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Opening the door on Medicare peer review


A federal court ruling would give the results of peer review inquiries to patients. Some think that's chilling news for physicians.


Cover Story

Opening the door on Medicare peer review

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Choose article section... A question of interpretation turns on divining Congress' intent Court critics predict trouble ahead A wake-up call to HHS and the PRO industry?

A federal court ruling would give the results of peer review inquiries to patients. Some think that's chilling news for physicians.

By Wayne J. Guglielmo
Senior Editor

The story of David Shipp and his wife, Doris, began as a simple family matter.

On Dec. 15, 1998, Mrs. Shipp was admitted to Baptist Hospital East in Louisville, KY, complaining of abdominal pain. Over the next few days and months, internist Peter L. Thurman, diagnostic radiologist David L. Jolgren, and general surgeon Thomas C. Dedman III saw Mrs. Shipp, who was a Medicare beneficiary. Despite treatment, Mrs. Shipp died of cancer of the cecum in June 1999.

That December, David Shipp expressed concerns about the quality of care his wife had received in a letter to Health Care Excel, the private peer review organization under contract to monitor Medicare delivery in Kentucky. Health Care Excel promised Shipp it would investigate his complaint.

The following August, the PRO mailed three replies, one for each physician involved. In the case of Dr. Thurman, Shipp was told, "no quality of care issues were identified." The two other letters, however, contained little information beyond the reassurance that a "thorough review" had been conducted. Without physician consent, the PRO informed Shipp, "we are unable [because of federal laws and regulations] to provide any specific information about the results of our review." If some problem was identified, the letter concluded, "please be assured . . . we will take all necessary action."

The PRO's handling of David Shipp's complaint is no longer a private matter. Since early last year, it has been part of a suit brought by the Washington, DC-based consumer advocacy group Public Citizen against the Department of Health and Human Services and its Medicare oversight agency.

At issue is whether HHS has the statutory authority to keep the nation's 53 PROs from revealing investigatory information in cases like the Shipps'. If it doesn't, as Public Citizen argues, then the results of an investigation, including details about any quality-of-care issues, can be revealed to a complainant without consent from the physician under review.

If HHS does have the statutory authority, as it argues, then physician confidentiality protections will continue. Not surprisingly, provider groups, including the AMA, have sided with HHS.

We sifted through the arguments on both sides to see how all this could affect you.

A question of interpretation turns on divining Congress' intent

In April 1985, HCFA (now the Centers for Medicare & Medicaid Services) issued regulations that spelled out, among other things, what data must be kept confidential following a Medicare peer review investigation. In the case of physicians, no information that explicitly or implicitly identified a doctor could be revealed, unless the doctor consented to the release, and provided no other individual was identified.

A year after the rules took effect, Congress amended peer review law to require PROs to investigate all patient complaints (the original 1982 act gave PROs some discretion in this regard) and to report the "final disposition of the complaint" to the complainant. In 1989, HCFA proposed changing its policy to conform more precisely to the amended statute, but to date no final rule has been issued.

In its suit, Public Citizen argues that HCFA's (CMS') rules prohibiting disclosure without practitioner consent are clearly out of step with the amended law. Not so, say defendants HHS and CMS. The amended statute requires "only that PROs inform beneficiary complainants that their complaint was received, that it was investigated, and that corrective action was taken if appropriate." Even if the meaning of "final disposition" is somewhat ambiguous, defendants say, deference should be given to the agency's reasonable interpretation.

To break the deadlock, US District Judge Ellen Segal Huvelle did what many judges do when faced with conflicting interpretations of the law: "She went back into the legislative history to try to divine the intent of Congress," says Robert T. Bernat, an internist and Chicago-based health care attorney at Sonnenschein Nath & Rosenthal.

The history shows that, in 1986, Congress struggled to reconcile competing versions of the statute. The Senate version would have restricted disclosures to procedural matters—that is, to telling patients only that the necessary and proper steps had been taken. The House version authorized a more substantive disclosure.

Given that the House version ultimately prevailed, Judge Huvelle concluded, one can reasonably assume that it reflected the will of Congress. Thus, last July she granted Public Citizen's motion for summary judgment and, in a separate order, gave HHS 20 days to inform PROs that they "are required to disclose the results of . . . investigations to beneficiary complainants." In September, HHS won a stay pending an appeal on the merits. At press time, no appeal date had been set.

Court critics predict trouble ahead

Supporters of the HHS position foresee dire consequences should the lower court's decision survive appeal. (HHS declined to comment on the pending suit.)

For one, they worry that disclosure of investigatory data will send a chill throughout the provider community. The peer review "process can only work . . . if physicians are willing to review each other and if the reviewing physicians can engage in completely frank and candid exchanges with respect to the physician under review," writes the AMA, the American Hospital Association, and the Federation of American Hospitals in their friend-of-the-court brief. "[S]uch exchanges are only possible if confidentiality is maintained throughout the peer review process."

"If the court decides otherwise," says general and vascular surgeon and AMA Board of Trustees member Donald J. Palmisano, "then we're going to see a retreat from serving on peer review committees."

