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Value Purchasing in Medicare Law: Precursor to Health Reform

Published online by Cambridge University Press:  24 February 2021

Alice G. Gosfield
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Extract

Since the advent of Medicare in 1966, a major focus of federal policy and legislation has revolved around the purchase of health care. Although initial programmatic content demonstrated some concern for both cost containment and basic quality assurance, by the late 1970's congressional cost control anxiety had reached a fever pitch, culminating in a completely revamped Medicare hospital reimbursement methodology enacted in 1982, combined with a retooled utilization control mechanism in the form of the Peer Review Organization (“PRO”) program.

At the same time, in the private sector, as the cost of health care increased, major corporate purchasers of health care services became increasingly concerned about the “value” of the health care benefits they were making available to their employees. In response to perceived consumer demand, these same corporations eventually, for reasons unrelated to health care, began to incorporate quality improvement into their core manufacturing and service missions.

Type
Articles
Information
American Journal of Law & Medicine , Volume 20 , Issue 1-2: Quality of Care and Health Reform: Complementary or Conflicting , 1994 , pp. 169 - 186
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 1994

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References

1 Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 290 (codified as amended in scattered sections of 42 U.S.C.).

2 Utilization review by hospitals was the primary control on expenditures, imposed as a condition of participation for hospitals. 42 U.S.C. § 1395(e)(6) (1993). Quality control was essentially compliance with health and safety standards, with other matters addressed primarily through “deemed” satisfaction of the conditions of participation based upon accreditation by the Joint Commission on Accreditation of Hospitals. 42 U.S.C. § 1395bb.

3 42 U.S.C. § 1395ww(d).

4 42 U.S.C. § 1320c-13.

5 The American Health Care Security Act of 1993, H.R. 1200, 103d Cong., 1st Sess. (1993).

6 Id. §§ 5003, 5013

7 Id. §§ 5006, 1407.

8 Id. §§ 5003-05, 5012.

9 Purely quality-oriented programs are typified by extensive legislative reforms in 1987 regarding nursing home care. See generally Collier, Current Issues in Federal Regulation of Long Term Care, in 1990 Health Law Handbook 3 (Gosfield ed., 1990) (discussing 42 U.S.C. § 1396r).

10 For a discussion of the development of PRO review and the First Scope of Work, see Gosfield, Alice G., Pros: A Case Study In Utilization Management and Quality Assurance, in 1989 Health Law Handbook 369Google Scholar (Alice Gosfield ed., 1989) [hereinafter Gosfield, Pros 1].

11 See infra notes 91-92.

12 See American Academy of Opthamology v. Sullivan, 998 F.2d 377 (6th Cir. 1993). The court upheld demonstration would consolidate preoperative evaluations, surgery and post-operative examinations for one fee, at three sites for a three-year demonstration.

13 42 U.S.C. § 1320c et seq. The program was an essential revamping of the PSRO program. For details on the development of the PSRO program and the succeeding PRO program see, Institute of Medcine, Med.Care: A Strategy for Quality Assurance (Kathleen Lohr ed., 1990); Alice G. Gosfield, PSROS: The Law and the Health Consumer (1985); Gosfield, PROs 1, supra note 12, at 361-97; Utilization Management, Quality Assurance, and Practice Guidelines, in 2 National Health Lawyers Association, Health Law Practice Guide 25-29, 25-66 (1993) [hereinafter Gosfield, Pros 2].

14 42 U.S.C. § 1320c-3(a) (1988).

15 Id. §1320c-3(a)(6)(A).

16 Review Responsibilities of Utilization and Quality Control Peer Review Organizations, 42 C.F.R. § 466.100 (1992).

17 42 U.S.C. § 1320c-3(a)(2) (1992).

18 Id. §1320c-5(b).

19 Such techniques include repeated unnecessary admissions to obtain additional payments, unnecessarily long admissions to obtain cost, and outlier payments and other reimbursement-driven practices anticipated in the new environment.

20 PRO Transmittal No. 5, August 1985.

21 See Gosfield, PROs 1, supra note 10, at 382-83.

22 The “Third Scope of Work” is the document issued by the federal government as a “Request for Proposal” from entities seeking PRO contracts.

23 See Gosfield, PROs 2, supra note 13, at 25-47 (discussing Quality Intervention Plan in the Third Scope of Work).

24 See supra note 19.

25 This phrase is defined as unnecessarily prolonged treatment, complications or readmission and patient management which results in anatomical or psychological disability or death.

26 42 U.S.C. § 1320c-5(b)(l)(A).

27 42 U.S.C. § 1320c-5(b)(l)(B).

28 See Jencks, Stephen F. & Wilensky, Gail R., The Health Care Quality Improvement Initiative: A New Approach to Quality Assurance in Medicare, 268 JAMA 900 (1992)Google Scholar.

29 42 U.S.C. § 1320c-3(a)(4)(A), (13) (1988).

