the state, won approval from the state to increase its premiums to physicians by an average of 28 percent.

Joseph Ross, CEO of Shore Health System, said premiums for liability insurance for the two community hospitals he oversees in Talbot and Dorchester counties increased by 65 percent this year. As a result, the hospitals had to divert hundreds of thousands of dollars from patient care to pay the premiums, he said.

The two hospitals are seeing increased turnover in staff because we’re not competitive with wages and salaries, Ross said.

Richard Reichard, executive director of the National Lutheran Home for the Aged in Rockville, said the home’s insurance premiums jumped from $44,000 to $352,000 over the last four years even though no claims were filed against it and it had not been cited for any deficiencies.

We are really caught in the medical malpractice crisis in a very large way, he said.

At the news conference, Larsen outlined several proposals that will be included in the alliance’s legislative plan, including returning to a $350,000 cap on awards for non-economic damages established in the 1980s. The cap has since been increased and is now more than $600,000, Larsen, the former state insurance commissioner, said.

The plan also would cap lawyer’s fees at levels ranging from 40 percent of the first $50,000 to 15 percent of anything over $600,000.

McCarthy said that would amount to 22 percent on a $1 million award. Lawyers typically have to put about $100,000 of their own money into a case and only win about one in four cases, he said.

I don’t know that anyone would risk $100,000 to win $200,000 if he’s only got one chance in four of winning, McCarthy said.

Trial lawyers will not be without allies in their battle against a powerful coalition that includes insurance companies, doctors, hospitals nursing homes and the governor.

Tort reform is opposed by consumer groups fearful that changes in tort law will mean that the health care industry will get financial relief at the expense of patients who suffer lifelong disabilities as a result of negligent acts by doctors and hospital personnel.

Some legislators also are skeptical about the motives behind the reform proposals and the need for changing the law.

The proposals don’t address patient safety at all, Senate President Thomas V. Mike Miller, D-Calvert, said. They are seeking to lower the awards to people who were wrongfully injured when a jury decides in their favor.

Maryland is not one of the states where the American Medical Association says there is a medical malpractice crisis, Miller said.

In the six states that AMA rates as “currently okay” on malpractice premiums and lawsuit controls–California, Colorado, Indiana, Louisiana, New Mexico and Wisconsin–other factors, particularly attractions as a place to live and its reimbursement environment, are more important issues for physician recruits, say several experienced recruiters. But, they add, a state’s overall treatment of malpractice issues is a factor for some recruits–especially ones from the 18 states that AMA rates as in full-blown malpractice “crisis.”

Karen Zeller, president of Rocky Mountain Medical Search in Ft. Collins, Colo., says Colorado’s popularity with physicians as a place to live is a far more potent factor explaining the relative ease of recruiting doctors there than is its malpractice stance. The state’s key disadvantage in physicians’ eyes is its relatively low commercial and Medicare reimbursement rates, which–when coupled with the large supply of physicians–results in typically lower physician pay than in other areas such as the Midwest and Northeast, says Zeller, whose clients are in the Midwest and West as well as Colorado.

In fact, says Marc Bowles, vice president for recruitment at Delta Medical Consulting in Dallas, the typical pay scale in Colorado for a general surgery partner in a practice is about $160,000, and general surgeons out of residency earn $90,000 to $100,000, both well below national norms. Colorado groups feel victorious if they negotiate commercial contracts for reimbursement levels above Medicare’s, Bowles adds, while in most parts of the country, commercial rates are well above Medicare’s.

Although malpractice is not the key factor in Colorado, Zeller, the current president of the National Association of Physician Recruiters, has made placements into the state with physicians from Florida, Pennsylvania and West Virginia, all malpractice crisis states. One such physician, a neurosurgeon, said “malpractice was a critical element of his decision to leave Pennsylvania,” she notes. His malpractice premiums fell to $60,000 in Colorado, well under half of what they were in Pennsylvania.

Bowles says that New Mexico is fairly difficult for recruiting because of its gross receipts tax on physician fees and because, like Colorado, it has relatively high managed care penetration and low reimbursement rates.

Common Denominator

Lynn Hatfield, physician recruiter for Parkview Health System in Ft. Wayne, Ind., says, “It’s never been really difficult to recruit physicians to Indiana.” Doctors like the state’s family-oriented lifestyles, she explains, and the relatively low profile of managed care supports their earning ability. Thus, Indiana’s effective control of malpractice cases only adds to the fairly attractive recruiting picture, Hatfield says.

