Mary Ellen Schneider

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment.

Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again. But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment.

Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again. But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment.

Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again. But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said.

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment—operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician practicing in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (FAMILY PRACTICE NEWS, Nov. 1, 2003, p. 1). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” he said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee—$40 for an average office visit. Patients who have insurance can still submit claims to be reimbursed by their insurance company.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on a bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she remarked.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance is affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and a barrier to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), who works with Dr. Macumber at the university.

Dr. Macumber, who holds a clinical faculty appointment in the family medicine department at UIC, has spoken to students and residents about his practice setup—though he is careful not to recommend it.

So far none of the residents has expressed an interest in practicing without insurance, Dr. Tranmer said, but it's good for them to hear about a practice that is doing things differently, including how Dr. Macumber runs his office with fewer employees and charges lower rates.

Dr. Mark Macumber, shown here with his wife, says he plans to get liability insurance when it becomes affordable. Courtesy Dr. Mark Macumber

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment—operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician practicing in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (FAMILY PRACTICE NEWS, Nov. 1, 2003, p. 1). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” he said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee—$40 for an average office visit. Patients who have insurance can still submit claims to be reimbursed by their insurance company.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on a bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she remarked.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance is affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and a barrier to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), who works with Dr. Macumber at the university.

Dr. Macumber, who holds a clinical faculty appointment in the family medicine department at UIC, has spoken to students and residents about his practice setup—though he is careful not to recommend it.

So far none of the residents has expressed an interest in practicing without insurance, Dr. Tranmer said, but it's good for them to hear about a practice that is doing things differently, including how Dr. Macumber runs his office with fewer employees and charges lower rates.

Dr. Mark Macumber, shown here with his wife, says he plans to get liability insurance when it becomes affordable. Courtesy Dr. Mark Macumber

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment—operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician practicing in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (FAMILY PRACTICE NEWS, Nov. 1, 2003, p. 1). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” he said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee—$40 for an average office visit. Patients who have insurance can still submit claims to be reimbursed by their insurance company.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on a bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she remarked.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance is affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and a barrier to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), who works with Dr. Macumber at the university.

Dr. Macumber, who holds a clinical faculty appointment in the family medicine department at UIC, has spoken to students and residents about his practice setup—though he is careful not to recommend it.

So far none of the residents has expressed an interest in practicing without insurance, Dr. Tranmer said, but it's good for them to hear about a practice that is doing things differently, including how Dr. Macumber runs his office with fewer employees and charges lower rates.

Dr. Mark Macumber, shown here with his wife, says he plans to get liability insurance when it becomes affordable. Courtesy Dr. Mark Macumber

ALEXANDRIA, VA. – In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted her claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. “The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

ALEXANDRIA, VA. – In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted her claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. “The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

ALEXANDRIA, VA. – In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted her claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. “The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

WASHINGTON – The Medicare Payment Advisory Commission is considering redistributing 1%-2% of Medicare physician payments to physicians who demonstrate quality based on certain performance measures.

But what measures to use, how to obtain the quality information, and whether to base payments on performance by individual physicians or group practices is still up in the air. Linking an even greater portion of physician pay to quality might be necessary to make the plan viable, commission member Arnold Milstein, M.D., said at a recent commission meeting.

Private-sector experiences indicate that in order for physicians to put a high priority on quality measures, payments need to be more than 10%, Dr. Milstein said, compared with the current 5%-10% on table from insurers.

“I also agree that we should put more and more of the payment at risk,” said Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System.

Over 3-5 years, Medicare should increase the amount of the payment that is at risk, he said.

“We've now seen 30 years of evidence that the payment system drives behavior more powerfully than almost everything else. So if you want quality to be a bigger part of the agenda, as we are suggesting it should be, then more and more of the payment system in fact has to be tied to quality,” Mr. Muller said.

But taking 1%-2% of Medicare physician payment and redistributing it based on quality may have a much bigger impact than larger payments from private insurers because of the larger average share of Medicare patients in many physician practices, said Glenn Hackbarth, MedPAC chairman and an independent consultant from Bend, Ore.

“The 1%-2% is a starting point,” Mr. Hackbarth said, “not necessarily an end point.” It would be better to start out at a lower level of payments as Medicare officials figure out the best measures to use, but keep the door open to increasing the amount of payments linked to quality over time, he said.

But Mary Frank, M.D., president of the American Academy of Family Physicians, cautioned that to make pay for performance work, Medicare officials can't just redistribute the payments. Additional funding will be needed to provide real financial incentives, but over time, the system will gain because improvements in quality and efficiency will decrease costs, she said in an interview with this newspaper.

Alan R. Nelson, M.D., a MedPAC member and an internist, cautioned that the commission members should be careful about pay for performance.

“We have to be aware, as we proceed with this, of unintended consequences that could end up in worse patient care, rather than better patient care,” Dr. Nelson said.

Although that's not a factor in the majority of situations, unintended consequences could occur, he said. For example, linking quality payments in the area of avoidable hospitalizations could create a disincentive. It can be difficult for physicians to decide how far to go in managing a patient's care successfully at home or if the patient needs to go into the hospital, Dr. Nelson said, but if there is a financial incentive to keep patients at home, it could create a greater risk for patients.

Pay for performance also leaves the door open to “cherry picking” of patients, Dr. Nelson said. For example, a physician may choose not to provide care to a patient who smokes, because that patient would hurt the physician's quality numbers.

The commission should also exercise caution in how it chooses to collect data, Dr. Nelson said. If Medicare is going to collect quality data using methods that impose an additional administrative burden on physicians, that time should be reimbursed. Physicians want to do a good job, he said, but they won't embrace unfunded mandates.

WASHINGTON – The Medicare Payment Advisory Commission is considering redistributing 1%-2% of Medicare physician payments to physicians who demonstrate quality based on certain performance measures.

But what measures to use, how to obtain the quality information, and whether to base payments on performance by individual physicians or group practices is still up in the air. Linking an even greater portion of physician pay to quality might be necessary to make the plan viable, commission member Arnold Milstein, M.D., said at a recent commission meeting.

Private-sector experiences indicate that in order for physicians to put a high priority on quality measures, payments need to be more than 10%, Dr. Milstein said, compared with the current 5%-10% on table from insurers.

