HHS Announces Availability of $51 Million in Resources for States to Build New Competitive Health Insurance Marketplace

HHS Also Soliciting Public Input in Developing Standards for Insurance Exchanges 

WASHINGTON – The Department of Health and Human Services (HHS) today announced two key steps in the process of partnering with states and other stakeholders to begin establishing health insurance Exchanges.  HHS announced the availability of up to $1 million in grants per state to help states begin work to establish Exchanges and published a request for comment calling for public input as HHS develops standards for the Exchanges.

Starting in 2014, health insurance Exchanges – new, competitive, consumer-centered health insurance marketplaces – will put greater control and greater choice in the hands of individuals and small businesses.  The Exchanges will make purchasing health insurance easier by providing eligible consumers and businesses with “one-stop-shopping” where they can compare and purchase health insurance coverage.  The Affordable Care Act authorized grants to the states to help them design and establish Exchanges in time for millions of Americans to choose their coverage for 2014.

“With most states struggling to keep their budgets in balance, these grants will give them the resources to conduct the research and planning needed to build the health insurance marketplace of the future,” said HHS Secretary Kathleen Sebelius.  “We are working hand-in-hand with states as we carefully implement the Exchanges to make sure they best meet people’s health insurance needs.”

This first round of Exchange grants will give states resources to conduct the research and planning needed to build a better health insurance marketplace and determine how their Exchanges will be operated and governed.

Each state has the option to establish and operate its own Exchange or partner with another state or states to operate a regional Exchange. If a state decides not to create an Exchange for its residents, HHS will help establish one on their behalf.  Grant applications are available at http://www.healthcare.gov/center/grants and are due by September 1, 2010. 

Keeping with President Obama’s commitment to transparency and open government, HHS also today issued a request for comment asking states, consumer advocates, employers, insurers, and other interested stakeholders to provide input as HHS develops the rules and standards Exchanges should be required to meet. Comments are due by October 4, 2010.  Read the complete request for comment at http://www.healthcare.gov/center/regulations.

The July HIT Standards Committee

by John Halamka, Life as a Healthcare CIO

The July HIT Standards Committee meeting focused on a review of the final Meaningful Use/Standards regulations and the processes for the next stage of our work.

Today, the Federal Register published the Meaningful Use Final Rule (down to 276 pages from 874) and the Standards and Certification Final Rule (down to 65 pages from 228).

Karen Trudel and Doug Fridsma began the meeting with an in-depth overview of Stage 1 Meaningful Use and Standards/Certification criteria.

Key discussion points included:

*EHRs do not have to be certified before the 90 day Stage 1 Meaningful Use demonstration period, just by the end. You can start the demonstration data collection before certification is completed. The entire CMS program begins January 2011, so it's possible to demonstrate Meaningful Use January 1 to March 31 using an EHR that is certified February 15.

*Although the Meaningful Use Menu set contains 10 choices from which Eligible Professionals(EPs) must choose 5, one of those five must be a public health/population health measure. Since there are only two choices for EPs, Immunization reporting and Syndromic Surveillance reporting, every professional must demonstrate one of these two public health transactions to qualify for meaningful use.

*Emergency Departments are now included in Hospital measure computation. This may create challenges for some organizations that have 100% CPOE use in the hospital but 0% CPOE use in the ED. Many hospitals have niche systems in the ED that may not integrate into hospital CPOE workflows. There is no question that the ED should have CPOE, but in 2011, not all EDs will. If a hospital has 60,000 ED visits without CPOE and 20,000 inpatient admissions with 100% CPOE use, the computation of 20,000 patients with medication orders entered via CPOE/(60,000 ED patients + 20,000 inpatient admissions) = .25 and thus will not qualify for meaningful use.

*EHRs must be capable of producing electronic Office visit summaries, as discussed in my previous blog, but meaningful use supports (and requires upon patient request) use of paper.

*It's unclear if Meaningful Use/Stimulus payments are taxable income to eligible professionals. No one has clarified this yet.

*The current standards required for patient summaries are CCR or CCD/C32. The current problem list vocabularies are ICD9 or SNOMED-CT. Although the CCR can use ICD9, the CCD/C32 implementation guide requires SNOMED-CT. It may be that the implementation guide will be relaxed to allow either ICD9 or SNOMED-CT for the problem list vocabulary in the CCD/C32.

