Monthly Archives: February 2015

Emerging Medical Care – Check the Box or Check the Patient

Emerging Medical Care

A central component of healthcare reform in general and the ACA in particular is creating new efficiencies in the system. It is readily apparent that the powers-that-be believe that if enough data is aggregated and crunched, new (and almost unimagined) efficiencies will be obtained.

The fact that too many doctors are complaining that their time and energy is being misappropriated from patient interaction and clinical care to administrative functions seems to be the cost of doing business. A real question is if the cost of aggregation of data and the ultimate hope for efficiencies are worth the distraction that doctors are complaining about. In particular, my question is if diverting doctors from today’s clinical care and a climate of reduced reimbursement is worth the expected efficiencies (projected lower future costs.)

I believe, however, that there is a second more important question which speaks to apparent differing views of the practice of medicine.

The traditional view seems to have been that while, on the one hand, medicine was driven by science and research, breakthroughs in medicine were driven by these scientific breakthroughs, new medicines, the development of new medical devices, and new treatment methodologies, on the other hand, there was also a significant overlay of intuitive medicine. The traditional view thoroughly embraced the idea that medical treatment was determined by a physician’s innate ability to integrate numerous facts, assess what they heard from the patient, compare it with their objective findings and arrive at a diagnosis and a course of treatment.

The modern ( governmental) view seems to embrace a philosophy that medicine can be broken down into drop-down screens (of which a doctor must choose) and an ever increasing level of diagnosis and treatment codes so that the aggregation of data (and in this case, the patients) must fit into highly defined predetermined slots.

As a small example, I decided to take an illustration of what I thought was already a very limited diagnosis for depression or anxiety in ICD-9 and show what it has morphed into with ICD 10. Frankly, doctors will now have to choose a needle in the haystack in order to better accommodate our apparent need for very detailed classifications for data aggregation.

V61.3 Problems with aged parents or in-laws
This is the ICD-9 code
2015 ICD-10-CM

Z63.1 – Problems in relationship with in-laws
This is the ICD 10 code

Other related ICD 10 codes that are similar

Z63.0 Problems in relationship with spouse or partner
Z63.31 Absence of family member due to military deployment
Z63.32 Other absence of family member
Z63.9 Problem related to primary support group

Need I say more?

The answer is unfortunately, there is more to be said because there are a number of potentially problematic outcomes:

  1. Doctors are forced to choose exact diagnoses, and it appears that the records will not contain and/or credit more than a certain number of ICD codes, which means that if there are more contributory issues, data will be aggregated that does not take those “outlier” issues into account.
  1. After limiting the physician, patients will then be held hostage to the outcomes of the diagnoses that they do not necessarily agree with but were forced into. In an effort not to be cryptic, the global plan is to move from fee-for-service reimbursement based on outcome. If the outcomes are measured against diagnoses (that may be flawed at least in part) the new reimbursement system and by definition the healthcare system, may be materially flawed.

One might argue that the position I’ve taken is too extreme because doctors can always write notes. The fact that these notes will not go into the data aggregation/reimbursement model is not of primary importance.

The problem is that even the proponents of a paradigm shift in the practice of medicine recognize that it is important to have doctors’ notes. In fact, they already realize that in certain cases (as in home care ), we need very detailed and specific notes of the doctors’ encounter with the patient who seemingly needs home care.

In an effort to reconcile the need for detailed notes and the extreme interest in uniform data, CMS made significant changes to the face-to-face encounter documentation requirements by eliminating the physician narrative requirement for most home health services for care episodes beginning on or after January 1, 2015. In making this change, CMS stated that the medical records of the certifying physician or the acute/post-acute care facility (if a patient in that setting was directly admitted to home health) must contain sufficient documentation to support the physician’s certification of patient eligibility for home health services, and to that end they have supplied a template with very detailed notes when the doctor has to check the box.

For those of you who are not able to, or choose not to follow the link, it is a five-page document requiring the patient’s biographical data, and a check-the-box substitution of what would otherwise be very detailed notes.

As early as 2011, IBM was working with their supercomputer “Watson” towards the ultimate goal of having the machine which beat Jeopardy experts accurately formulate diagnoses. Reports from 2011 indicated that even at that time, there were already computer programs that were far better at diagnoses than Watson.

