October 2002 Bulletin

Spotlight on patient safety liability reform

On August 13, 2002 E. Anthony Rankin, MD, Secretary of the AAOS Board of Directors (and editor-in-chief of the Bulletin), represented the Academy at President Bush’s Economic Forum at Baylor University in Waco, Texas (see sidebar). Of the eight breakout sessions held, Dr. Rankin participated in the one devoted to health care issues.

During the day-long event, Dr. Rankin engaged in a number of discussions with policy makers, including Secretary Tommy Thompson of the Department of Health and Human Services (DHHS), and Mark McClelland, MD, PhD, the chief health economist for the White House and a member of the President’s Council of Economic Advisors. During lunch, Dr. Rankin had the opportunity to speak personally with President Bush about the Administration’s commitment to the passage of professional liability reform legislation.

It must be noted that attendance at the Forum was by exclusive invitation, and the AAOS was one of a very few medical societies invited to participate in this event. There were a number of factors that enabled the AAOS to secure an invitation. The AAOS Political Action Committee (PAC) has become a major "player" among the medical societies by contributing significant amounts of money to Congressional political party activities. These increased contribution levels have helped to put the AAOS on the "radar screen" for potential invitations to these types of functions. In addition, the AAOS Washington office has continued to pursue an aggressive policy of interacting with key White House staff. We have met several times at the White House on such issues as liability reform and Medicare reimbursement. In June, AAOS President Vernon T. Tolo, MD, also had a White House meeting to emphasize the Academy’s commitment to volunteerism. A final reason was the Administration’s desire to focus the attention of the Forum on professional liability reform and its awareness that orthopaedic surgeons, in particular, have been significantly affected by the medical liability crisis.

Patient safety

The House Ways and Means Committee passed legislation the third week of September calling for development of voluntary systems by hospitals and other providers for reporting medical errors. AAOS worked with Committee staff on legislative language adding confidentiality protections to ensure that reporting systems protect the identity of individual patients and health care professionals, as well as protections against the use of this information for litigation.

It is the litigation protections that have stalled activity in the Senate and divided key senators—Senator Edward Kennedy (D-Mass.), chair of the Senate Committee on Health Education Labor and Pensions (HELP) and Senators Bill Frist (R-Tenn.) and Jim Jeffords (I-Vt.)—who took an early lead to develop legislation together. When the bill was close to completion, the American Trial Lawyers Association approached Senator Kennedy asking for elimination of the protection provisions. Completion of Senate activity is uncertain.

Medical liability reform

On September 26, the House of Representatives approved H.R. 4600, the Help Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) Act of 2002 by a vote of 217 to 203. This legislation includes several meaningful tort reforms, including a cap on noneconomic damages.

The Washington office worked closely with the Executive Directors and Presidents of several state orthopaedic societies to gather orthopaedic information about how the liability crisis may be affecting delivery of, and access to, care. This information was shared with legislators who could possibly be swayed to vote in favor of the bill after receiving information about this crisis in their home state.

Although H.R. 4600 passed in the House of Representatives, it is not likely that the Senate will consider medical liability before the adjournment of the 107th Congress. In July of this year, an attempt to bring up similar liability reform provisions in the Senate was defeated on a procedural vote.

Medicare payment update

Returning from August recess, the Senate still has not focused its attention on legislation to correct the Medicare payment update formula. AAOS, along with other medical societies, continues to work behind the scenes with key members of the Senate Finance Committee to seek relief before the 107th Congress adjourns for the November elections.

Committee staff is pushing for action on a provider give-back package. Some members of the Committee, concerned that time is running out, are considering alternative avenues to address some temporary relief for physicians and other providers slated for further decreases in the coming year

The House-approved provisions currently call for a temporary solution by requiring a statutory 2.5 percent increase in the Medicare payment update for 2003, 2004 and 2005, financed by borrowing this money from later years. This would result in steep decreases in Medicare reimbursement for the years beginning in 2006, unless the formula is corrected. The Coalition for Fair Medicare Payment, of which the Association is an active member, is seeking a more favorable, long-term solution in the Senate, when it considers Medicare payment issues in September.

In a related matter, Congress has also turned its attention to addressing the geographic variance in Medicare payment, largely as a result of pressure from health care professionals in States with lower reimbursement. A House-approved provision requires the General Accounting Office to make: (a) an assessment of the validity of each component of the geographic adjustment factors; (b) an evaluation of the measures and the frequency with which they are revised; and (c) an evaluation of the methods used to establish the costs of professional liability insurance including the variation between physician specialties and among the different states, the update to the geographic cost of the practice index and the relative weights for the malpractice component.

This fall, in the U.S. Senate, an amendment may be offered to actually correct this disparity rather than just study it. Because so many key members of the Senate Finance Committee, which has jurisdiction over Medicare, are from relatively rural States, it is very likely that the Senate will address this issue.


On May 9, 2002, the DHHS issued a notice of proposed rule making on the Emergency Medical Treatment and Labor Act (EMTALA). The AAOS Washington office prepared extensive comments on those areas of the law with which we have had longstanding concerns.

On June 13, in direct response to comments by the Academy and a few other medical societies, the Centers for Medicare and Medicaid Services (CMS) issued two letters to clarify EMTALA requirements. CMS stated that an on-call physician could be simultaneously on-call at more than one hospital, provided that all hospitals involved are aware of the physician’s on-call schedule and each hospital has a back-up plan when the physician is not available to respond. In addition, CMS clarified that physicians are permitted to schedule elective surgery during the time that they are listed as on-call, provided that the physician has a back-up plan for emergency services during surgery. It is expected that the final EMTALA rule will be released this fall. (Note: the AAOS Board of Directors approved a policy statement on EMTALA at its September meeting. See the Board approves position statement article for more information.)

Physical therapists’ legislation

There has been little action on H.R. 3363 and S. 2386, the Medicare Patient Access to Physical Therapists Act. Currently, H.R. 3363 has 36 cosponsors and S. 2386 has only its two original sponsors.

Rather than pursue cosponsorship of this legislation, the physical therapists have focused their attention on an alternate course. They have been successful in gaining a provision in the House-approved version of the Medicare drug benefit bill requiring the General Accounting Office to conduct a study on access to physical therapy services in states authorizing services with a physician referral compared to states that don’t require a physician referral.

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