“I also agree that we should put more and more of the payment at risk,” said Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System.

Over 3-5 years, Medicare should increase the amount of the payment that is at risk, he said.

“We've now seen 30 years of evidence that the payment system drives behavior more powerfully than almost everything else. So if you want quality to be a bigger part of the agenda, as we are suggesting it should be, then more and more of the payment system in fact has to be tied to quality,” Mr. Muller said.

But taking 1%-2% of Medicare physician payment and redistributing it based on quality may have a much bigger impact than larger payments from private insurers because of the larger average share of Medicare patients in many physician practices, said Glenn Hackbarth, MedPAC chairman and an independent consultant from Bend, Ore.

“The 1%-2% is a starting point,” Mr. Hackbarth said, “not necessarily an end point.” It would be better to start out at a lower level of payments as Medicare officials figure out the best measures to use, but keep the door open to increasing the amount of payments linked to quality over time, he said.

But Mary Frank, M.D., president of the American Academy of Family Physicians, cautioned that to make pay for performance work, Medicare officials can't just redistribute the payments. Additional funding will be needed to provide real financial incentives, but over time, the system will gain because improvements in quality and efficiency will decrease costs, she said in an interview with this newspaper.

Alan R. Nelson, M.D., a MedPAC member and an internist, cautioned that the commission members should be careful about pay for performance.

“We have to be aware, as we proceed with this, of unintended consequences that could end up in worse patient care, rather than better patient care,” Dr. Nelson said.

Although that's not a factor in the majority of situations, unintended consequences could occur, he said. For example, linking quality payments in the area of avoidable hospitalizations could create a disincentive. It can be difficult for physicians to decide how far to go in managing a patient's care successfully at home or if the patient needs to go into the hospital, Dr. Nelson said, but if there is a financial incentive to keep patients at home, it could create a greater risk for patients.

Pay for performance also leaves the door open to “cherry picking” of patients, Dr. Nelson said. For example, a physician may choose not to provide care to a patient who smokes, because that patient would hurt the physician's quality numbers.

The commission should also exercise caution in how it chooses to collect data, Dr. Nelson said. If Medicare is going to collect quality data using methods that impose an additional administrative burden on physicians, that time should be reimbursed. Physicians want to do a good job, he said, but they won't embrace unfunded mandates.

WASHINGTON – The Medicare Payment Advisory Commission is considering redistributing 1%-2% of Medicare physician payments to physicians who demonstrate quality based on certain performance measures.

But what measures to use, how to obtain the quality information, and whether to base payments on performance by individual physicians or group practices is still up in the air. Linking an even greater portion of physician pay to quality might be necessary to make the plan viable, commission member Arnold Milstein, M.D., said at a recent commission meeting.

Private-sector experiences indicate that in order for physicians to put a high priority on quality measures, payments need to be more than 10%, Dr. Milstein said, compared with the current 5%-10% on table from insurers.

“I also agree that we should put more and more of the payment at risk,” said Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System.

Over 3-5 years, Medicare should increase the amount of the payment that is at risk, he said.

“We've now seen 30 years of evidence that the payment system drives behavior more powerfully than almost everything else. So if you want quality to be a bigger part of the agenda, as we are suggesting it should be, then more and more of the payment system in fact has to be tied to quality,” Mr. Muller said.

But taking 1%-2% of Medicare physician payment and redistributing it based on quality may have a much bigger impact than larger payments from private insurers because of the larger average share of Medicare patients in many physician practices, said Glenn Hackbarth, MedPAC chairman and an independent consultant from Bend, Ore.

“The 1%-2% is a starting point,” Mr. Hackbarth said, “not necessarily an end point.” It would be better to start out at a lower level of payments as Medicare officials figure out the best measures to use, but keep the door open to increasing the amount of payments linked to quality over time, he said.

But Mary Frank, M.D., president of the American Academy of Family Physicians, cautioned that to make pay for performance work, Medicare officials can't just redistribute the payments. Additional funding will be needed to provide real financial incentives, but over time, the system will gain because improvements in quality and efficiency will decrease costs, she said in an interview with this newspaper.

Alan R. Nelson, M.D., a MedPAC member and an internist, cautioned that the commission members should be careful about pay for performance.

“We have to be aware, as we proceed with this, of unintended consequences that could end up in worse patient care, rather than better patient care,” Dr. Nelson said.

Although that's not a factor in the majority of situations, unintended consequences could occur, he said. For example, linking quality payments in the area of avoidable hospitalizations could create a disincentive. It can be difficult for physicians to decide how far to go in managing a patient's care successfully at home or if the patient needs to go into the hospital, Dr. Nelson said, but if there is a financial incentive to keep patients at home, it could create a greater risk for patients.

Pay for performance also leaves the door open to “cherry picking” of patients, Dr. Nelson said. For example, a physician may choose not to provide care to a patient who smokes, because that patient would hurt the physician's quality numbers.

The commission should also exercise caution in how it chooses to collect data, Dr. Nelson said. If Medicare is going to collect quality data using methods that impose an additional administrative burden on physicians, that time should be reimbursed. Physicians want to do a good job, he said, but they won't embrace unfunded mandates.

ALEXANDRIA, VA. – Traditional tort reform measures like damage caps won't address some of the fundamental problems with the medical liability system, experts said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

To deal with the current malpractice situation, the medical community needs to address the reasons why people sue–injuries, unmet expenses, and anger, said Lucian L. Leape, M.D., of the department of health policy and management at the Harvard School of Public Health, Boston.

“The main reason most people sue is because they are angry at the physician,” Dr. Leape said.

But the current system and the most commonly proposed reforms, such as damage caps, don't address the need to increase disclosure of errors to patients or incentivize physicians to offer apologies, he said.

In the current tort system, filing a lawsuit is often the only way that patients feel they can get information about what happened to them or impose a penalty on the physician, said Michelle Mello, Ph.D., also of the department of health policy and management at the Harvard School of Public Health. But this process often fails to secure an admission of responsibility or an apology, she said.

Traditional reforms such as caps would undercompensate seriously injured patients and increase administrative costs, Dr. Mello said. But they would not help deter medical malpractice, she said.