Are we heading towards a day where rather than seeking a referral from a doctor to a specialist, patients will go to their computers, enter their symptoms and be given a diagnosis and either a prescription or a referral to a doctor?

I know this sounds far-fetched, but on the other hand, if it does happen I’m sure people will look back and say the writing was on the wall.

I am fearful that this is the wave of the future, that the age-old intuitive medicine will be replaced by a national medical practice driven by algorithms, artificial intelligence, statistical analyses and computer science, which will be boiled down to the digital/ministerial practice of medicine. Patients and/or doctors will be taking direction from machines.

I hope I am wrong.

What do you think?

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Breast Implants and Cancer – the disease looking for a cause

Woman looking trough a loupe

As a predicate matter, I do not mean to in any way negate the horrible anguish, devastation or pain-and-suffering endured by cancer victims and their families.

Although I am not a doctor and I am not a scientist (just an attorney), it appears that there is an apparent need for people to have someone or something to blame for this devastating disease.

I recently read a bulletin from a law firm claiming that it is extremely worrying that the number of incidences of breast implants related to anaplastic large cell lymphoma (ALCL) has risen sharply since the first reported case. This statement was made with respect to approximately 150 women who have been diagnosed with cancer allegedly related to implants.

While my heart goes out to any cancer victim and/or their families, ALCL is an extremely rare form of cancer which is estimated to affect one in 500,000 women. Initial evidence dismissed the link between ALCL and breast implants. Thereafter, in 2011, the FDA embarked on a review of the available data and concluded that there is a POSSIBLE association between breast implants and ALCL, although it is strangely rare. In fact, it was not possible to confirm with statistical certainty that breast implants caused ALCL and was not possible to identify (a) the type of implant (silicone versus saline,) or (b) the reason for implant (reconstruction versus aesthetic) that could be associated with either greater or smaller risk. Bottom line, it is a very rare form of cancer, and the big WHY of cancer still looms large.

The problem with many of these news releases is that they are likely to fuel victims and their families who alternatively blame or sue their doctors. It is unfortunate that:

  1. When a person is met with an undesired outcome (particularly with respect to medical care), he/she feels that there must be someone to blame, which in the case of medicine, is generally the doctor.
  1. Even when individuals are advised of particular risks, they stay focused on the benefits (perceived or real) until they are confronted with the risks about which they were warned.
  1. Item 2 above exists with virtually every drug and medication we take, but we generally ignore all of the accompanying warnings.
  1. When doctors advise patients about the risks inherent in various procedures, patients think that those risks happen to other people.
  1. Number 4 above is especially so in the case of aesthetic surgery e.g. breast augmentation. Let’s face it, whatever the motivation or benefit (perceived or real), the possibility of the risks involved in any surgery or anesthesia are not front and center in a patient’s mind.

Clearly, informed consent is necessary, but that does not negate the risks of medication and/or surgical procedures. Apparently, it also does not in any way limit the various studies and finger-pointing with regard to cancer.

A recent study has purportedly linked increased risk of bladder cancer to “meat related compounds” including nitrate and nitrite. In the NIH – AARP Diet and Health Study, Cancer August 2010, 854 transitional cell bladder–cancer cases were found among the over 300,000 men and women enrolled in the 1995 NIH – AARP Diet and Health Study. The results indicate that in comparison to the people who ate the least amount of processed red meat, the top 20% of red meat-eating participants had a 30% greater risk of contracting bladder cancer. In this case, absent mandated warnings on red meat, it is based on personal lifestyle choices.

The Harvard School of Public Health documented 2,830 cases of breast cancer during 20 years of follow-up of 88,803 premenopausal women and concluded that on the one hand, there were higher risks of breast cancer among the people who had higher red meat intake, while on the other hand, higher intakes of poultry, fish, eggs, legumes and nuts were not related to breast cancer overall. Once again, this relates to personal choice. The authors of the study reported that “each serving per day increase in red meat was associated with a 13% increase in risk of breast cancer, acknowledging that “this is relatively small risk” but “the absolute number of excess cases attributable to red meat intake would be substantial and thus a public health concern.” Not surprisingly, they suggested replacing red meat with legumes and poultry per the American Cancer Society dietary guidelines.

