Hearings dissect Prop. 46 on medical malpractice

This article was originally published on CalWatchdog.com

California’s state and local governments could be hit with an increase of tens of millions to several hundred million dollars in annual health care costs if Proposition 46 passes on Nov. 4. That was the warning from California legislative analyst Ross Brown at a joint legislative committee informational hearing on the initiative on Monday.

The proposition also would raise costs for private health care providers, Brown said. But he did not estimate a dollar amount. Several providers warned the costs would be significant enough to force them to reduce medical services, particularly for the state’s poorest residents.

The main cost driver in the initiative is the raising of the $250,000 cap on noneconomic damages for medical malpractice to match inflation. The cap was implemented by the Medical Injury Compensation Reform Act in 1975. That means the cap would increase to about $1.1 million today, then rise even higher annually depending on future inflation.

Malpractice costs currently represent about 2 percent of total annual health care spending in California. A 440 percent increase in the damages cap would force companies with health care either to pay increased premiums to insurance companies or pay more out-of-pocket if they are self-insured.

The two other major provisions of Prop. 46 – requiring providers to check the state’s prescription drug database and mandating drug testing of physicians – could result in offsetting costs and savings, according to Brown. For example, there would be additional costs for drug testing, but it might result in fewer instances of medical malpractice.

Hearing

The first half of the three-hour hearing focused on emotional testimony from the proposition’s author, Bob Pack, and others whose family members have been killed by medical malpractice.

Pack said his two children were killed and his wife injured when they were hit by a driver under the influence of prescription narcotics, mainly Vicodin. The woman’s drugs were provided by six doctors, none of whom was aware other doctors were writing prescriptions for the same woman.

To prevent that kind of “doctor shopping” by drug addicts, Pack lobbied the state Legislature to create the Controlled Substance Utilization Review and Evaluation System database. But only about 30,000 doctors and pharmacists out of a total 200,000 in California are using it. Prop. 46 would require the remaining 170,000 to consult the database before prescribing or dispensing drugs for first-time users.

Gary Heller told the committee his wife Linda developed chronic neck pain after being rear-ended in an auto accident. A doctor prescribed a dangerous level of morphine sulfate, which led to her death after suffering for 32 days in the hospital.

The specialist subsequently was arrested for several DUIs, was in treatment programs and relapsed, Heller said.

“If Proposition 46 had been in, in my opinion, my wife’s doctor would have been caught before he negligently prescribed the drugs that caused her respiratory failure,” he said. “I believe the outcome was totally preventable. And that is something that I will have to live with for the rest of my life.”

Lethal meds

Tammy Smick said her 20-year-old son Alex was prescribed a lethal combination of medications in an Orange County hospital. Ironically, Alex had checked himself into the same hospital to safely detox off prescription medications he had become addicted to after a back injury.

“Alex was one of up to 440,000 Americans who are killed every year because of preventable medical error,” she said. “But to me Alex is not merely a statistic, he’s my son. I am not fighting for money. I am fighting for justice and accountability. And in memory of my beloved son, I am fighting for change so that no others suffer the same devastation.”

Michelle Monserratt-Ramos’s fiancée died after a surgical mistake resulted in infection. His doctor has been arrested for possession of crack cocaine, she said, but is still practicing medicine. She could not get a lawyer to take the case due to the low cap on non-economic damages.

“They told us, ‘You absolutely have a case, but because of the [cap] we are sorry, but it would not be a good business decision to take Lloyd’s case,’” she said. “Believe me, you don’t ever want to hear that [your loved one’s] life or their death is a bad business decision. All any victim or their family wants is answers and to be able to hold a negligent doctor accountable in order to save someone else’s life.”

Counties

The opposition to Prop. 46 was led by Farrah McDaid Ting, representing the California State Association of Counties. California’s 58 counties operate public hospitals and clinics that serve more than 3 million people annually, she said, providing a health care safety net for California’s poorest residents.

“Proposition 46 will increase costs for counties,” she said. “All of these services could be negatively affected if Proposition 46 became law. Especially for counties that self-insure, the increase in medical malpractice claims and costs would be devastating to them. It would come directly out of county general fund dollars.

“We’re also worried about the administrative nightmares that could happen under Proposition 46. We’re concerned about the potential for increased numbers of suits and the amount of staff time that those would require. We are working to continue providing critical health services, and we worry that Proposition 46 would reduce county resources at a time when they are needed the most.”