Damage caps also fail to address the poor correlation between medical injury and malpractice claims, she said. Instead of focusing on caps, the medical community needs to consider an administrative compensation system to replace torts.

The malpractice system is “blocking efforts at patient safety,” said Troyen A. Brennan, M.D., professor of medicine at Harvard Medical School, Boston, and professor of law and public health at the Harvard School of Public Health.

A new system should be established to separate compensation for injuries from deterrence, he said. In order to do that, liability for negligence has to be eliminated, and reporting has to be made based on patient injury.

“You have to enable open and honest reporting,” Dr. Brennan said.

And physicians have to realize that reporting patient injury is part of their professional responsibility, he said.

Currently, some physicians do not disclose errors or injuries. It's a rational economic response to their rising premiums and fear of being sued, he said, but it's not an ethical response.

ALEXANDRIA, VA. – Traditional tort reform measures like damage caps won't address some of the fundamental problems with the medical liability system, experts said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

To deal with the current malpractice situation, the medical community needs to address the reasons why people sue–injuries, unmet expenses, and anger, said Lucian L. Leape, M.D., of the department of health policy and management at the Harvard School of Public Health, Boston.

“The main reason most people sue is because they are angry at the physician,” Dr. Leape said.

But the current system and the most commonly proposed reforms, such as damage caps, don't address the need to increase disclosure of errors to patients or incentivize physicians to offer apologies, he said.

In the current tort system, filing a lawsuit is often the only way that patients feel they can get information about what happened to them or impose a penalty on the physician, said Michelle Mello, Ph.D., also of the department of health policy and management at the Harvard School of Public Health. But this process often fails to secure an admission of responsibility or an apology, she said.

Traditional reforms such as caps would undercompensate seriously injured patients and increase administrative costs, Dr. Mello said. But they would not help deter medical malpractice, she said.

Damage caps also fail to address the poor correlation between medical injury and malpractice claims, she said. Instead of focusing on caps, the medical community needs to consider an administrative compensation system to replace torts.

The malpractice system is “blocking efforts at patient safety,” said Troyen A. Brennan, M.D., professor of medicine at Harvard Medical School, Boston, and professor of law and public health at the Harvard School of Public Health.

A new system should be established to separate compensation for injuries from deterrence, he said. In order to do that, liability for negligence has to be eliminated, and reporting has to be made based on patient injury.

“You have to enable open and honest reporting,” Dr. Brennan said.

And physicians have to realize that reporting patient injury is part of their professional responsibility, he said.

Currently, some physicians do not disclose errors or injuries. It's a rational economic response to their rising premiums and fear of being sued, he said, but it's not an ethical response.

ALEXANDRIA, VA. – Traditional tort reform measures like damage caps won't address some of the fundamental problems with the medical liability system, experts said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

To deal with the current malpractice situation, the medical community needs to address the reasons why people sue–injuries, unmet expenses, and anger, said Lucian L. Leape, M.D., of the department of health policy and management at the Harvard School of Public Health, Boston.

“The main reason most people sue is because they are angry at the physician,” Dr. Leape said.

But the current system and the most commonly proposed reforms, such as damage caps, don't address the need to increase disclosure of errors to patients or incentivize physicians to offer apologies, he said.

In the current tort system, filing a lawsuit is often the only way that patients feel they can get information about what happened to them or impose a penalty on the physician, said Michelle Mello, Ph.D., also of the department of health policy and management at the Harvard School of Public Health. But this process often fails to secure an admission of responsibility or an apology, she said.

Traditional reforms such as caps would undercompensate seriously injured patients and increase administrative costs, Dr. Mello said. But they would not help deter medical malpractice, she said.

Damage caps also fail to address the poor correlation between medical injury and malpractice claims, she said. Instead of focusing on caps, the medical community needs to consider an administrative compensation system to replace torts.

The malpractice system is “blocking efforts at patient safety,” said Troyen A. Brennan, M.D., professor of medicine at Harvard Medical School, Boston, and professor of law and public health at the Harvard School of Public Health.

A new system should be established to separate compensation for injuries from deterrence, he said. In order to do that, liability for negligence has to be eliminated, and reporting has to be made based on patient injury.

“You have to enable open and honest reporting,” Dr. Brennan said.

And physicians have to realize that reporting patient injury is part of their professional responsibility, he said.

Currently, some physicians do not disclose errors or injuries. It's a rational economic response to their rising premiums and fear of being sued, he said, but it's not an ethical response.

WASHINGTON – Physicians and policy makers are divided on how to level the playing field on physician-owned specialty hospitals.

While the Medicare Payment Advisory Commission (MedPAC) is considering reforms that would eliminate some of the financial incentives to launch specialty hospitals, the American Medical Association in turn wants to preserve the competition that these hospitals provide.

At press time, MedPAC was preparing to vote on draft proposals that would refine the diagnosis-related groups (DRGs) used to determine hospital payments to better account for differences in severity of illness among patients.

MedPAC also is deciding whether to recommend the elimination of the whole hospital exemption for all new hospitals and develop criteria for grandfathering existing ones. If adopted, this would prohibit physicians from referring patients to new hospitals, both single specialty and full-service hospitals, in which they have an ownership stake. And MedPAC commissioners are weighing whether to allow the Department of Health and Human Services to regulate gainsharing arrangements between physicians and hospitals.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, said Ariel Winter, a MedPAC analyst who presented the draft recommendations to the commission last month.

“My big concerns here are about an unlevel playing field,” said MedPAC Chairman Glenn M. Hackbarth.

The challenge for MedPAC is to devise a way to have competition among hospitals under a payment system that is fair to everyone and that benefits patients, Mr. Hackbarth said.

Under the Medicare Modernization Act, the commission was charged with conducting an analysis of cardiac, orthopedic, and surgical specialty hospitals focusing on costs and the payment system. MedPAC is scheduled to issue a report to Congress in March.

The Medicare reform law also placed an 18-month moratorium on the self-referral, “whole hospital” exemption for new specialty hospitals. The moratorium, which is set to expire in June, doesn't include existing hospitals or those under construction. The whole hospital exemption allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the “whole hospital.”

Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System, said he wants to see a payment system that will reward hospitals for providing care to the full spectrum of patients, rather than provide incentives for selecting patients whose conditions might be less severe.

