July 1997 Bulletin

Academy focuses on members' concerns

As President, I receive many letters from Academy fellows covering a wide range of topics. These letters, as well as comments made to me by individual members at the meetings I attend, are important. They give a clearer picture of evolving issues, concerns and the needs of our members. Many of these letters and comments reflect tremendous frustration, anxiety and even anger directed toward managed care organizations, payers, market forces and health policy decision-makers.

Three issues these past two months generated most of these letters and comments: The implications of the Medicare practice expense payment issue; Medicare fraud and abuse; and suggestions that what we need is a physician union. The following discussion is meant to briefly bring you up-to-date on my thinking on these three issues and refer you to more in-depth reviews in this issue of the Bulletin.

Practice expense payments

The Medicare practice expense payment issue has been a top concern in the letters I receive. It also is among the Academy's highest priorities in the health policy area, as detailed in my last "Across the President's Desk" column in the April Bulletin.

In Washington, we continue educating policymakers on access to specialty care, quality care and about fairness in reimbursement issues. We have asked Congress to delay the Jan. 1, 1998 implementation of a new practice expense payment system until the Health Care Financing Administration (HCFA) has sufficient data on which to base any new Medicare reimbursement system. We continue to point out the flaws in HCFA's practice cost study, including the complete breakdown of a mail survey which was supposed to give HCFA actual numbers from medical practices.

In early May, the Board of Councilors and other Academy leaders spent a very effective day on Capitol Hill on this issue. I believe our message generated a lot of interest and concern among the senators and representatives that met with us. Many of them already knew about the issue and, after hearing from us, agreed to pursue it further with HCFA. Some of the senators and representatives even agreed to consider congressional hearings on HCFA's activities. The New Jersey congressional delegation was particularly adamant. Within 24 hours after the councilors and Board leadership from New Jersey met with them, the delegation sent a letter to Bruce Vladeck, HCFA administrator, asking for an explanation of his agency's activities.

Since these Congressional visits, two major views seem to be emerging on the "Hill." One view is that HCFA's current approach should be scrapped and replaced with a new study, delaying implementation of the new payment system until at least 1999. The other view is that the new payment system should start next January, as planned, with a transition period to give HCFA time to "refine" its work.

In the meantime, the Academy and most other specialty societies are writing letters focused on HCFA's failed attempts to collect and analyze actual practice cost information. Included in this letter will be a description of the kind of study that we think HCFA should have done, based on sound cost accounting principles.

In addition, the Academy has funded a separate study on orthopaedic practice costs. This study will provide data and a methodology which HCFA might be able to use either as part of a new study or for evaluating the results of their current data during the "refinement process." Several other specialty societies are doing similar studies with similar goals and objectives.

Remember, Congress has the power at any time to stop HCFA from establishing a new payment system. In May, I sent a letter to all of you (Academy fellows) urging that each of you contact your senators and representatives about this issue. You have responded. You were terrific. Many of you copied me on the letters you wrote. In addition, I know many of you have talked personally to your senators and representatives. I have had the opportunity to go with some of our members to their "key contacts." Our message of obtaining accurate data, fairness, access and quality care has been heard loud and clear.

We need you to keep the pressure up. If you have not done so already, contact your senators and representatives. Ask them to look into this issue and to take appropriate action. Our message is, "Stop the proposed payment system because it is based on a flawed study." Direct HCFA to collect and analyze practice cost data based on accurate cost accounting principles. Make sure that any changes in Medicare fees, up or down, are based on solid information. Otherwise, many physicians might not be able to cover their overhead, which would affect the quality of care that patients expect and deserve under the Medicare program.

Medicare fraud and abuse

Fraud and abuse against the Medicare program has always been illegal, and the Academy has generally supported the government's actions on violations. I believe, however, that the government has gone too far in its latest initiatives. There are two main problems.

First, the Office of Inspector General (OIG) in the Department of Health and Human Services, is auditing and penalizing physicians for not following regulations even though these regulations were not yet in effect. This is occurring in regard to the current "physical presence" requirement for attending physicians, which became effective in July 1996.