A Johns Hopkins study was recently published in the journal Science, which indicated that two-thirds of cancer incidence of various types can be blamed on random mutations and not heredity or risky habits like smoking. It is important to note that breast and prostate cancer were excluded from the study. The study looked at 31 types of cancer and found that 22 of them including leukemia, pancreatic, bone, testicular, ovarian and brain cancer could largely be explained by these random mutations, which are essentially nothing more than bad luck.

The other nine types, including colorectal, skin cancer (basal cell carcinoma) and smoking-related lung cancer were more heavily influenced by heredity and environmental factors like risky behavior or exposure to carcinogens.

Overall, 65% of cancer incidence was attributed to random mutations in genes that can drive cancer growth.

Once again, I do not mean to minimize the pain, anguish and agony of cancer victims or their families, but it appears to be a disease looking for a cause, and in many cases, people looking for someone to blame.

What do you think?


$8+ Million Dollar Verdict against a Concierge Medicine Company – Anomaly or Game Changer?


I recently saw a very short report about this Florida case, Beber v. MDVIP, and commented on it. Considering the importance and far reaching implications, however, I took a closer look and realized that it is important for lawyers, doctors and other professionals in the healthcare arena to have a more detailed understanding of the facts and the possible ramifications.

The underlying facts are pretty straightforward; the questions and possible implications are not. In order to fully understand the nuances, I think it important to understand certain details.

The late Joan Beber sought treatment from Dr. Metzger, a concierge physician affiliated with MDVIP. Depending on whose story you believe, there were either intervening complications or Dr. Metzger failed to timely/accurately diagnose the issue. Accordingly, Ms. Metzger required a leg amputation in 2008, and passed away four years later (in 2012).

At that time, MDVIP charged patients $1,500 per year and offered a marketing service for doctors and paid those doctors for patient checkups. MDVIP has developed a very sizable base of doctors and patients.  Its annual rate has risen to $1,600 and it currently has 784 enrolled doctors and derives annual revenue of approximately $700 million dollars according to some reports

Before the trial, Dr. Metzger settled with respect to malpractice, but the case went forward primarily relating to MDVIP.

Most of the various causes of action brought against MDVIP were that it was responsible for the malpractice of Dr. Metzger and other medical professionals, that Dr. Metzger (and thereby, MDVIP) failed to timely seek the intervention of a vascular surgeon, that Ms. Beber’s husband (former General Counsel of W.R. Grace) wanted his wife treated at a hospital  to which Dr. Metzger did not have admission privileges, and maybe most importantly, that there was an implied promise on the part of MDVIP that far surpassed the level of “reasonable care” and required MDVIP  to provide “exceptional doctors, exceptional care and exceptional results.” The argument of this enhanced and (in this writer’s opinion) ill-defined standard renders virtually any result that turned out less than ideal to fall short of the care that was allegedly promised. In essence, that was the argument made by plaintiff’s counsel in their closing statements by saying that “exceptional doctors and exceptional care” might in the case of the stage four cancer patient be able to provide another month of life with a higher quality of life, but in this case fell short of what was promised. The implicit argument was that short of an illness where the result is inevitable, there was a promise of quasi-perfection.

I have read some of the available promotional literature, reviewed the fifth amended complaint, the MDVIP contract with the physician, as well as the patient membership agreement with MDVIP and (while I have not read all of the trial exhibits or viewed the totality of the trial) it appears that this argument may have played well with the jury, but it’s not really supported by the documentation or objective common sense.

As an example, the MDVIP agreement stresses that “Your Affiliated Physician’s limited practice size also enables your Affiliated Physician to provide conveniences such as same or next day appointments that start on time, unhurried visits, 24/7 availability via personal pager or cell phone, and enhanced coordination of specialist care at no additional charge to you.” I did not see any indication that the doctors chosen would be subject to an almost impossible standard of care.

Paragraph 8 of the membership agreement, however, did say “Entire Agreement. The undersigned agrees to the terms of this agreement all of which are expressed herein. There are no promises or representations except as set forth herein.”

It is significant to note that in Article 18 of the agreement between MDVIP and the physician (Metzger) it states that “physician acknowledges that and the VIP shall not have or exercise control or direction over the method by which physician or physician’s personnel perform any work or render where he/she performs any services or functions.” This further raises the question how MDVIP was held responsible for the actions or inactions of one of its physicians. The fact that it could oversee does not mean it could control.

