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AAOS Now

Published 1/1/2012
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Mary Ann Porucznik

Healthcare Reform: Threat or Opportunity?

AAOS Fall Meeting attendees focus on fallout from PPACA

Government regulations are a growth industry,” noted Patricia Brewster, MHA, FACMPE, CEO/Partner at IntraHealth Group in Atlanta, Ga. “The Federal Register has grown 26 percent since 2001—from 64,438 pages to 81,405 pages.” And that’s just one indicator of the impact that healthcare reform is having on orthopaedic practices.

Ms. Brewster, a member of the American Association of Orthopaedic Executives (AAOE), led a symposium on “How to Optimize Your Staff Talent to Prepare for Healthcare Reform” during the 2011 AAOS Board of Councilors/Board of Specialty Societies Fall Meeting.

“Your time is your most valuable resource,” she told the physicians in the audience. “But statistics indicate that nearly 20 percent of your time is spent in care coordination of patients who are not in the office.”

According to George Trantow, FACHE, CMP, executive director, Aspen Orthopaedic Associates, Aspen, Colo., one way to address this issue is to “push every task to the lowest level. Delegate clinical care to nonphysician support staff, such as nurse practitioners or physician assistants. Let patients request appointments online and complete any paperwork before they get to the office.”

Jim Kidd, CMPE, executive director, St. Peters Bone & Joint Surgery, St. Louis, urged orthopaedic surgeons to establish standards within their practices, to give staff appropriate responsibility and authority, and to start tracking financial metrics such as the following:

  • Practice operating costs per procedure
  • Practice operating costs per patient
  • Total costs per patient from the payer’s perspective
  • Total costs per episode of care from the payer’s perspective

He encouraged the use of automation, such as electronic funds transfers and automatic postings, which can result in improved regulatory compliance, less staff time, and improved cash flow while protecting the practice against embezzlement and errors.

The advent of healthcare reform, said Mr. Kidd, means that “physicians are not in the driver’s seat. But you can find opportunities if you improve your operational efficiency, increase your market share, improve marketing and customer service, and enhance your negotiating skills. Start making small practice changes now; be flexible and assemble the data that will make your practice irresistible to insurance networks.”

State-level reforms
According to David Schlactus, MBA, president of the AAOE and CEO of Hope Orthopedics of Oregon, concerns about reforms to the healthcare system on the state level are as significant—if not more significant—than those on the federal level. In Oregon, for example, the state is the primary insurer for 53 percent of the population, through Medicaid, and its Health Leadership Task Force—which includes every major insurance company, hospital, and healthcare system—controls coverage for 53 percent of the population.

As a result, regulations applied to high risk pools of patients might be extended to the entire population—with disastrous consequences. For example, reforms in Massachusetts, Oklahoma, Vermont, and Washington have resulted in higher deductibles for some orthopaedic procedures, limited emergency room visits, and reduced fees for workers compensation cases.

Involvement is key. Echoing sentiments expressed at the inaugural Orthopaedic Quality Institute, he reminded the audience, “If you are not at the table, you are on the menu!”

Stephen McCollam, MD, chair of the BOC committee on state legislative and regulatory issues, pointed out that help is available to assist state orthopaedic societies in dealing with these issues. Over the past 3 years (2008–2011), the committee has issued nearly $1 million in grants to state orthopaedic organizations to help address issues such as scope of practice, medical liability reform, imaging referral, and public payment systems.

Medical liability alternatives
As Douglas W. Lundy, MD, FACS, chair of the AAOS Medical Liability Committee, pointed out, although California’s landmark Medical Injury Compensation Reform Act first established the principle of caps on noneconomic damages, state supreme courts have overturned legislation establishing caps.

David Teuscher, MD, BOC chair and a member of the Claims Review Committee for the Texas Medical Liability Trust, reviewed the situation in Texas, where a coalition of groups were eventually able to pass a constitutional amendment that allowed legislation to impose noneconomic damage caps (See “Medical liability reform works,” AAOS Now, December 2011).