But Francis J. Crosson, M.D., a MedPAC member and executive director of the Permanente Federation in Oakland, Calif., said simply removing the whole hospital exemption could potentially eliminate the ability of some physicians to create an environment that fits their practice style.

He suggested that the commission should explore ways to separate the two major motives for physician ownership of hospitals–profits and having a say in hospital governance.

Refinements of the DRG system should be sufficient to curb any cherrypicking of patients, Randolph B. Fenninger, of the American Surgical Hospital Association, told MedPAC members. But he objected to any recommendation to eliminate the whole hospital exemption or continue the current moratorium. Hospital officials have commented that the emergence of specialty hospitals has been a “wake-up call” and caused them to improve services, he said. “To take away the ability of physicians to invest in these hospitals is a call to go back to sleep,” Mr. Fenninger said.

Mr. Fenninger added that the grandfathering clause will not work. The investments in specialty hospitals will be rendered valueless very quickly, he said.

A similar debate took place at the AMA's interim meeting in late 2004, when delegates approved a board report encouraging competition among health facilities as a means of promoting high quality, cost-effective care.

Surgical specialties in particular voiced support for the specialty hospitals, while other delegates warned of the repercussions. “These hospitals take highly profitable patients and ship them out of the community hospitals. They don't have to support less profitable areas, such as pediatric units,” Daniel Heinemann, M.D., a family physician from South Dakota, said during committee debate.

“They're a threat to our physicians and a threat to hospitals in our state.” In addition, “there has not been a huge increase in quality care because of these hospitals.”

Russell Kridel, M.D., a delegate from the American Academy of Facial Plastic and Reconstructive Surgery, countered that clinical care would be better off if left to the community hospitals. “Shouldn't we all do what we do best?” he said.

The report also opposed efforts to extend the moratorium.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.

WASHINGTON – Physicians and policy makers are divided on how to level the playing field on physician-owned specialty hospitals.

While the Medicare Payment Advisory Commission (MedPAC) is considering reforms that would eliminate some of the financial incentives to launch specialty hospitals, the American Medical Association in turn wants to preserve the competition that these hospitals provide.

At press time, MedPAC was preparing to vote on draft proposals that would refine the diagnosis-related groups (DRGs) used to determine hospital payments to better account for differences in severity of illness among patients.

MedPAC also is deciding whether to recommend the elimination of the whole hospital exemption for all new hospitals and develop criteria for grandfathering existing ones. If adopted, this would prohibit physicians from referring patients to new hospitals, both single specialty and full-service hospitals, in which they have an ownership stake. And MedPAC commissioners are weighing whether to allow the Department of Health and Human Services to regulate gainsharing arrangements between physicians and hospitals.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, said Ariel Winter, a MedPAC analyst who presented the draft recommendations to the commission last month.

“My big concerns here are about an unlevel playing field,” said MedPAC Chairman Glenn M. Hackbarth.

The challenge for MedPAC is to devise a way to have competition among hospitals under a payment system that is fair to everyone and that benefits patients, Mr. Hackbarth said.

Under the Medicare Modernization Act, the commission was charged with conducting an analysis of cardiac, orthopedic, and surgical specialty hospitals focusing on costs and the payment system. MedPAC is scheduled to issue a report to Congress in March.

The Medicare reform law also placed an 18-month moratorium on the self-referral, “whole hospital” exemption for new specialty hospitals. The moratorium, which is set to expire in June, doesn't include existing hospitals or those under construction. The whole hospital exemption allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the “whole hospital.”

Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System, said he wants to see a payment system that will reward hospitals for providing care to the full spectrum of patients, rather than provide incentives for selecting patients whose conditions might be less severe.

But Francis J. Crosson, M.D., a MedPAC member and executive director of the Permanente Federation in Oakland, Calif., said simply removing the whole hospital exemption could potentially eliminate the ability of some physicians to create an environment that fits their practice style.

He suggested that the commission should explore ways to separate the two major motives for physician ownership of hospitals–profits and having a say in hospital governance.

Refinements of the DRG system should be sufficient to curb any cherrypicking of patients, Randolph B. Fenninger, of the American Surgical Hospital Association, told MedPAC members. But he objected to any recommendation to eliminate the whole hospital exemption or continue the current moratorium. Hospital officials have commented that the emergence of specialty hospitals has been a “wake-up call” and caused them to improve services, he said. “To take away the ability of physicians to invest in these hospitals is a call to go back to sleep,” Mr. Fenninger said.

Mr. Fenninger added that the grandfathering clause will not work. The investments in specialty hospitals will be rendered valueless very quickly, he said.

A similar debate took place at the AMA's interim meeting in late 2004, when delegates approved a board report encouraging competition among health facilities as a means of promoting high quality, cost-effective care.

Surgical specialties in particular voiced support for the specialty hospitals, while other delegates warned of the repercussions. “These hospitals take highly profitable patients and ship them out of the community hospitals. They don't have to support less profitable areas, such as pediatric units,” Daniel Heinemann, M.D., a family physician from South Dakota, said during committee debate.

“They're a threat to our physicians and a threat to hospitals in our state.” In addition, “there has not been a huge increase in quality care because of these hospitals.”

Russell Kridel, M.D., a delegate from the American Academy of Facial Plastic and Reconstructive Surgery, countered that clinical care would be better off if left to the community hospitals. “Shouldn't we all do what we do best?” he said.

The report also opposed efforts to extend the moratorium.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.

WASHINGTON – Physicians and policy makers are divided on how to level the playing field on physician-owned specialty hospitals.

While the Medicare Payment Advisory Commission (MedPAC) is considering reforms that would eliminate some of the financial incentives to launch specialty hospitals, the American Medical Association in turn wants to preserve the competition that these hospitals provide.

At press time, MedPAC was preparing to vote on draft proposals that would refine the diagnosis-related groups (DRGs) used to determine hospital payments to better account for differences in severity of illness among patients.

MedPAC also is deciding whether to recommend the elimination of the whole hospital exemption for all new hospitals and develop criteria for grandfathering existing ones. If adopted, this would prohibit physicians from referring patients to new hospitals, both single specialty and full-service hospitals, in which they have an ownership stake. And MedPAC commissioners are weighing whether to allow the Department of Health and Human Services to regulate gainsharing arrangements between physicians and hospitals.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, said Ariel Winter, a MedPAC analyst who presented the draft recommendations to the commission last month.