*The Syndromic Surveillance Standards required are HL7 2.3.1 or HL 2.5.1. Although 2.5.1 has a detailed implementation guide (Public Health Information Network HL7 Version 2.5 Message Structure Specification for National Condition Reporting Final Version 1.0 and Errata and Clarifications National Notification Message Structural Specification), there is no current HL7 2.3.1 guide. It's been retired and is no longer used. Hence it may make sense for ONC to remove HL7 2.3.1 as a possible standard for this transaction. Otherwise it will be challenging to certify the transaction and guarantee interoperability.

*Although no transport standards are currently specified, enabling innovation in this area, it is important than in the future, after we learn more from HIE pilots, NHIN Direct, and Beacon Communities, that some specificity is provided to accelerate interoperability.

*A Smoking status vocabulary has been suggested, but is not a certification criterion.

*Although eligible professionals have a choice of quality measures to report (3 core or 3 alternate core plus 3 from a list of 38 measures), EHRs have to be able to produce all of them. This is an interesting point because although the menu set gives EPs and hospitals optionality, EHRs have to support all quality measures and Menu set data exchanges in order to be certified.

*Medication Reconciliation needs only to be done between institutions not within an institution to satisfy the Meaningful Use measure.

Doug also informed the committee that of the 10 Standards and Interoperability Framework RFPs, two have been awarded - the NHIN RFP to Stanley (a large consulting company) and the Standards Harmonization RFP to Deloitte. It will be interesting to see how the Standards Harmonization activity serves as a successor to HITSP.

Next, Jamie Ferguson discussed the need for a framework to support clinical summaries of all kinds. The committee discussed that a modular, CDA-template-based approach would work well. Efforts such as hData and Green CDA are complementary to this idea. Basically, anyone needing to send a summary document for a particular purpose could assemble CDA templates as needed to create a human readable and computable content package. We also agreed to followup on any modular approaches the CCR authors may be working on.

Jamie updated us on the Vocabulary Task Force and its upcoming hearings. Our hope is to document the requirements for a vocabulary/codeset resource containing all intellectual property needed for Meaningful Use in a web-based repository.

Janet Corrigan and Floyd Eisenberg described the process of work group meetings and information gathering to specify the stage 2 and 3 quality metrics.

I had to leave the meeting to moderate the afternoon session of the ONC/Institute of Medicine Building a Learning Healthcare System conference. I'll blog about that on Monday.

Per Jon Perlin, the afternoon of the HIT Standards Committee meeting including a rich discussion of the Privacy and Security Tiger Team Update by Deven McGraw/Paul Egerman, anEnrollment Workgroup Update, and public comment. During the public comment period, the committee was deeply moved by a speech from the mother of a child with a serious illness. She thanked the committee for all their work to date to empower patients and improve the quality, safety and efficiency of care.

Regulations are final, stakeholders are thankful, and we're making progress! Thanks to everyone who has contributed the process thus far.

OpenNotes

The OpenNotes project has launched with the goal of evaluating transparency in primary care through on-line sharing of encounter notes between patients and their physicians.

The July 20th Annals of Internal Medicine reports that "few patients read their doctors' notes, despite having the legal right to do so. As information technology makes medical records more accessible and society calls for greater transparency, patients' interest in reading their doctors' notes may increase. Inviting patients to review these notes could improve understanding of their health, foster productive communication, stimulate shared decision making, and ultimately lead to better outcomes. Yet, easy access to doctors' notes could have negative consequences, such as confusing or worrying patients and complicating rather than improving patient–doctor communication. To gain evidence about the feasibility, benefits, and harms of providing patients ready access to electronic doctors' notes, a team of physicians and nurses have embarked on a demonstration and evaluation of a project called OpenNotes."

Participants include 100+ primary care physicians and 25,000 patients from Beth Israel Deaconess Medical Center (BIDMC) in Boston, Geisinger Health System (GHS) in rural Pennsylvania, and Harborview Medical Center (HMC) in Seattle.

"As the general trend toward transparency accelerates, hospitals and health care systems with electronic medical records increasingly allow patients to view laboratory results, medication lists, and other parts of the medical record. However, though patients own their medical records, they rarely have easy access to the notes written about them by doctors and others. OpenNotes is a simple, but potentially disruptive intervention that aims to transform the patient-clinician relationship as it furthers both transparency and the democratization of health care. The "bottom line" evaluation of OpenNotes is straightforward: Will patients and doctors want to continue when the study period ends?