The plaintiffs hammer away at this alleged enhanced standard of care. Frankly, I always thought and still think that concierge medicine obtains its fees because of the limited number of patients a doctor may have, and the 24/7 availability/rapid scheduling of appointments. It is the patient’s choice and responsibility to select the doctor of his/her choice.

Of course, the prosecution spoke about all of the marketing efforts done by MDVIP, and the jury was faced with the fact that someone had died despite the reality that there were apparently conflicting expert reports, and as the defense pointed out in its closing arguments, it would be unfair to play Monday morning quarterback.

Ultimately, the jury came back with a verdict comprised of:

Joan Beber
Past medical expenses, whole modifications – $536,285.91
Bodily injury, pain and suffering, loss of capacity for enjoyment of life – $8 million

Robert Bieber
Loss of wife’s comfort, society and attention – $2
Loss of services – $3,001

Apparently, there is an additional line item for attorney’s fees and possible interest.

Various reports indicate that although Dr. Charles Metzger was found to be 95% negligent and Netanial Lowen was found to be 5% negligent, the above stated verdict of $8,539,001 ($8,539,288.91?) would be fully attributable to MDVIP.

It appears that a lot of the blame laid at MDVIP’s feet was with respect to its alleged promise of exceptional doctors and exceptional care. In my opinion, that does not rise to medical malpractice only possibly puffery, or at worst, false advertising for which the verdict seems to be unusually excessive as it related to MDVIP.

I think that if this case goes up on appeal the verdict may not survive.

This case, however, raises a number of significant questions:

  1. Will this verdict in any meaningful way change the emerging trend towards concierge medicine, which basically offers easier access to doctors, easier interaction and more face-to-face time with the doctor?
  1. Will this case negatively impact those entities that try to develop a brand name and act as a marketing agency for independent contract doctors, relegating concierge medicine to independent practices that used to go that route? The course of an independent practice to undertake marketing and adoption as a concierge practice, though, faces considerable obstacles.
  1. If an independent practice wishes to go the route of concierge medicine where it directly collects the fee (which ultimately includes marketing and other associated expenses), this may raise significant issues if those charges are additional fees in excess of insurance recovery, which based on most contracts, is not allowed, and therefore, it may effectively limit concierge medicine to those very few and rarified doctors who do not accept any insurance.
  1. Will concierge medical companies have to have a disclaimer that “our network does not assure you of any better treatment or outcomes than if you took a list of doctors and blindly threw a dart at the wall?” While this may sound absurd, the following question may put it into perspective.
  1. An insurer advises prospective applicants that the doctors in its group have been carefully screened (credentialed) and those doctors have demonstrable records and exhibit the qualities that patients deserve, or some other complimentary language. Will the insurer now be liable for medical malpractice and be held to some higher standard because they were paid and made some representation?

There is an old legal adage that bad facts make bad law.

From my limited inquiry into this case, I believe that a jury may have focused on some sales puffery and viewed it as false advertising, and then raised it to a higher order of magnitude where they made what was essentially a marketing company liable for malpractice.

What do you think?

Government Has an AHA Moment – MD Specialists May Be Left Out in the Cold.


As infantile as this may sound, our government has finally realized that if you pay more, it actually costs more. That is, in essence, the realization that lies at the center of our government’s AHA moment.

To best understand the issue, the AHA moment and the future consequences, the historical background is important.

As a general rule, Medicare sets various rates of compensation for doctors and hospitals. In many or even most instances, private insurance companies’ contracts with medical providers and their reimbursement is based on a multiple of Medicare reimbursement.

Therefore, Medicare reimbursement, to a large extent, drives a significant portion of global (not private pay) reimbursement for physician, clinical, home and hospital-based medical care.

Furthermore, it is patently obvious that with regard to surgery, hospitals have a higher cost structure than surgical centers, and emergency rooms have a higher cost structure than urgent care centers or independent medical practices. While the degree, the cause of the differences or the attendant reasons may be subject to debate, it is clear that the cost of the operational overhead varies dramatically. Accordingly, Medicare and private insurers pay hospitals more for surgery than they pay surgery centers. Similarly, Medicare pays hospitals more for various treatments than it pays independent practices.

What amazes me is that there was apparently no real recognition that if you pay hospitals more money for the same service, the aggregate cost of healthcare increases as well.

The following chart gives a few examples of the differing reimbursements rates for doctor offices vs. off campus hospital owned practices.

