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Health Law
UMKC School of Law
Marciarille, Ann Marie


Prof. Marciarille

Fall 2012

“The Cost Conundrum,” Atul Gawande:

o In the U.S., 1 out of 6 dollars earned spent on healthcare; in McAllen,TX Medicare spends roughly $15,000 per enrollee (in nearby El Paso, spent $7,500 per enrollee, though the demographics of El Paso are nearly the same as McAllen)

o McAllen, TX — heavy drinking rate 60% higher than national average, 38% obesity rate; dr. performed 8000 heart surgeries in the past 20 years (on patients who nearly all had diabetes and/or who were obese) — up to half could have been prevented by cholesterol-lowering drugs

o “Rich towns get the new school buildings, fire trucks, and roads, not to mention the better teachers and police officers and civil engineers. Poor towns don’t. But that rule doesn’t hold for health care.”

o Medicare ranks hospitals on 25 different categories, and on all but 2 of them, El Paso hospitals ranked better than McAllen (despite the cost differential)

o ONE of the reasons for increased costs, one doctor explains, is that younger, newer doctors instead of providing ways to prevent a problem from getting worse and giving the patient alternatives to surgery, they immediately jump to surgery (gall stone example) — by operating, the doctor makes more money (rather than simply prescribing a pain med and recommending diet change)

· Another example — the woman with chest pains. 15 years ago, if a woman came in with chest pain but no family history of heart disease, send her home and MAYBE recommend an EKG. NOW — order an EKG, stress test, cardiac cath

· “Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care.” (looked at UnitedHealthcare’s data)

· “In 2005 and 2006, patients in McAllen received 20% more abdominal ultrasounds, 30% more bone-density studies, 60% more stress tests with echocardiography, 200% more nerve-conduction studies to diagnose carpal-tunnel syndrome, and 550% more urine-flow studies to diagnose prostate troubles. They received 1/5 to 2/3 more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received 2-3 times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for 5 five times as many home-nurse visits.” The primary reason for McAllen’s extreme costs was overuse of medicine.

o Increased testing/surgery –> increased rate of complications so ARE people really healthier from the additional medicine? NO.

o People in high-cost areas like McAllen, TX are actually less likely to receive low-cost preventative measures.

o Money driven decisions in health care –> in low cost areas, the income for any given doctor is generally derived from the services he provides but in high-cost areas, many doctors may have a side job (including some who own other areas of the hospital or separate imaging centers); increases likelihood that a doctor will recommend a person to undergo an additional test, if it means that this other area of his life may profit.

o Mayo Clinic –> began pooling money so that each doctor is paid out of the Mayo Clinic budget and NOT based upon the care they give (takes away any possible financial incentives for additional care); also increased doctor time with each patient; doctors meet almost weekly to discuss patients and other goings on in the hospital

**What happened in 1980 that put us on the trajectory? Now the federal govt spends 18% of GDP on health

The “Iron Triangle of Health Care” –> Cost, Access and Quality

Medical Error (instead of using “liability”) –> see posted slideshow

Defining “Sickness”

o World Health Org defines “health” as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.” Not necessarily helpful if “disease” isn’t defined.

· “Health is a dynamic state of complete physical, mental, spiritual and social well-being and not merely the absence of disease and infirmity.” (failed 1998 Amendment)

o Boorse – disease is a biological malfunction, a deviation from the biological norm of natural function.

o Parsons – something more than a mere biological abnormality is needed; to be ill is to have a deviant characteristic for which the sick role is appropriate (i.e. the need for treatment or rest)

o “Health” definitions

· Wellness –> an active process of becoming aware of and making choices toward a more successful existence

§ Risk-taking behavior? What if it has a genetic component?

· Achieving maximum human potential

· Is one the opposite of the other?

§ Not really.

o Are health and sickness points on a continuum of human experience?

· There are several factors that go into deciding whether you’re “healthy” or “ill” –> you can be unhealthy and still not have a particular disease, or you could have a disease and not be considered “ill”; variances of “healthy”; as you age you AGE into disability

o What is “illness”?

· Manifestation of disease

· Socially constructed deviance

· A metaphor

· Whatever your insurance company says it is

· “Defining a condition as an illness to be aggressively treated, rather than as a natural condition of life to be accepted and tolerated, has significant economic effects.”

o Slideshow:

· A number of the topics discussed in Health Law are relevant to both the individual and the corporate sides of the ledger because health care delivery, organization, and finance are everywhere intertwined.

· Example: Medical Error

· Relevant to the individual patient who experiences the error (compensation, disability)

· Relevant to the individual provider/provider group that makes the error (malpractice defense, licensing concerns, contractual obligations to insurers)

· Relevant to any institutional structures that may have fostered the error (liability, licensing concerns, pay for performance considerations, never event non-payment concerns)

· Relevant to the payer (private or government)

· Relevant to the health care consuming public (pass through of compensation costs, licensing concerns, disclosure concerns)

What is Illness?

· A manifestation of disease? (Furrow, p.2)

· A socially constructed deviance? (Furrow, p.2)

· A metaphor? (Sontag, 1978)

· Whatever your insurance company says it is?

· “Defining a condition as an illness to be aggressively treated, rather than as a natural condition of life to be accepted and tolerated, has significant economic effects.” (Furrow, p.3)

Katskee v. Blue Cross/Blue Shield of Nebraska (Neb. 1994) p. 3

K was diagnosed as suffering from genetic condition known as breast-ovarian carcinoma syndrome, meaning that after tracing her family history of breast and ovarian cancer, K was at a really high risk of developing either one of these cancers. The doctors recommended surgery to remove her uterus, ovaries and fallopian tubes. Although BCBS initially said it would cover the surgery, Dr. Mason (chief medical officer for BCBS) told K that it wouldn’t cover the surgery, which she had anyway in Nov. 1990. K brought this action for breach of contract and the lower court granted BCBS’s motion for summary judgment. This court reversed, finding that her condition was considered an “bodily disorder” under the policy and it remanded for further proceedings.