During the 12 months of the study, patients are invited to read the notes their PCPs write following office visits, e-mail correspondence, and phone calls. They can view these notes in their medical records via the secure websites where they can also view other portions of their medical records – PatientSite at BIDMC, and MyGeisinger at GHS. At Harborview, OpenNotes patients are the first to view notes and other parts of their records via HealthReach, Harborview's new portal

Once the PCP writes and signs a note after an encounter, the note is "opened," and patients receive an e-mail message announcing its availability. Shortly before his/her next scheduled appointment, the patient receives another message suggesting that s/he review the note in preparation for the visit."

Health Wonk Review - Dog Days of Summer

The Health Wonk Review is up at Workers' Comp Insider - - for the best of the healthcare policy blogosphere.

Will More Insurers Control Health Care Costs Better?

by Uwe E. Reinhardt

A common theme among health reformers has been that the small-group and individual markets for health insurance are too concentrated and thus inadequately competitive. The proposed remedy is to have more independent insurers compete within local markets.

Reformers left of center on the ideological spectrum – President Obama prominent among them – advanced this thesis frequently in their advocacy of a new, public health plan, or of insurance cooperatives, for Americans under age 65.

Reformers right of center appear to subscribe to the same thesis when they argue for allowing insurers to sell health insurance across state lines. An alternative interpretation, however, is that they merely wish to permit what finance people call “regulatory arbitrage” – that is, shopping by consumers among different regimens of health-insurance regulation and their associated costs.

Widgets versus health insurance. As someone who has long taught micro-economics I understand, of course, why competition among multiple producers in the market for the legendary widget will drive down the price of widgets to minimum feasible production costs, plus a small profit margin, if widget makers buy the inputs they use in similarly competitive input markets. This is the standard textbook case of perfect competition.

I have some trouble, however, grafting this model onto the market for health insurance, which is not quite like the market for the legendary widget.

To arrive at the premium a commercial health insurer will charge for a particular policy and risk class, the insurer’s actuaries will first project the expected per capita outlays (X) for the covered health care products and services that insured members in that risk class are likely to trigger over the insured period. This is by far the largest cost component embodied in the premium.

To these actuarially expected outlays on purely medical benefits (X), the insurer will then add allowances for the cost of marketing the policy (M) (advertising and broker commissions), administering it (A), and the desired profit margin (P) needed to stay in business over the long term. The sum of these components will equal the premium.

What Component Of Premiums Would Be Reduced By Increasing The Number Of Insurers?

The question then is which of these components – X, M, A and P – would be driven down by having more insurers compete for enrollees in a given market area.

The prime candidate would seem to be P, the profit margin. In practice, however, that margin is smaller than seems widely believed – typically much below 10 percent and often below 5 percent.

There might be some economies in administrative costs (A) per insured in the case of large insurers allowed to sell policies across state lines in the small-group and individual markets. However, these economies would pale compared to the savings that might be achieved in the market for medical benefits.

The marketing costs (M) would, if anything, increase with the number of insurers competing in a local market.
The same, it seems to me, applies to the largest outlay insurers make — medical benefits (X). The bulk of the medical benefits procured by an insurer for residents in a given market area are produced by providers within that market area. In general, both private and public insurers have only limited, if any, control over the volume of the medical benefits that local clinical decision makers ask insurers to purchase for the insured.

Furthermore, the larger the number of insurance companies active in a local market, the smaller any insurer’s market share will be — other things being equal — and the less leverage any insurer will have in bargaining with area providers over the prices of health care.

Growing supply-side concentration. Over the past decade, the supply side of the health care sector in many localities has become ever more concentrated, as hospitals formed systems and physicians joined together in larger groups. The current nouvelle vague – so-called Accountable Care Organizations (ACOs) – will only further encourage that concentration. I find it hard to believe that, in the face of this trend, fragmenting the buy side of health care even more would serve the goal of cost containment.

Ideally, in my view, the market for health insurance would be oligopolistic, which means that only a few insurers — each with some market clout vis à vis providers — would compete for enrollees in a local market. What the ideal number would be is an interesting question on which economists can have a lively debate.

