Reviewing Peer Review

sullivan_charlesPeer review is pervasive in hospitals as well as large clinical practices as a result of statutes, courts’ adoption of the corporate negligence doctrine, and accreditation standards.  And physicians subject to peer review are increasingly hospital employees or employees of large group practices.  It should come as no surprise, then, that employment-based challenges to particular peer reviews have increasingly arisen in the courts — with claims ranging from being used to retaliate for whistleblowing to allegations that such reviews were undertaken as a means of discrimination on a variety of bases.

Of course, where “employment” is not involved, such challenges, whatever their abstract merits, fail because the physician is simply not protected by the relevant law. But even as more physicians became employees, many challenges continue to be unsuccessful because of the “adverse employment action” requirement of antidiscrimination statutes.  Thus, the courts have construed Title VII and other laws as not proscribing discrimination per se but as prohibiting discrimination only if it results in sufficiently severe consequences.  The effect of this rule is to insulate relatively minor workplace decisions from challenge. Where retaliation for filing a charge or otherwise opposing discrimination is concerned, the federal laws are somewhat more protective. In such cases, if the employer’s action is of the kind reasonably likely to deter protected conduct, it is sufficiently severe to be actionable.

This structure, of course, raises the question of whether peer reviews can be sufficient for liability – assuming, of course, that the employee can establish the requisite causal nexus between the peer review and the prohibited employer conduct.

There are few cases dealing explicitly with the problem, but most courts have thought not: merely referring a patient’s case or a physician’s practice more generally for peer review is common and does not automatically result in any adverse consequences at all. But these cases often conflate the question of whether a referral is adverse with whether the plaintiff can establish that the referral was motivated by discrimination or retaliation. For example, the Seventh Circuit wrote:

Patt has not offered evidence to show that the peer review activities constituted an adverse employment action. The record shows that participating in peer review was a requirement of Patt’s contract (like all doctors at Family Health), and that her male colleagues also had cases referred to peer review. Patt has offered no basis to conclude that the number of her cases referred to peer review was inordinate when compared to the number of her male colleagues’ cases referred for review. Nor has she offered evidence to suggest that any of her cases were inappropriate for peer review. Accordingly, Patt has failed to establish an adverse employment action. . . .

Patt v. Family Health Sys., 280 F.3d 749, 754-755 (7th Cir. 2002).

But what if a doctor can show reason to believe that peer review was wielded for impermissible motivations? Romero v. County of Santa Clara, 2014 U.S. Dist. LEXIS 94643(N.D. Cal. July 10, 2014), permits suit in such cases.  In a kitchen-sink complaint, Dr. Luke Romero, an anesthesiologist, claimed a variety of claims for his treatment by the Santa Clara Valley Medical Center at which he worked. Although the district court dismissed most of his complaint, it upheld his retaliation claims where the alleged reprisal was via peer reviews. Dr. Romero had engaged in protected conduct, inter alia, by complaining about patient care issues and about discrimination. Beginning shortly thereafter, he was subjected to five peer review investigations.  Looking to the principle that an action is sufficiently adverse if it is likely to deter the protected conduct at issue, the court found peer review to satisfy that standard. Low peer review ratings could subject a physician to discipline, and even loss of privileges with an attendant report to the National Practitioner Data Bank.

Of course, being subjected to peer review does not necessarily result in unfavorable findings, and Romero was not, in fact, subject to corrective action or any other tangible consequences. Only one of the reviews resulted in an unfavorable finding. But the court found that the possibility remained that the peer reviews themselves were an adverse employment action, at least where retaliation was claimed (remember, it has a somewhat lower standard).

That still left the question of whether the reviews were retaliatory, but the court had little problem finding that Romero survived summary judgment on this issue: the peer reviews “came close on the heels” of his protected conduct, and, in the two years prior to that protected conduct, he had not had a single peer review referral. Although neither party compared Romero’s rate of peer reviews with the average doctor at the hospital, Romero offered evidence of both other doctors unfairly targeted and suspicious procedural problems with the reviews.

