Surfing Stark II: prohibition against self-referrals

In 1989, the Chairman of the House Ways and Means Subcommittee on Health, Fortney (Pete) Stark (D.-Calif.), turned the health care industry on its ear by introducing the "Ethics in Patient Referrals Act" to Congress. The bill, commonly known as "Stark I," prohibited physician referrals to entities in which they held a financial interest. As Stark's bill made its way through Congress, its substance was dramatically reduced by the legislative process. Ultimately, the law was incorporated as part of the Omnibus Budget Reconciliation Act of 1990. Stark I's main thrust is that it bars physicians from referring Medicare patients to clinical laboratories with which they have a financial relationship. Furthermore, laboratories providing those services must report information concerning any ownership arrangements between the referring physician and the laboratory. Now, to complicate the picture, providers must contend with amendments to the original law that extend the reach of its prohibitions. Called "Stark II," these amendments took effect on January 1, 1995. In this article, guidelines for dealing successfully with the requirements of the law are outlined.     

'90s may be decade for physician payment reform

The '80s in health care were characterized by reform of Medicare payment for hospital services. The '90s are likely to be characterized by reforms in the manner in which physicians are paid for services to Medicare beneficiaries. In this article, the authors examine the steps that are already under way or proposed for reforms in the payment for physician services under Medicare.     

Legal issues in accepting capitation

The effort to reduce the cost of medical, hospital, and ancillary services increasingly focuses on shifting the financial risk for the cost of these services to those who provide them. Shifting arrangements include capitation for physicians classified as "primary care" physicians; capitation arrangements that include primary and specialty services; risk shifting to medical groups, IPAs, and other physician organizations; as well as the packaging of physician and hospital services on a "full risk," "per case," or other basis. Accepting financial risk for the cost of medical and other health care services, as well as the responsibility for managing the provision of services, may very well be the only remaining opportunity for providers to maximize reimbursement and maintain administrative and clinical self-direction. However, physicians must work with managed care organizations (MCOs) through negotiation of contracts and throughout the relationship to make sure: Unnecessary financial and legal risks to the MCO and physicians are eliminated. Risks that cannot be eliminated are apportioned between the MCO and physicians. All risks are managed in a coordinated fashion between the MCO and physicians.     

The new health care civilization: integration of physician land and manageria

Changes occurring in health care demand that physicians expand their professional knowledge and skills beyond the medical and behavioral sciences. Subjects absent from traditional medical education curricula, such as the economics and politics of health care, practice management, and leadership of professional organizations, will become important competencies, particularly for physicians who serve in management roles. Because physicians occupy a central role in planning and allocating medical care services and other health care resources, they must be better prepared to work with other health care professionals to create a new civilization, even if this means leaving the cloistered domain of "physician land" to serve as interface professionals between the delivery of medical services and the management of health care. Our research findings and conclusions strongly suggest that economic, management, and leadership competencies need to be incorporated into the professional development of physicians, especially in postgraduate and continuing education curricula.     

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.     

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.     

The role of the coordinator of care

Regardless of the specific outcome of the current health reform debate in Washington, it is likely that major changes to the health care system are in the offering. These changes, many of which are already in place or imminent in some locations, will have a major impact on the evolving relationships between physicians and hospitals. Most expect that these changes will accelerate the development of integrated health care delivery systems that will compete in the marketplace for a mixture of public and private health insurance dollars. In this system of "managed competition," health care dollars will flow to those systems that can ensure the best clinical outcomes while using the least economic resources. In this scenario, competing collaborative health networks that can manage the continuum of care will be central to the health care delivery system. The economic and political ties between physicians and hospitals will become more closely linked as government and private payers of health care services foster the development of these integrated, value-based health care delivery systems.     

