Introduction to Health Care Law

1
Introduction to Health Care Law

• Professor Edward P. RichardsLSU Law
  Centerhttp//biotech.law.lsu.edu/

2
Key Issues

• Scientific medicine is about 120 years old
• Technology based medicine is less than 60 years
  old
• Doctors are not scientists and many do not
  practice scientific medicine.
• There is no stable model for medical businesses,
  leading to constant change and unending legal
  problems.
• Health care finance shapes medical care and is a
  huge mess

3
Critical Dates in Medicine
4
1400s

• Birth of Hospitals
• Places where nuns took care of the dying
• No medical care against the Churchs teachings
• No sanitation assured you would die

5
Early 16th Century

• Paracelsus
• Transition From Alchemy

6
Mid 16th Century

• Andreas Vesalius
• Accurate Anatomy

7
Early 17th Century

• William Harvey
• Blood Circulation the body is dynamic, not
  static

8
1800

• Edward Jenner
• Smallpox and the notion of vaccination

9
1846

• William Morton - Ether Anesthesia

10
1849

• Semmelweis
• Childbed Fever and sanitation
• Controlled Studies

11
1854

• John Snow
• Proved Cholera Is Waterborne
• Basis of the public sanitation movement

12
1860-1880s

• Louis Pasteur
• Scientific Method
• Simple Germ Theory
• Vaccination For Rabies
• Pasteurization to kill bacteria in milk

13
1867-1880

• Joseph Lister
• Antisepsis surgeons should wash their hands and
  everything else, then use disinfectants
• Listerine

14
1880s

• Koch
• Modern Germ Theory
• Organic Chemistry
• Birth of the modern drug business
• The real starting point for scientific medicine

15
1850s - 1900s

• Sanitation Movement - Modern Public Health

16
Schools of Practice - Pre-Science (1800s)

• Allopathy
• Opposite Actions
• Toxic and Nasty
• Homeopathy
• Same Action as the Disease Symptoms
• Tiny Doses
• Less Dangerous
• Naturopaths, Chiropractors, Osteopaths, and
  Several Other Schools

17
Most Medical Schools are Diploma Mills

• No Bar to Entry to Profession
• Small Number of Urban Physicians are Rich
• Most Physicians are Poor
• Cannot Make Capital Investments
• Training
• Medical Equipment and Staff
• Physicians Push for State Regulation to create a
  monopoly

18
Legal Consequences

• No Testimony Across Schools of Practice
• Different from Medical Specialties
• Surgery, Internal Medicine, Pediatrics
• All Same School of Practice - Allopathy
• All Same License
• Cross-Specialty Testimony Allowed
• Still important with the rise of
  alternative/quack medicine

19
Transition to Modern Medicine and Surgery
20
The Business of Medicine

• Mid to Late 1800s
• Physicians are Solo Practitioners
• Most Make Little Money
• Have Limited Respect

21
Surgery Starts to Work in the 1880s

• Surgery Can Be Precise - Anesthesia
• Patients Do Not Get Infected - Antisepsis

22
Effect on Licensing and Education

• Once there are objective differences (people
  live) between qualified and unqualified docs,
  people care
• You can make more money with better training
• You can make more money with better equipment and
  facilities
• Effective Medicine Drives Licensing
• Licensing Limits Competition
• Physicians Start to Make Money

23
The Tipping Point

• About 1910, going to the doctor, and particularly
  the hospital, shifted from being more dangerous
  than avoiding them to increasing your chance of
  survival.

24
Bars on Corporate Practice of Medicine - 1920s

• Physicians Working for Non-physicians
• Concerns About Professional Judgment
• Cases From 1920 Read Like the Headlines
• Banned In Most States
• Real Concern Was Laymen Making Money off
  Physicians

25
Physician Practices

• Shaped by Corporate Practice Laws
• Sole Proprietorships
• Partnerships
• Mostly Small
• Some Large Groups
• First Organized As Partnerships
• Then As Professional Corporations

26
Impact of Corporate Bans on Institutional Practice

• Physicians Do Not Work for Non-Governmental
  Hospitals
• Contracts Governed by Medical Staff Bylaws
• Sham of Buying Practices
• Physicians Contract With Most Institutions
• Charade of Captive Physician Groups
• Managed Care Companies Contact With Group
• Group Enforces Managed Care Companys Rules
• Physicians Can Be As Ruthless As Anyone

27
Evolution of Hospital Administration

• From Nuns to MBAs

28
From Hotel to High Tech - The Evolution of
Hospitals

• Started With Surgery
• Medical Laboratories
• Bacteriology
• Microanatomy
• Radiology
• Services and Sanitation Attract Patients
• Internal Medicine
• Obstetrics Patients