Hatfield, and Frank Manale, president of Physician & Healthcare Resource Group in Slidell, La., say their states have statutory procedures that strongly discourage the filing of invalid malpractice suits. In both states, claimants are required to file their allegations with a review board of three physicians and a lawyer before going to court. While claimants may go forward without a decision from a review board that the case has substantial evidence, failure to win such a decision discourages the filing of many cases. Conversely, losing such a decision encourages physicians and hospitals to settle cases before they are filed in court.

Mississippi, an AMA crisis state, had a “mass exodus” of physicians to Louisiana, Alabama and Tennessee–the latter two states in AMA’s intermediate category, “showing problem signs”–from 2000 until the legislature enacted a malpractice reform law in 2002, according to Manale.

Jamey Morgan of Concorde Physician Source in Milwaukee says the six states that have their malpractice situations under control have a “common denominator” of laws on the books for eight to almost 30 years with similar provisions:

* Caps on noneconomic damages of $250,000–the same as a current federal legislative proposal–in most of the six states.

* Procedural restrictions such as advance review boards.

* State government involvement, often to handle damages in catastrophic cases, and sometimes accompanied by damage caps for the entire case, with some exceptions.

An elderly doctor of great wit, learning, and drives away. And he has been learning that a considerable majority of the homeless, on whom the city is spending $33 per person per day, tend to dematerialize when offered concrete jobs. Only to return to the homeless scene a few days or weeks later. Ed Koch is learning, in short, what Roger Starr taught us all many years ago in his book about the disorganized poor. And all this means that when Koch runs again, he will be running not so much as a Democratic Reformer, but as a reformed Democrat.

AN ELDERLY doctor of great wit, learning, and experience thinks he has an idea for the eternal, apparently insoluble problem of the rising cost of medicine.

Now this rise in cost appears to be heavily related to the involvement of the Federal Government in medical expenses. Professor Milton Friedman has as usual said it succinctly: Not long ago, tbe United States spent 4 per cent of its GNP on medicine. Today it spends 10 per cent. And guess what? The government pays 6 per cent of its GNP in medical subsidies.

But Dr. Herbert Berger of Staten Island focuses, for the moment, on malpractice suits and the huge sums that juries award, carried away by their sympathy for the plaintiff and (almost inevitably) confident that after all the cost of a judgment will be paid by an insurance company. The results of this are well known. A physician in Florida needs to spend $180,000 on malpractice insurance, and, of course, the fee is passed along to his patients (who, in significant numbers, pass the bill along to the government). The result, says Dr. Berger, is not only that the cost of medicine is excessive. There are other more subtle consequences. One of them is early retirement by qualified physicians who deal with a clientele that cannot afford to pay the higher prices and is not protected by the government or by insurance companies. Still another consequence is the extraordinary precautions that many physicians feel they need to take, so that when the kid comes in with what appears to be poison ivy and it turns out to be advanced gonorrhea, the doctor, when facing a jury, can point to his having ordered 16 tests to explore every possibility.

“It has been my lot to testify as a medical expert in many trials. At the conclusion, one frequently hears exclamations such as, ‘We’d have won if we had a better lawyer.”‘ Dr. Berger goes on to suggest what can only strike one as, well, inconceivable. It is that a movement, presumably led by a non-Nader type, should be launched to sue lawyers whose presentation of their client’s case is defective. The suggestion, surely, is difficult to imagine as a likely cure for the problem at hand. A lawyer who fails to persuade a jury that his client has been harmed by a negligent doctor is not often guilty of gross negligence. And since many of these lawyers are suing on a contingency basis, charging their clients only a percentage of the award, it is unlikely that they would proceed with actionable negligence,

Even so, the idea is interesting, to the extent that it encourages harsher treatment by the courts of ambulance-chasing lawyers. I like enormously the example Dr. Berger gives: “Perhaps an example of the miscarriage of justice is in order. A lady was awarded $800,000 because she lost her navel after an operation for an umbilical hernia. The navel is always sacrificed after such a procedure. Her result was excellent. The only use for a navel that I had ever heard of was that it was a handy place to keep salt when eating celery in bed.”

No doubt there are lawyers who can persuade a jury that the loss of a handy receptacle for one’s salt when lying in bed is a serious deprivation. But Dr. Berger is clearly correct in suggesting that laws need to be passed by the states, perhaps patterned after Florida’s law that seeks to limit awards for mental anguish. It is one thing to award a patient a substantial sum of money for the loss, say, of a finger. But to add a million dollars for mental anguish is an invitation to judicial extortion.