Changes in physician and non-physician relationships

At the end of World War II, one-third of the nation's hospital administrators were physicians. During the 1950's through the mid-1980's a new breed of masters'level administrator, with well-honed coordinating skills, orchestrated a major expansion of new programs, services, and facilities. With the advent of the Medicare prospective payment system (PPS), more governing boards restructured their administrative staffs with corporate titles. Meanwhile, physicians sensed that trustees were becoming far more concerned with bottom line performance to repay a mounting debt that hospitals had incurred to remain technologically competitive. Since mergers and integrated health systems by themselves will be unable to generate significant operating efficiencies, governing boards will be forced to change direction and shift back to recruiting physicians as their CEOs or in other senior positions to assure themselves of the clinical leadership required to implement the managed care concepts of reducing utilization and cost, and simultaneously enhancing quality of patient care.     

Medicare private contracting: increasing patient choice and access?

Congress modified the Medicare program through the Balanced Budget Act of 1997 to expand patient choices for payment to physicians and certain other practitioners by allowing private contracting. This represents a shift in policy that has broad consequences for health care financing and program integrity. The effect of private contracting on quality and access to care remains unknown. Quality and access should be the most important measures of its success or failure. Out of pocket costs to seniors and vulnerable patients must also be watched closely.     

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.     

How much administration is today's physician doing?

The substantial changes in the organization and financing of health care services that have occurred in the United States over the past decade have helped to facilitate a growing role for physicians in health care management. These administrative roles for physicians are becoming increasingly important within many health care institutions with regard to such issues as cost containment and cost effectiveness, quality assurance and professional standards, and access to care. The growing complexity and diversity of the delivery system have created the need for more physicians to become involved in "orchestrat(ing)" the management of the medical-industrial complex."     

Hospital-physician relations: overcoming barriers to cooperation.

In the September-October 1986 issue of Physician Executive, we discussed the application of strategic business units (SBUs) to health care. SBUs are those corporate entities that market similar products to one or more target populations with similar characteristics. Examples of SBUs in health care are obstetrics, cardiology, orthopedics, etc. When the services within each SBU are linked together, they might resemble a vertically integrated health care system. In the case of obstetrics, a woman may have contact with physicians, a hospital, home care nurses, house-cleaning services, birthing teachers, and maternity clothing boutiques. Each of these are products/services within the SBU of obstetrics. Strategy development by SBU implies an external focus on the marketplace in terms of the specific mission of the SBU (clinical specialty). It also implies responding to the needs of consumers for whom the historical and present divisiveness between hospitals and physicians is immaterial and irrelevant. In this article, we will focus on ways to stabilize the relationship between hospitals and physicians within an SBU context in order to compete more successfully as a team in today's health care environment.     

How should managed care physicians be paid?

When paying a physician for medical or surgical services, most patients expect the traditional bill or charge for that encounter or visit. While most people also pay health insurance premiums, few patients expect to prepay for their health care. But that is the foundation of most managed health care systems-prepaid medicine. PPOs, IPAs, and HMOs are typically health care providers linked together to provide services to a set population for a specific prepaid fee or "capitation" payment. Other providers contract with these managed care insurers to receive a predetermined and often "discounted" professional fee for services. These managed care organizations have already gone through a number of stages in determining how physicians are to be compensated for their services, and further changes loom on the horizon.     

The new physician role as employee.

Rapid and ongoing changes in the way in which medicine is practiced and health care services delivered have made employees of physicians who were once the very definition of entrepreneurs. If this new role is difficult for physicians, it is doubly difficult for those who must manage such employees. To be effective managers of other physicians, physician executives must be aware of the historical and sociological basis of the physician profession.     

Solving physician-hospital administration conflicts: a physician strategy for the '90s

Today's health care climate creates increased potential for conflict between hospital administrators and hospital-based physicians. Voluminous regulations, increasing operating costs, professional liability exposure, changing methods of reimbursement, constraints on capital expenditures, and similar constraints on bed expansion have caused hospitals to explore new and innovative sources of revenue. Hospitals have become more eager to provide "bundled" services and health care "packages" in order to compete for discounted reimbursement contracts demanded by large-volume purchasers. While the impact of these changes is clearly felt in the private sector, similar fiscal constraints also may require university hospitals to modify their traditional role as leaders in education, research, and community service. In short, all hospitals are under intense pressure to increase revenues, reduce operating costs, and maintain the scope and quality of services provided.     