GENERAL SURGERY 49560 Repair initial incisional or ventral hernia; reducible $742.00 $2,429.00
CARDIO-VASCULAR 36560 Insertion of tunneled centrally inserted central venous access device, with subcutaneous port; younger than 5 years of age $1,344.83 $2,123.47
36571 Insertion of peripherally inserted central venous access device, with subcutaneous port; age 5 years or older $1,319.64 $1,768.17
36593 Declotting by thrombolytic agent of implanted vascular access device or catheter $29.95 $161.31
19380 Revision of reconstructed breast $797.06 $3,586.79
19366 Breast reconstruction with other technique $1,449.03 $2,655.57

In addition, particularly with specialists, when a patient goes to an independent medical practice and has certain tests performed, those treatment codes incorporate the fact that the treatment occurred in the doctor’s office, so that the doctor receives one payment for treating the patient and administering the test or performing the procedure.

Hospitals, however, have traditionally been entitled to what is referred to as a “double-dip” because the doctor is allowed to bill for the procedure and the hospital is able to bill for the use of the facility. As such, the total reimbursement dramatically increases. It is not uncommon for the difference to be 100% or more. Once again, it is amazing that in this day and age in which the rising cost of healthcare seems to be in the forefront of the news, it apparently took a very long time to realize that if you pay more for the same medical treatment/procedure, the aggregate cost actually goes up.

As a result of this disparity, many hospitals embarked on purchasing and/or absorbing numerous specialty medical practices.

A recent survey by The American College of Cardiology found that between 2007 and 2012, the number of cardiologists working for hospitals more than tripled while the percentage working in private practice fell from 59% to 36%.

I recently had a discussion with a partner in a suburban cardiology group comprised of nine cardiologists who told me that his practice was bought by a hospital and that the doctors are now paid directly by that hospital. The hospital they work for is based in a large city approximately 30 miles away. It was obvious that the value to the hospital was the fact that the cardiology practice directed many procedures to the hospital, but the reality is that the aggregate revenue/cost of the treatments performed at the satellite location increased as well.

In another case, a client recounted that her child was treated by a pediatric cardiologist who joined up with the hospital. Looking at her EOB (explanation of benefits setting forth how much her insurance paid), going to the same doctor, at the same office, for the same procedure yielded reimbursement that was significantly more than double of what the doctor had been previously reimbursed.

This seemingly simple idea that when you pay more your costs increase has apparently finally hit home as evidenced in the Federal government’s proposed 2016 budget.

The new budget seeks to “encourage efficient care by improving incentives to provide care in the most appropriate ambulatory setting: the budget proposes to improve incentives to provide ambulatory care in the most appropriate clinical setting. Evidence suggests that in recent years, billing of many ambulatory services has been shifting from physicians’ offices to the usually higher paid hospital outpatient department setting, increasing Medicare spending and beneficiary cost-sharing.”

At this juncture the Federal government only seeks to equalize reimbursement for off-campus hospital/medical practices with independent physician practices.

What is driving this move is both the government’s cost as well as trying to address the ever rising co-pay contributions by the patients.

The White House has apparently calculated that this move will yield a larger economic benefit to the government than raising Medicare eligibility from 65 to 67. This calculation underscores the degree of enhanced reimbursement paid to off-campus hospital medical practices

It is not certain whether the hospitals will be able to justify the disparity in payment and thereby fend off this proposal, or that the votes of the many people suffering from increased co-pays as well as the general need to address the cost of healthcare will allow it to pass in the budget. Your guess is as good as mine.

A number of questions come to mind:

1. Even if this adjustment does not occur in the 2016 budget, how long will it take until this concept/need gains traction, and in fact occurs?

2. If off-campus medical practices are not afforded enhanced reimbursement, will the hospitals seek to move those practices on campus, or will they be rendered unable to renew the contracts they have with these practices?

3. If at some point in the future hospitals are no longer able to renew the contracts because they are not receiving the reimbursement that was the basis of the initial acquisition of the medical practices, what will happen to the doctors? Specifically, are these medical practices that have become accustomed to working in a more “corporate” environment and were able to step away from the ministerial/operational/entrepreneurial aspects of their practices, be forced to go back to square one, and considering the regulatory overlay that has occurred in the last few years, will they be able to make the transition?

4. At some point, will the government incentivize urgent care and surgical centers by raising their reimbursement and incentivizing them to the extent that this lower overhead model draws down the number of hospital admissions and thereby, the aggregate cost of healthcare?