BCBS denied coverage, arguing that K’s condition was not an “illness” and thus the surgery was not medically necessary.

The court looked at the language of the policy, finding that the terms “disease” and “disorder” were not ambiguous as written in the policy and that they encompass any abnormal condition of the body or its components of such a degree that in its natural progression would be expected to be problematic; a deviation from the healthy or normal state affecting the functions or tissues of the body.

The court next looks at whether K’s condition constitutes an illness –> BCBS argues that K’s condition was only a PREDISPOSITION to an illness and cannot constitute an actual illness. Dr. Mason made this determination despite his total lack of experience and knowledge in this field and without consulting outside research or a claim review committee.

Dr. Lynch (K’s diagnosing doctor) testified that while there is no physical test for determining the presence of the condition, he traced the occurrence of hereditary cancer in K’s family. Also, stated that women with the syndrome have at least a 50% chance of developing breast and/or ovarian cancer while unaffected women have only 1.4% risk.

§ K could have also made the claim that having the insurance company pay for the surgery NOW rather than have to pay for the cost of treatment once she actually develops cancer. (except, what if K doesn’t STAY with the same insurance provider after she has the surgery?)

Dr. Lynch and Roffman agreed that usually the standard of care for someone with this syndrome is to use surveillance methods, but that in K’s case where she had an inordinately high risk for ovarian cancer, the standard of care may require radical surgery. BCBS didn’t proffer any evidence disputing any of these statements.

While keeping in mind that not every predisposition to another illness constitutes an “illness” for purposes of insurance, the court (citing C.J. Cardozo) explained that when a condition is such that in its probable and natural progression it may be expected to be a source of mischief, it may reasonably be described as a disease or an illness.

Based upon the evidence, the Court finds that K suffered an illness as defined by the insurance policy and BCBS not entitled to JMOL.

Notes & Questions (p.9):

If K is ill for purposes of this instance, would she also be considered to have a pre-existing condition?

Under the Affordable Care Act –> children can’t be denied for pre-existing condition (in the next couple of years, adults will fall under this too). Now insurance companies can deny you or can make you pay way more.

Alcoholism a disease? Drug addiction a disease?

For purposes of the ADA, as long as you’re in treatment (or make a good faith effort to treat it), alcoholism IS a disease and you cannot be discriminated against based on the status. (doesn’t include drug addiction)


s determined by the Secretary.

Atul Gawande borrowed from the aviation industry when developing the check list –> there IS an importance in standardization (especially when these checklists are developed after disasters)

**Several research goals to improve these 10 indicia of quality.

**Several performance websites to make information widely available to the public re: providers and hospitals

**INSURANCE EXCHANGES –> to implement quality reporting, case management, disease management, to prevent hospital re-admissions through effective discharge planning and implement activities to improve patient safety and reduce medical errors through the appropriate use of best clinical practices, evidence based medicine and health information technology

PCORI –> “R” word is rationing

o Some people are concerned that there is someone other than a doctor making decisions NOT to give a certain procedure

Problem: Battling Standards I (p. 19-20)

How to encourage your doctors to use the drug therapy INSTEAD of the angioplasties?

o Incentivize such practice –> if it reduces in-hospital infections, re-admissions, etc. then the hospital itself should be getting additional funding (or some other incentive) from the government that the hospital in-turn could use to reward physicians who use this less-invasive approach. Not to mention, it is also less time they will have to spend doing procedures and gives them more time to speak with the patient and answer questions (which in turn results in presumably higher marks for the physician)

o Educate the cardiologists on this study –> if a doctor has done something this way for YEARS it is going to be difficult for them to just change overnight, especially when their way has been working. Circulate the study to the doctors and encourage cardiologists to partake in this less invasive approach.

This new approach will also require additional education for the hospital staffs so that they are aware of this OTHER approach, especially if they spend a lot of their time with the patient; they can answer questions while the doctor is busy with other patients.

o I am conflicted on the revenue aspect because angioplasties provide A LOT of revenue, however if there is need for re-admission (which the angioplasties seems likely to have a higher risk for an adverse event), it could end up HURTING the hospital in the long run even if they get this pay out at the beginning. I guess, here’s to hoping it all balances out in the end!

o One problem I have with putting in place just ONE approach to this problem, is that the demographics of this hospital system vary widely. While a stent for one person may be well and good and solves the problem quickly, it may not be as good of an idea for a more vulnerable patient to undergo such surgery. You also have to think about the cost of some of these drugs (that may or may not be covered by Medicare or other insurance plans) that will be used and largely paid for by the individual. Also, one’s environment is important because a younger person getting an angioplasty probably has several environmental factors that make him LIKELY to need an additional one in the future — is angioplasty or the drug therapy best for this particular person?

How does a health system CEO talk to cardiologists? VEEERRRRRRRY politely (they are the chief profit makers for the hospital)

o Appeal to them as people of science

o “inquiring minds” approach –> just ask the cardiologists HOW they do certain things and then

o Start off with the financial implications

o Talk to the cardiologists one on one BEFORE talking to them in the group — they might give a little more leeway in an individual setting than in the group and in an individual setting they cannot gang up on you

Is infertility a disease? –> American Society for Reproductive Medicine (ASRM) (2009): “Infertility is a disease, defined by the failure to achieve a successful pregnancy rate after 12 months or more of regular unprotected intercourse. Earlier evaluation and treatment may be justified based on medical history and physical findings and is warranted after six months for women over age 35 years.”