Watchdog for Quality and Costs : New Power Rises Over Health Field
Within the last year, a little-known organization called California Medical Review Inc. has quietly applied broad federal powers to influence how hospitals handle their Medicare beneficiaries, including--in some cases--whether older patients are allowed to check in overnight or even be operated on.
While little recognized outside the health-care field, CMRI--as it is referred to within the medical community--has a far-reaching mandate: To watch over the quality of Medicare, the federal health insurance program for people over 65, while also determining whether services given a patient are necessary and reasonable.
In essence, it has become both judge and enforcer of key aspects of medical practice under the giant federal program that provides some 40% of hospital revenue in the state.
In just over a year, the watchdog group has blocked more than $35 million in federal reimbursement to hospitals for admissions it judged either unnecessary or too long and gained authority to seek monetary sanctions against hospitals and doctors for substandard care.
In addition, it has pressured hospitals to send their elderly patients home after treatment for certain conditions rather than admitting them to hospitals overnight.
And to the unease of established medical interests, the nonprofit corporation seeks an even broader role to review the “appropriateness” of medical care, one that potentially would affect patients of all ages.
Thus, it has begun offering consulting services to private employers and hopes that its limited role as a reviewer of MediCal, a government health-care program for the poor, may be extended.
As a result, members of the medical community are keeping a watchful eye on the organization.
“They are potentially a very powerful group, and that’s why I think we have to watch them warily and make sure they don’t misuse that power,” said Tom Fohrde, a Berkeley physician who is chairman of a California Medical Assn. panel that keeps tabs on CMRI.
CMRI officials, meanwhile, say the organization already has had a positive impact: “If the patient doesn’t really need to be in the hospital, there’s not much reason for him to be,” said the board’s president, William H. Moncrief Jr., a thoracic surgeon and retired major general who was decorated for service with the Army in Vietnam. “ . . . I think we’ve had a tremendous impact on practice patterns.”
CMRI just emerged as a major player in the state’s multi-billion-dollar hospital industry in October, 1984, after winning a $27-million federal contract to become California’s “peer review organization” for Medicare.
Before that, such authority was spread out among 28 organizations, under a system sometimes criticized for being too lenient in cases of questionable care.
When federal officials decided to scrap the old review system, a majority of the 28 review groups joined together to form CMRI in San Francisco.
Since bidding successfully for the two-year federal contract, CMRI has set up 15 offices throughout the state and set loose 170 trained reviewers, mostly nurses, to check on hospital records.
Calls on Consultants
In addition, CMRI calls on the services of paid physician-consultants when hospitals challenge its findings. Officials estimate that CMRI ultimately will review some 40% of the state’s 900,000 to 950,000 admissions for Medicare this year.
The organization counts 22,000 doctors whom it inherited from the previous review groups as its membership, a figure that is roughly one-third of the state’s physicians. But power is concentrated in a board of 18 doctors, two hospital administrators and two Medicare beneficiaries. (Moncrief receives $50 an hour and expenses for his 15-to-18-hour-a-week duties as president.)
In its relatively brief existence, CMRI already has had a significant impact on the way hospitals do business:
- With the implied threat of blocking federal payments, CMRI has accelerated a trend in hospitals of treating Medicare patients without admitting them overnight for a handful of prescribed conditions.
CMRI officials say that the $35 million being withheld from hospitals includes unnecessary admissions related to congestive heart failure, pneumonia, diabetes, back problems and a variety of other ailments.
Many Doctors Agree
Many doctors agree that the practice of steering patients toward their own beds rather than those of the hospital often can be done safely, while yielding cost savings.
Also, CMRI allows exceptions if doctors get advance permission. Nonetheless, some have questioned whether blocking reimbursement for admissions based on a subsequent review of records is fair in light of the individual nature of each hospital case.
- For one type of problem, cataracts, CMRI pressure appears to have nearly eliminated the practice of admitting elderly patients to the hospital.
Before the federal watchdog gained its authority, California hospitals admitted some 2,000 cataract patients each month. By April, 1985, that number had plummeted to 180 admissions, the remaining patients treated on a “come and go” basis, according to CMRI.
- Under authority granted earlier this year by the federal government, CMRI is recommending that officials financially penalize hospitals and doctors for several cases of care deemed substandard.
Action has begun on another 37 sanctions and officials predict the number may reach 100 next year. Nonetheless, said CMRI’s Assistant Medical Director John T. Kelly: “It’s only a small number of physicians in a small number of hospitals that we have identified as having significant quality problems.”
