October 1996 Bulletin

Academy opposes demonstration project

It is no secret that the planned Health Care Financing Administration (HCFA) demonstration project for total hip and total knee replacement procedures has the potential to heavily influence the delivery of orthopaedic care in the future and, therefore, is of great interest and concern to us all. That is why I want to take this opportunity to bring you up to date on the Academy's activities and current position on the project.

We became aware of HCFA's intent to initiate this demonstration project as an effort to reduce costs and test a new payment method (a negotiated package price combining Part A and Part B payments into a single payment to a hospital for each episode of care), and the intent to designate the participating hospitals as "Centers of Excellence" last year. In response, we adopted a Position Statement (August 1995) that stated that we did not object to HCFA's exploration of alternative payment methods to reduce the cost of health care, but that we strenuously opposed their use of the term "Centers of Excellence" to describe the hospitals selected to participate in the project.

When the letters of solicitation were sent out in March 1996 to hospitals in the two HCFA regions being included in the project (upper Midwest and West Coast), the term "Centers of Excellence" was not only still being used, but the hospitals also were encouraged to use the term for marketing their programs if selected. The solicitation letter made it clear that the primary requirement for selection would be willingness to accept a discounted payment from the government. In April, Executive Vice President Bill Tipton sent a letter to Donna Shalala, Secretary of the U.S. Department of Health and Human Services, urging HCFA to abandon the use of the term "Centers of Excellence." In early May, HCFA responded, indicating that the term would be changed to "Participating Centers of Excellence."

At the May meeting of the Board of Directors, the Council on Health Policy and Practice recommended and the Board adopted a plan that also denounced the new name for participating hospitals; sought to increase communication with the Fellowship, particularly those practicing in the 10 states involved with the project; and to seek a face-to-face meeting with appropriate HCFA officials regarding the term "Centers of Excellence." The Board also authorized funds for the preparation of possible legal action regarding the use of this or similar terms. The Committee on Health Care Financing has been monitoring this project from its inception and has met on several occasions with Armen H. Thoumanian, PhD, the project director, who has enlisted the Academy's assistance but has indicated that HCFA would go forward with or without our support.

Oppose project

At the National Orthopaedic Leadership Conference and Board of Councilors meeting in Washington, D.C. in June, Thoumanian addressed the groups and answered questions about the project. After discussing the issues, the Board of Councilors passed a resolution urging the Academy to oppose the project in its entirety and to continue opposition to the term "Centers of Excellence" and other similar terms. Other professional organizations not involved in this project have joined us in this battle. Later in June, the Academy introduced a resolution at the American Medical Association meeting opposing the use of that term in HCFA demonstration projects; the resolution was adopted by the AMA House of Delegates. Similar sentiments were expressed in a strong letter to HCFA from Paul Ebert, MD, executive director of the American College of Surgeons.

Also ongoing through the summer, Dr. Tipton had direct discussions and negotiations with Bruce Vladek and Kathleen Buto of HCFA about the "Centers of Excellence" issue but by August we received word that there would be no change; HCFA would continue to call hospitals "Participating Centers of Excellence."

In early September, the Executive Committee of the Board of Directors, along with members and staff of the Council on Health Policy and Practice, the Washington office, and Office of the General Counsel, met by conference call to reassess our position prior to the September meeting of the Board of Directors. We unanimously agreed to recommend to the Board that our position be modified to oppose both the HCFAdemonstration project and the terms "Centers of Excellence" and "Participating Centers of Excellence." We also reviewed and recommended a draft Position Statement reflecting this new position, and authorized the Academy to retain counsel to challenge HCFA's use of those terms in the demonstration project. These were all adopted unanimously by the Board of Directors at our September meeting.

Position statement

The new Position Statement articulates our concerns about the project, which include restrictions of choice and access for Medicare beneficiaries, the limited potential for cost savings, the type of payment arrangements being used, and the encouragement of abusive marketing of "Centers of Excellence." It also strenuously objects to any attempt by HCFA to contract exclusively with certain hospitals for the provision of joint replacement procedures. Our belief that hospitals involved in the demonstration project cannot be deemed "Participating Centers of Excellence" is reinforced. In addition, the statement emphasizes that anticipated measures that involved hospitals may be forced to rely on to accommodate HCFA's discounted prices could have a negative impact on the quality of care and be deleterious for patients.

While the Academy continues to have no objection to HCFA's exploration of alternative payment methods to reduce the cost of health care, we are opposed to this total hip and total knee demonstration project, and are continuing our efforts to have the terminology relating to "Centers of Excellence" eliminated. Stay tuned for further developments.

Kenneth E. DeHaven, MD

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