Capitation and informatics

When physicians, hospitals, and allied health professionals bill for services they render, their information processing requirements are relatively simple, at least compared to those of capitated organizations. When payers (insurers or employers) accept financial risk for the health care services of beneficiaries, they have usually invested in claims processing, membership tracking, and, under managed care, utilization review and provider profiling systems. But payers, for the most part, have not invested in electronic collection of clinical information about beneficiaries, nor have they tended to keep all claims they have processed in electronic form for study after accounts are settled and payments disbursed. In this article, we will explore why informatics is so important to capitated organizations and why payers that have traditionally taken financial risk for insuring the health care costs of populations are also learning about the importance of informatics.     

From managing access to managing care: the impact of primary care on health care delivery organizations.

Professional "revenge of the nerds" is currently taking place, as managed care evolves generalist physicians into new professional prominence. Primary care physicians are finding themselves at the center of health care market reform as health plans, insurers, and other financing organizations turn to them as the key to cost control. In short supply, they are prospering financially from the demand. As the source of patients, they are gaining in prestige from specialists and hospitals who once demeaned them. But these newfound roles are only the initial steps in the transformation of the primary care practitioner. The change that the generalists are experiencing is essentially managing access to care, not truly managing care itself. There are large and crucial differences between managing access to care and actually managing care. These differences are, in many ways, a higher calling for primary care practitioners as they refocus attention on patient outcomes, which will in itself result in a lower resource utilization above and beyond the crude controlling of access. What those differences are, what new roles they require, and what impact they will have on organizations that either house or contract with primary care physicians will be the focus of this article.     

Community health information networks. Threat or opportunity in the doctor-patient relationship?

The last half of the 20th Century has been witness to numerous changes in the delivery and financing of health care services. These changes have impacted the one-to-one doctor-patient relationship that may have existed in the past to become a complex of relationships. The contemporary physician collaborates with many other professionals to assist in the delivery, financing, and monitoring of health care services. These clinicians and other professionals require access to patient information to deliver care and secure payment. The patient understands this. Yet the patient has concerns about the widening circle of persons authorized to access his or her information. These concerns have been amplified by the development of community health information networks--(CHINs). This article focuses on CHINs, both patient concerns and the role physicians can take in developing them.     

Medicare and Medicaid: the first successful effort to increase access to health care

The passage of Lyndon Johnson's health care legacy, Medicare and Medicaid, in 1965 represents the last time that health reform legislation expanding access to care was successfully proposed and implemented in the United States. Access, of course, represents only half the pie in health reform, the other part being the organization of the health care system. There has never been any major legislation passed through both houses of Congress and signed by a President that changed the organization and delivery of health services. It seems certain that President Clinton will propose legislation dealing with both access to and organization of our health care system. Though it may not have seemed so at the time, President Johnson had it easy compared to the challenges confronting President Clinton.     

The rudiments of an Internet-based health plan for consumers: an interview with John Danaher, MD, MBA. Interview by Richard L. Reece

Richard L. Reece, MD, interviewed John Danaher, MD, MBA, on August 16, 2000, to discuss how his new company is preparing for the perfect storm--the looming convergence of demanding consumers, defined contributions, and Internet-based health plans. He describes how his firm is putting financial and clinical tools in the hands of consumers and physicians, so consumers can be more enlightened in their health care choices. Danaher says, "We're not about buying goods and services online. We are transforming the way consumers buy health care and seek insurance. We're trying to be a 401 k where people get on, knowing their risk profile and return horizons. We aim to motivate consumers to be proactive in making health care choices. How do we make consumers responsible and motivated enough to take control of managing their health care costs? How well we articulate this call to consumer action will be the key to our success."