So what am I missing here? Why do so many otherwise sensible people believe that fragmenting the buy side of the health care market even more than it already is will help contain the rising cost of health care? I would argue just the opposite.
__________________________

Uwe Reinhardt, noted Princeton economist, originally published this article in the Health Affairs (copyright).  This article is subject to a Creative Commons license.

Final Rules on Meaningful Use & Standards

This compendium summarizes resources and analysis related to the final rules for Health Information Technology - Meaningful Use and Standards.

AMA's American Medical News reports that "the final 'meaningful use' rule for electronic medical record adoption gives physicians and hospitals some flexibility in meeting certain objectives to qualify for billions in federal incentives."

Robin Raiford's quick summaries of 1) the objectives and measures and 2) a list of the standards.

Mu Quick

Standards Quick

The rules were announced in this press briefing:


David Blumenthal summarizes the objectives from The "Meaningful Use" Regulation for Electronic Health Records (NEJM):

John Halamka presents an overview of the Meaningful Use rules:
Meaningful Use

Keith Boone provides a Meaningful Use Standards Summary at Healthcare Standards.  John Halamka published an Analysis of the Final Standards Rule and FAQ's at Life as a Healthcare CIO.

House Ways and Means Subcommittee on Health reviews HITECH/Meaningful Use:

House Ways and Means Committee Hearing on HITECH 7_20

Blumenthal's testimony before the House Ways and Means Subcommittee on Health:  Efforts to Promote the Adoption and Meaningful Use of Health Information Technology:
2010Jul20 Blumenthal Testimony

Tony Trenkle's testimony before the House Ways and Means Subcommittee on Health:  Efforts to Promote the Adoption and Meaningful Use of Health Information Technology:
2010Jul20 Trenkle Testimony

Tony Trenkle's summary of the changes in the final rule was presented to the HIT Policy Committee on July 21 (see pages 16 - 33):

HIT Policy Committee - 2010-07-21


The bookmarked meaningful use final rule is available at http://mycourses.med.harvard.edu/ec_res/nt/401D45C0-6F53-44EE-9BC5-87454E612FCD/MUfinal.pdf.

The meaningful use rule implements the provisions of the American Recovery and Reinvestment Act of 2009 that provide incentive payments to eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs) participating in Medicare and Medicaid programs that adopt and successfully demonstrate meaningful use of certified electronic health record (EHR) technology. This final rule specifies—the initial criteria EPs, eligible hospitals, and CAHs must meet in order to qualify for an incentive payment; calculation of the incentive payment amounts; payment adjustments under Medicare for covered professional services and inpatient hospital services provided by EPs, eligible hospitals and CAHs failing to demonstrate meaningful use of certified EHR technology; and other program participation requirements. Also, the Office of the National Coordinator for Health Information Technology (ONC) will be issuing a closely related final rule that specifies the Secretary’s adoption of an initial set of standards, implementation, specifications, and certification criteria for electronic health records. ONC has also issued a separate final rule on the establishment of certification programs for health information technology.

Electronic Health Record Incentive Program Final Rule 2010-17207

The Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology final rule (bookmarked) is available at http://mycourses.med.harvard.edu/ec_res/nt/8A3EA09D-B491-45FB-8D24-F3523F28E0A0/STANDARDSfinal.pdf.  

The standards rule completes the adoption of an initial set of standards, implementation specifications, and certification criteria, and to more closely align such standards, implementation specifications, and certification criteria with final meaningful use Stage 1 objectives and measures. Adopted certification criteria establish the required capabilities and specify the related standards and implementation specifications that certified electronic health record (EHR) technology will need to include to, at a minimum, support the achievement of meaningful use Stage 1 by eligible professionals, eligible hospitals, and/or critical access hospitals under the Medicare and Medicaid EHR Incentive Programs. Complete EHRs and EHR Modules will be tested and certified according to adopted certification criteria to ensure that they have properly implemented adopted standards and implementation specifications and otherwise comply with the adopted certification criteria.

Standards, Implementation Specifications and Certification Critera for EHR Technology Final Rule 2010-17210


NIST has documented the updated testing procedures at http://xw2k.nist.gov/healthcare/use_testing/finalized_requirements.html.  "NIST has completed its revisions of the draft test procedures to adjust to the Final Rule. These test procedures have been provided to ONC for the National Coordinator's approval for use under the temporary certification program by ONC-ATCBs. The test procedures will retain the "Approval (Pending)" status until formally approved by the National Coordinator."