“My big concerns here are about an unlevel playing field,” said MedPAC Chairman Glenn M. Hackbarth.

The challenge for MedPAC is to devise a way to have competition among hospitals under a payment system that is fair to everyone and that benefits patients, Mr. Hackbarth said.

Under the Medicare Modernization Act, the commission was charged with conducting an analysis of cardiac, orthopedic, and surgical specialty hospitals focusing on costs and the payment system. MedPAC is scheduled to issue a report to Congress in March.

The Medicare reform law also placed an 18-month moratorium on the self-referral, “whole hospital” exemption for new specialty hospitals. The moratorium, which is set to expire in June, doesn't include existing hospitals or those under construction. The whole hospital exemption allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the “whole hospital.”

Ralph W. Muller, a MedPAC member and CEO of the University of Pennsylvania Health System, said he wants to see a payment system that will reward hospitals for providing care to the full spectrum of patients, rather than provide incentives for selecting patients whose conditions might be less severe.

But Francis J. Crosson, M.D., a MedPAC member and executive director of the Permanente Federation in Oakland, Calif., said simply removing the whole hospital exemption could potentially eliminate the ability of some physicians to create an environment that fits their practice style.

He suggested that the commission should explore ways to separate the two major motives for physician ownership of hospitals–profits and having a say in hospital governance.

Refinements of the DRG system should be sufficient to curb any cherrypicking of patients, Randolph B. Fenninger, of the American Surgical Hospital Association, told MedPAC members. But he objected to any recommendation to eliminate the whole hospital exemption or continue the current moratorium. Hospital officials have commented that the emergence of specialty hospitals has been a “wake-up call” and caused them to improve services, he said. “To take away the ability of physicians to invest in these hospitals is a call to go back to sleep,” Mr. Fenninger said.

Mr. Fenninger added that the grandfathering clause will not work. The investments in specialty hospitals will be rendered valueless very quickly, he said.

A similar debate took place at the AMA's interim meeting in late 2004, when delegates approved a board report encouraging competition among health facilities as a means of promoting high quality, cost-effective care.

Surgical specialties in particular voiced support for the specialty hospitals, while other delegates warned of the repercussions. “These hospitals take highly profitable patients and ship them out of the community hospitals. They don't have to support less profitable areas, such as pediatric units,” Daniel Heinemann, M.D., a family physician from South Dakota, said during committee debate.

“They're a threat to our physicians and a threat to hospitals in our state.” In addition, “there has not been a huge increase in quality care because of these hospitals.”

Russell Kridel, M.D., a delegate from the American Academy of Facial Plastic and Reconstructive Surgery, countered that clinical care would be better off if left to the community hospitals. “Shouldn't we all do what we do best?” he said.

The report also opposed efforts to extend the moratorium.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment–operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (CLINICAL PSYCHIATRY NEWS, Feb. 2004, p. 112). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” Dr. Macumber said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee–$40 for an average office visit. Patients with insurance can still submit claims to be reimbursed by their insurance company, but Dr. Macumber won't deal with the paperwork.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Because he does not have to spend time dealing with insurance companies, Dr. Macumber said he can afford to spend 20-40 minutes with each patient.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on his or her bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she said.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance becomes affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), where Dr. Macumber holds a clinical faculty appointment in family medicine.

Dr. Mark Macumber “went bare” because he couldn't afford malpractice insurance and wanted to draw attention to high rates. Courtesy Dr. Mark Macumber

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment–operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (CLINICAL PSYCHIATRY NEWS, Feb. 2004, p. 112). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” Dr. Macumber said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee–$40 for an average office visit. Patients with insurance can still submit claims to be reimbursed by their insurance company, but Dr. Macumber won't deal with the paperwork.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Because he does not have to spend time dealing with insurance companies, Dr. Macumber said he can afford to spend 20-40 minutes with each patient.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on his or her bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she said.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance becomes affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), where Dr. Macumber holds a clinical faculty appointment in family medicine.

Dr. Mark Macumber “went bare” because he couldn't afford malpractice insurance and wanted to draw attention to high rates. Courtesy Dr. Mark Macumber

For a little more than a year, Mark Macumber, M.D., has been conducting a health policy experiment–operating his medical practice without liability insurance.

“The most surprising and rewarding thing is the response I get from the patients,” said Dr. Macumber, a family physician in Berwyn, Ill., and Chicago.

It's been a year full of surprises for Dr. Macumber since he opened his family medicine practice in September 2003 in Berwyn with no medical liability coverage (CLINICAL PSYCHIATRY NEWS, Feb. 2004, p. 112). Today, he is breaking even and has opened a second location in Chicago.

When he started, he knew he couldn't afford the $40,000 liability premium he would have to pay; he also wanted to draw attention to the skyrocketing malpractice rates many physicians must pay. That's still the case, he said, but his experience has also driven the issue of access to health care to the top of his priority list, he said.

“It started out about medical malpractice, but it's really about access,” Dr. Macumber said.

Since most patients' insurance companies require physicians to carry liability insurance, he doesn't bill insurance companies and, instead, offers his services for a reduced fee–$40 for an average office visit. Patients with insurance can still submit claims to be reimbursed by their insurance company, but Dr. Macumber won't deal with the paperwork.

About 25%-33% of his patients have health insurance, but most are uninsured. Some patients come to see him because they support what he's doing; others have said they want continuity and are sick of changing doctors every year. For still others, it's cheaper to see him at $40 a visit than it is to pay the copayments or coinsurance associated with their health plans.

Some patients come to him because they want the confidentiality he provides by not filing information with insurance companies.

And for Dr. Macumber, cutting out insurance companies means more time, more money, and less aggravation. “I'm so relieved I don't have to deal with that at all,” he said.

Because he does not have to spend time dealing with insurance companies, Dr. Macumber said he can afford to spend 20-40 minutes with each patient.

Not accepting insurance also means that he can charge whatever he wants, including giving someone a break on his or her bill, or even bartering for care. He can also choose to charge for telephone calls, though he hasn't done that yet. He already charges patients about $10 to fill out paperwork.

