AAOS Bulletin - February, 2005

In Brief

Although the outlook for 2005 appears better than in recent years, several states are facing major budget shortfalls. Many are considering sizeable cuts to their Medicaid programs due to expanding health care costs. Furthermore, many state governors are concerned that the federal government will use Medicaid cuts to help shrink the federal budget shortfall, shifting more of the cost onto the states. In the current fiscal year, 16 states are running out of Medicaid funds.

Various aspects of medical liability reform will remain a hot topic in many states. Maryland has just completed a special session on the issue, and voters in California, Colorado, Florida and Nevada approved ballot measures dealing with this subject. Several states are considering medical liability reform legislation.


A group of 4,500 physicians can pursue a class action suit against an HMO based on that organization’s regular downcoding and refusal to pay claims. According to the Health Law Reporter, testimony indicated the HMO would send claims to a “cost containment” employee with no medical training, rather than to a medical review board.


Fulton County State Court Judge Craig L. Schwall, Sr., has taken the issue of expert witness testimony into his own hands. According to American Medical News, the judge banned an expert witness from testifying in his courtroom, saying that the physician’s testimony was lacking in credibility and apparently untruthful.


On January 11, 2005, state legislators overrode Gov. Robert Ehrlich’s veto to pass the Maryland Patients Access to Quality Health Care Act. Gov. Ehrlich vetoed the bill because he felt the reforms did not go far enough, and because the bill contained a 2 percent premium tax on HMOs. Although medical and hospital associations agree that the bill does not go far enough and that further reforms are still needed, the consensus appears to be that even the limited relief the bill provides was enough to make it worth supporting.


On December 30, 2004, the Medical Practitioner Licensure Consumer Protection Act became law. This bill expands the powers of the boards within the Division of Professional Licensure, including allowing for sanctions of medical practitioners by a board of registration.


A recently enacted bill clarifies the duties of a physician who supervises a physician’s assistant (PA). The law allows a physician who supervises a PA to delegate the performance of medical care services for a patient who is under the physician’s case management responsibility to the PA, if the delegation is consistent with the PA’s training.


BlueCross BlueShield of Montana has brought a federal antitrust lawsuit against Missoula Radiology, apparently for refusing to join their network. BlueCross claims that the suit was actually brought because Missoula Radiology has an unfair lock on the market. According to American Medical News, many doctors say that if the Blues are successful, it could encourage future suits to be brought by plans against doctors who won’t sign a contract with them.

New York

To help close a projected budget gap of $4 billion, Gov. George Pataki has proposed approximately $1 billion in health care and Medicaid spending cuts, significantly reducing benefits for around 340,000 people. In addition, reimbursement rates to hospitals and nursing homes would be cut.


Rep. Camille “Bud” George is promising to introduce a whistleblower protection law for health care professionals. The proposed law would provide protection to health care professionals who make reports of unsafe conditions, facilities or practices, and would invalidate physician contract clauses that discourage such reporting.


Due to state budgetary woes, TennCare, Tennessee’s Medicaid program, may be severely cut. TennCare has been one of the most generous Medicaid plans in the nation, but cuts being considered would reduce it to one of the smallest offerings. According to American Medical News, this would shift a huge amount of uncompensated care onto Tennessee’s hospitals and physicians. Gov. Phil Bredesen still hopes that an alternative solution to make TennCare work will be found.


Although two malpractice reform bills are being considered by the state, it appears unlikely that either will pass, according to the chairwoman of the Senate Health Care Committee. This would mean that both initiatives, one developed by lawyers and one by doctors, could likely go on the ballot in November for a public vote. Initiative 330 would put a cap on noneconomic damages and limit lawyers’ fees in medical liability suits. Initiative 336 would revoke licenses of doctors who accumulate multiple jury verdicts against them.

Bruce Allain, JD, is a legislative analyst in the department of socioeconomic and state society affairs. He can be reached at allain@aaos.org

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