The case is a textbook example of a clash between desirable public policies, both related to public health: peer review is central to improved patient care in the modern healthcare system, and disincentives to use it when appropriate threaten its success. On the other hand, peer review creates the opportunity to keep employees in line, and discourage the kind of whistleblowing which is thought to help keep the entire system honest. It also creates opportunities for racial,  gender, or disability discrimination.  Whether Romero is an outlier or the first of a new line of jurisprudence on this issue remains to be seen.


Kathleen Boozang on Death with Dignity Legislation Currently Pending in New Jersey

dean-kathleen-boozang-176x220There’s a fair chance the New Jersey Assembly will take up the Death with Dignity Act before the legislators head off to the Jersey Shore for the summer.  The topic is appropriate for this blog, entitled Health Reform Watch, because physician-assisted suicide (PAS) is a kind of desperate attempt at reforming end-of-life care.  The frustration with the limited extent to which we’ve been able to improve end-of-life care over the last three decades is understandable.  I suggest, however, that even with the enactment of practitioner orders for life sustaining treatment (POLST) legislation, New Jersey has not been sufficiently creative or aggressive in attempting to change end-of-life care practices in the state, and the legislature should be focused on other initiatives to achieve that end.  Based on the experiences of Oregon, Washington, and Vermont, there is no reason to expect that a Death with Dignity law would contribute meaningfully to an improvement in end-of-life care for New Jerseyans.

First, let’s get one matter out of the way:  I do not believe that the proponents of Death with Dignity legislation are motivated by a desire to reduce the cost of end-of-life care.  The patient suicide movement has been around for a very long time, and has always, in my view, been grounded in the philosophical belief in patient autonomy and an expansive view of a right to control the means and timing of one’s death.  Experience in those states where PAS is legal is that too few people take advantage of physician-assisted suicide for its availability to make a dent in health care costs.  If anything, reducing healthcare costs is more likely to be a reason supporting improvements to end-of-life care, although nationally, it’s not clear one way or the other whether reforming end-of-life care will actually reduce Medicare costs – the labor-intensive care required for several months of hospice is expensive.  New Jersey could be different.  Certain indicators suggest that patients dying in New Jersey receive more aggressive treatment than almost any other state in the country. Because that’s not how the majority of people want to die, it could be that in New Jersey, improving care of the terminally ill would save Medicare dollars.  If that’s a side benefit, all the better.  My primary point in this regard is that I don’t think it’s fair to accuse proponents of PAS of being motivated by potential cost savings; proponents of reforming the care of the chronically and terminally ill are more likely to cite costs as a factor in their search for reform.  Ultimately, I believe that both sides are motivated primarily by the desire to provide patients and their families with compassionate, holistic, and high-quality care in the last years and months of life.  That will not be accomplished by physician-assisted suicide. Read more


AMA Sailing Into the Noncompete Wind?

September 10, 2013 by · Leave a Comment
Filed under: Health Law, Physicians 

sullivan_charlesGiven that noncompetition clauses are ubiquitous, whether in independent practice groups or in the increasingly common hospital or health system employment of physicians, the AMA’s disapproval of them seems, at best, quixotic.  The AMA’s Principles for Physician Employment, adopted last November, forthrightly states that “[p]hysicians are discouraged from entering into agreements that restrict the physician’s right to practice medicine for a specified period of time or in a specified area upon termination of employment.” § 3(f). Noncompetes, of course, do both.

The Principles as a whole were clearly driven by the increasing phenomenon of hospitals employing doctors, not merely providing them privileges, and address a number of areas where the “new normal” for physician work requires reassessment of old patterns. Thus, the Principles address conflicts of interest, medical staff relations, and the continuing of privileges when employment terminates.

Given the clear purpose of the document in trying to maintain some degree of physician independence from their hospital employers, the section addressing noncompetes is a curious provision. It adds an air of unreality to what, presumably, is a document intended to affect real world decision.  And its phrasing is equally odd: Self-interest, of course, points towards not restraining a physician’s right to compete. Presumably, then, postemployment covenants not to compete are routinely signed by doctors because they are extracted as a condition of employment. What additional motivation or leverage the Principles might offer to resist employer demands is dubious.