Dr. Macumber's practice has been a safety net for those patients who don't qualify for Medicaid and don't have insurance, said Ellen Brull, M.D., president of the Illinois Family Physicians Association.

Although Dr. Macumber initially received a lot of publicity for practicing without insurance, the other aspect of his practice is that he is providing a medical home for the uninsured, she said.

But Dr. Brull said she would still rather work to fix the system than see more physicians follow Dr. Macumber's experiment. “The whole system is so flawed, it needs to be revamped,” she said.

Although Dr. Macumber's practice is rapidly growing and becoming financially viable, he still doesn't recommend that other physicians follow in his footsteps.

“I'm not going without malpractice insurance because I want to go without malpractice insurance,” he said. Once liability insurance becomes affordable, he plans to get it.

Dr. Macumber said he got to really see how destructive the medical liability compensation system had gotten when he decided to practice without it. But he sees traditional tort reform strategies, such as damage caps, as a gut response from physicians who feel angry and cornered.

“Tort reform is nice, but the system itself is flawed on so many levels,” he said.

The medical liability system is a barrier to improving quality and to reporting and learning from our mistakes, he said. Dr. Macumber said that he believes that the answer is a set of comprehensive reforms that address the current system's economic, practice, and ethical problems.

“What he's doing is very interesting and it's obviously risky, but it is something that challenges the status quo,” said Patrick Tranmer, M.D., professor of clinical family medicine at the University of Illinois at Chicago (UIC), where Dr. Macumber holds a clinical faculty appointment in family medicine.

Dr. Mark Macumber “went bare” because he couldn't afford malpractice insurance and wanted to draw attention to high rates. Courtesy Dr. Mark Macumber

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined that rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis. The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the patient-physician relationship when they are not well handled. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that the system isn't necessarily a model for countries like the United States because of differences in size and structure of the health care system. New Zealand's population is 4 million, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system coexists with universal state-funded health care.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined that rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis. The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the patient-physician relationship when they are not well handled. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that the system isn't necessarily a model for countries like the United States because of differences in size and structure of the health care system. New Zealand's population is 4 million, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system coexists with universal state-funded health care.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

“We've made a really good start,” Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined that rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis. The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering.

New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000.

New Zealanders on the whole seem to prefer the modest but certain compensation system, Dr. Bismark said.

The no-fault system also has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings.

“The number of bad apples is really small,” Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about, Dr. Bismark said.

And complaints can still have toxic effects on the patient-physician relationship when they are not well handled. “This system is not neutral for doctors,” she said.

Dr. Bismark pointed out that the system isn't necessarily a model for countries like the United States because of differences in size and structure of the health care system. New Zealand's population is 4 million, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system coexists with universal state-funded health care.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

"We've made a really good start," Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000. New Zealanders on the whole seem to prefer the modest but certain compensation system, she said.

The no-fault system has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. "The number of bad apples is really small," Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. "This system is not neutral for doctors," she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

"We've made a really good start," Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000. New Zealanders on the whole seem to prefer the modest but certain compensation system, she said.

The no-fault system has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. "The number of bad apples is really small," Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. "This system is not neutral for doctors," she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

ALEXANDRIA, VA. — In New Zealand, all physicians pay $700 a year for indemnity insurance, and it's nearly impossible to sue a physician.

That's because New Zealand has had a no-fault injury compensation system in place for the last 30 years.

The Accident Compensation Corporation (ACC), a state-funded insurer established in 1974, addresses unmet patient expenses from injuries. And since 1994, New Zealand's Health and Disability Commissioner has handled complaint resolution and provider accountability.

"We've made a really good start," Marie Bismark, M.B., a legal advisor to the New Zealand health and disability commissioner, said at a meeting on patient safety and medical liability sponsored by the Joint Commission on Accreditation of Healthcare Organizations.

Compensation is available to patients for medical errors that are the result of a failure to observe a reasonable standard of care. The ACC also provides compensation for medical mishaps that are defined as rare and severe adverse outcomes of appropriate treatment. Dr. Bismark gave an example of how the system works: A 22-year-old woman with a history of pelvic pain underwent laparoscopy to confirm the diagnosis of endometriosis. During the surgery, her bowel was perforated, which lead to peritonitis.

The woman required further surgery to remove the perforated section of her bowel and form a temporary colostomy. She spent 3 weeks in critical care recovering. New Zealand's Accident Compensation Corporation accepted the woman's claim as a medical mishap and she was awarded $28,000 to cover treatment costs, pharmaceuticals, transportation, home help, and lost earnings.

In a situation where a person can no longer perform his or her job, the government will pay for retraining in a new career. And in cases of permanent disability, patients can receive a lump sum payment of up to $70,000. New Zealanders on the whole seem to prefer the modest but certain compensation system, she said.

The no-fault system has an accountability component, she said. In 1994, the government established a code of patients' rights and designated the health and disability commissioner as the independent health ombudsman to enforce those rights.

Patient complaints are often handled through advocacy or mediation. During the advocacy process, an independent patient advocate works to resolve the complaint directly with the provider. In the case of mediation, a neutral third party assists the patient, the physician, and a representative of the hospital to come to a formal agreement.

Formal investigations are generally reserved for serious complaints, she said.

Few complaints proceed to a disciplinary hearing. In a typical year, they receive about 531 complaints, which lead to about 151 investigations, and 10 disciplinary hearings. "The number of bad apples is really small," Dr. Bismark said.

So far, the experience with the no-fault system has shown that patients typically aren't seeking to punish physicians, Dr. Bismark said. Instead, they want to see systemic changes that will keep mistakes from happening again.

But a downside of the system is that there are many adverse events that ACC officials never hear about. And complaints can still have toxic effects on the relationship between patients and physicians when they are not handled with care. "This system is not neutral for doctors," she said.

Dr. Bismark pointed out that her country's system isn't necessarily a model for countries like the United States because of the differences in size and the structure of the health care system. New Zealand is a country of 4 million people, and its per capita health care costs are about $1,857, compared with $5,267 in the United States, she said. And New Zealand's no-fault system exists in the context of universal state-funded health care coverage.

