Physician financial relationships in the new regulatory environment

In recent months, physicians have been under scrutiny by the federal government with respect to their financial relationships with both drug manufacturers and home care companies. This heightened scrutiny can be attributed, in part, to the attention that has been placed on health care fraud and abuse in this country as a major cause of rising health care costs. Federal investigators currently are examining physician financial relationships in light of the Medicare/Medicaid antikickback statute to determine whether certain payments made to physicians are intended as inducements to refer patients or to prescribe certain products. "Health Law" is a regular feature of Physician Executive contributed by Epstein Becker & Green. Mark Lutes of the law firm's Washington, D.C., offices serves as column editor.     

Physician self-referral on the fast track

One of the most hotly debated areas of health care fraud and abuse has been the prohibition on physician self-referral. Now, this prohibition is limited to physicians referring patients to clinical laboratories in which they have an ownership interest and for which the services are reimbursed under the Medicare program. However, this law may be expanded to include other health care services to which physicians cannot refer, as well as to other federal programs and private payers. While Congress works toward this end, many state governments have already taken the lead in expanding the prohibition beyond clinical laboratories and the Medicare program. "Health Law" is a regular feature of Physician Executive contributed by Epstein, Becker, and Green. Mark Lutes of the firm's Washington, D.C., offices serves as editor of the column.     

Why such a hurry?

Over the past decade or so, federal health policy has chased health care costs that grew out of control largely because of federal intervention in the form of the Medicare/Medicaid programs. Having implemented a prospective pricing system for institutional providers, the government has followed up with a resource-based relative value system for physicians. The prognosis for this new effort may be no better than that for past attacks on health care costs, and the outcome could be substantially worse.     

Reinhardt on reform. Interview by Donna Vavala

Almost since the federal government took its giant step into health care delivery and financing in 1965 with Medicare and Medicaid, the emphasis in Washington has been on reducing the costs of health care. Almost all federal health law subsequent to those two programs has been aimed at cost control, even when the titles of the bills promised a more noble purpose. The most notable exception is the law establishing end-stage renal disease coverage, but it has become a prime exacerbator of rising costs. Not even the designers of the federal programs envisioned how quickly health care costs would rise and how substantial the increases would be. The federal tab in 1993 was $280.6 billion. In 1960, it was $3 billion and in 1970 it was $17.8 billion. And overall health care costs have followed a similar curve, growing from 5.3 percent of the U.S. GDP in 1960 and 7.4 percent in 1970 to 13.8 percent in 1993. The end is not in sight. Economists are predicting growth to 18 percent of GDP by the next century. Uwe E. Reinhardt, PhD, James Madison Professor of Political Economics in the Woodrow Wilson School at Princeton University, does not believe that the "bite" will become that large, but he does expect increases to continue into the near future. In the interview recorded in this article, Professor Reinhardt assesses both the current and his predicted financial scenario for the health care field.     

A Medicare reform primer

The use of the federal budget process to change Medicare policy is of importance to physician executives because of its impact on the health care delivery system. In particular, changes in Medicare policy, driven by the need to shore up the solvency of a politically popular program, will create changes for other public and private purchasers of health care. Reforming Medicare through the budget process is not new. Physician fees have been frozen, reduced, and selectively increased as a result. In 1983, the hospital reimbursement methodology was changed to prospective payment through this process. The budget process will continue to be used to make policy changes because of the large amount that Medicare occupies of the federal budget. Given the profound impact changes in Medicare can have in other health care sectors, the lack of consensus for a long-term solution would mean those in the health care arena will have to be prepared for significant annual policy changes through the reconciliation process.     

Health care economics is changing--the law is sure to follow

Law is intimately related to economics. As the economic relationships in a market change, the legal landscape evolves accordingly. Even if no health care reform is enacted at the federal level, ever-increasing portions of today's managed indemnity sector will convert to plans constraining enrollee choice and seeking to deliver cost-effective care through risk-sharing relationships (both corporate and contractual) with providers. This is inevitable, given employer and federal government pricing demands, and it is changing the face of health care law. If federal reform is enacted and/or the systems adopted in Minnesota, Maryland, Washington, and Florida (to name a few) are replicated elsewhere, the legal concerns of physicians and other providers will shift even more dramatically. In this article, some of the legal fall-out from these economic developments is discussed.     

