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Medical Tort Reform Does Not Fix the REAL Problem

Medical malpractice tort reform bills were recently introduced in both chambers of the Iowa legislature. According to a January 30 article in the Iowa Capital Dispatch, the bills are fast-tracking through various subcommittees after being touted by Governor Reynolds in her Condition of the State address.

This new version of tort reform would put a $1 million hard cap on noneconomic damages in lawsuits against healthcare providers for cases of substantial or permanent loss or impairment of a bodily function, substantial disfigurement, or death. Noneconomic damages may include awards for pain and suffering and emotional distress.

Supporters of tort reform – hospitals, physicians, malpractice insurance companies – say there are too many frivolous lawsuits that cause ‘runaway’ and ‘shock’ verdicts that are out of control. The argument is that this causes a shortage of healthcare providers in our rural communities and drives OB-GYN clinics and hospitals out of business.

Not to be lost in this discussion, the New England Journal of Medicine recently published findings on the estimated progress of patient safety, using a sample of hospital admissions in 11 Massachusetts hospitals in the pre-COVID year of 2018.  At least one adverse medical event was identified in 23.6 percent of the admissions, and 9.0 percent of the admissions included an adverse event that was rated as serious, life-threatening, or fatal. About 23 percent of the adverse events were judged to be preventable.

These findings are disturbing, yet should not be surprising. The results serve as notice that all other states – including Iowa – are not exempt from having similar results. For example, in 2018, I released an Iowa report that found nearly one-in-five Iowa adult patients experienced medical errors in the past five years, either for themselves or for someone close to them.

A seminal report in 1999, To Err is Human: Building a Safer Health System,” estimated the annual number of lives lost to medical errors was up to 98,000 in hospitals alone. Subsequent estimates put this number much higher at 250,000 to 400,000 annual deaths.

Has progress been made since ‘To Err is Human’ was published? Donald Berwick, noted physician and former Administrator of CMS, indicates the safety movement has, at best, stalled.

The campaign effort in Iowa to thwart ‘excessive’ tort awards is a tired approach that continues to ignore the true facts. The medical establishment would rather spend their efforts and financial resources to chase tort reform protections rather than fixing the inherent problems that cause egregious medical errors in the first place.

Numerous studies continue to prove that tort reform does little to nothing to entice more physicians to practice in states that have implemented tort reform. In January, the Center for Justice & Democracy (CJ&D) released a briefing book, “Medical Malpractice: By the Numbers,” which provides a wealth of information that disputes many tort reform arguments.  One 2019 analysis summarized, before and after tort reform was implemented: “Texas, like many other states, faces a challenge in attracting physicians to rural areas. But we found no evidence that tort reform lessened that challenge.”

Six top medical researchers found that “tort reform” does not reduce “defensive medicine” or healthcare costs. In fact, tort caps may actually increase costs.

According to a December 2020 edition of Medical Economics (found on page 17), Iowa has been identified as having the eighth lowest medical malpractice rates in our country. Iowa’s Governor and elected officials can make a true impact by proposing and implementing legislation that holds hospitals and medical providers more accountable for the dismal patient safety results.

Iowans should not have to rely on arbitrary caps established by special interest groups who benefit at the public’s expense. It is now time to serve the entire public, rather than a handful of those unwilling to practice safe and effective care. Tort reforms merely mask the real problem that politicians are unwilling to confront.

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Compliance Update on Hospital Price Transparency
10 Largest Iowa Hospitals

For the past year, I have written about the Hospital Price Transparency rule that requires hospitals to make clear, accessible pricing information available online. The rule went into effect on January 1, 2021.  Under this rule, each hospital operating in the U.S. is required to provide online pricing information about the items and services they provide in two ways:

  1. In a display of shoppable services (for 300 common services) in a consumer-friendly format.
  2. As a comprehensive machine-readable file with prices for all items and services for each separate health insurance company.

Providing this information is presumed to make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

When this law was implemented on January 1, 2021, the financial penalty for hospitals not complying, regardless of hospital size, was up to $300 a day ($109,500 annually). Many U.S. hospitals, however, have not complied with this federal rule, and instead have opted to keep their secret pricing arrangements to themselves. As of late December 2021, no hospitals have been penalized by the Centers for Medicare & Medicaid Services (CMS), which enforces the rules. The CMS has issued about 335 warnings for violations, in addition to providing hospitals information and technical assistance to increase compliance.

New Penalties Apply January 1, 2022

According to a December 30 Wall Street Journal article, over 1,000 hospitals have fully complied with this rule – which represents only about 17 percent of all U.S. hospitals.