5. If number 4 (above) occurs, how will hospitals deal with the lower revenue obtained because patients and revenue were diverted to urgent care and surgical care centers? Ultimately, we need hospitals, and in order for them to operate, they must be able to cover their costs. We cannot afford to lose our hospitals, and therefore, will the cost/reimbursement of the remaining treatments/procedures that do occur at the remaining hospitals be increased to offset the lost revenue? If that is the case, how much money will we ultimately save?

I believe that the future is uncertain, but it is reasonably certain that individual moves do not happen in a vacuum. Effectively, every action has a reaction and both the future of healthcare and the consequences of the various initiatives seem far from certain or even predictable.

What do you think?

The Economic (Non)Sense of Medicine as a Career

There is an almost universal recognition that America cannot afford its health care system. While on the one hand the government seeks to expand the number of people covered by insurance and increase the minimum levels of coverage, it simultaneously seeks to rein in the aggregate cost. Obviously, there must be some “give” somewhere.

Reimbursement for medical treatment (including both the reimbursement obtained by doctors as well as the reimbursement obtained by medical facilities such as clinics, surgical centers and hospitals) seems to be the number one target for cost-containment, with big Pharma a close second (although big Pharma is beyond the scope of this post.)

Curtailing, limiting or otherwise decreasing doctor/treatment reimbursement directly effects the revenue medical practices obtain, and therefore the amount that doctors earn.

I believe that there is an apparent lack of recognition that doctors make a very substantial and significant investment in pursuing a medical career. Ultimately, the sacrifices made by doctors must yield financial reward commensurate with their sacrifices, and in line with the commitment/benefit ratio of other pursuits,  or the medical profession may be abandoned, at least in part.

 A doctor typically spends 10 years + of higher education in pursuit of his or her medical training, many hundreds of thousands of dollars in tuition, significant sums in associated expenses, and the opportunity costs of money not earned during that decade (or longer.) It seems readily evident that people who are intelligent, hard-working, studious, and are ready to forgo instant gratification for a longer-term payoff, have other career choices where the sacrifice/benefit ratio augurs in favor of the alternative choices. At the end of the day, if we want doctors, there must be a value proposition in relation to the other available alternatives. I am concerned that recent changes are upsetting the career choice equilibrium.

In a recent study sponsored by CareCloud in partnership with Quantia MD with responses from over 5000 physicians certain key findings were set forth.

 1. US physicians are now more than twice as likely to foresee eroding, not increasing, profits in 2014.

2. The issues weighing on finances are led by declining reimbursements (60%), rising costs (50%) requirements of the ACA (49%) and the transition to ICD 10 (43%)

3. Successful patient engagement requires that physicians have adequate time and space to focus on care. But the percentage of doctors spending more than one day a week on paperwork rose sharply between 2013 and 2014 from 58% to 70%. Nearly 1/4 (23%) spend more than 40% oftheir time on administration, up from 15% in 2013.

4. Interest in selling their practices is rising

5.   Almost 1/3 of physicians aim to rip and replace at least one element of the core technology platforms in the next year, citing cost (36%) usability (31%) noncompliance with ICD 10/MU (31%) and a lack of vendor innovation (17%).

It does not take a rocket scientist to figure out that as the reward and satisfaction of a particular career declines, the people seeking to embark on that path will similarly decline.

By analogy, there was a recent article in the New York Law Journal regarding the legal profession and the decline in prospective lawyers. The article reported that fewer people are choosing to enter the legal profession. Law school enrollment for first-year students has declined 30% in the past four years and is at its lowest level since 1973. Enrollment at New York Law School’s has fallen approximately 23% since 2010. People are shying away from the legal profession-despite the desperate need for affordable and accessible legal services by the poor and people of limited means-because they sense it is no longer a reliable source of employment in today’s economy sufficient to justify the significant cost of legal education.

Are we being penny wise and pound foolish with respect to the reimbursement and resultant earnings of doctors. Are we driving future doctors away from medicine, and if so, who will ultimately pay the price. 

What do you think

Will the government send medical practitioners back to the Stone Age or to Bankruptcy Court?

There are currently two competing forces with respect to the administration of healthcare. On the one hand, the government seeks widespread use of EMRs and electronic dissemination of medical records. On the other hand, OIG, various Attorneys General and the courts present potentially crippling financial liability for the almost inevitable data breaches caused by hackers.

