After “health,” the most frequently used word in the Patient Protection and Affordable Care Act (PPACA) is neither “patient” nor “physician” nor “hospital” nor “insurance.” “Secretary,” as in “the secretary of health and human services,” is mentioned more than 2,500 times in the 2,300-page bill. And more than 700 times, the PPACA says “the secretary shall.” Each of these directives is a sign of new regulations to come on physicians and health care. Unfortunately, the PPACA was not the genesis of physician regulation, nor are these busy rulemakers limited to the federal government. “An extensive regulatory framework … arose haphazardly, with little consideration of how the pieces fit together,” the Federal Trade Commission and U.S. Department of Justice reported in 2004. The huge numbers of state and federal regulations and their haphazard nature place tremendous burdens on physicians’ practices, most of which are still small businesses. These rules insert themselves between physicians and their patients, frequently do little to improve patient care, and divert physicians’ time and energy away from the patients in the exam room. We need to repeal, reorganize, and reprioritize if we want a functional health care delivery system.
Even the federal government realized the folly of imposing this kind of burden on a profession that is struggling under the weight of thousands of pages of regulations, plus many more pages of manuals, guidance, and interpretive information.  The General Accounting Office took the Center for Medicare & Medicaid Services (CMS) to task for confusing inconsistencies between its incentive and penalty programs for physicians’ use of electronic prescribing and electronic health records.  The secretary (Health and Human Services Commission Secretary Kathleen Sebelius) offered an escape hatch for the electronic prescribing deadline — then had to extend that by 120 and then 150 days. When it became obvious that neither physicians nor hospitals nor insurance companies could possibly comply with the HIPAA 5010 requirement, she offered 90 and then 120 days of leeway. The Medicare and Medicaid billing systems’ own inability to use HIPAA 5010 correctly exacerbated the medical emergency caused by Texas’ new “dual-eligibles” rule limiting what the state would pay for patients covered by both programs. (See Section 7.) And — bowing to heavy pressure from TMA, the American Medical Association, and others — the secretary delayed for one year the Oct. 1, 2013, deadline for moving to the ICD-10 coding system.
Word Cloud of PPACA Text
Computational Legal Studies, March 2010
2011: A Case Study
The phrase “the secretary shall” sent strong regulatory shivers down the spines of American physicians last year — and mostly stemming from laws other than the PPACA. Consider this murderers’ row of regulatory carrots and sticks displayed in TMA’s “Calendar of Doom,” an Internet-based tool to help physicians remember and plan for the compliance deadlines:
- June 30, 2011: Write 10 electronic prescriptions or face a 1-percent Medicare penalty in 2012.
- Sept. 6, 2011: New Medicare audits begin for anesthesiologists, covering claims back to October 2007.
- Dec. 31, 2011: Reporting deadline to claim 1-percent electronic prescribing bonus.
- Dec. 31, 2011: Reporting deadline to claim 1-percent Physician Quality Reporting System (PQRS) bonus.
- Jan. 1, 2012: Convert all billing to new HIPAA 5010 format or receive no payment from Medicare, Medicaid, or commercial insurance for any health care services provided.
- June 30, 2012: Write 10 electronic prescriptions or face a 1.5-percent Medicare penalty in 2013.
- Oct. 1, 2012: Last chance to achieve 90 days of meaningful use for first-year participants in Medicare’s electronic health record incentive program.
- Dec. 31, 2012: Reporting deadline to claim 1-percent electronic prescribing bonus.
- Dec. 31, 2012: Reporting deadline to claim 0.5-percent PQRS bonus.
- Oct. 1, 2013: Make massive shift to ICD-10 coding system or receive no payment from Medicare, Medicaid, or commercial insurance for any health care services provided. (Later shifted to Oct. 1, 2014.)
Eliminate costs and hassles that don’t contribute to or add value to patient care
New compliance requirements are bombarding physician practices seemingly every day. Just this January 2012, a new electronic format for claims and other electronic transactions (called “HIPAA 5010”) added new costs to physician practices. The switch to the International Classification of Diseases and Related Health Problems version 10 (ICD-10), currently set for October 2014, will require the adoption of an entirely new coding system to record all possible diagnoses and inpatient procedures. It will add significant physician and staff training costs.
