The failure of community benefit

Though proponents of tax exemption for health care providers continue to extol the virtues of the community-benefit test, Part II of this article illustrates that the train pretty much has already left the station on this front. Both the federal government and the states increasingly look to uncompensated care as the touchstone of exemption for health care providers. To a great extent, this transition back to a "relief of the poor" standard for exemption is the result of the inherent lack of precision in community benefit standards, along with the general trend of empirical evidence that nonprofit health care providers behave similarly to their for-profit counterparts. Faced with this situation, federal and state policymakers naturally have focused on charity care as the one quantifiable behavioral difference to justify exemption. Nevertheless, some empirical evidence suggests that nonprofits may engage in socially desirable behavior other than simply free care for the poor, and the arguments that a mixed ownership system provides the best overall health care model cannot be dismissed out of hand. Thus, despite my past criticisms of the community benefit formulation, I have come to the view that we should seriously consider the options available beyond complete repeal of the community benefit test or a return to a strict charity-care exemption standard. I continue to believe that we should demand a fairly high level of "accountability" from exemption, however, and that exemption should have some direct causal connection to whatever socially-desirable behavior we are seeking. While one option along these lines is to adopt Nina Crimm's approach of rewarding specific behaviors through a deduction or credit system, using "enhancing access" as a test of exemption may provide the best combination of flexibility and verifiable behavioral differences to support continued exemption for health care providers.     

IRS General Counsel Memorandum threatens some hospital-physician joint ventures

To defend against the heightened scrutiny of hospital-physician relations expected from the IRS, hospital management should closely examine any activities now conducted with physicians to determine whether each activity, as organized and operated, furthers the hospital's charitable mission of promoting the health of its community, rather than merely enhancing the financial health of the institution itself. Any arrangements that do not appear to satisfy the principles enunciated in GCM 39862 should be examined to see if they should be restructured or dissolved. In structuring new transactions and examining existing arrangements, the following principles should be kept in mind: 1. Transactions should not be premised upon increased utilization or physician referrals. Enhancing or protecting market share, even for the purpose of preserving an institution's presence in the community, will likely no longer be accepted as a justification for pursuing joint venture arrangements. In justifying such ventures, management must distinguish between benefit to the community and benefit to the institution. 2. Transactions whereby existing services or equipment are "spun off" to a hospital-physician joint venture run a serious risk of enhanced IRS scrutiny. 3. Transactions creating or providing new facilities or services should be more favorably perceived, particularly where participants other than the hospital take an active role in managing the venture. Where the hospital is the sole general partner and merely manages what it would have managed had there been no physician investors, the question of why physicians are involved will likely be of greater concern than it has been in the past.(ABSTRACT TRUNCATED AT 250 WORDS)     

Does Proposed Federal Cyberstalking Legislation Meet Constitutional Requirements?

As a microcosm of society, the Internet attracts some of the same undesirable elements that inhabit the offline world. Unfortunately "cyberstalkers" are among them. A proliferation of stories posted on the Internet and reported in the news, as well as an increase in cases handled by police computer crime units, indicate the problem is on the rise. This article explores current state and federal stalking laws in the United States, their application to cyberspace and First Amendment concerns related to cyberstalking legislation. The article suggests that the current federal stalking law is inadequate to deal with the growing problem of interstate cyberstalking, reviews two bills in Congress that would make interstate cyberstalking a crime and concludes that both bills would benefit from slight changes in wording to help them deflect constitutional challenges for vagueness and overbreadth and make them more effective.     

Determining health care rights from behind a veil of ignorance

Should our society establish positive rights to health care that each citizen could claim, as many health policy analysts believe? Or should it provide only background rules of contract and property law and leave the provision of health care to the free market, as Richard Epstein advocates in Mortal Peril? In this article, Professor Korobkin argues that this question should be addressed from the Rawlsian "veil of ignorance" perspective. That is, the question should be answered by asking what kind of society would individuals agree to form if they had no knowledge of their individual skills or endowments; if they did not know whether they were rich or poor, healthy or sick, weak or strong. Professor Korobkin contends that individuals behind such a veil of ignorance would balance their inherent risk aversion (which favors a safety net of "rights") against the inefficient incentives created by rights regimes that would reduce net social wealth (which favors a free market). Whether they would choose to establish rights to health care or not is ultimately an empirical question that turns on how inefficient any particular right would be. The question thus requires a case-by-case analysis of proposed rights. The article then considers the policy issues of (1) community rating of private health insurance and (2) the mandated provision of emergency medical care. It concludes that in these cases the inefficient incentives created by establishing rights are probably smaller and/or controllable enough to lead individuals behind the veil of ignorance to favor a regime of positive rights.     

Whistleblower protection for nurses and other health care professionals

Because most employees in the United States, including health care professionals, are employed "at will" (which means their employment can be terminated for any reason or no reason, as long as the reason isn't illegal), retaliatory actions by employers toward employees who speak out (i.e., blow the whistle) are not uncommon. Additionally, the law protecting whistleblowing employees varies greatly depending on the state where the employee works or if he or she works for the federal government. This article examines when and under what conditions a nurse or other health care professional may be protected from having an adverse employment action taken against him or her for reporting such issues as patient safety violations or health care fraud. The authors offer issues a nurse or other health care professional should consider before making the decision to blow the whistle. Finally, the authors also discuss the remedies such as reinstatement, back pay, or other compensatory mechanisms that may be available to employees terminated for reporting wrongdoing.     