Buyer Beware

The American Society for Dermatologic Surgery is warning consumers to be careful when undergoing cosmetic procedures. And the group is asking physicians to talk to their patients about the risks of invasive cosmetic procedures performed by practitioners without the proper training. "It is our responsibility to protect consumers from the unfortunate proliferation of nonphysician providers who typically don't have the necessary medical training and qualifications to diagnose the condition, perform the procedure, and adequately handle complications when they occur," said ASDS President Rhoda S. Narins, M.D. An ASDS member survey from 2002 showed that 41% of respondents said they had seen a significant increase in the number of patients seeking corrective treatment for damage caused by untrained practitioners. ASDS advises consumers to make sure a physician is on site, to check out the physician's credentials, to be sure a medical history is taken, to insist on having an initial evaluation with a dermatologic surgeon, and to discuss pain management options to avoid risks of general anesthesia.

A Spot in the Shade

The American Academy of Dermatology is providing seven grants to nonprofit organizations that build permanent shade structures over outdoor locations such as playgrounds, pools, and eating areas. "As the number of hours people spend outdoors participating in leisure activities continues to rise and as dermatologists note an increase in the number of patients diagnosed with skin cancer, it has never been more important to offer protection from the dangerous rays of the sun," said AAD President Boni E. Elewski, M.D. The academy estimates more than 95,000 new cases of melanoma were diagnosed last year, up 4% from 2003. The grantees were chosen from 95 applications and the projects that were selected are expected to affect more than 3,500 people each day. For more information on the grants, visit

www.aad.org

New Surgical Marker

The Food and Drug Administration cleared for marketing a first-of-its-kind external surgical marker that could minimize the potential for wrong-site, wrong-procedure, and wrong-patient surgeries. The device uses radio frequency identification technology to mark an area of the patient's body for surgery. The patient's name and surgical site are printed on the tag and the inside of the tag is encoded with the date of the surgery, the type of procedure, and the name of the surgeon. Here's how it will work: The tag would be scanned with a desktop reader for confirmation by the patient and placed in the patient's file. On the day of the surgery, the tag would be scanned again and verified by the patient. Then, the tag, which has an adhesive backing, would be affixed to the patient's body near the surgical site. Once in the operating room, the tag would be scanned and verified again. The system is manufactured by SurgiChip Inc.

Retiree Health Benefits

It's still too early to say what the impact of the 2006 Medicare prescription drug benefit will be on retiree health benefits, Jon Gabel, vice president for health systems studies at the Health Research and Educational Trust told the Medicare Payment Advisory Commission at a recent meeting. Mr. Gabel said that in recent conversations with employers, most say that they don't know how they will adjust retiree health benefits based on the coming benefit. An HRET survey conducted a few months after the passage of the Medicare Modernization Act showed that only about 1% of retirees from firms with 200 or more workers would lose all their health benefits. The majority of retirees currently receiving benefits would continue to receive both health and drug benefits either through Medicare-subsidized employer plans or from employer-sponsored benefits that wrap around the Medicare Part D coverage. "There's a great deal of uncertainty," Mr. Gabel said.

Anthem-WellPoint Merger Finalized

California Insurance Commissioner John Garamendi has approved the $16.4 billion merger of Anthem Inc., a for-profit BlueCross BlueShield subsidiary with plans in nine states, with WellPoint Health Networks, a Blues plan serving California and several other states. Mr. Garamendi approved the plan only after Anthem agreed to modify it to guarantee that the merger will not result in increased premiums for WellPoint customers. The agreement also calls for a $35 million contribution to health care clinics in underserved communities in the state, and another $200 million for health care in underserved communities.

Medicare Settlement

Temple University Physicians has agreed to pay more than $1.8 million to settle civil charges arising from an investigation into its Medicare Part B billing practices. The Department of Health and Human Services audited Medicare Part B claims submitted by the group between July 1995 and July 1996 and concluded that the group lacked sufficient documentation to support some claims, and that some claims represented a greater level of service than was actually provided. "This settlement … is intended to correct improper past behavior and to ensure that the physician submitting the claim to Medicare actually rendered the service," Patrick L. Meehan, U.S. Attorney for the Eastern District of Pennsylvania, said in a statement on behalf of HHS. The physician group denies the government's allegations and any liability relating to them.

Buyer Beware

The American Society for Dermatologic Surgery is warning consumers to be careful when undergoing cosmetic procedures. And the group is asking physicians to talk to their patients about the risks of invasive cosmetic procedures performed by practitioners without the proper training. "It is our responsibility to protect consumers from the unfortunate proliferation of nonphysician providers who typically don't have the necessary medical training and qualifications to diagnose the condition, perform the procedure, and adequately handle complications when they occur," said ASDS President Rhoda S. Narins, M.D. An ASDS member survey from 2002 showed that 41% of respondents said they had seen a significant increase in the number of patients seeking corrective treatment for damage caused by untrained practitioners. ASDS advises consumers to make sure a physician is on site, to check out the physician's credentials, to be sure a medical history is taken, to insist on having an initial evaluation with a dermatologic surgeon, and to discuss pain management options to avoid risks of general anesthesia.

A Spot in the Shade

The American Academy of Dermatology is providing seven grants to nonprofit organizations that build permanent shade structures over outdoor locations such as playgrounds, pools, and eating areas. "As the number of hours people spend outdoors participating in leisure activities continues to rise and as dermatologists note an increase in the number of patients diagnosed with skin cancer, it has never been more important to offer protection from the dangerous rays of the sun," said AAD President Boni E. Elewski, M.D. The academy estimates more than 95,000 new cases of melanoma were diagnosed last year, up 4% from 2003. The grantees were chosen from 95 applications and the projects that were selected are expected to affect more than 3,500 people each day. For more information on the grants, visit

www.aad.org

New Surgical Marker

The Food and Drug Administration cleared for marketing a first-of-its-kind external surgical marker that could minimize the potential for wrong-site, wrong-procedure, and wrong-patient surgeries. The device uses radio frequency identification technology to mark an area of the patient's body for surgery. The patient's name and surgical site are printed on the tag and the inside of the tag is encoded with the date of the surgery, the type of procedure, and the name of the surgeon. Here's how it will work: The tag would be scanned with a desktop reader for confirmation by the patient and placed in the patient's file. On the day of the surgery, the tag would be scanned again and verified by the patient. Then, the tag, which has an adhesive backing, would be affixed to the patient's body near the surgical site. Once in the operating room, the tag would be scanned and verified again. The system is manufactured by SurgiChip Inc.