Does HITECH / Meaningful Use need a Plan B? Vince Kuraitis and David Kibbe weigh in.

Privacy and Security Redux

A sixty day comment period starts tommorrow on newly proposed regulations under HIPAA that would:

• expand individuals’ rights to access their information and restrict certain disclosures of protected health information to health plans, 
• extend the applicability of certain of the Privacy and Security Rules’ requirements to the business associates of covered entities, 
• establish new limitations on the use and disclosure of protected health information for marketing and fundraising purposes, and 
• prohibit the sale of protected health information without patient authorization. 

In addition, the proposed rule is designed to strengthen and expand Office of Civil Rights' ability to enforce HIPAA’s Privacy and Security provisions. These rules are mandated by HITECH.

“Giving more Americans the ability to access their health information wherever, whenever and in whatever form is a critical first step toward improving our health care system,” said ONC's David Blumenthal. “Empowering Americans with real-time and secure access to the information they need to live healthier lives is paramount.”

HHS also launched today a privacy website at http://www.hhs.gov/healthprivacy/index.html.

“HHS strongly believes that an individual’s personal information is to be kept private and confidential and used appropriately by the right people, for the right reasons,” said Joy Pritts, recently appointed Chief Privacy Officer. “Without such assurances, an individual may be hesitant to share relevant health information.”

HHS is also looking more closely at entities that are not covered by HIPAA rules to understand better how they handle personal health information and to determine whether additional privacy and security protections are needed for these entities.

PHRs will be covered under HIPAA, if they act on behalf of a covered entity.  The rule does not apply to PHR vendors that provide services on behalf of the patient instead of the covered entity (e.g., Google, Microsoft).

Defensive Medicine - "A Costly Defense"

A recent independent national physician Gallup survey found that physicians attribute 26 percent of overall healthcare costs to the practice of defensive medicine. Of the physicians surveyed, 73 percent agreed that they had practiced some form of defensive medicine in the past 12 months.  According to a just-published e-book summary, "$1 in every $4 spent on healthcare each year is spent on unnecessary tests and treatments ordered by physicians solely to protect themselves against lawsuits."   

This article continues the interview with Rick Jackson, CEO of Jackson Healthcare and sponsor of the Gallup survey.

HTN: How did you get engaged with the topic of defensive medicine?

Rick Jackson: We did a survey of 1,900 doctors to understand the voice of the doctors. 90% of the doctors said that the number one priority was tort reform or some kind of malpractice reform. I was actually surprised by that. I was going to be speaking with senators and congressmen - - I was on a panel and they wanted me to talk about defensive medicine. And to be honest at that point in time it wasn’t one of my best subjects. So we followed up to find out how much defensive medicine is costing. We couldn’t find any quantification of defensive medicine – how prevalent it was.

We did a study of 3,000 doctors in late November – our survey came back with 34% percent of total healthcare costs tied to defensive medicine. We knew we had something. A little bit of the story is that we decided nobody’s going to know who Jackson Healthcare is outside of healthcare - - we have some reputation within healthcare but not outside - - especially among politicians. We hired Gallup to quantify and ask the same question. Gallup did the interviews and came out with a lesser percentage than we came up with but still a significant number.

When we went to Washington, most of the people that would talk with us were Republicans because tort reform is something that they’re talking about. Well the good news is that this is a lot larger number than anybody thought. Malpractice expense is the tip of the iceberg. Defensive medicine is the real cost. So the good news is that this is a big amount of money and a big opportunity for us to reduce cost which is the problem of healthcare, not the symptoms that I think Washington has been addressing.

But the bad news is that tort reform doesn’t work. They (the politicians) all said “what?” Well it works a little bit on reducing malpractice cost. But as far as doctors practicing defensive medicine, it doesn’t.

HTN: Why won’t tort reform work?

Rick Jackson: I should say traditional tort reform. What I find in medicine is that what’s most important is to identify the problem. So what’s the problem we’re trying to solve? This is a “financial Armageddon” among physicians. The United States is the only major country in the world where the physician is personally financially liable for medical errors. Meaning that they can make one mistake then be unable to make a living and someone can take everything that they have. That’s different than anywhere else. Canada doesn’t have that. England doesn't have that. Australia and New Zealand - - they don’t have the kind of system that we have.