Medicare’s required new PQRS provides a monetary incentive at first but imposes penalties beginning in 2015. A number of new state and federal privacy laws introduce more administrative burden, and severe new penalties for noncompliance. State and federal governments are using more “fraud” detection, resulting in monumental compliance programs that further increase the cost of running a practice. TMA and dozens of other medical societies have written to CMS “about the imminent storm that is about to occur due to simultaneous implementation of multiple programs that will create extraordinary financial and administrative burden, as well as mass confusion, for physicians.” These changes have limited documented evidence they will lower fraud or improve privacy, but complete assurance they will increase the cost of doing business in medicine.
It’s because of the vast number of complex commercial insurance and federal and state regulations that affect physicians and their patients that TMA developed the Calendar of Doom.
The cost to operate a physician’s office continues to climb unabated. Unfunded mandates and hidden regulatory burdens like the ongoing hassles of annually renewing state registration to continue to prescribe needed medications for patients threaten the viability of practices and patients’ access to care. The average cost to staff and run a practice now exceeds $500,000 per physician, and that’s before the physician gets paid a dime. These excessive administrative expenses add to the escalating cost of medical care that are borne by patients, employers, and taxpayers.
Medical Group Management Association; U.S. Bureau of Labor Statistics, 2011
Excessive regulations also hurt local economies, which receive nearly $1 million in wages and benefits for each physician in practice.  Physician offices employ support staff and often work with nonphysician providers, increasing the total number of employees in the industry to well above the count of physicians alone. In 2009, Texas office-based physicians supported 249,010 jobs. On average, each office-based physician supported 5.8 jobs, including his or her own. 
Texas should not burden practices with additional regulatory costs that provide no benefit to patients or their health care.
Put ICD-10 on permanent hold
The ICD-10 requirement is an excellent example of a costly regulation that will disrupt practice operations. ICD-10 is a 20-year-old boondoggle of a system that will help only health care researchers. Before Secretary Sebelius delayed the new coding language for an additional year, the federal government announced that all physicians, hospitals, providers, and insurance companies must shift from ICD-9 to ICD-10 no later than Oct. 1, 2013. The punishment for noncompliance is severe: no payment for any medical services provided.
The number of diagnostic codes that physicians would be required to use under ICD-10 would grow from 13,500 to 69,000. The number of codes for inpatient procedures also would soar from 4,000 to 71,000.  For example, the new system has 480 codes for a fractured knee cap — up from a grand total of two in ICD-9. Switching to ICD-10 will mandate extensive revision of physicians’ paper and electronic systems. Transition to the new system is expected to cost solo physicians as much as $83,000 each, and group practices of up to 10 doctors as much as $250,000. 
The ICD-10 mandate will create significant burdens on the practice of medicine with no direct benefit to individual patient care. It is a huge weight to place on physicians when they face numerous other administrative hurdles, including implementing and achieving meaningful use of electronic health records (EHRs), meeting quality measures under Medicare’s PQRS and other programs, the impending creation of accountable care organizations in Medicare, and more. The timing of the transition could not be worse, as many physicians already are spending significant time and resources implementing EHRs in their practices.
ICD-10 is old technology developed during the 1980s and not designed to work in the current electronic world. A new version of the diagnostic and procedure codes, ICD-11, could come as early as 2015. It is being designed for use with electronic health records and the Internet, and should be more user-friendly than ICD-10.
Replace harmful restrictions with realistic incentives
TMA believes that the patient-physician relationship must be preserved regardless of patients’ health conditions, ethnicity, economic circumstances, demographics, or treatment compliance patterns. Unfortunately, many pay-for-performance strategies intended to contain health costs could undermine this relationship. These strategies have proliferated in both commercial and government health programs. The PPACA also relies on payment based solely on outcomes and mandates pay adjustments for all physicians, which may selectively penalize physicians who treat disadvantaged patients.
Pay-for-performance systems that do not risk-adjust properly for patients’ health status and that rely solely on claims data for evaluation of care will likely hurt the patient-physician relationship. This is particularly true if patient risk factors, chronic conditions, compliance, health disparities, and culturally competent care are not factored into the physician’s performance profile. For example, physicians’ ratings or payments are hurt if they are measured on how many of their patients obtain mammograms at appropriate times and the patient chooses not to follow the doctor’s advice to get the mammogram. Other examples of physicians’ quality rating measurements being directly impacted by patient choice include medication compliance, routine screening exams, weight management, and tobacco counseling.
Don’t tax sickness
Saving lives should not be taxed like other services. Health care is not a traditional business activity and should not be subject to a traditional business activity tax.
