Practice Beat

October 11, 1999

Collective bargaining, lawsuits against HMOs, Tort Reform, health coverage, managed care, clinical guidelines, alternative medicine, looking aheadNovember.

Practice Beat

Collective Bargaining: Pennsylvania may be next to level the playingfield

The Pennsylvania legislature is considering a bill that would allow independentphysicians to jointly negotiate fees and contract terms with health insurers.Similar to the law passed in Texas, this bill would exempt physicians fromfederal antitrust laws.

Sponsors contend that without it physicians don't have sufficient marketpower to reject unfair contracts that impede their ability to deliver appropriatecare.

Among the non-fee-related patient care issues that Pennsylvania physicianscould bring to the table, if the law is enacted:

  • The definition of medical necessity and other conditions of coverage.
  • Utilization review criteria and procedures.
  • Clinical practice guidelines.
  • Preventive care and other medical management policies.
  • Patient referral standards and procedures.
  • Drug formularies.
  • Quality assurance programs.
  • Liability issues (for both physicians and insurers) stemming from treatment--or denial of it.
  • Timing of payments, including interest and penalties for late reimbursements.
  • Credentialing standards and procedures for selecting, retaining, and terminating participating physicians.
  • Mechanisms for resolving disputes.
  • Determining which of the insurer's health plans doctors must participate in.

Lawsuits Against HMO's: An appeals court swings open the Golden Gate

For the first time, a California appellate court has allowed a punitivedamages suit against a Medicare HMO to proceed in state court.

The plaintiff, now deceased, had suffered from progressive lung disease.In the lawsuit, which is being continued by his estate, he had sued PacifiCareof California, his physician, and the doctor's medical group, charging themwith negligence and fraud for failing to provide needed care. The suit claimedthat the defendants repeatedly refused to refer the patient to a specialistfor a lung transplant, ultimately forcing him to leave the plan in orderto get on a transplant list. He also contended that the HMO had denied thecare for its financial gain.

A trial court had dismissed the case on grounds that it was precludedby Medicare law, which allows beneficiaries to sue only in federal court,and then only for reimbursement of the actual value of the denied services.But even though some of the damages sought are for Medicare benefits, theappellate court pointed out that the primary causes of action are basedon claims that don't involve reimbursement issues.

While those causes of action are predicated on a failure to provide benefits,the court said, "removal of the right to sue the private Medicare providerfor its torts would result in an inequitable and substantial dilution ofthe rights of patients."

Managed Care: What's behind the rising red ink at many HMOs?

Despite huge increases in membership, HMOs continue to lose money, accordingto two recent studies. Weiss Ratings, an insurer safety rating company inPalm Beach Gardens, FL, found that 56 percent of the 576 HMOs in its databaselost money last year--about the same proportion as in 1997. What's more,nearly 17 percent of plans failed to meet minimum risk-based capital guidelinesadopted in 1998 by the National Association of Insurance Commissioners.

The second study--by Baltimore-based HCIA, a health care informationcompany--found that the typical HMO's median expenses have outpaced revenueseach year since 1996. Ironically, the enrollment increases may be partlyto blame. Medical and hospital expenses are growing rapidly now that HMOsare no longer insuring only young, healthy populations, HCIA says.

Disciplinary Update

The Sinaiko verdict: probation

The terms: onerous

After many months of reconsidering its August 1998 decision to revokethe medical license of San Francisco internist/allergist Robert J. Sinaiko,the Medical Board of California has reaffirmed its original findings: Sinaikowas negligent in treating patients outside the prevailing standard of care,prescribing excessively (particularly in the off-label use of drugs), andconducting unauthorized experiments on his patients. (See "Was thisdoctor 'unconventional' enough to lose his license?" June 21, 1999.)The board dismissed several lesser charges, however, and halved its levyon Sinaiko for the cost of his own prosecution--from $99,000 to $49,500.

But the board stayed the license revocation and placed Sinaiko on fiveyears' probation, with specific conditions: that he be closely monitoredby a physician chosen by the board, pass an examination in allergy and immunology,take a class in medical ethics, and discontinue his use of the treatmentsfor which he was prosecuted--including the low-dosage allergy treatmentenzyme-potentiated desensitization (EPD) and the oral form of amphotericinB for suspected fungal infections.

Sinaiko will be limited to using EPD only as part of a formal clinicaltrial, and amphotericin B only if and when the FDA approves the oral formspecifically for such use. In response to defense arguments that no patientwas shown to have been harmed by Sinaiko, the board reaffirmed its earlierposition that "harm can come in many forms. There can be economic harm,as in the case of [patient S.L.], who paid for a drug with no proven efficacy,or paying for unproven treatments when the money would be better spent oncounseling, as in the case of [patient L.T.S.]."

The California Medical Association took no position on Sinaiko's specifictreatments. But it objected strongly to the intrusion of state authoritiesinto physicians' traditional leeway in treating individual patients, includingthe off-label use of drugs. Patients' rights advocates, physician labor-unionofficials, and several prominent California doctors condemned the board'saction as well.

"Even though the board didn't formally revoke his license,"says Sinaiko's attorney, Richard Turner of Sacramento, "the terms andconditions of probation will do so in effect." For one thing, saysTurner, after years of legal costs, Sinaiko no longer has the means to footthe $49,500 cost of his prosecution. And failure to pay it would itselfbe a violation of probation. Turner and Sinaiko plan to challenge the board'sdecision in Sacramento Superior Court. They'll continue to the US SupremeCourt, if necessary. --Michael Parrish

Tort Reform: Caps on damages: Doctors win one, lose one

The battle over tort reform in California is on hold--at least untilnext year. A grassroots campaign by doctors managed to turn back an attemptby trial lawyers to push through various proposals that would have raisedthe cap significantly. When the legislature reconvenes in January, lawmakersare expected to consider a bill that would preserve the cap, while addingjust a cost-of- living adjustment in future years. That's a far cry fromone the lawyers had backed, which would have raised the ceiling to as highas $1.2 million.

Doctors in Ohio were less fortunate. In a majority opinion, the OhioSupreme Court recently struck down the state's 1997 tort reform law. Thelaw included issues the court had already found to be unconstitutional,and its enactment was an attempt by the legislature "to usurp the court'sconstitutional authority," the justices said. Because the statute interfereswith the court's power to regulate its own procedure, they held, it violatesthe doctrine of separation of powers--and that makes it unconstitutional.

The Ohio tort law includes limits on noneconomic damages, the eliminationof the collateral source rule, and a requirement that would-be plaintiffsobtain a certificate of merit affirming their injuries.

Tort reform laws are coming under increasing attack, according to theAmerican Tort Reform Association. In recent years, for example, courts in17 states have struck down part or all of their states' reforms.

Health Coverage: Do Americans really want to deal with insurers online?

Two-thirds of the people who have both Internet access and health insurancesay they want to be able to check the specifics of their coverage online,according to a poll by Cyber Dialogue. The Internet database marketing companyalso reports that nearly two-fifths of Internet users who expect to changehealth insurers in the next year say they'd be more likely to choose a carrierwho would let them access their benefits online.

But that high level of interest seems at odds with current reality. Whilesome insurers already offer one or more services that patients say theywant, only 8 percent of insured Internet users actually do use their carrier'sWeb site--and 68 percent don't even know whether their carrier has one.

By Joan R. Rose, Senior Editor



Joan Rose. Practice Beat.

Medical Economics

1999;19:38.