And it is unquestionably true that state legislatures would react more forcefully if the resentment were more palpable. But as the Federal Government absorbs more and more of the cost of the entire medical enterprise the question becomes abstract. If a doctor can pass along his insurance fees to his patient, who in turn passes them along to the Federal Government, the pressures for reform attenuate: and years go by and nothing happens-except a rise in medical expenses.

THE BUSH Administration is going to have to face the problem of out-of-sight medical costs. The official in charge of recommending sensible reform would do well to call in Joseph Califano, who was secretary of HEW under Carter and explored deeply the question of controlling health costs, which findings he incorporated in his book, Americas Heath-Care Revolution, published several years ago. There is nothing more useful in town than a reformed Democratic heavy-spender. A meeting between the new head of HHS, Dr. Louis Sullivan, Joe Califano, and Dr. Berger should be run in prime time.

Replacing MegaWest Medical Management Suite, Companion PM is a fully integrated practice management system designed to help physician practices improve productivity, efficiency and levels of care. Its features include A/R billing and reporting, collections, a patient master, claims processing and appointment scheduling, and it encrypts source code and data streams to ensure HIPAA compliance. The system offers optional modules for orthopedic practices, health centers, anesthesiology, allergy management, advanced collections, patient care tracking, document and image management, and electronic remittance of claims. Companion PM’s scalability and modular design allow it to be tailored to a practice’s exact needs. As part of its flexible system architecture, it also uses tools that are SQL-, HL7-and ODBC-compliant. Its operating system and platform independence enable practices to use their existing hardware. Companion Technologies Corp., Columbia, S.C.

An eight-member California blood-center consortium asked for help designing and developing an information tracking and management system for blood banking. The result is the SafeTrace donor-management information system. This system has comprehensive donor-recruitment capabilities, and can manage fixed site and mobile donor collection. It maintains real-time, historical donor demographic and deferral data. Its Oracle database is compatible with standard third-party database tools, interfaces with automated testing equipment, and supports current and emerging regulatory guidelines. Look to SafeTrace for donor management, final transfusion/product, laboratory, inventory/distribution, and billing requirements.

As I travel around the country to attend HFMA chapter meetings, I often ask how many attendees have heard of HFMA’s PATIENT FRIENDLY BILLING project. I’m pleased to see a growing number of bands go up. My follow-up question-”Do you work for an organization that has embraced the Patient Friendly Billing philosophy?”–unfortunately gets a less affirmative response. Although many folks are familiar with HFMA’s efforts to focus the industry’s attention on this topic, apparently not everyone has jumped on the bandwagon to implement the: recommendations.

For those unfamiliar with this effort, Patient Friendly Billing is a collaborative endeavor of HFMA, the American Hospital Association, the Medical Croup Management Association, and select provider partners to promote clear, concise, and correct patient friendly financial correspondence. A team of talented volunteers has spent more than three years highlighting opportunities to improve the messages and information that we send to our patients via the patient billing process. This group began by sitting down with hospital and physician billing office staff to identify barriers to cresting patient-friendly communication. In addition, hospital software vendors were consulted to validate the find lugs and, more important, to be part of the solution. The team also formed focus groups of patients and family members to determine at what point during the process communication is preferred and, if so, what level of detail should be provided.

Several studies have shown that general practitioners do not detect most of their patients’ emotional disorders (Goldberg and Huxley 1980), leading distressed people to consult repeatedly and with multiple professionals. One potential problem is that this phenomenon could increase as a result of free and universal access to healthcare services (Newhouse, Manning, Morris, et al. 1981).

Studies of the relationship between psychological distress and health services utilization have shown that women use healthcare services for affective problems more often than men (Schurman et al. 1985; Fylkesnes, Johnsen, and Forde 1992) and that elderly people obtain fewer services for mental health problems than do their middle-aged counterparts (Leaf, Livingston, Tischler, et al. 1985). On the other hand, inconsistent results are reported regarding the association between income, education, and health services utilization (Fylkesnes, Johnsen, and Forde 1992; Wells, Manning, Duan, et al. 1986). Moreover, studies suggest that individuals who have a usual source of medical care are more likely to use medical health services (Greenley, Mechanic, and Cleary 1987; Leaf, Livingston, Tischler, et al. 1985). Support from family members and friends also influences health services utilization (Horwitz 1978).