30 Id. §1320c-3(a)(4)(B).

31 See Gosfield, PROs 2, supra note 13, at 25-62.

32 42 U.S.C. § 1320c-3(a)(2) (1988).

33 For a more detailed consideration of physician reimbursement issues, see Alice G. Gosfield Part B Reimbursement: Developments, Limits and Pitfalls, in 1990 Health Law Handbook, supra note 9, at 275-310; Alice G. Gosfield, Unintentional Part B False Claims: Pitfalls for the Unwary, 1993 Health Law Handbook 205-30 (Alice G. Gosfield ed., 1993).

34 42 U.S.C. § 1395w-4(a) (Supp. Ill 1991).

35 Physician Payment Review Commission, Annual Report to Congress i (1989) [hereinafter Commission Report],

36 Id. at 32.

37 By adopting the American Medical Association's procedural coding system, the RBRVS system incorporated a recognition of cognitive (or evaluation and management or visit) services which incorporated notions of complexity of the problem, time spent with the patient or on the floor of the hospital working on the patient's issues, and whether the patient was a new or established patient. For examples of CPT codes, see Medicare Program, Fee Schedule for Physicians’ Services, 56 Fed. Reg. 59,502, 59,792 -801 (1991).

38 Commission Report, supra note 35, at 71.

39 42 U.S.C. § 1395w-4(f)(4) (Supp. Ill 1991).

40 42 U.S.C. § 1395w-4(f)(l)(D).

41 Id.

42 Id.

43 Medicare Part B Carrier's Manual, HIM-14, Part III § 7528 [hereinafter Carrier's Manual].

44 Carrier's Manual, supra note 43, § 7525.

45 See Commission Report, supra note 35, at 241; Executive Summary, HHS Report to Congress on Med.Care Physician Payment Oct. 1989.

46 Carrier's Manual, supra note 43, § 7514.

47 Id. § 7500.

48 Id. § 7514.1A.2.

49 Id. §7514E.

49 Id. §7514E.

50 In 1993, the General Accounting Office found that most medical necessity determinations were made by non-medically trained clerks. General Accounting Office, Med.Care Part B Reliability of Claims Processing Across Four Carriers, GAO/PEMD-93-27 (1993).

51 See 42 U.S.C. § 1320a-7(b)(8) (defining “sanctioned” individual).

52 Health Care Financing Administration, Pub. No. 15, Provider Reimbursement Manual § 1000 et seq.

53 42 U.S.C. §1320a-5 (1988).

54 ld. § 1320a-3.

55 42 U.S.C. § 11,101 (1988).

56 Id.

57 See Rothschild, The Health Care Quality Improvement Act and The National Practitioner Data Bank, in 1993 Health Law Handbook, supra note 33, at 313-57.

58 See 45 C.F.R. § 60.1 (1993).

59 42 U.S.C. § 1320-C-9.

60 Omnibus Reconciliation Act of 1989, 42 U.S.C. § 201 et. seq. (1989).

61 42 U.S.C. § 1395bb.

62 See Gottlieb, Questions at the Top on Hospital Policy, N.Y. TIMES, May 17, 1992, at 18; Gottlieb, Investigatory Study Reports on Patients, N.Y. TIMES, Apr. 6, 1992, at Bl.

63 Carrier's Manual, supra note 43, at § 4169.

64 Pub. L. No. 101-508, § 4205(b), 104 Stat. 445 (1990).

65 42 U.S.C. § 1320a-7(b)(5) (1988).

66 Withholding Medicare Payments to Recover Medicaid Overpayments, 42 CFR § 405.

67 See Access to Mortality Data: Consumers No, PROs Yes, 21 Med. Utilization Rev. 1 (1993).

68 See 42 C.F.R. § 476.100, 476.101-.102, 476.111-.114 (1985); see also Gosfield, PROs 1; supranote 10, at 391-97.

69 See supra note 58.

70 See Vladeck Calls Temporary Halt to Annual Medicare Death Studies, 21 Med. Utilization Rev. 1 (1993).

71 False claims are any statements made to secure reimbursement. Inaccurate claims are subject to both criminal and civil penalties under specific health care legislation. 42 U.S.C. § 1320a-7(a), (b).

72 Id. §1320a-7(b)(ll), (12).

73 Id. §1395a(p)(3)(A).

74 A non-participating physician is one who does not agree to accept assignment (direct payment from Medicare) 100 % of the time. Id. § 1395u(h)(l).