Recognizing the unique nature of health care, when legislators rewrote the state’s business tax in 2006, they included deductions for the free and under-reimbursed care physicians provide to Medicaid, Medicare, Children’s Health Insurance Program (CHIP), workers’ compensation, military, and charity care patients. Because physicians have contractual and ethical obligations to care for patients, often without regard to their own financial interests, their losses on unpaid and underpaid services are unavoidable and substantial. Those losses merit recognition.
No other profession is required by law to give away its products or services for free. Federal law requires physicians to provide care to patients in emergency settings without regard to ability to pay. Texas physicians deliver almost $2 billion per year in a hidden tax via unpaid charity care. 
Medicaid and CHIP payments to Texas physicians cover less than half the cost of providing care. Each Texas physician, on average, provides almost $83,000 per year in undercompensated care to Medicaid and CHIP patients (even more in some specialties) in rural Texas and along the border. Tax increases add to the cost of caring for these patients, forcing more physicians to find ways to limit participation in these government programs.
Current Texas tax policy imposes a tax on vaccines purchased for use in a physician’s office then administered through inoculations. For many physicians, vaccines are the second-largest expense for their practice, which can influence whether they continue to stock and offer vaccines. Because the cost savings from immunizations are considerable, Texas should promote greater access to immunizations by eliminating taxation barriers for physician practices.
Texas physicians pay their fair share in business and personal taxes. They also pay such additional state taxes as a licensing fee, an occupational tax, a patient-protection fee, a website fee, and an additional license surcharge imposed by the legislature. These fees are in addition to the sales taxes physicians pay on the supplies and equipment they use to care for patients, and the property taxes they pay on all business property and equipment.
Texas should not place additional taxes on caring for the sick.
Support responsible ownership of hospitals
Texas’ health care delivery system has changed dramatically over the past decades. Life-saving technologies and treatments, and the types of settings in which patients receive services, have proliferated. Physicians, hospitals, and others have invested extensively in these technologies and settings. While physician investment in the health care system is not new, there have been considerable changes in health care coverage, financing, licensing, and regulatory environment over the past decade. These changes drive the debate over who should invest in facilities. Texas is also the uninsured capital of America, which creates competition for a dwindling supply of paying patients.
TMA strongly supports responsible physician investment in technology, facilities, services, or equipment. Physicians invest in facilities to improve the effectiveness, efficiency, timeliness, and quality of the care they provide to their patients. The focus should be not on who owns the medical facility — a physician, a nonprofit entity, or a for-profit company — but on the quality of the facility and appropriateness of patient care. Referrals to a physician-owned entity or an entity in which the physician has a financial relationship must be based on the patient’s medical needs, and full disclosure of financial relationships to patients is appropriate. If overutilization or deviations from quality care are the issues, legislators should address those problems regardless of ownership, rather than limiting patient choice and innovation in the marketplace.
One of the more egregious sections of the Patient Protection and Accountable Care Act significantly inhibits physicians’ legal right to own or invest in hospitals and other facilities that provide high-quality care to their patients. Section 6001 prohibits new doctor investment in hospitals that take Medicare patients; no physician-owned hospitals may start nor may current ones expand.
Federal law should not interfere with physician ownership of hospitals. Studies show physician hospitals have better health care outcomes, shorter hospital stays, and much higher patient satisfaction ratings than nonphysician-owned hospitals. In Texas, physician-owned hospitals employed 22,226 people and paid $1.2 billion in salaries in 2009.  Nationally, physician-owned hospitals provide, on average, approximately 6.2-percent charity care.  These hospitals pay billions in salaries, hundreds of millions in taxes, provide charity care, and deliver services in underserved or abandoned areas. TMA has filed several legal briefs that support a lawsuit seeking to overturn Section 6001 of the PPACA.
- Put ICD-10 on permanent hold until ICD-11 or another appropriate replacement for ICD-9 is ready for widespread implementation.
- Require government agencies to consider the disruption that new regulations and penalties introduce into medical practices and refrain from introducing new hurdles. The one-year delay of ICD-10 is a step in the right direction.
- Protect physicians who care for chronically ill or noncompliant patients from quality-of-care measures that do not account for such variances in patient populations. Stop implementation of Medicare’s “value-based purchasing” program, unless physicians who treat these populations are treated fairly.
- Protect tax law provisions that acknowledge physicians’ unique roles in caring for all patients — this includes physicians who provide charity care.
- Exclude the cost of vaccines from the state business tax.
- Repeal legislation that limits physician ownership of hospitals.
- Promote responsible ownership of all health care facilities, whether owned by a physician, hospital, or other provider.
TMA Healthy Vision 2020