Federal budget helps drive health policy. A close-up look at the budget process and how it affects health care funding

Crafting the budget is an annual process that Congress and the administration use to define the national policy agenda. It is a massive undertaking to decide how more than two trillion dollars is spent by the federal government. Over 20 percent of the budget is used for health care. The budget is a political document that defines the priorities of the federal government and directly influences overall health policy. Its construction deserves to be followed and influenced by physicians to ensure the health of the public.     

Health policy guided by five questions

As the U.S. Congress pursues a course for the restructuring of the U.S. health care system, it will have to carefully evaluate potential solutions in terms of their effect on cost and access. This article explores five questions, the answers to which will have to guide any health care policy changes at the federal level.     

A conversation on the future of health care

An extensive amount has been written, reported, and spoken on health care reform. It is a time of turmoil and uncertainty in the health care field. There is a great deal of talk at the federal level on reform, but efforts there seem to be at least temporarily stymied. Much is happening at the local and regional level, however, as the health care field itself wrestles with the changes that have already occurred and with the promise of changes that lie ahead. In the following conversation between two fictional physician executives, one with many years experience, the other his junior, some of the issues surrounding health care reform are discussed. Although the specific environment for the conversation is managed care, most physician executives will find themselves somewhere in the conversation. let's eavesdrop as they speak, in the late summer of 1994.     

Public hospitals: an assessment and plan for the future.

We are currently living in very difficult times for most health care providers. Even though we have always known it, the fact that resources for health care are limited is now abundantly apparent to consumers, health care providers, fiscal intermediaries, government (local, state, and federal), health care planners, and policy makers. Hospitals, especially, are being severely pressured to reduce resource consumption and costs. Conditions that are difficult for nonpublic hospitals are critical for public hospitals in general and nearly fatal for rural public hospitals. Fortunately, nonpublic hospitals are beginning to realize for the first time that their future depends, to a significant degree, on a strong and financially healthy public hospital system. If the public hospital, the hospital of last resort, closes, medically indigent patients will have to be treated in nonpublic hospitals, with the resultant medical, financial, economic, political, and social consequences. Therefore, the importance of public hospitals has to be even better recognized and appreciated and these institutions actively supported in order for the private and total health care systems to be successful.     

The private practitioner in hospital quality assurance

External forces continue to dictate the necessity of delivering high-quality health care along with methods of proving that the claimed quality is attained. Gone are the days when both the institution and its practitioners could answer quality questions simply by stating that they were delivering excellent health care to their patient population. The federal government, via the Health Care Financing Administration, and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) are mandating that institutions prove, without question, that they are delivering health care of the highest quality. The essential key to attaining these goals is cooperative private practitioners.     

Health care trends, Part 2. The new health care team. Panel discussion

In Part 2 of this third annual panel discussion, six experts talk about the growing diversity of health care providers and what it means for consumers and physicians. Americans are getting their wellness and health care services from a wider variety of non-physician practitioners than ever before. The number of allied health and alternative providers with direct patient access is likely to continue growing. This trend is being driven by consumer demand, by the lobbying efforts of non-physician providers, and by federal, state, and private payers who see the potential for reduced health care spending, greater consumer satisfaction, and better outcomes. In practice, this means physicians and non-physician providers, some of whom may not be sanctioned by the medical establishment, are obligated to collaborate as a team. Members of this new provider team will have to communicate effectively (with each other, with consumers, and with payers) and make evidence-based clinical decisions. Physicians may have to share decision-making with other members of this new health care team.     

