July 1996 Bulletin

Academy updating clinical policies

Will be replaced with more comprehensive tools

The Academy has turned up the heat in its fight with the Health Care Financing Administration (HCFA) to prevent the use of the term "participating centers of excellence" with the proposed hip and knee replacement demonstration project.

In May, the Board of Directors authorized the preparation of legal documents for a possible request for a court injunction to prevent the use of the term.

Last month, Academy president Kenneth E. DeHaven, MD, told the National Orthopaedic Leadership Conference (NOLC) in Washington, D.C. that "we're ready to go to the mat (with HCFA) over the name 'centers of excellence.'"

Councilors oppose term

At the same meeting, the Board of Councilors approved a resolution that the Academy "continue to oppose the use of the terms 'centers of excellence,' 'participating center of excellence' and other similar terms or concepts."

The term is being used to describe hospitals that participate in a HCFA program to lower health care costs. HCFA and the hospitals negotiate a package price which combines physician and hospital payments for a single episode of care into a single payment to the hospital. The hospital then distributes the payment to all of the providers involved in the provision of care. The global price must be lower than the total payment Medicare would otherwise make for that procedure.

The councilors' resolution, which is not binding on the Academy's Board of Directors, also urged that the Academy oppose the demonstration project for total hip and knee arthroplasty "because the demonstration project will affect the quality of and access to patient care." The resolution told the Academy to continue legal efforts to halt or substantially modify the demonstration project.

The Academy is not opposing HCFA's efforts to find ways to reduce health care costs, but it is opposing the use of the "centers of excellence" term as a marketing ploy by the participating hospitals.

In a letter to Donna E. Shalala, secretary, U.S. Department of Health and Human Services (HCFA), the Academy pointed out that HCFA has not gathered sufficient evidence to determine the quality of care by the institutions.

Kathleen A. Buto, associate administrator for policy, HCFA, responded that the preapplication phase requested expressions of interest and limited amounts of data, but the final application will be more comprehensive. "Application review panels will be asked to recommend those applicants with the highest quality surgical programs based on such factors as clinical outcomes, comprehensiveness of quality assurance programs, and quality of postdischarge care."

Not satisfied

HCFA's conciliatory action of changing the term from "centers of excellence" to "participating centers of excellence" did not satisfy the complaints of orthopaedic surgeons at the NOLC. They also were not mollified by the fact that the official in charge of implementing the demonstration project doesn't like the term.

Armen H. Thoumaian, PhD, senior social science research analyst, HCFA's Office of Research and Demonstrations, said he argued against using the term to no avail. Thoumaian addressed the NOLC, explaining that the demonstration project was a research project to explore new service delivery methods to lower health care costs.

"It is not a 'centers of excellence' demonstration; it does not fit the strict definition of that term," he said. "These are all Medicare providers and all have high quality standards.

"What we are doing is negotiating a bundled payment for a few procedures with a number of high quality hospitals that wish to participate in this type of arrangement and explore new ways of service delivery."

Despite Thoumaian's protests, the term came into general use when HCFA started its Medicare Heart Bypass Center Demonstration in 1991. After five years of arguing about the use of the term, Thoumaian said HCFA started using it, rationalizing that "there are a number of centers of excellence and these are the few that wish to participate."

There are Medicare centers of excellence for liver and heart transplant procedures and Medicare does steer patients to those hospitals, he said.

"We are not actively steering patients to these participating hospitals (in the cardiovascular and orthopaedic demonstration project). We are allowing them to market themselves as being in a Medicare experimental program for bundled payments."

His office oversees the marketing promotions and has the power to drop a hospital from the program if it exaggerated its role in advertising and marketing. However, that has never happened, he said.

Some councilors were skeptical that Thoumaian's office of less than 100 people can administer the program and monitor and control the marketing of all the participating hospitals, especially when he said that his office also was involved with "hundreds of other projects" and had "serious resource constraints."

While the Academy's official policy is directed only at the marketing signficiance of the term "centers of excellence," it was clear from comments made at the NOLC, that many orthopaedic surgeons are opposed to the demonstration project for other reasons.

They also expressed strong concern that the demonstration project would place participating physicians under the control of hospital administrators, that community-based hospitals would lose patients, and that their fees for a procedure would be less that the Medicare fee.

In trying to assuage the complaints of the orthopaedic surgeons, Thoumaian, said he had heard many of the same concerns from the cardiovascular surgeons, but that they later found the concerns to be baseless. By the second year of the program, they loved it, he said.

In an interview following his presentation, Thoumaian explained that in the second year of the program, the cardiovascular surgeons could go to hospital administrators and negotiate better deals because the demonstration program couldn't continue without the surgeons. Orthopaedic surgeons will be in the same position, he said.

Responding to the complaint that HCFA didn't establish standards for quality for participating hospitals, Thoumaian told the councilors, "you make the standards, we will make sure they are met."

Thoumaian also told the councilors that there were no plans to regionalize complex and costly procedures. "We are hoping that this demonstration is showing that it is not only feasible but desirable rrangement instituted under the regular Medicare program and that this would encourage some regionalization of services away from very low volume hospitals to higher volume hospitals."


The basis for the Medicare Participating Heart Bypass Center Demonstration project was a study by the Office of the Inspector General which found outcomes for bypass heart surgery were better at institutions that had a high volume of the procedure. The Health Care Financing Administration (HCFA) found that one-third of Medicare bypass surgeries were in hospitals performing fewer than 50 Medicare cases a year. The assumption was that surgical outcomes could be improved by encouraging the growth in high-volume heart surgery centers. It also was assumed that the costs per case could be expected to decrease as the hospital's volume increased.

A demonstration program for heart bypass procedures was developed in 1991. Through the end of 1995, the bypass demonstration project involved 9,900 procedures and saved Medicare $38 million.

The program is now being expanded to other cardiovascular procedures and to total hip and knee joint replacements. Combined, these procedures involve over 900,000 Medicare patients a year involving $13.5 billion in costs.

HCFA has received 535 preapplication responses and will select 50 to 100 hospitals to participate in the demonstration project over a three- to five-year period.

Home Previous Page