Because of this poor compliance record, the CMS issued new rules last fall that increases the penalty for larger hospitals that have 30+ beds. Beginning January 1, 2022, the rule requires these hospitals to pay a $10 per bed per day penalty, not to exceed a maximum daily dollar amount of $5,500. The maximum annual total penalty amount would be $2,007,500 per large hospital. Smaller hospitals (with a bed count of 30 or fewer) will remain at $300 penalty per day.

What About the 10 Largest Iowa Hospitals?

For each medical procedure or service, hospitals are required to post five prices: the gross charges; the discounted prices for cash payment; the prices negotiated by hospitals with each insurer; and the minimum and maximum negotiated prices they have agreed to charge patients.

Looking at the 10 largest Iowa hospitals (by total inpatient discharges), it appears that most all provide consumer shoppable services on their websites, but only four of these hospitals also provide acceptable machine-readable information. The ten hospitals are listed below.

Hospitals in Des Moines

When assessing three Des Moines hospitals (Broadlawns, MercyOne and UnityPoint), as written in my January 2021 blog, only Broadlawns Medical Center appeared to be compliant with BOTH consumer shoppable services and machine-readable information during 2021. MercyOne and UnityPoint Health, however, were non-compliant with one or both requirements when the rule became effective last January 1, 2021.

As of the release of this blog (January 11, 2022), it appears that both MercyOne (Des Moines) and UnityPoint Health (Des Moines) appear to be compliant with regards to displaying ‘shoppable services.’ MercyOne has also attempted to comply with the machine-readable requirement, but there are a limited number of insurers found in their Excel file. For example, Wellmark offers a number of various plans in the Iowa marketplace (HMO, PPO, etc) that may have different negotiated rates, but MercyOne has clumped all of these under the broad heading, ‘Commercial/Wellmark.’ A consumer has no way to determine which Wellmark plan has been quoted on the MercyOne website. Because of this vagueness, I regard MercyOne Des Moines as only ‘partially’ compliant with the machine-readable requirement. By comparison, Broadlawns at least broke out the price differentials between Wellmark’s ‘PPO’ versus ‘HMO.’

UnityPoint is not yet compliant with displaying the comprehensive machine-readable file. UnityPoint does provide Excel and PDF files that only provide the ‘Charges’ for each medical procedure, but no other information and no mention of insurance companies. In fact, UnityPoint references the ‘Machine-readable Excel file’ for “charges in effect December 31, 2020 – which is outdated information.

Enforcement of Rules

It is unknown at this time when the CMS will enforce and apply the new 2022 penalties. Thus far, the only guidance from the CMS website states the following:

Beginning January 1, 2021, we’ll monitor and enforce these price transparency requirements. For hospitals that do not comply, we may issue a warning notice, request a corrective action plan, and impose a civil monetary penalty and publicize the penalty on a CMS website.

Hospitals have resisted publishing their negotiated prices for many reasons. One primary reason is they believe the price information is too complicated and that these disclosures would not be useful to patients. Clearly, the federal rules disagree with this assumption.

Conclusion

On the surface, it appears more work is needed by many Iowa hospitals, specifically as it relates to providing the machine-readable file. Will implementing a higher penalty in 2022 change the behaviors and practices of the larger hospitals in 2022? Time will tell – stay tuned.

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American Hospital Association Advertisement
A Closer Look

A November 15 advertisement in the Wall Street Journal caught my attention – and then my ire. Rick Pollack, President and CEO of the American Hospital Association (AHA), a national organization that represents nearly 5,000 hospitals and health care networks – penned a piece titled, “Fighting for Fair Health Insurance Policies for Patients and Clinicians.”

The advertisement began with the following statement: “Hospitals and health systems put the health and welfare of their patients first. But for some of the nation’s largest commercial health insurance companies, that increasingly is not always the case.”

Pollack continues by asserting health insurance companies have policies that compromise patient care, access to that care and safety. “These include frequent changes to coverage, limited provider networks, delays in authorizing treatment and failure to pay providers in a timely manner.” I must admit, there is some truth to these assertions. Defending insurance companies on many of these issues will not come from me.

Pollack provides a few examples of the atrocities committed by insurance companies, which “blindsides” patients and “puts their health at risk.” Equally abhorrent, are the “billions of dollars in added costs to the health care system,” which “contribute to clinician burnout.” Again, I will not push back on such allegations.

Finally, Pollack goes for the jugular by writing that unjustified behavior by insurance companies is allowed because “commercial health insurance markets are increasingly concentrated and nearly every market is dominated by a single larger commercial insurer.” Yep, this too has some validity.

My ‘Ire’

So why am I incensed by this AHA advertisement? Quite simply, it amounts to the pot calling the kettle black. Finger pointing deflects blame from where it also belongs. Medicine has become more of a profit-incentive business than a public good that cares for patients. The large majority of clinicians serving patients are doing so for the ‘right’ reasons. Unfortunately, the business side of medicine tears away at the sanctity of patient care, leaving doubt in the care we once trusted. 