Retiree Health Benefits

It's still too early to say what the impact of the 2006 Medicare prescription drug benefit will be on retiree health benefits, Jon Gabel, vice president for health systems studies at the Health Research and Educational Trust told the Medicare Payment Advisory Commission at a recent meeting. Mr. Gabel said that in recent conversations with employers, most say that they don't know how they will adjust retiree health benefits based on the coming benefit. An HRET survey conducted a few months after the passage of the Medicare Modernization Act showed that only about 1% of retirees from firms with 200 or more workers would lose all their health benefits. The majority of retirees currently receiving benefits would continue to receive both health and drug benefits either through Medicare-subsidized employer plans or from employer-sponsored benefits that wrap around the Medicare Part D coverage. "There's a great deal of uncertainty," Mr. Gabel said.

Anthem-WellPoint Merger Finalized

California Insurance Commissioner John Garamendi has approved the $16.4 billion merger of Anthem Inc., a for-profit BlueCross BlueShield subsidiary with plans in nine states, with WellPoint Health Networks, a Blues plan serving California and several other states. Mr. Garamendi approved the plan only after Anthem agreed to modify it to guarantee that the merger will not result in increased premiums for WellPoint customers. The agreement also calls for a $35 million contribution to health care clinics in underserved communities in the state, and another $200 million for health care in underserved communities.

Medicare Settlement

Temple University Physicians has agreed to pay more than $1.8 million to settle civil charges arising from an investigation into its Medicare Part B billing practices. The Department of Health and Human Services audited Medicare Part B claims submitted by the group between July 1995 and July 1996 and concluded that the group lacked sufficient documentation to support some claims, and that some claims represented a greater level of service than was actually provided. "This settlement … is intended to correct improper past behavior and to ensure that the physician submitting the claim to Medicare actually rendered the service," Patrick L. Meehan, U.S. Attorney for the Eastern District of Pennsylvania, said in a statement on behalf of HHS. The physician group denies the government's allegations and any liability relating to them.

Buyer Beware

The American Society for Dermatologic Surgery is warning consumers to be careful when undergoing cosmetic procedures. And the group is asking physicians to talk to their patients about the risks of invasive cosmetic procedures performed by practitioners without the proper training. "It is our responsibility to protect consumers from the unfortunate proliferation of nonphysician providers who typically don't have the necessary medical training and qualifications to diagnose the condition, perform the procedure, and adequately handle complications when they occur," said ASDS President Rhoda S. Narins, M.D. An ASDS member survey from 2002 showed that 41% of respondents said they had seen a significant increase in the number of patients seeking corrective treatment for damage caused by untrained practitioners. ASDS advises consumers to make sure a physician is on site, to check out the physician's credentials, to be sure a medical history is taken, to insist on having an initial evaluation with a dermatologic surgeon, and to discuss pain management options to avoid risks of general anesthesia.

A Spot in the Shade

The American Academy of Dermatology is providing seven grants to nonprofit organizations that build permanent shade structures over outdoor locations such as playgrounds, pools, and eating areas. "As the number of hours people spend outdoors participating in leisure activities continues to rise and as dermatologists note an increase in the number of patients diagnosed with skin cancer, it has never been more important to offer protection from the dangerous rays of the sun," said AAD President Boni E. Elewski, M.D. The academy estimates more than 95,000 new cases of melanoma were diagnosed last year, up 4% from 2003. The grantees were chosen from 95 applications and the projects that were selected are expected to affect more than 3,500 people each day. For more information on the grants, visit

www.aad.org

New Surgical Marker

The Food and Drug Administration cleared for marketing a first-of-its-kind external surgical marker that could minimize the potential for wrong-site, wrong-procedure, and wrong-patient surgeries. The device uses radio frequency identification technology to mark an area of the patient's body for surgery. The patient's name and surgical site are printed on the tag and the inside of the tag is encoded with the date of the surgery, the type of procedure, and the name of the surgeon. Here's how it will work: The tag would be scanned with a desktop reader for confirmation by the patient and placed in the patient's file. On the day of the surgery, the tag would be scanned again and verified by the patient. Then, the tag, which has an adhesive backing, would be affixed to the patient's body near the surgical site. Once in the operating room, the tag would be scanned and verified again. The system is manufactured by SurgiChip Inc.

Retiree Health Benefits

It's still too early to say what the impact of the 2006 Medicare prescription drug benefit will be on retiree health benefits, Jon Gabel, vice president for health systems studies at the Health Research and Educational Trust told the Medicare Payment Advisory Commission at a recent meeting. Mr. Gabel said that in recent conversations with employers, most say that they don't know how they will adjust retiree health benefits based on the coming benefit. An HRET survey conducted a few months after the passage of the Medicare Modernization Act showed that only about 1% of retirees from firms with 200 or more workers would lose all their health benefits. The majority of retirees currently receiving benefits would continue to receive both health and drug benefits either through Medicare-subsidized employer plans or from employer-sponsored benefits that wrap around the Medicare Part D coverage. "There's a great deal of uncertainty," Mr. Gabel said.

Anthem-WellPoint Merger Finalized

California Insurance Commissioner John Garamendi has approved the $16.4 billion merger of Anthem Inc., a for-profit BlueCross BlueShield subsidiary with plans in nine states, with WellPoint Health Networks, a Blues plan serving California and several other states. Mr. Garamendi approved the plan only after Anthem agreed to modify it to guarantee that the merger will not result in increased premiums for WellPoint customers. The agreement also calls for a $35 million contribution to health care clinics in underserved communities in the state, and another $200 million for health care in underserved communities.

Medicare Settlement

Temple University Physicians has agreed to pay more than $1.8 million to settle civil charges arising from an investigation into its Medicare Part B billing practices. The Department of Health and Human Services audited Medicare Part B claims submitted by the group between July 1995 and July 1996 and concluded that the group lacked sufficient documentation to support some claims, and that some claims represented a greater level of service than was actually provided. "This settlement … is intended to correct improper past behavior and to ensure that the physician submitting the claim to Medicare actually rendered the service," Patrick L. Meehan, U.S. Attorney for the Eastern District of Pennsylvania, said in a statement on behalf of HHS. The physician group denies the government's allegations and any liability relating to them.