In pursuing his proposed overhaul of the healthcare system, President Obama has presented himself as aloof from the legislative fray and merely offering broad principles, according to the New York Times. But behind the scenes, Obama and his advisers have been quite active, sometimes negotiating deals in a manner that is potentially at odds with the president's rhetoric, according to the Times.

The health insurance industry's trade group wants state and federal policymakers to examine what it claims are "exorbitant" out-of-network charges by physicians that are detailed in an industry-sponsored survey released today.

The America's Health Insurance Plans report, a survey of physician out-of-network charges in the 30 largest states, found what AHIP claims are wide disparities in the cost of various services that were in some cases tenfold higher than Medicare reimbursements for the same service in the same area. Susan Pisano, AHIP vice president for communications, calls the figures "pretty startling."

"It is important for this to be in the public domain simply because there is nothing from preventing somebody from charging that much. You basically can charge whatever you want," says Pisano.

The survey's release comes one day after President Obama leveled blistering criticism at the private health insurance industry at a town hall meeting in Portsmouth, NH. The president told a clapping, cheering crowd that "right now we have a healthcare system that too often works better for the insurance industry than it does for the American people. And we've got to change that."

Pisano rejects suggestions that AHIP's new report was an attempt to deflect the negative publicity from the president's broadsides.

"Certainly, we have been publicly vilified, but there are bigger questions here," she says. "We've been having a lot of discussion about how much health plans pay doctors. We've been having a lot of discussions about what the appropriate levels are for out-of-pocket costs and cost-sharing limits for consumers. What we haven't been having a discussion about is what is being charged. If we are going to be having thoughtful policy discussions, we need to have all of that information. So far, it's been all from one perspective. What do you think that says about the discussion?"

Pisano says AHIP hired Dyckman & Associations, the Washington, D.C.-based consultants, to compile the survey after hearing repeated complaints from its members about exorbitant out-of-network charges. She says the survey findings should prompt state and federal policymakers to investigate out-of-network charges and compare them with in-network charges, as well as fees charged for similar services in other countries.

In one state, the survey found, a physician billed a patient $6,791 for "cataract surgery with insertion of artificial lens" more than 1,100% of the Medicare fee of $581. Pisano says similar examples were found in all 30 states, and there are many examples of even higher variation in charges. She says the survey was "conservative," did not cherry pick egregious examples, and had been purged of dubious or extreme outliers.

Jon Skinner, a healthcare economist at Dartmouth College, says he believes that "some truly high payments are floating around." He noted similar findings in other studies, most recently a July 19 report by Health Reform Watch at Seton Hall University's School of Law, Health Law & Policy Program.

"The question of what providers charge is of course very, very important for the overall costs of healthcare," Skinner says. "However, I do not think that high prices charged by out-of-network providers are a large factor in why healthcare costs are so expensive. It is symptomatic of a more general problem with U.S. healthcare—the lack of information about and attention to prices."

The survey's release comes at a time of high anxiety for the health insurance industry, which has been the focus of sharp criticism from the Obama Administration. The industry strongly opposes Obama's call for a public plan to compete with private insurers, which Obama says is needed to keep private insurers "honest." Private plans, however, say they would be placed at a competitive disadvantage.

On Tuesday, the president blamed reform critics for mischaracterizing the public plan as a government takeover. "This is not about putting the government in charge of your health insurance. I don't believe anyone should be in charge of your health insurance decisions but you and your doctor," he told the crowd. "I don't think government bureaucrats should be meddling, but I also don't think insurance company bureaucrats should be meddling. That's the health care system I believe in."

Sounding like a consumer activist, Obama told the crowd that stronger oversight of the private healthcare sector is needed "just make sure that private insurers are treating you fairly so that you are not buying something where if you failed to read the fine print, next thing you know, when you actually get sick, you have no coverage."

"Under the reform we're proposing, insurance companies will be prohibited from denying coverage because of a person's medical history. Period," the president continued. "They will not be able to drop your coverage if you get sick. They will not be able to water down your coverage when you need it. Your health insurance should be there for you when it counts—not just when you're paying premiums, but when you actually get sick. And it will be when we pass this plan."

To a muffled rumble of boos from some American Medical Association members in June, President Barack Obama quashed doctors' hopes he would support a national cap on medical malpractice awards.

Caps, he said, "can be unfair to people who've been wrongfully harmed."

But might there be other palatable alternatives to achieve tort reform, mechanisms that would reduce if not eliminate many of the drawbacks in the current legal system? And might there be aspects in some of them that would appease not only Republicans, but Democrats as well?

In fact, there are three ideas that are being increasingly circulated.

The three concepts were explained in a New England Journal of Medicine Perspective last month by attorneys Michelle Mello, M. Phil, and Troyen Brennan, who also is a physician, of the Harvard School of Public Health.

Medical courts

"Medical courts," also called "health courts," are judicial systems similar to many other types of specialty courts where medically proficient specialist judges decide only on cases related to malpractice. There would be no juries, and thus no potential for attorneys to sway verdicts on the basis of theatrical emotional oratory.

Similar courts operate to decide cases involving specialized areas of mental health, behavioral issues, bankruptcy, drug addiction, worker's compensation, tax delinquencies, and many other kinds of troublesome legal issues. And these specialized judicial systems are generally regarded as a success for a variety of practical reasons. Mainly, these judges know complex medical treatment issues far better than their counterparts who may rarely be assigned such a case.