The AHA and its members are far from faultless on many of the criticisms it throws at health insurers. In fact, the atrocities they commit are swept under the rug and largely left ignored. When transgressions do surface, carefully polished responses are crafted by the AHA and its minions. Below are just a few of the many transgressions committed by the AHA and its powerful members:

  • Leveraged Local Power – Local hospitals infiltrate and hypnotize our communities, business associations and the state legislature to help soften or silence negative pushback on their business behaviors and practices. They often remind us of the “economic impact” they provide to our local economies and the ‘free’ care provided to those without health insurance. This is true, but nonprofit hospitals are exempt from paying most federal and state taxes, which may outweigh the charity care they provide. Because of this economic presence, they feel entitled to be treated with reverence to promote their own business interests. Yet contrary to arguments made by the medical establishment that bloated healthcare equates to more local jobs and serves as a multiplier-effect for local economies, growing our medical industrial complex just does not fit the true narrative of having thriving economies. Consolidation of hospitals, we are often led to believe, will broaden access to care and increase efficiency. As a result, the public will benefit by having “lower costs and improved care.” Yet, many of these mergers serve as a ploy to leverage bargaining prowess with third-party payers to ensure favorable, and more profitable prices. Studies have shown that hospital consolidation is more about enhancing bargaining power and less about integration aimed at reducing costs and providing better, safer care.
  • Opaque Pricing – The hospital price-transparency rule, which took effect this past Jan. 1, required hospitals for the first time to disclose the confidential prices negotiated with health insurers. Despite hospital opposition to this rule, it was implemented to help boost competition and control rising U.S. healthcare spending. According to a Wall Street Journal article in March, hospitals used various methods, including so-called blocking codes, to make it harder for people to search for and download pricing data. The Centers for Medicare and Medicaid Services then recently released a final rule to raise penalties if hospitals do not comply. Not surprisingly, the AHA and other hospital trade groups pushed back. Hospitals around the country are notorious for charging exorbitant and variable prices to patients. Keeping prices opaque is a huge benefit to hospitals, but not to those who pay the bills. Let’s be honest, it’s about the bottom line – healthcare is in the money business.
  • Billing Complexity Equals Medical Debt – Opaqueness in pricing also carries through to how hospitals bill for their services. Hospitals behave as if they are entitled to our money – even if the billing is unfair and inaccurate. Fortunately, we have a new law enacted to protect patients against surprise medical bills, a practice that hospitals have allowed to happen for decades. Medical debt continues to pile up for patients, causing bankruptcy to those with and without health insurance coverage. 
  • Harm to Patients – We have known for years that fatalities due to preventable mistakes made in U.S. hospitals are enormous. In fact, if medical errors were tabulated similarly to other diseases, it is estimated that medical errors would be the third-leading cause of death in this country, behind only heart disease and cancer. It is egregious that death certificates do not list the preventable complications that contribute to the death of patients. The AHA and hospital trade groups whitewash preventable medical mistakes and patient harm as if they don’t happen. Instead, more resources are spent to initiate state laws that implement and enforce tort reforms that protect their backside. Apparently lobbying for such legislation is much easier than actually mitigating the harm they are needlessly causing.
  • Lobbying Power – The hospital and medical community lobbies state legislatures, Congress and federal agencies to influence decisions that benefit themselves, not the public. According to OpenSecrets.org, a nonpartisan, nonprofit, and independent organization that tracks money in U.S. politics,health’ was the top lobbying sector in 2020, spending over $629 million. Since 1998, this sector has dished out over $9.5 billion, edging out ‘Misc. Business’ ($9.4 billion) and Finance/Insurance/Real Estate ($9.36 billion).  ‘Health’ lobbyists represent the American Medical Association, American Hospital Association, pharmaceuticals, and so on. In the $4+ trillion healthcare industry, lobbying efforts can pay off handsomely. The ‘investments’ mentioned above are merely a drop in the bucket for the eventual returns that will come sometime later. 

Bottom Line

The business of medicine should be less about ‘private gain’ and more about ‘public good.’ The monetization of medicine has been designed for the benefit of those who stand to profit at the expense of those who are forced to blindly pay. To be fair, insurance companies are not without fault. However, I see this advertisement as yet another deflection from the real truth. We deserve greater transparency and accountability from those who provide our healthcare and the insurance companies that help pay for such care. Lastly, we must have honest and bold action from those we elect to protect the public’s interests. Unfortunately, patients are an afterthought in this perverse system that too often lacks appropriate accountability.

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