Ruth Haskins, a Sacramento OB-GYN, said the initiative will drive up health care costs, hurting the poor.

“Many of the patients that I treat come to me from the emergency room referrals and are on Medi-Cal,” she said. “They simply wouldn’t be able to afford the exorbitant increased health care costs that Proposition 46 would yield. I worry that that would mean that they wouldn’t get the necessary prenatal care to ensure safe, low-risk deliveries for healthy babies.

“If Prop. 46 were to pass, OB-GYNs like me, along with other high-risk specialists, would be forced to reduce our services or close their doors altogether. Proponents may say this measure is about safety. But the truth is Prop. 46 doesn’t do anything to improve safety or quality of health care in California. In fact, it would do just the opposite.”

Rising costs

Cathy Frey, CEO of the Central Valley Health Network, also warned that health centers and community clinics “may have to look at what services they can continue providing.”

Cesar Diaz, representing the State Building and Construction Trades Council, said his union’s 400,000 members and their families are already having to pay extra for the same level of health care. He’s concerned that Prop. 46 will force them to pay even more.

“We see Prop. 46 as being a venue for increased legal costs and basically attorneys having more access to such financing,” he said.

ACLU

American Civil Liberties Union representative Michael Risher said the ACLU is opposed to the physician drug testing provision in the measure.

“It’s an unwarranted invasion of the privacy that our California Constitution specifically protects,” he said. “It’s unlikely to make us any safer.

“And it’s particularly galling that this provision was apparently thrown in not because people cared about drug testing – I think there’s a recognition that’s something more properly addressed by this Legislature – but because it apparently did well in focus groups and was thrown in as a sweetener, despite the fact that California’s Constitution does have a single-subject rule for initiatives.”

The “single-subject rule” exists to ensure initiatives stay on topic and don’t become grab bags of different changes in the law. However, a study by the University of California found court enforcement of the rule is not rigorous.

Drug testing

Sen. Hannah-Beth Jackson, D-Santa Barbara, said she’s a big fan of the ACLU, but strongly disagreed with its opposition to physician drug testing.

“As someone who’s had more than my share of surgery, I want to make sure that my physician is not under the influence of drugs or alcohol while performing that surgery,” she said. “We require school bus drivers … to undergo some level of drug testing.

“As a supporter of ACLU I’m a tad surprised about the extent of your indignation about the notion of wanting to make sure that our doctors, particularly in hospitals where life and death decisions are made, are actually equipped mentally to perform those procedures.”

Risher responded, “It’s not that any of us wants to be operated on by a physician who’s under the influence. The data on random, suspicionless drug testing tend to show very little deterrent effect and very little enforcement effect with anything aside from marijuana, because that stays in the system longer than drugs like alcohol, cocaine and heroin.”

Jackson also argued it makes sense to increase the malpractice damages cap as a deterrent punishment for what she called the 5 percent of physicians who are guilty of 95 percent of medical malpractice.

But Assemblyman Richard Pan, D-Sacramento, who is also a pediatrician at a Sacramento clinic, disagreed.

“I do take issue with the statement that the only thing that will get doctors and hospitals to pay attention to quality is financial,” he said. “The research I’ve seen shows very little correlation between medical liability suits and quality improvement. In fact, most of the patient safety and quality literature talks about systems change, transforming the health care delivery.”

Frey agreed, saying that numerous laws and oversight regulators already provide safeguards for patients.

“Community clinics and health centers, particularly those that are federally funded, are under an enormous amount of scrutiny,” she said. “They report to the federal government, they report to the state of California. They report, report, report. And quality is our number one issue.”

Field poll conducted in the second half of August showed support for Prop. 46 had dropped to just 34 percent (with 37 percent opposed and 29 percent undecided) from the 58 percent support (30 percent opposed, 12 percent undecided) it had received in late June/early July. The drop in support followed an increased campaign of TV ads by the anti-46 side.

This article was originally published on CalWatchdog.com

Quarter-million applicants still waiting for Medi-Cal

Originally published on CalWatchdog.com:

A quarter-million Medi-Cal applicants have been waiting more than 45 days, and in some cases nearly a year, either to receive coverage or find out why their application has been denied.

That’s an improvement from the 900,000 applicants who were languishing in early summer without coverage or word from Medi-Cal. But it will take another six weeks for most of the remaining 250,000 residents to receive or be denied coverage, according to Department of Health Care Services Director Toby Douglas.