29
Post WW II Technology

• Ventilators (Polio)
• Electronic Monitors
• Intensive Care
• Hospitals Shift From Hotel Services to Technology
  Oriented Nursing

30
Post World War II Medicine

• Conquering Microbial Diseases
• Vaccines
• Antibiotics
• Chronic Diseases
• Better Drugs
• Better Studies
• Childhood Leukemia

31
Hospital Liability - Old Days

• Charitable Immunity
• No professional services
• Physicians provided or supervised professional
  services
• No Independent Liability for Nurses
• No Liability for Physician malpractice

32
Reformation of Hospitals

• Paralleled Changes in the Medical Profession
• Began in the 1880s
• Shift From Religious to Secular
• Began in the Midwest and West
• Not As Many Established Religious Hospitals
• Today, Religious Orders Still Control A Majority
  of Hospitals

33
After Professionalization

• Demise of Charitable Immunity
• Liability for Nursing Staff
• Negligent Selection and Retention Liability for
  Medical Staff

34
Hospital Staff Privileges

• Physicians are Independent Contractors
• Hospitals Are Not Vicariously Liable for
  Independent Contractor Physicians
• Hospitals Are Liable for Negligent Credentialing
  and Negligent Retention
• Hospitals Can Be Liable if the Physician is an
  Ostensible Agent

35
Joint Commission on Accreditation of Hospitals

• 1950s
• Now Joint Commission on Accreditation of Health
  Care Organizations
• American College of Surgeons and American
  Hospital Association
• Split The Power In Hospitals
• Medical Staff Controls Medical Staff
• Administrators Control Everything Else
• Enforced By Accreditation

36
Contemporary Hospital Organization

• Classic Corporate Organizations
• CEO
• Board of Trustees Has Final Authority
• Part of Conglomerate
• Medical Staff Committees
• Tied To Corporation by Bylaws
• Headed by Medical Director
• Constant Conflict of Interest/Antitrust Issues

37
Medical Staff Bylaws

• Contract Between Physicians and Hospital
• Not Like the Bylaws of a Business
• Selection Criteria
• Contractual Due Process For Termination
• Negotiated Between Medical Staff and Hospital
  Board

38
Health Care Finance

• From the Blues to Managed Care

39
Paying for Medical Care

• Pre-WW II
• Mostly Private Pay
• Some Employer Provided - Kaiser
• WW II
• Price Controls
• Post WW II
• Health Insurance As Benefit
• Private Insurance
• The Blues
• Medicare/Medicaid

40
Blue Cross - Blue Shield - 1930s

• Developed by Docs and Hospitals
• Sold to Teachers
• Assure Access
• Assure Payment
• Jump started by WWII
• Non-pay benefits under wage controls

41
The Blues Reimbursement Policy

• Pay Whatever Was Charged
• Subsidize the Rural Areas
• Subsidized Over-bedding and Over Treatment

42
Federal Programs
43
Social Security Income and Disability

• 1930s
• Lifted the elderly out of poverty
• Provided disability insurance for workers
• The disability is quite a big and valuable
  program and pays for a lot of medical care

44
Hill-Burton

• Post-WWII
• Funded construction of community hospitals
• Had community service requirements, but those
  have all expired
• Created the US emphasis on hospital based care
• Spent from the 1970s to the 1990s reducing
  hospital beds to control costs
• Excess beds or Surge Capacity?

45
The Great Society

• Medicare
• Old People
• Certain disabled people
• Medicaid
• Poor People
• Nursing Homes
• About 40 of medical dollars
• Fought by the AMA
• Made Docs Rich

46
No Good Old Days for Patients

• Gaming the System under Fee For Service
• Right to Die As Example
• Cannot Just Open the Checkbook
• Greed Is Not Good in Medical Care
• Fee for Service Drives Unnecessary Care
• Hospitals Have to Care More About Money Than
  Patients
• Rich Docs Are Not Always Better Docs

47
Federal Interventions

• Feds Pay nearly 50 of Health Care
• Other Plans Follow the Feds
• Usual and Customary Charges for Docs
• Based on the Community
• Adjusted for the Docs Previous Charges
• Complex

48
Hospital Costs

• Big Dollars Are in the Hospital Charges
• Docs only get 20-25 of the health care budget
• Hospitals get a lot of the rest
• Drugs are an increasing share
• Fee for Service Drove Unnecessary Care
• Open-end Reimbursement drove High Prices
• Hospitals did not even know costs

49
Diagnosis Related Groups - DRGs - 1983

• Watershed in Health Care Reimbursement
• Prospective Payment (Capitation)
• Based on Admitting Diagnosis
• Fixed Payment
• Some Adjustments
• Encouraged health insurers to also manage
  physician care

50
Making Money Under DRGs

• Fewer Tests and Procedures
• Complete Reversal of Prior Reimbursement
• No Bump for ICU
• Reduce Length of Stay
• Dropped About 20 at Once, continued to drop
• Ideal Is Out the Door, Dead or Alive
• Patients Discharged Much Sicker
• Which Was Right, Then or Now?