So physicians have everything to gain by protecting themselves. In fact, I was actually surprised - - we basically copied Wikipedia's definition of defensive medicine and it is medically unnecessary treatment. That’s it. We’re ordering medically unnecessary treatment for the purpose of protecting ourselves from a lawsuit. In the states that have tort reform, doctors practice just as much defensive medicine as the people that didn’t have it. Like in Texas especially, we drilled down even further. There might have been a percentage point difference, but it’s materially the same. Tort reform hasn’t modified their behavior because at the end of the day the physicians are worried about “financial Armageddon”.

HTN: What are the implications from a policy perspective?

Rick Jackson: What it requires is a different solution. If you look at Gallup’s survey, there’s $650 billion per year in defensive medicine. Our survey was $850 billion per year in defensive medicine. So somewhere between those two numbers there’s that potential amount. And even if that’s half right, it’s trillions of dollars in the next several years if we could solve it.

My solution was to come up with a system like workers comp - - the physician is accountable professionally, but financially they’re not liable. Anybody could file a claim with a medical review board of physicians that are independent -- they would decide whether or not there was a medical error. If there was, then the compensation board, just like in workers compensation, would decide what that amount is.

Florida actually did that with ED (Emergency Department) doctors just recently. You can’t sue a doctor - - the state is going to be responsible for lawsuits. I don’t know if that will be constitutional in Florida or not, but that’s what’s got to happen. The smart thing about that is that the ED is the number one profession that is practicing defensive medicine. Somebody comes in the ED and they’re going to run every test in the world on them because if anything was ever wrong with that patient that they didn’t pick up, they can get sued. So the one out of a thousand patients that they might have missed, they’re going to charge the other 999 for medical tests just to make sure they don’t get sued.

HTN: There was a 2004 CBO study that said that tort reform wouldn’t get rid of the practice of defensive medicine because there’s too much money at stake. (“Some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients.”)

Rick Jackson: I’m surprised the CBO would say that since they don’t know anything about the way healthcare is practiced.

First of all, tort reform – the way it’s being done in Texas and the way it’s being promoted– the CBO is right for a different reason. Our studies are proving that tort reform with caps and penalties– it doesn’t eliminate or certainly doesn’t even discourage defensive medicine. So from that standpoint I think they’re right.

What they’re wrong about though is that the healthcare costs are in prescriptions, in-patient admissions, MRI’s, diagnostic tests and all of those. Doctors don’t get money for that. That’s an illogical comment because there’s a perception that doctors get all of the money in healthcare. It’s just a bad perception – it’s wrong. So doctors don’t make money off of that. Are there some doctors that get some money off of MRI if they have one in their building? Maybe. But a doctor that admits a patient into the hospital doesn’t make money off of the hospital. They don’t get any kickback from drugs. It’s illegal to get kickbacks from lab. It’s illegal to get kickbacks to refer to another speciality. So I think that’s wrongheaded. They don’t make money off of defensive medicine. How many ER doctors that are practicing defensive medicine get money off of anything they order? Zero.

HTN: The ED case is an interesting example.

Rick Jackson: That’s the best example. They don’t get anything out of it. They might get a percentage of billings for their professional services, but they don’t make any money off of anything else. So they have nothing to gain by doing that.

HTN: Are there any studies or examples where there have been changes in the rules that have resulted in changes in outcomes that would be along the lines that Gallup is predicting?

Rick Jackson: There haven’t been and the trial lawyers in our lifetime may not permit it. Constitutionally, people think it’s a violation if you can’t sue somebody for some kind of tort. Here’s what we’re doing: we’re paying $650 to $850 billion per year to get $4 billion of malpractice claims to patients. Two thirds of the malpractice claims that are paid every year go to insurance companies and attorneys, the other third goes to patients.

Is it worth us paying that much more money for them to get that money? Versus under my system, there would be twice as many people that get money because doctors would come forward then and be able to admit when they make mistakes. And more people would be able to file a claim with or without an attorney and get more money.

It’s one thing where I come and hurt you. It’s quite another thing when the doctor is doing the best they can and they make a mistake and they clip the wrong vein for example. All lawsuits start with malicious intent to harm. That’s crazy. Doctors just don’t do that. It’s an education issue.