- CMRI is exercising some authority over medical decisions that previously belonged to doctors.
For example, in an attempt to prevent unnecessary surgery, the organization now requires doctors to call an 800 telephone number to get CMRI’s permission to perform certain elective procedures, such as coronary artery bypass operations, gallbladder removals and hip replacements. Advance permission is not required for emergencies. MediCal and some private insurance programs have previously required similar advance approval, but the procedure is a new one for Medicare, according to CMRI.
Majority Approved
In practice, the vast majority of requests are approved, possibly because physicians are learning not to request unnecessary procedures, CMRI officials said.
Moncrief acknowledged in an interview that not all doctors are enthusiastic about working with CMRI and telling their peers they’re doing something wrong. “Nobody wants to say no.”
But he contended that CMRI’s power of the purse was prompting greater efficiency in the health-care system. “I would think that next year we might see a smaller number of dollars denied because the hospitals are getting smarter, and they’re forcing the doctors to practice appropriate medicine.”
Many hospital officials apparently believe that CMRI is doing a good job in carrying out its mandate, although various questions and concerns remain.
A recent survey by the California Hospital Assn. found that 78% of hospitals considered their experience with CMRI to be satisfactory or very positive, although communication and costs of photocopying and postage--sometimes $50 for a single hospital case--caused concern.
C. Duane Dauner, president of the hospital association, said that CMRI had gone through “normal growing pains” in setting up its bureaucracy and credited it with a good job in responding to its federal mandate.
But he complained that hospitals were unfairly penalized when federal reimbursement was denied, and questioned whether its reviewers relied too heavily on impersonal formulas when evaluating the appropriateness of a hospitalization.
‘Medicare Won’t Pay’
“Doctors can still admit the patient, but the difficulty for us as hospitals is that Medicare won’t pay the hospital anything,” Dauner said. “Therefore we end up between a rock and a hard spot because we provide the care that was ordered by the physician and we receive no payment.”
However, according to CMRI, if a bill is disallowed, the patient is held responsible for little or none of the costs.
Dauner said that CMRI’s system of relying on formal criteria for evaluating whether a patient should have been hospitalized, after the fact, comes close to “cookbook medicine,” adding: “When you’re dealing down at the bedside it’s not as easy as looking at 11,000 cases in a book.”
One of the fundamental questions about CMRI is whether its mission is more to promote quality of care or savings in cost. According to its own press release, CMRI’s role is to review the “quality and cost” of health care for Medicare beneficiaries.
Jeffrey S. Kirschner, a vice president of American Medical International, which owns 21 hospitals in California, said he had not observed a concerted effort by CMRI “to address the issues of the quality of health care in our facilities.”
Despite skepticism in the hospital community, CMRI officials are publicly stressing their role as guardians of quality, particularly in light of concerns raised about the effect a new, tighter Medicare reimbursement system is having on hospital care of the elderly.
Hopes for Quality Care
“If we can ensure quality of care to the Medicare beneficiary, that’s our goal,” Moncrief said. “And if a spin-off is saving money, well great.”
CMRI officials would like to extend their vision of appropriate medicine to other areas, including post-hospital stays in nursing homes and MediCal.
(CMRI already has a $1.5-million state contract to review care under MediCal in six Central California counties and 38 communities in Los Angeles.)
CMRI also has begun offering its services to private employers interested in monitoring their employees’ health care costs and the level of care they receive.
And in what would be a significant expansion of authority, federal officials are debating whether CMRI and similar organizations elsewhere should withhold doctors’ payments for unnecessary treatment under Medicare.
Currently, CMRI’s power to deny such reimbursement is limited to charges by hospitals.
“I think it’s about time we put some heat on the doctors,” Moncrief said. “Up to this point the hospitals have been taking the financial heat.”
Fears Over Expanding Role
The possibility of such a growing role leads some to wonder whether CMRI could evolve into an excessively powerful arm of the federal government, dictating medical practice throughout the health-care system.
“Our concern is that in any system there have to be differences of opinion,” said Stephen E. Dixon, a vice president with National Medical Enterprises, which owns or manages 33 hospitals in California. “A single, monolithic system would provide us with what everybody would worry about--pure, cookbook medicine.”
Moncrief responds that as long as doctors hold the watchdog’s leash, CMRI will not seek an undue concentration of power.
“As long as practicing physicians, who should be responsive to the physician communities in which they practice, are controlling the organization, then I don’t see any problem,” he said.