51
Federal Laws Enabling Managed Care for Docs

• Federal HMO Act in the 1970s
• Preempted State Laws Banning Prepaid Care
• ERISA
• Passed to allow labor unions to negotiate
  national health plans with big employers
• Preempts state regulation of certain self-insured
  health plans
• Gave self-insured plans an edge and drove most
  employers to them

52
Managed Care Organizations - MCOs

• Insurance Plans That Control Patient Care
• Includes the Old Alphabet Soup
• HMOs
• PPOs
• IPAs

53
Two Major Variables

• Employer or Contractor
• Do the docs work for the plan or a captive group?
• Do the docs contract with many plans, treating
  patients based on different plan benefits?
• Open or Closed
• Do the docs treat only patients from a single
  plan or a mix of plans?
• Why do these matter?
• Leverage on the doc's decisions

54
Direct Controls on Costs

• Pay Less for Services
• Use Market Power to Bargain
• Control Access Points
• Limit Hospital Stays
• Limit Tests, Procedures, and Referrals
• Direct Control of Access
• Pre-approval
• Tell the Docs What to Do
• Most Honest

55
Indirect Controls

• Capitation
• CRF--Consultation and Referral Funds
• Withhold and Incentive Pools
• Stop-loss and Reinsurance
• Total Capitation
• Economic Credentialing
• Dumb Down Services
• Free Ride on Other Plans or the Government

56
Deferring Care

• Stop-gap Care
• Keep You Out of the Hospital
• Keep You Away From Specialists
• Managing Crises, Not Solving Problems
• Only works in the short term, but plans only
  think in the short term
• Unsustainable Policies - Plans Are Going Broke

57
How Patients Get Hurt - Easy Answers

• Denied Care - the Usual Lawsuit
• Incompetent Care by Bad Doc
• Incompetent Care by a Non-doc
• Putting Patients in Dangerous Facilities
• Not Using Proper Drugs
• Simple Negligence

58
Good Docs Do Bad Things

• Too Little Time to See the Patients
• Inadequate Labs and X-ray Available
• Locked Into Problematic Specialists
• Patients Cannot Get in to See You
• Lose Control in the Hospital

59
Why Fears of Malpractice do not Improve Care

• Too Far Away in Time
• Too Uncertain
• Fight for Quality - Die Today
• Lose Your Job
• Get Hit With Restrictive Covenants
• Get Blackballed by Other Plans
• Get Reported to the BOME for Alleged Bad Care
• ERISA Preemption

60
Kill the Messenger Phase - 1990s

• Plans Will Not Tolerate Dissent
• Key Issues
• Avoid Notice of Problems
• Keep Other Staff in Line
• Keep Patients in the Dark
• Keep Regulators Ignorant
• Gag Rules
• Fireem
• Greshams Law

61
Post-Pegram Days

• Pegram hinted at plan liability for meddling in
  care
• Plans moved to global controls
• Limitations in the policies
• Incentives and holdbacks to force rationing on
  the physicians
• Generally are pushing down the payment for care
• Primary care income has been falling for a decade

62
Hospital Economics

• Old Days
• More Patients Meant More Money
• More Docs to Admit Patients
• Insurance Was So Generous It Cross-subsidized
  Indigent Care
• Now
• Hospital beds are being closed to save money
• DRGS- Insurance and Government Pay is Very
  Limited - No Cross-Subsidy
• Under-Insured or Over-Cared-For Patients Cost
  Money

63
Nursing Homes

• Mostly for-profit
• Driven by changes in effectiveness of medical
  care and demographics
• Hospitals kept patients for months in the old
  days
• As care improved, there was pressure move chronic
  care patients out

64
Nursing Homes and DRGs

• DRGs shortened hospital stays
• Acuity went up
• More pressure to move patients to nursing homes
• Relatively lax standard and regulations, compared
  to hospitals
• Lots of litigation

65
Specialty Hospitals

• Complex care is safer when regionalized
• Specialty hospitals can provide better care at
  lower prices
• Do not need to provide money losing services
• Do not take uninsured patients
• Shift the most valuable patients from community
  hospitals
• Dramatically increase unnecessary surgery

66
Bottom-Line

• Health care is an industry in transition
• Key Problems
• Access
• Cost
• Distributive justice
• Quality

67
(No Transcript)