The AHA and FAH share that concern, even though the district court decision about Medicare PROs doesn't directly affect hospital peer review. "Cases can be cited as precedent in other courts," says AHA senior counsel Maureen Mudron. "And so it's of interest to hospitals that state or federal court decisions support the peer review process."

Critics of the lower court decision also worry that disclosure would create a treasure trove for plaintiffs' lawyers. Developing a plaintiff's case on contingency is often risky, says Chicago's Robert Bernat. "If [plaintiffs' lawyers] can get somebody else to build their case for them, they'd be much more willing to take on risky cases."

On the other hand, says Bernat, some "deserving cases" might also see the light of day if attorney costs were kept down. "It's the classic tort dilemma: If you change the dynamics for attorneys, are you doing something good or something bad—or perhaps both?"

Finally, if confidentiality protections are lifted, the PRO industry says, then even voluntary quality improvement projects would suffer. Such projects, say industry officials, are intended to help doctors fix systems—like those for monitoring diabetes—that impede the delivery of good quality patient care despite doctors' best intentions.

"If physicians think that by working with the QIOs ["quality improvement organizations," as CMS now refers to PROs ] they're subject to punishment, then the main work of the whole program will be set back, and that would be bad for health care," says David Schulke, executive vice president of the Washington, DC-based American Health Quality Association, the industry trade group.

A wake-up call to HHS and the PRO industry?

Public Citizen and its supporters dismiss these warnings as overblown and self-serving. They're especially critical of the notion that opening the investigatory process will undermine the "main work" of the PROs.

Over the years, the PRO program has moved "from a regulatory, policing mode into what they describe as an educational mode," says internist Sidney Wolfe, director of Public Citizen's Health Research Group. "Education is certainly part of what they do, but taking some form of action should also be."

The lawsuit, he says, should serve as a reminder that the balance has tilted too far in one direction—and that HCFA (CMS) has allowed it to happen. As evidence, he points to the recent HHS Office of Inspector General report, which referred to the beneficiary complaint process as "a rusty safety valve." (See "The PRO complaint process: Still flawed after all these years".)

Wolfe also views the suit as a wake-up call to those who've forgotten that taxpayers are funding Medicare and thus the PRO program: "At the very least, families would like to know the results when an investigation is launched into a given doctor's performance."

Wolfe's insistence on public disclosure and a more punitive role for PROs wouldn't enhance public safety, and might even undermine it, his critics say. To illustrate, they point to the history of the Aviation Safety Reporting System. "The moment they made it completely confidential, [incident] reports went up dramatically," says the AMA's Donald Palmisano. "Within a relatively short time, [after an incident is reported], the [Federal Aviation Administration] is looking at the incident and fixing the system." Health care attorney Robert Bernat agrees: "I don't see that exposing PRO proceedings to the sunlight creates greater protections for the public."

Whichever way the PRO program goes, the legal debate over public disclosure will likely be settled once briefs are filed, oral arguments heard, and the appellate court reaches its decision. (At this point, no one is talking about a hearing before the Supreme Court, although that could happen.)

For physicians, the suit—like the Institute of Medicine's 1999 report on medical errors and patient safety—may appear to be one more step toward a system of "shame and blame," as the AMA's Palmisano refers to it. Doctors would prefer to shift the focus to how systems and individual performance can be improved.

Yet, at a time when consumers are demanding more accountability, it's hard for many patient advocates to accept that egregious errors and lapses in care can be shielded from public view. Fortunately, less than 10 percent of the doctors investigated annually by Medicare PROs are found to have delivered substandard care, according to industry estimates. If accurate, that figure underscores a pertinent fact: The overwhelming majority of doctors are doing a good job.

The PRO complaint process: Still flawed after all these years

In 1995, HHS' Office of Inspector General issued a report critical of the way PROs handled beneficiary complaints. The process, the OIG said, was flawed in three significant ways: (1) It was too secretive, which precluded the PROs from responding to complainants in a meaningful way; (2) it was underutilized by beneficiaries, which made identifying patterns of poor care difficult; and (3) it generally took too long.

Last August, the OIG published a follow-up report and found that little had improved since then.

The OIG report pegs the lack of progress to two underlying problems. First, contracts between CMS and the PROs treat the complaint process "as a distinctly minor activity." For the peer review organizations, the report says, quality improvement and payment-error reduction take precedence.

The other reason progress has been slow, according to the OIG: "PROs tend to be more oriented toward the medical community than to the beneficiary community." That's great for conducting quality improvement projects, the report notes, but not so good for developing a better complaint process.

What to do? The OIG lays out two options for CMS to consider. It can either fix the complaint process within the existing PRO program, or establish an external, independent program. Both options have pluses and minuses says the OIG.

The PRO industry favors keeping the complaint process in-house, and has sent the OIG its own blueprint. For example, if complaints are to be given higher priority, the American Health Quality Association says, then funding for this labor-intensive activity must be increased. But AHQA resists any attempts to turn the process into a traditional enforcement program that fixes blame and names names. Similarly, the AMA has opposed what it calls a "police-type role for PROs."

Such alarms may be premature. Still, if plaintiffs in the Public Citizen-HHS suit win on appeal, PROs could well become more police-like.


Wayne Guglielmo. Opening the door on Medicare peer review. Medical Economics 2002;5:110.

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