The recent data breaches of Target and Sony, among others, amply demonstrate that financial data (which often includes medical data) presents a rich target for hackers. The value of Medicare information is often much more valuable, on a per person basis, than a person’s credit history. More specifically, dishonest DME companies and/or sham medical facilities are able to use improperly obtained Medicare information thus enabling them to be reimbursed well in advance of the government becoming aware of, investigating and finally stopping the improper billing and resulting payments. Considering the value of these “rich targets,” it seems almost inevitable that data hacking is a growth (albeit illegal) industry.

Conversely, the government is currently cutting Medicare reimbursement from more than 257,000 U.S. doctors by 1% for failure to meet federal goals in the use of electronic medical records. In addition, 28,000 providers will be fined an additional 1% of Medicare pay for failure to prescribe medications electronically.

While there are approximately 400,000 providers that have received bonus Medicare payments for meeting electronic use goals, these bonuses will ultimately be replaced by fines for failure to adopt electronic records and/or communications.

For those that have adopted EMR and electronic communication systems, the courts are generally allowing private rights of action for the breaches, and this is in addition to the governmental fines and associated costs for HIPAA and HITECH breaches.

In a case brought in Minnesota, U.S. District Judge Paul Magnuson recently ruled that consumers were allowed to sue Target Corporation over the retailer’s late 2013 data breach that they claim compromised their personal financial information. Target has said that at least 40 million credit cards were compromised in the breach which may have resulted in the theft of the personal information (such as e-mail addresses and phone numbers) of as many as 110 million people. This ruling followed a similar decision by Judge Magnuson in which he allowed banks to move forward with their lawsuits against Target for the money they spent reimbursing fraudulent charges and for the issuance of new credit and debit cards related to the breach.

With respect to the Sony breach, at least four lawsuits have been filed accusing Sony of not doing enough to protect individuals’ private data, including personal medical information. According to the class action lawsuit filed in U.S. District Court in California, “for decades, [Sony] failed, and continues to fail, to take the reasonably necessary actions to provide a sufficient level of IT security to reasonably secure its employees’ [personal information].”

Frankly, the same allegation could be asserted against any organization that is the victim of a data hack. The essential argument would be that by sheer virtue of the fact that data was hacked, the company, or in this case the medical provider, did not provide sufficient security.

Effectively, medical providers are forced to either embrace electronic medical records and electronic dissemination of medical information or face lower revenues and/or fines. On the other hand, if they do embrace the use of EMRs and electronic transmission of PHI, they risk the consequences of an almost inevitable chance of their data being hacked, which could (at least theoretically) render them insolvent or even bankrupt.

Alternatively, medical providers could follow the Kremlin’s logic and recognize that entering information into a computer renders it susceptible to hacking or improper dissemination. Specifically, in July of 2013, a source in Russia’s Federal Guard Service (FSG), which is in charge of safeguarding Kremlin communications, disclosed that FSG was looking to spend approximately $15,000 to purchase ELECTRIC typewriters in light of the publication of secret Wiki leaks documents. Apparently, they believe that computers cannotbe trusted. Interestingly, it appears that the Kremlin actually forgot that computers are not the only technology vulnerable to attack. Even ELECTRIC typewriters are not safe.

There were reports that German politicians were also considering a return to manual typewriters for sensitive documents. The Germans were not even considering electric typewriters, but were going back to the REALLY old-fashioned MANUAL typewriters. If you are starting to believe that the Germans are paranoid, the Associated Press (in the 1980s) reported that the Soviets bugged the typewriters in the U.S. Embassy. “In the second such lapse since 1978, U.S. officials allowed Soviet agents to get hold of typewriters being shipped to the U.S. Embassy in Moscow and to bug them electronically ‘for years,’” the Senate intelligence committee said Tuesday. As a result, the panel said “for years, the Soviets were reading some of our most sensitive diplomatic correspondence, economic and political analyses, and other communications.”

With the advent of microchips, one could argue that even pens could transmit information.

It would be very sad if the medical profession were held to a standard that large corporations and even governments cannot maintain. Is using quill pens the only bulletproof solution to preclude liability, or should we have reasonable and attainable standards beyond which doctors, clinics and hospitals would not be held accountable for data hacks?

What do you think?

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