Second, the OIG is auditing and penalizing physicians, going back to 1992, for allegedly upcoding evaluation and management (E/M) services, even though the AMA and HCFA did not provide clear guidelines on E/M coding until August 1995.

The Academy and other associations, including the AMA, are outraged by these retroactive audits, which we feel are unfair and illegal. We are troubled by the severe penalties. Penalties should be assessed when violations are made knowingly, which is not the situation in many of these cases. We also are concerned about the use of large financial inducements to encourage practice administrators and other employees to act like "bounty hunters" in gathering evidence of alleged fraud and abuse.

It is interesting to note that while physicians are penalized for inadvertent upcoding, physicians are not recouping their losses for inadvertent downcoding. While downcoding may not be "fraud and abuse," it seems only fair that improper coding of any sort be addressed at the audit. It is clear these audits are considered and motivated to generate a large source of revenue for the Medicare system. While some of our members have had audits, the focus in the initial audits has been the teaching institutions with larger potential returns.

The Academy will continue to bring you information on this issue. There are two articles in this Bulletin and two Health Policy Updates on the Academy's fax-on-demand service which address this issue. An unfair audit could be financially and professionally devastating to our individual members. Fortunately, we are in this situation with all other physicians and will not have to fight this one alone. The Academy is working aggressively with other associations, including the AMA, to have this issue readdressed. Since Congress and the Administration are unlikely to take any action, we also are considering joining others in legal action against the Department of Health and Human Services.

Physician unions

As a result of the two previous issues and numerous other factors in the current evolving marketplace, some of our members are feeling vulnerable and left out. It is no wonder that I also am receiving letters about physician unions, in particular, for orthopaedic surgeons.

The Academy has been monitoring them with interest; the Academy does not have a position on physician unions. It is an issue that we need to understand in more detail. What aspects of a union may be applicable and can these objectives be achieved through IPA's? I have asked the Academy's Office of General Counsel and health policy department to carefully evaluate this issue and provide information on it to our leadership and our fellowship.

Most physicians to-date that have belonged to unions have been employees of the government or university clinics. In addition, some physicians are forming "unions" that are closer in nature to IPA's and we need to clarify the differences. While unions have the potential to give desired bargaining power in certain contracting situations, they may have too many downsides. Unions could, potentially, cause antitrust problems for individual physician contractors. More importantly, unions could have serious consequences for medicine as a profession. They could impact our autonomy as professionals and our relationships with our patients and other providers. Certainly, strikes and forms of withholding care would tarnish us as patient advocates.

In conclusion, as we build consensus on these potentially divisive issues, remember the Academy is a national organization that represents all orthopaedic surgeons from solo practitioners to those working in fully integrated systems.

The letters that I receive include expressions of strong feelings and opinions on opposite sides of some issues. The "horns of dilemma" have taken on new meaning to me. There are those who believe strongly the Academy should only focus on education and there are those who believe we need to do more to influence health policy. Some say to me if the Academy becomes like a union or advocates of self-interest they will quit. On the other side, I hear from those experiencing tremendous frustration and anxiety over their future and want the Academy to be more militant on their behalf. Some even believe the Academy should have been able to prevent the impact of this health care reform on the orthopaedic surgeon.

We can all agree we need to remain advocates for quality education and quality patient care, access to specialty care, defending fairness in reimbursement methodology, supporting musculoskeletal research, and building coalitions with our patients and other physicians in these areas. These objectives and priorities are in our Strategic Plan.

Your Board of Directors have completed its formal review and update of the American Academy of Orthopaedic Surgeons' Strategic Plan for this year. (This is our road map and determines how we use our resources and personnel. It is a living document and is now being circulated for comment and review. The final approval for this year will be in September. Please direct your input to your representative councilor or specialty society, the Board of Directors or to me.

Douglas W. Jackson, MD

Special acknowledgment to Robert C. Fine, JD, for assistance in preparing this column.

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