Graham Newson, associate director of the AAOS office of government relations, reviewed the provisions in the healthcare reform act (PPACA) relating to medical liability. Both PPACA and the president’s budget for fiscal year 2012 include funding for medical liability reform demonstration projects such as health courts, safe harbors, and early disclosure and offer programs.

The Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act (HR 5) would not only encourage speedy resolution of claims by shortening the time in which a lawsuit can be filed, but also enhance payments to patients by limiting how much attorneys can take from a settlement. Beyond measures that would cap noneconomic damages, noted Mr. Newson, other legislative options include the following:

  • Reforming the collateral source rule by eliminating “double recovery” by plaintiffs who have their medical expenses paid by health plans, worker’s compensation, or other collateral sources of benefits and still obtain damage awards for such expenses from a jury or a settlement in a medical liability lawsuit
  • Requiring that any individual who serves as an expert witness in a medical liability case meet standards of expertise and knowledge, as set forth by the law
  • Requiring a certificate (or affidavit) of merit to be filed with medical liability lawsuits, with failure to do so resulting in the dismissal of the liability claim
  • Preventing the plaintiff’s use of physician communications to patients after an adverse event in medical liability cases against the physician

According to James Wootton, JD, of the Health Information Technology Liability Coalition, one proposed measure—the Patient Safety and Compensation Act (PSCA)—includes “everything except caps” and would hopefully generate enough bipartisan support for passage.

“Evidence that legal reform lowers the cost of the healthcare system by lowering the incidence of defensive medicine is substantial,” said Mr. Wootton. “According to the Congressional Budget Office, medical liability reform would save an estimated $54 billion over 10 years.”

Mr. Wootton noted that the PSCA would discourage frivolous lawsuits and encourage settlement of meritorious claims by including “I’m Sorry” protections, pre-litigation notice, encouragement of remedial measures to improve safety and Certificates of Merit. The PSCA would help ensure that the standard of care and causation of injury are accurately determined by providing expert witness standards, a requirement of negligence, standards for emergency department care, and protections for “Good Samaritans.”

Finally, it would help ensure that damages are reasonably and appropriately assessed through the use of standards for punitive damages, proportional liability provisions, collateral source rules to prevent double recoveries; and periodic payments of damages. “The American people made it clear that tort reform should be a part of any reform of the healthcare system and were disappointed when PPACA did not include any,” he concluded. “PSCA would give them hope that the culture of litigation that has deformed the practice of medicine would be replaced by a new culture of trust and partnership between healthcare providers and their patients.”

Mary Ann Porucznik is managing editor of AAOS Now. She can be reached at porucznik@aaos.org

Did you know…?
According to Medical Group Management Association surveys, in 2010,

  • Gross fee-for-service charges for full-time surgeons averaged $2,484,498
  • Gross revenues per full-time employees averaged $1,105,059 but expenses (salaries, benefits, operating costs, information technology, and building occupancy) per full-time employee averaged $598,221
  • Overhead expenses accounted for nearly 53 percent of total operating costs in medical practices
  • Managed care payers accounted for more than half of all charges, while Medicare/Medicaid accounted for nearly 20 percent of charges
  • The average medical practice has 5.25 full-time staff employees for every full-time physician employee
  • Less than half of hospitals and medical groups surveyed measure practice operating costs per procedure and practice operating costs per patient

Editor’s note: The AAOS Fall Meeting, a gathering of members of the AAOS Board of Councilors (BOC) and Board of Specialty Societies (BOS), was held Oct. 27–30, 2011, in Seattle. In addition to BOC and BOS business meetings, the Fall Meeting featured open hearings, open microphone sessions, a “Performance Improvement Module” workshop, educational sessions for participants in the Leadership Fellows Program, and eight symposia focusing on a variety of topics. This is the second in a series of reports on the meeting.

View the presentations: http://www3.aaos.org/member/mtg_presentations/fall/view.cfm (Login required)