It is true that the law frowns upon noncompetition agreements, which means that they are subjected to more scrutiny than other contracts; usually this is framed in terms of having to be no broader than necessary to protect the employer’s legitimate interest. And employers have no legitimate interest in preventing competition per se; rather, they have an interest in protecting patient relationships and confidential information.  Further, restrictive covenants are unenforceable if they are contrary to the public interest, and some states show more of a disposition to strike down or narrow physician clauses on that ground.  And a small number of states actually bar such postemployment restraints in the medical context.

Given the stakes involved, physician noncompetition agreements are frequently litigated, either by hospitals or practice groups trying to enforce contractual restraints or in declaratory judgment actions brought by doctors subject to such provisions seeking to have them invalidated. It’s possible, then, that the Principles might be relevant not in barring physician, noncompetes but in convincing a court that a particular clause is invalid. Possible – but unlikely, given the divergence between the Principles’ prescription and pervasive industry practice on the ground.

Another possibility might be to seek to empower physicians as employees. In the brave new world of hospital employment of physicians, doctors lose their independence but gain labor law protection.  Maybe in a collective bargaining context, the Principles can be deployed by a physician’s union in an effort to eliminate or narrow such restraints.

Or maybe the section merely reflects the AMA’s long-standing resistance to such clauses, however ineffective it has been.  At various times, it has viewed noncompetes as unethical (1933), “not unethical” (1960), “not in the public interest” (1980) and to be discouraged in any event but unethical if too broad (1996). S. Elizabeth Wilborn Malloy, Physician Restrictive Covenants: The Neglect of Incumbent Patient Interests, 41 Wake Forest L. Rev. 189, 217-18 (2006).

A skeptic might say that the failure of prior hostility to have much effect on either practices or the law means that the AMA is continuing to tilt at windmills.  But the counter argument is that such a statement might influence other jurisdictions to join those few now barring such physician covenants.


An Uncertain Future for ICD-10

February 26, 2012 by · Leave a Comment
Filed under: Physicians 

amy-catapano21On February 14, 2012, Marilyn Tavenner, the acting Administrator of CMS, told reporters that CMS will “re-examine the timeframe” of the planned conversion to the ICD-10 code standard.  Presently, covered entities under HIPAA must fully convert from the ICD-9 coding system to ICD-10 by October 1, 2013.

ICD-10, which stands for the International Classification of Diseases, 10th Revision, is a coding system that providers use for billing purposes and medical researchers also use for statistical analysis.  ICD-10 consists of 68,000 codes that will expand upon the 13,000 codes currently being used with ICD-9. The codes, each representing a separate medical service or diagnosis, are used by providers and hospitals when they submit their bills to the insurer. The providers receive payment for their services based upon the codes and the terms of their reimbursement agreement. From these codes, medical researchers are able to evaluate kind and frequency of care; with more than five times as many descriptive codes in the new system, many researchers and evidence based medicine proponents are said to look forward to the far greater depth of analysis the new coding system will offer. The United States already lags behind many countries in ICD-10 implementation and it is said that this compliance extension will widen the gap even further.

Two days after Ms. Tavenner’s announcement, HHS issued a news release stating that “HHS will initiate a process to postpone the date by which certain health care entities have to comply with ICD-10.” Kathleen G.  Sebelius, the Secretary of HHS, states in the news release that “we have heard from many in the provider community who have concerns about the administrative burdens they face in the years ahead. We are committing to work with the provider community to reexamine the pace at which HHS and the nation implement these important improvements to our health care system.”

HHS’s news release leaves a lot of questions unanswered. There is no hint at which “certain health care entities” will be granted an extension for compliance and how far off the new deadline will be. HHS claims they will “initiate a process,” which leads many to believe a formal rule making process with public comments will occur. This process could possibly take years to complete, which undoubtedly has caused a giant sigh of relief for providers and institutions across the country that feel ill-prepared for the 2013 deadline. Analysts at Health Care IT News estimate that the deadline could be pushed off a year or two if there is a formal rule-making process.