At a Sept. 23 Assembly Health Committeeoversight hearing, Douglas touted the Medi-Cal expansion as a “tremendous success,” but cautioned the enrollment backlog may never be totally cleared.

Legislators expressed frustration that their constituents are being dropped from coverage without notice, getting the run-around when they try to find out what’s happening with their applications or never being informed about the potential for Medi-Cal coverage in the first place.

“It’s taking months – months – to check on the status of cases,” said Assemblyman Jim Patterson, R-Fresno. “We are completely unable to help constituents in a timely manner. And it’s happening over and over again.”

Patterson said applicants seeking information are getting caught in what he called a referral loop. “They are told the state is just a billing agency and they need to contact the county,” he said. “The county says, ‘It’s not our job, you have to go talk to the state.’ This is a loop that’s going on and on. We get the concerns that they are bounced from person to person, and everyone saying they can’t address the issue and they need to call somebody else.”

Covered California

Two million patients have been added to the Medi-Cal rolls the past year through the new Covered California exchange, part of the federal Affordable Care Act, or Obamacare. Medi-Cal now covers 11 million Californians – about 29 percent of state residents. The Medi-Cal budget is more than $90 billion, an 80 percent increase from just four years ago, according to committee ChairmanAssemblyman Richard Pan, D-Sacramento.

The application-processing delays have been due to the unexpectedly large increase in applications, technical snafus and administrative decisions to delay coverage until residency and income are verified, according to Cathy Senderling, deputy executive director of the County Welfare Directors Association.

“We are in a situation where it’s been incredibly exciting to have the Affordable Care Act after so much planning,” she said. “But it’s also been very frustrating for our workers and we know for our customers as well.”

Most of the 250,000 cases remaining in the backlog are in some stage of being worked on, she said. “Many of them actually need to be denied. And the capacity of the system has not yet been brought up to be able to do that because of the way it was programmed and the confusion that would be created for our customers.”

Patterson argued that these kinds of snafus are inherent in “a state-run and sort of a command-and-control approach to health care.”

“We asked for this,” he said. “By doing the things we have done, by taking this Affordable Care Act, putting a California overlay on it and the 2 million additional, all of the things that we have done, we should have understood that this would be the result, that we were going to end up with significant bureaucratic problems, that we were inviting these very kinds of problems.

“So I think to suggest that we are the victims of success doesn’t sit well with the people that are trying to be the examples of the success. And so the backlogs, the payment, the notifications, the dropping of individuals, all of this is really creating a serious matter of an urgent level. And I hope that you can take that back to your organization and the governor and others in charge.”

Backlog

Elizabeth Landsberg, director of legislative advocacy for the Western Center on Law and Poverty, pointed out that many of the hundreds of thousands of people stuck in the Medi-Cal backlog have suffered as a result.

“Some people are going without health care and having terrible health consequences,” she said. “Some can’t get care tests because they can’t pay out of pocket for them. And some are going into medical debt and facing collections because of it. This is a story about real people, our neighbors, our friends, our fellow Californians.

“It’s a story about a woman with severe pain from diverticulitis who has been using the emergency room when her pain is severe. The doctor said she needs to get non-urgent treatment of the condition to prevent the severe pain and the trips to the emergency room. We have patients going to the emergency room, but they cannot get on Medi-Cal and get the care that they need. Emergency rooms don’t provide that.

“This is story of a woman who applied through the Covered California portal in December, was told she should be eligible for Medi-Cal. She has medical bills from May 2014 and she has a hospital threatening her with collection actions against her. This is the story of a man who also applied nine months ago and has to pay out of pocket for insulin pump supplies and was hospitalized for diabetes complications affecting his heart.”

Landsberg said the state is not informing applicants of “their right to file for a fair hearing if they don’t have a timely eligibility determination. State law is clear, we have to make these decisions within 45 days.”

Her organization, along with several other advocacy groups, filed a lawsuit in Alameda County Superior Court on Sept. 17, Rivera vs. Toby Douglas, seeking to force the state to comply with its own law.

“Consumers simply don’t know that something’s going wrong if they don’t get an answer,” said Landsberg. “They get one notice from Medi-Cal saying, ‘We think you’re eligible for Medi-Cal, you’ll hear if you are.’ Many people still are familiar with the old rules where childless couples weren’t eligible for Medi-Cal. They don’t know that something’s wrong.”

Access

Assemblyman Roger Hernandez, D-West Covina, is also concerned that his constituents are being left in the dark.