In Mechanic’s conceptualization of health services utilization (Mechanic 1978, 1986), individuals perceive a need, evaluate its nature, examine alternatives, and weigh costs and benefits associated with the decision to consult. He also suggests that the perception of this need is influenced by socio-cultural factors. Accordingly, we formulated the hypothesis that a latent construct, “perceived need for health,” constitutes the most immediate cause of illness behavior. This construct reflects the effect of (1) physical and psychological symptoms, (2) predisposing factors encompassing socio-demographic and socio-psychological characteristics, and (3) enabling factors that facilitate or inhibit health services utilization, such as social support (Andersen and Newman 1981). Furthermore, in accordance with the theory that ambulatory medical services utilization is not totally explained by need factors, we hypothesized that predisposing and enabling factors have a direct effect on utilization. Moreover, to statistically identify this hypothesized model, a self-reported perceived health status measure was used to scale the latent construct of perceived need for health. This model could be described in the LISREL notation using the following structural equations:

[x.sub.i] = [[Lambda].sub.i,.sub.m][[Xi].sub.m] + [[Delta].sub.i,sub.i] (1)

[y.sub.j] = [[Lambda.sub.j],.sub.n][[Eta].sub.n] + [[Epsilon].sub.j,j] (2)

[[Eta].sub.n] = [[Beta].sub.n,n][[Eta].sub.n] + [[Zeta].sub.n,] (3)

[[Eta].sub.n] = [[Gamma].sub.n,m][[Xi].sub.m] + [[Zeta].sub.n,n] (4)

These equations are represented in Figure 1, where the [Xi.sub.m] (ksis) are latent constructs representing observed enabling, predisposing and illness variables ([x.sub.i]). The [[Eta].sub.n] (etas) are instrumental latent constructs representing observed outcome variables (y.sub.j). The [[Lambda].sub.i,m] (lambdas) and [[Delta].sub.i,i] (theta-deltas) refer to reliability coefficients and measurement errors of the observed exogenous variables [x.sub.i]. The [[Lambda].sub.j,n] (lambdas) and [[Epsilon].sub.j,j] (theta-epsilons) refer to reliability coefficients and measurement errors of the observed endogenous variables (y.sub.j). The [[Beta].sub.n,n] (betas) represent path coefficients among outcome latent constructs, and the [[Gamma].sub.n,m] (gammas) represent path coefficients among outcome latent constructs and enabling, predisposing and illness latent factors. Finally, the [[Xi].sub.n,n] (zetas) represent variance in the latent constructs explained by external causes not measured in the study.

In the present study we were interested in testing the plausibility of this model in explaining the number of visits to a physician, and to assess the effect of psychological distress symptoms on perceived health need and the use of ambulatory medical services.

Ray Vuono, CEO of MedLink International stated “The economies of scale in this venture are apparent to us. We believe that we will now be able to refer our physicians internally for their billing and recovery needs. In addition, we will also have access to provide CNI clients with the MedLink EHR and its suite of services. We believe this presents MedLink International the opportunity to realize revenues on the practice management end as well as the billing side and enables us to offer solutions to the medical community for every aspect of their practice.”

The principals of CNI have nearly twenty years of experience in the medical billing and recovery arena. CNI specializes in re-gaining the revenue and subsequent profits its clients practices are entitled to, utilizing electronic claims and personalized reimbursement strategies. With its experience in assigning proper coding to diagnoses and procedures, CNI receives the financial reimbursement correctly from insurance companies and government agencies that approximately 25% of medical practices across America are only receiving 70% on due to under coding, missed charges, and un-reimbursed claims.

MedLink’s acquisition of CNI is subject to MedLink’s continued due diligence and there can be no assurance that its acquisition of CNI will be completed, or if completed, whether it will be completed on a timely basis.

Alton Sturtevant points out, “There is no simple answer to this question that can be applied to all labs, payers or locations. The large number of variables that must be taken into consideration include:

* lab’s fee schedule (i.e., the higher the charges above allowable charges will result in a higher nonallowed portion of the bill),

* payer’s reimbursement level,

* test mix performed,
* number of providers seen on the day of service (e.g., did the physician perform a hematocrit in his office and then order a CBC from the lab on the same day?),

* accuracy of the billing data received from the physician’s office,

* accuracy of Current Procedural Terminology (CPT) coding of each billable procedure,

* patient’s deductible,

* accuracy and efficiency of the filing process,

* diligence of follow-up to reimbursement (i.e., rebill patient for portion of the bill when allowed by carrier),

* level of your small-balance write-off, and

* medical necessity review by the payer.

“The only realistic way to answer your question is to select a representative portion of bills for your payers (at least 20 each) and do a post-payment audit. This will allow you to find points of error within your process. Our laboratory performs this procedure on a routine basis.”