Disclosure and offer
Expansion of "Disclosure and offer" demonstration projects, in which providers would disclose the occurrence of caregiver-caused events that brought harm to patients and their families, and would promptly make offers of compensation.

Patients may or may not waive their right to sue, but in theory, they would not. The Harvard authors said that while he was a senator, Obama "co-sponsored legislation to promote this approach."

Safe harbors
Utilization of care standards created by the Federal Coordinating Council for Comparative Effectiveness Research, created by $1.1 billion in stimulus funds, could create "safe harbors" for physician and hospital practices that adhere to them.

If providers abide by these evidence-based guidelines, they would have "safe harbor" from liability. This kind of tort reform might even go farther than pay-for-performance experiments in getting providers to comply with best practices.

This strategy is incorporated in the recently introduced bill to establish the Health Care OverUse Reform Today Act (HealthCourt Act) by Rep. Tom Price (R-GA). The safe harbor would apply only to those physicians who abide by those nationally recognized standards of care.

This strategy also might avoid the expensive practice of defensive medicine, in which providers order a lot of costly unnecessary drugs, tests, and procedures out of fear they will be sued if someone decides the absence of such care caused a patient harm.

"Defensive medicine spurred by concern about malpractice liability is a substantial driver of the escalation of health care costs," wrote Mello, Phil and Brennan. "These costs are notoriously difficult to estimate," they added, "but trimming even 1% of total health care spending would save around $22 billion per year."

The American Medical Association's first choice is, of course, the cap on pain and suffering awards, such as the system in place in California since 1975. The Medical Injury Compensation Reform Act (MICRA) includes a $250,000 cap on non-economic damages, which the AMA says has lead to improved patient access to care, lower medical liability premiums, and lower healthcare costs throughout the state.

"Medical liability premiums increased more than 1,029% throughout the country from 1976 through 2007–except in California," where they grew by less than one-third of that amount, according to the AMA.

"Medical liability reform will help doctors implement best-practices in patient care and reduce unnecessary health costs," says AMA President J. James Rohack, MD.

While the AMA prefers caps, "we are committed to exploring innovative solutions like health courts, early disclosure and compensation programs, expert witness qualifications, and a liability safe harbor for physicians who follow evidence-based guidelines," Rohack says. "The goal is to keep physicians caring for patients, while still allowing access to the court system."

Non-economic damages like pain and suffering are just too difficult to accurately quantify and should be capped, or done away with entirely, agrees Darren McKinney, spokesman for the American Tort Reform Association, whose 300 members include hospital groups, governments, and pharmaceutical and insurance companies.

But caps are not on the table.

The medical court or health court idea is attracting considerable interest. And one arguing for its consideration is Philip Howard, founder and chair of Common Good, a New York City-based nonprofit dedicated to legal system change.

"The idea is that these would be administrative tribunals without juries, where judges would make written rulings applying established standards of care," Howard says.

"Unlike the system of arbitration, one of the main goals here is to achieve consistency.  We're trying to fix the harm that's caused by the fear and distrust that has corroded the practice of healthcare, because doctors don't trust the justice system."

The United States is a backward nation in this regard, he adds. "Every other country in the civilized world has a non-economic damage by a schedule. In England, for example, it's 3,000 pounds if you lose a toe or a finger, and 300,000 pounds if you're paralyzed."

In the U.S., a birth defect can result in a huge variation of awards, even if the damage might not have been prevented, Howard says.

In a statement, the AMA said they are not averse to the idea of health courts. They "would provide a forum where medical liability actions could be heard by judges specially trained in medical liability matters and who hear only medical liability cases."

The AMA in 2007 "developed and adopted" health court principles to assist state and local governments, insurers, hospitals, and other entities interested in exploring this option for medical liability reform."

Howard says there are many reasons why the current legal system doesn't do a good job punishing those who commit malpractice and it fails at rewarding patients and families who are harmed.

Here are some other reasons why the system doesn't always work:

1. Many plaintiffs can't find an attorney to represent them or don't have the money to pay a retainer.


2. Plaintiffs rarely get anywhere near the amount of their loss, or if they do, about 60% of that money is allegedly eaten up by attorneys' fees and witness costs.


3. Plaintiffs wait as many as five years for the results of a trial, and longer if it goes on appeal.


4. There's a wide variation in judgments and verdicts, often depending not on the merits of the case, but on the skill of attorneys on either side, the disposition of the judge, the persuasiveness of the witnesses, and the demographics of the community and the jury.


5. The specter of lawsuits has prompted some surgeons to decline to accept riskier cases out of fear that a bad outcome will damage their track record, as mortality rates are increasingly published on state regulatory agency Web sites.

In California, the Office of Statewide Health Planning and Development publishes heart surgery mortality rates for hospitals and surgeons. Some state medical boards also publish the amount of jury verdict awards and out-of-court settlements when amounts are out of line with the risk in that practitioner's specialty.

The bottom line, says Howard, is that the medical court idea deserves more consideration. "Modern healthcare is so complicated and scientific, it seems irresponsible to give that responsibility to ordinary judges, who would only see four or five cases a year, but to a judge who is dedicated to medical care."