The great health policy debate of 2010

Moderator: Good evening. Tonight I will be moderating a debate on the Health Care System Salvage and Coverage Overhaul Act of 2010 (Senate Bill 1, with companion legislation in the House). The bill is awaiting final congressional action, and the issue is considered so important that all 14 major television networks are carrying this debate live, along with many radio networks and at least 1,873 Internet/World Wide Web sites. As you know, S.B. 1 would provide immediate federal aid to the 1,000 hospitals and health care systems that are currently in bankruptcy; extend government-subsidized coverage to the estimated 90 million Americans who lack it; return to the federal government a wide range of health care regulatory and payment activities that had been transferred to the states; and prohibit certain types of health care enterprises and services, chiefly proprietary delivery and managed care systems. At the moment, the chances of its passage are too close to call. Arguments in support of S.B. 1 will be presented tonight by Sen. Joseph P. Kennedy II, Democrat of Massachusetts; arguments in opposition to the bill will be presented by Sen. George W. Bush, Republican of Texas; and the view of the Independent Party will be presented by former Kansas Senator Nancy Kassebaum, who also speaks as chairman of the National Nonpartisan Commission to Save American Health Care. Senator Kennedy will begin.     

The AMA faces down FDR and wins

There are two types of change that can occur via federal health care legislation: expansion in access and cost containment. Without passing judgment on the advisability of legislative change, I will argue that federal legislation is unlikely to occur unless both the executive and the legislative branches of government are controlled by the Democratic party. I am not suggesting that the change is necessarily an "improvement," only that Democratic Party control is necessary, particularly as the change pertains to access.     

Outpatient care from the payer's perspective

Beginning with this issue of Physician Executive, members of the Society on Insurance of the American College of Physician Executives will provide an ongoing column for readers on the unique point of view of the health care insurer. The column starts with an offering by the Chairman of the Society on the physician executive's role in resolving the anomalies of the health care payment system.     

The ethicist

The 1990s seem drawn for major changes in the U.S. health care delivery system. After a quarter century of piecemeal changes to compensate for the cost dislocations caused by passage of the federal Medicare and Medicaid programs, legislators, moved by a high level of demand from buyers, third-party payers, and consumers, are at last positioned for some structural revamping. Nothing is certain, however, as evidenced by the shifting deadline for introduction of the current Administration's approach to solutions. In this article, the author uses a fictionalized scenario to imagine the status of our health care system in the year 2000. As in 1990, much will remain to be done, even if much will have been accomplished.     

The impact of health care reform on group practice

Just two years ago, it would have been very difficult to imagine that reform of the health care system would today be a national domestic priority and that Congress would be considering one of the most significant and far-reaching pieces of legislation in the past 50 years. The issue is still in doubt, but it seems clear that, in this session of Congress or the next, legislation of far-reaching consequences will likely be passed. In fact, change on a widespread scale has already begun. During 1993, every state legislature except those of Nevada and Wyoming considered measures that would alter the way medical care is financed and delivered. Of the states that acted, both last year and in recent legislative sessions, eight have passed laws with the ultimate objective of ensuring access to medical care for all citizens. Government, at both the state and federal level, is clearly taking on the health care issue. The impact of reform on physicians, and thus on group practices, will be substantial. This article outlines the current course of health care reform and addresses its specific implications for the management of group practices.     

National health reform advocates retrench and prepare for Medicare

With the failure of President Truman's efforts to pass compulsory health insurance for all, national health reform (NHR) advocates began to redirect their political attention to a politically powerful group of Americans who were simultaneously vulnerable from a health care point of view--the elderly. This effort culminated in the passage of Medicare under President Johnson. This article will focus on antecedents to passage of Medicare that can be found in the Eisenhower and Kennedy administrations. It will also discuss other facets of health reform proposals from the Eisenhower administration. While most proposals never became law, the legislative intent of many of them--outlawing cancellation of policies, a minimum standard health benefit package, establishment of regional health authorities, preference for prepayment plans, and establishment of a reinsurance pool administered by the federal government--is currently under active discussion by the Clinton health reform task forces.     

New governance for a new era: issues and challenges for integrating systems

In this first part of a two-part column, Dr. Ruffin introduces seven key factors that will govern the operations of integrated systems. It is important to understand, he says, that, in the movement from a fee-for-service payment mechanism, in which the various elements of the health care field bill for their services independently and according to rules designed for their benefit, to an intregrated system, in which such independence can only lead to confusion in information systems, very substantial changes will be required in the governance of our health care institutions and organizations. In the second part of the column, Dr. Ruffin will elaborate on the seven factors that must be considered in the transition.