As the news of Ms. Tavenner’s announcement spread, members of the industry sent out messages cautioning that a complete overhaul of the current plan is unlikely.  Ms. Tavenner’s announcement, which happened at the American Medical Association (AMA) Advocacy Conference in Washington, D.C., was fittingly met with applause by AMA members. The AMA has publicly and vehemently opposed the current October 1, 2013 deadline.  In a January 17, 2012 letter addressed to Speaker of the House John A. Boehner, the Executive Vice President and CEO of the AMA James L. Madara M.D. pleaded with Speaker Boehner to stop the implementation of ICD-10. In the letter, Dr. Madara argues that the conversion “will create significant burdens on the practice of medicine with no direct benefit to individual patient care, and will compete with other costly transitions associated with quality and health IT reporting programs.” Of course, Dr. Madara is referring to the task of implementing an electronic health records (EHR) system in accordance with CMS’s meaningful use criteria, which entitles a covered entity to receive incentive payments from CMS. Dr. Madara also cites to what he deems to be the competing tasks of dealing with financial penalties for non-participation in Medicare programs, including e-prescribing and the Physician Quality Reporting System.

ICD-10 opponents also cite to the industry’s recent failure to comply with the January 1, 2012 deadline to comply with the transition to Version 5010, a HIPAA electronic transactions upgrade that is necessary to support ICD-10, as evidence that the industry is not ready for the ICD-10 change. In November 2011, CMS gave in to industry pressures to extend the 5010 compliance deadline an additional ninety days. It is undeniable that providers are already subject to tremendous demands under HIPAA and the HITECH Act, on top of Medicare cuts, which are placing significant financial stress and compliance burdens on the industry. It is not surprising that ICD-10 has met a lot of resistance from providers. However, it is no secret that providers and institutions are consistently successful lobbyists for their concerns and beliefs and it remains to be seen how CMS will proceed with the scheduled ICD-10 implementation and what compromises will be made.

Proponents of the ICD-10 system argue that the new coding system will create significant positive changes in the industry because it will help collect important data that will improve the quality of patient care, decrease costs, and collect statistics for medical research.  CMS and the Center for Disease Control and Prevention believe that the new codes will create more accurate and exact descriptions of diagnoses and inpatient procedures, which will improve efforts to track care, detect emerging health issues and improve quality. A report from Deloitte, a consulting firm, reported that the increased size and scope of the ICD-10 codes is expected to provide potential benefits in cost and quality measurement, public health, research, and organizational monitoring and performance measurement.  Whether a provider supports the change or not, Deloitte echoes the sentiment of many that advance planning is essential. Providers and institutions that have already invested time and money into the ICD-10 implementation are frustrated and upset by CMS’s decision to “reexamine” the current compliance deadline.  After all, no provider wants to see its large investment in the ICD-10 system put to waste.

The fact is that no one, perhaps even CMS and HHS, is certain about the date of the future ICD-10 implementation plan so perhaps the smartest choice for providers is to proceed with steps to continue the ICD-10 implementation. Considering the prospect of the financial disincentives attached with non-compliance, it seems like a risky choice for any provider to sit around and wait and see what may happen, especially when the ICD-10 implementation cannot happen overnight.  There are providers that started the ICD-10 conversion process back in 2009 when it was first introduced and they still have not completed the task. Unfortunately for providers, the ICD-10 conversion requires time, manpower, training, testing with payers, and significant technological changes that will carry high administrative and financial costs.  The Medical Group Management Association (MGMA), which opposes the ICD-10 implementation, estimates that it will cost a ten doctor practice more than $285,000 to convert to ICD-10, with software upgrades accounting for only $15,000 of that amount. According to the MGMA, the bulk amount would be for increases in claims queries, reductions in cash flow, and increased documentation time.  What it comes down to is that if a provider wants to be paid for its services, noncompliance with ICD-10 is not an option. The risk for successful claims processing and receiving payments in a timely fashion is present, but adequate preparation and testing well before the compliance deadline is the best way to combat this significant risk.

One thing is certain – until HHS releases a new rule and schedule for ICD-10 implementation, opponents will continue to argue that the costs to adopt the new system are too high, the task too onerous, and the rewards too speculative to justify such an undertaking.  Unless the industry comes together to find a solution for an easy transition, this could be a bumpy road until the ICD-10 transition is complete.