We talked with Mitch McConnell’s office, John Boehner’s office, Tom Colburn who’s the doctor out in Oklahoma, Tom Price who’s a congressman and doctor in Georgia. They were surprised to hear that tort reform doesn’t “solve” defensive medicine. They were surprised by that, or their staff was. They were scratching their heads. So the issue is “how do we solve that problem”?

One of the reasons that I think defensive medicine is more prevalent now than several years ago is that in our later survey, 87% of the doctors said that a mentor or a physician told them horror stories. So most doctors are being taught it now. That’s the problem. The younger doctors are practicing defensive medicine more than the older doctors, which seems strange since I would guess that the older doctors have more to lose.

HTN: Regardless of what the right prescription is to fix it, the numbers are just staggering.

Rick Jackson: You hit on the main message. No matter which way we do it, this is a big number that we’re paying for the “privilege” of having doctors that have personal financial liability. This is a big number. The question is are we willing to keep doing it?

I had a couple of people ask me if doctors would just lie about this (on the survey). You’ve been in healthcare – you know – why would doctors lie about this? What do they have to gain? Again, they don’t make money off of it. If the CBO was accurate, they’d probably say “no – we don’t practice defensive medicine because we make money off of it”. So there’s really no reason for them to lie about it.

Most people don’t know that all of healthcare is ordered by physicians. It’s illegal to go into a hospital and get a diagnostic test or get a prescription without the permission of a physician. So if the doctors don’t know who’s practicing defensive medicine, then who does? We felt like it was the right source - - if they don’t know, nobody does.

HTN: There are some experiments in the health reform legislation around defensive medicine. There’s some move to see what can be done there. What are your thoughts about the bill?

Rick Jackson: $50 million to do some kind of a test. That’s not even a serious bill. The problem is that we have to come up with a good solution. There are some solutions that will significantly help. My solution is the best, because I’ve tried to eliminate the problem of personal financial liability – that’s the problem.

But one of the complaints that doctors have is that they’re never reviewed by a jury of their peers. Because a jury of their peers would be other physicians or people that know what they’re doing.

One of the things that Newt Gingrich’s firm has done is to come up with a different solution - - healthcare courts. It would be judges and experts that only do healthcare. And therefore they would know what’s really going on, eliminating some of the frivolous lawsuits. That would probably help with defensive medicine. I don’t think it would necessarily do away with it, at least until physicians are not personally financially liable.

If you ask people who pays for doctors mistakes, they’ll say the hospital or the insurance company. They don’t know that the physician is personally financially liable. People have watched “General Hospital” forever, or they see “House”, and it’s always the hospital saying “we’re going to have to pay this malpractice claim” - - of course that’s television.

If everybody already thinks that doctors aren’t personally financially liable, why not go ahead and make that accurate? Because that would solve the problem.

HTN: There is a just published study on physicians’ views of defensive medicine in the Archives of Internal Medicine. The study suggests savings in the $60B range – an order of magnitude less than the Gallup survey.

Rick Jackson: It’s our understanding that the $60 billion figure comes from Amitabh Chandra, Professor of Public Policy with Harvard Kennedy School of Government. According to a New York Times article, Chandra’s figure is cited by both the American Medical Association and trial lawyers. Honestly, we don’t know what data he used to arrive at his number, and we don’t know how old this data is. We sent Mr. Chandra our survey information on June 30th.

In our study, we asked physicians to estimate what percent of overall healthcare spending do they believe is defensive in nature. In our study with Gallup, physicians estimated 26 percent to be defensive in nature. In our independent, online study, physicians estimated defensive spending to be 34 percent. As you know, a recent report from The Centers for Medicare and Medicaid Services recently estimated overall U.S. healthcare spending in 2009 to be $2.5 trillion. Applying these physician estimates to overall spending brings us to between $650 billion and $850 billion being spent each year on medically unnecessary services. We believe ONLY physicians know what influences their practice of medicine.

We have to make sure that, in our quest to put a price on defensive medicine, we don’t lose sight of the big opportunity that exists here: billions of dollars in annual savings can be realized if we focus on addressing the root problem driving defensive medicine practices. If Chandra’s numbers are close, our savings could be tens of billions of dollars each year. If our numbers are closer to reality, our saving could be hundreds of billions. No matter what the real number is, we can’t ignore the significance of this opportunity. It requires action.