“People are asking how we get folks connected with access to health care,” he said. “I’m concerned representing a community … where we see a high level of immigrant, working class, Latino and minority populations that are not having the same access to registration and information about how to sign up as other non-Latino groups are. That’s a problem in terms of outreach.”

Douglas assured the committee that improvements are being made. “Everyone is working around the clock,” he said. “What I want to report to you, and where we will get soon, is that every individual that applies and is providing all the information necessary will get enrolled in the program in the appropriate timeframes. And that’s what we need to get to. And we’re not there yet.

“The system continues to get a lot better. This continues to be a work in progress. We were quick in implementing health care reform. And it’s going to take next year still to work through some of these final system stages.”

He cautioned, though, that as his department works to get things right with the first year of Medi-Cal applications through the Covered California exchange, those applications will soon be coming up for renewal, potentially creating new challenges.

Cronyism and Mitt Romney’s Massachusetts Healthcare Legacy

Cronyism Is Endemic in Contemporary Politics

“Cronyism.” That word is likely to be thrown around a great deal over the coming months in the Republican primary battle. Cronyism is bad when, for example, it’s done to lure companies to locate in a particular state, but it’s worse when used to increase government intrusion into people’s lives. That’s what happened when former Massachusetts governor Mitt Romney pressed to get support for his health care plan, the widely acknowledged model for Obamacare.

According to a 2008 report by The Heritage Foundation, at the time of Romneycare’s passage the two largest safety-net hospital systems in Massachusetts—Boston Medical Center (BMC) and Cambridge Health Alliance (CHA)—had “become dependent on direct subsidies” and were concerned that, even accounting for the significant rate increases allowed under the new law, a shift to Medicaid managed care would hurt their bottom line.

To get the law passed, Romney and his allies agreed to a host of annual payments—including “MCO supplemental payments,” “disproportionate share hospital payments,” and special “hospital supplemental payments,” targeted just for the two systems. At the last minute, more than $540 million in so-called “Section 122 payments” were inserted into the law, designed to supply BMC and CHA with an even bigger financial cushion over the next three years.

In practice, these funds—which included federal, state, and local taxpayer money—served as direct subsidies for the two providers’ expansion. According to MIT Professor Jonathan Gruber, “The federal government was essentially supplementing the expansion of these inner city hospitals.” When some lawmakers suggested cutting back on the amounts, provider officials complained about all the great programs they’d have to shut down—such as BMC’s “food pantry.”

As it turned out, the cost of these subsidies made the difference for Romneycare’s financial stability, at least in the short term. As the system faced higher than expected enrollment, the Section 122 payments forced Massachusetts to prioritize more money for the required earmarks to BMC and CHA—money that might otherwise have been used to cover costs of patient care. According to The Heritage Foundation, in 2008 “Section 122 payments come to $180 million, while Commonwealth Care overruns are $153 million. … In effect, the state was subsidizing institutions, not patients.”

In the long run, the institutional subsidies and ever-increasing costs of coverage—Massachusetts’ premium costs have skyrocketed since Romneycare’s passage and are now the highest in the nation—are taking their toll on the fiscal sustainability of Romney’s plan. The latest estimates indicate that over the next decade the law will cost $2 billion more than Romney and his allies predicted.

Such corporate cronyism abounds in government today. When states are competing for new jobs from prospective employers, governors of all political stripes use special favors to try to woo business to their state. Nearly all governors have slush funds of various sizes to deploy for such occasions, consisting of tax abatements, credits, and other incentives.

These favors don’t deliver public benefits. After all, if Texas’s roughly $200 million slush fund were the reason the state has produced four of five net new private-sector jobs in the United States in the past five years—with 88 percent within the past two years coming from the private sector—every state would have similar success in job creation.

There’s a right way and a wrong way to try to attract jobs. The right way is by ensuring a transparent legal and regulatory environment, with low taxes and a solid educational system, and creating an educated populace well prepared to fill jobs for generations. The wrong way is by picking winners and losers directly in the halls of government—preventing competition, rewarding rent-seeking behavior, and enshrining into law direct transfers from the taxpayers to corporations.

This is a lesson the federal government could stand to learn, along with state and local governments. Creating a friendly climate for business and job creation takes a lot more than writing a check with somebody else’s money.

 

(Benjamin Domenech ([email protected]) is a research fellow at The Heartland Institute and managing editor of Health Care News.)