Medicare Payment, a System in Need of Fixing

January 8, 2012 by · Leave a Comment
Filed under: Medicare, Physicians 

band-aid_close-up[Ed. Note: We are pleased to welcome Andy Braver, Esq. back to Health Reform Watch. Andy is a health care attorney who recently completed an LL.M in Health Law at Seton Hall Law. Prior to entering the LL.M. program, Andy spent five years as a healthcare provider, running a state of the art medical diagnostic imaging center.  During that time, he dealt with many important health law issues faces by providers today, including Fraud and Abuse, Medicare and Medicaid licensing and reimbursement, state and private accreditation organizations, private payers, electronic health records, and HIPAA and other privacy issues, to name just a few.]

Medicare’s fee for service payment system has many problems that need fixing.  While recent studies have predicted that Accountable Care Organizations (ACOs) may very well achieve better care and lower costs, any savings generated as a result of these new groups of providers will be just a drop in the bucket solution to a vast problem.

Medicare was projected to spend over $500 billion on patient care in 2010.  Notwithstanding the fact that the White House Office of Management and Budget believes $36 billion of the Medicare and Medicare Advantage payments made in 2009 were improper.

The problem is, there is no distinction made for the provision of quality medical care.  Conversely, there is no check in the system to make sure that the care provided is inadequate.  If you provide the service, you get paid.

I realize that in many areas of medicine, it is difficult or even impossible to create a system to accurately and impartially judge the adequacy of care provided.  How in fact do you measure the ‘quality’ of healthcare?  Do you look at the structure of an entity, its organization and ability to provide what is generally regarded as good care?  Or do you look at the actual process or provision care, measuring relative malpractice claims among other objective factors?  Many believe that better outcomes suggest better care.  While I do not believe that outcome or evidence based medicine is the answer to every problem, it certainly can be a solution to some of these challenges.

There are differences in the Medicare program based on geography, and local coverage determinations and reimbursement rates, whether using the PPS or RVU systems (Part A & B), vary greatly across the country.  That part of the system makes sense by taking into account cost of living, cost of employment, property costs, and local tax rates.

In my mind, however, these processes fail because they do not further take into account advances in technology, or reward investment in the future.  For example, Medicare pays the same amount of money for an MRI exam regardless of the type of machine that was used to take the picture, and without a thought given to the type of storage system employed by the medical provider.  Imagine a facility with a two decade old system, state licensed and able to take pictures, with a machine equivalent to the first generation digital camera I owned 15 years ago, and printed pictures that are stored in a file room.  Then imagine a state of the art facility with an HD camera taking high resolution digital pictures, stored in an electronic file system, in a format that is able to be sent electronically to specialists all around the country (or world), and accessed by the patient quickly and securely on the internet.  Are those two pictures worth the same to Medicare?  There certainly is increased value to the patient in the ‘new’ system.  Better picture quality undoubtedly leads to better diagnostic capability (better medicine), and fewer picture redos over time; long-term storage and record portability is certainly going to lower future treatment costs if the issue is a chronic one.  HITECH and the new EHR incentive programs recognize the importance of electronic medical records, but it remains to be seen how those requirements will affect licensing and reimbursement rates.  Will there be a license ranking and a tiered payment system based on perceived quality or outcome?

I certainly hope that payments are tiered when advanced technology is used, but not according to self-assessment rankings and quality benchmarks.  I would argue that medicine is the one area where any kind of ranking and result (or outcome) based assessment is virtually impossible.   People are not cars, and JD Power cannot provide meaningful answers when it comes to medicine; there is no way to objectively determine a specific course of treatment for a particular patient is better at one hospital versus another.  No two patients are the same, though it is entirely possible they might both drive the same car.  Determining quality in healthcare is exceedingly difficult.  Patient bases are different, whether because of socio-economic reasons, or geography.  So do you then look to the education of the physician to determine quality?  We don’t do the same for lawyers?  Or do we?  Do you look at healthcare structure (how an entity is organized, its equipment, etc…) to determine quality?  Or process (the # of lawsuits against it, for example)?  Better outcomes alone do not mean better healthcare, and none of these items taken alone should affect licensing of healthcare providers.  In the end, this highlights the fact that designing a system that is fair and without major flaws may never be possible with so much money in the system and with so many parties having opposed interests. But that doesn’t mean we shouldn’t try to fix the expensive and broken (the status quo is unsustainable), it just means that attainable reform could very well mean significantly less unfairness and less major flaws. Because ultimately, in this context, the perfect may be the enemy of the good.


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