75 Id. § 1320a-7a (discussing penalties generally).

76 Program Integrity -Medicare and State Health Care Programs, 42 C.F.R. § 1001.1301 (3) (i) (1993).

77 Id. § 1001.1301 (a)(3)(ii).

78 Pub. L. No. 95-142, 91 Stat. 1175 (1977).

79 See, e.g., Becker et al., Avoiding Multiple Sanctions and Collateral Consequences When Settling Fraud and Abuse Cases, in 1993 Health Law Handbook, supra note 33, at 187-204; Paul P. Cacioppo, Health Care Fraud and Abuse: A Guide to Federal Sanctions (1991); Alice G. Gosfield, Unintentional Part B False Claims: Pitfalls for the Unwary, in 1993 Health Law Handbook, supra note 33, at 205-30; Imperato, 1992-1993 Developments in Health CareFraud and Abuse, in 1993 Health Law Handbook, supra note 33, at 147-86; Robert W. McCann, Qui Tarn Actions Under the Federal False Claims Act: Quod Quisquis Norit in hoc se Exerceat, in 1992 Health Law Handbook, (Alice G. Gosfield ed., 1992), at 67-82; James G. Sheehan, Fraud Investigations and Prosecutions: A Perspective, in 1992 Health Law Handbook 3-24 (Alice G. Gosfield ed., 1992); Sanford V. Teplitzky & S. Craig Holden, 1990-1991 Developments in Medicare and Medicaid Fraud and Abuse, in 1992 Health Law Handbook, supra, at 25-66; Sanford V. Teplitzky & S. Craig Holden, 1989 Developments in Medicare and Medicaid Fraud and Abuse, in 1990 Health Law Handbook, supra note 9, at 433-57; Sanford V. Teplitzky et al., Medicare and Medicaid Fraud and Abuse, in 1989 Health Law Handbook, supra note 10, at 507-46; Tillman & Colborn, Fraud and Abuse Audits and Investigations: Practical Guidance, in 1991 Health Law Handbook 23-48 (Alice G. Gosfield ed., 1991).

80 42 U.S.C. § 1320a-7b(b).

81 42 U.S.C. § 1395nn (Supp. 1994).

82 Id.

83 42 U.S.C. §§ 1320a-7b(b), 1320a-7 & 1320a-7a(k).

84 42 C.F.R. § 1001.952 (1992).

85 42 U.S.C. § 1320a-7(b)(6)(B).

86 carrier's Manual, supra note 43, § 14,001.

87 Anesthesiologists Affiliated v. Sullivan, 941 F.2d 678, 680 (8th Cir. 1991).

88 42 U.S.C. § 1320a-7(b)(6).

89 Carrier's Manual, supra note 43, § 1400.

90 42 U.S.C. § 1395dd; see also Donald P. Wilcox & Hugh M. Barton, Overview of the Emergency Medical Treatment Act, in 1992 Health Law Handbook, supra note 79, at 83-110.

91 Id. § 1395dd.

92 Id. § 1395dd(d)(3).

93 Id. § 1320a-7(b)(6)(B).

94 See id. § 1320c-9(a)(l).

95 Id. § 1320a-7a(a)(3).

96 Id. § 1320a-7(b)(6)(C), (D).

97 Id. §1320a-7a(b)(2).

98 42 U.S.C. § 299(b); see also Alice G. Gosfield, Value Purchasing and Effectiveness: Legal Implications, in 1991 Health Law Handbook, supra note 79, at 211-17.

99 42 U.S.C. §1320b-12(a)(l).

100 H.R. 101-386, at 874 (Joint Explanatory Statement of the Comm. on Conference on Omnibus Budget Reconciliation Act of 1989).

101 See supra note 39.

102 42 U.S.C. § 299b.

103 42 U.S.C. § 299b-l(a) (1991).

104 See supra note 42 and accompanying text.

105 H.R. 101-386, supra note 103, at 893. For a discussion of t h e relationship with physician payment reform, see Alice G. Gosfield, Part B Physician Reimbursement: Developments, Limits and Pitfalls, in 1990 Health Law Handbook, supra note 9, at 290-305.

106 Guidelines were defined by the Institute of Medicine in its guidance to the Agency for implementing the statutory authority as “systematically developed statements to assist practitioner and patient decisions about appropriate heath care for specific clinical circumstances.” Institute of Medcine, Clinical Practice Guidelines: Directions for a New Program 8, 38 (Marilyn J. Field & Kathleen N. Lohr eds., 1990) [hereinafter IOM 2].

107 Id. at 42-51.

108 For the development of these concepts see supra note 12.

109 42 U.S.C. § 299b-l(b)(2) (Supp. Ill 1991).

110 Requests Pouring in for AHCPR's New Practice Guidelines, Mod. HealthCare, Aug. 31, 1992, at 33.

111 See IOM 2, supra note 106 on the subject of cost control and Medicare priorities.

112 42 U.S.C. 299b-l(b)(5) (1992 & Supp. 1993).

113 See Kaiser Releases “Report Card”, 1 Med. Outcomes & Guidelines Alert, Oct. 28, 1993, at 3.

114 See Guidelines for Clinical Practice: From Development to Use 210-15 (Marilyn J. Field & Kathleen N. Lohr eds., 1992).

115 H.R. 3600, 103d Cong., 1st Sess. § 5000(a) (1993).

116 See id. §§5412-14.

117 See, e.g., id. § 1412 (requiring health plan to disclose to enrollees and prospective enrollees the protocols used by the plan for controlling utilization and costs).

118 See id. §4111.

119 Id. §4118.