The debate over specialty hospitals: how physician-hospital relationships have reached a new fault line over these "focused factories"

Within the last 20 years, the fragile symbiotic relationship between physicians and hospitals has become increasingly strained. Physicians have created new healthcare delivery systems, including a host of for-profit, physician-owned specialty hospitals. Proponents of specialty hospitals argue that they provide high quality facilities and allow for innovative treatments. Opponents, however, contend that such hospitals "cherry pick" patients who otherwise would help to subsidize general hospitals, and point to the various fraud and abuse issues raised by physician-owned specialty hospitals. This Article examines the specialty hospital phenomenon and the arguments for and against such entities. It also analyzes whether an extension of the present federal moratorium on the construction of new physician-owned specialty hospitals is in the best interests of the country's healthcare system. The author concludes that the data are unclear as the overall impact of such hospitals and that they should not be further constrained until when and if the facts are clear.     

Researcher liability for negligence in human subject research: informed consent and researcher malpractice actions

Two sets of federal regulations, the "Common Rule" and Food and Drug Administration (FDA) regulations, govern human subject research that is either federally-funded or involves FDA regulated products. These regulations require, inter alia, that: (1) researchers obtain informed consent from human subjects, and (2) that an Institutional Review Board (IRB) independently review and approve the research protocol. Although the federal regulations do not provide an express cause of action against researchers, research subjects should be able to bring informed consent and malpractice actions against researchers by establishing a duty of care and standard of care. Researchers owe human subjects a duty of care analogous to the special relationship between physicians and patients. The federal regulations should provide the minimum standard of care for informed consent in human subject research, and complying with them should be a partial defense. In contrast, expert testimony should establish the standard of care for researcher malpractice, and IRB approval should be a partial defense.     

The Calculus of Cosponsorship in the U.S. Senate

We investigated why a legislator would be willing to vote “yea” on final passage of a bill but would choose not to cosponsor that bill. We tested a series of hypotheses regarding the cosponsorship decisions of individual senators, using a dataset that includes every major initiative that was introduced and received a floor vote in the Senate between 1975 and 2000. We found that senators are more likely to cosponsor bills when their preferences diverge from the Senate median but are closer to those of the bill's sponsor. Also, senators are more likely to cosponsor bills when they sponsor a higher number of bills overall, when they become more connected with colleagues, and when their constituents increase demand for legislation within particular policy areas. Senators are less likely to cosponsor bills if they received a higher percentage of the general election vote in their most recent election.     

Legislating Crime Policy from the White House: Presidential Success with Congress in the Passage of Federal Crime Control Policy

Previous research has found that presidents, in general, have the power to influence congress in the passage of federal crime control policy. What has not been fully explored is whether presidential supported bills are more likely to influence congress to pass federal crime control bills. Therefore, this study draws upon the theory that presidents influence congress to test the hypothesis that president supported legislation on crime will achieve greater success in congress than non-supported bills. Analysis of legislative, presidential and congressional data from 1946 through 1996 suggests support for the theory that presidential supported bills are 2.8 times more likely (or 185% more likely) to become law.     

Qui tam claims: threat to voluntary compliance programs in health care organizations

The Department of Justice (DOJ) reports that after violent crime, health care fraud is the department's top priority. The number of health care fraud investigations pending at the DOJ increased from 270 cases in 1992 to more than 4,000 in 1997. The DOJ's primary weapon in prosecuting health care fraud is the federal False Claims Act (FCA) of 1863 (31 U.S.C. secs. 3729-3733). Almost unique among federal antifraud provisions, the FCA may also be used by "private prosecutors" to file lawsuits on behalf of the federal government charging organizations with submitting false claims to the government. The FCA rewards such whistle-blowers with a share of any resulting recoveries as a bounty and protects them from discharge for filing false claims lawsuits against their employers. It also requires defendants to pay the costs and attorneys fees of successful claimants. Although the private "bounty hunter" features of the FCA data back to the Civil War, these so-called qui tam claims were nearly dormant until 1986, when Congress amended the FCA to revive their use. Following the 1986 amendments, and paralleling the rapid increase in federal reimbursements for health care costs, private qui tam claims have far expanded beyond their traditional purview of defense contracts into the field of health care. By 1997, health care providers were the targets of 54 percent of the 530 private qui tam lawsuits field that year.     

Controlling post-transfusion hepatitis: a proposal to publicize hepatitis rates of transfusion facilities.

A federal requirement that donor blood be labelled as either "paid" or "volunteer" took effect on May 15, 1978. A major rationale for requiring such labelling is that physicians, now that they can distinguish between categories of blood, will fear liability for post-transfusion hepatitis resulting from the use of paid blood. Thus, supporters of the labelling requirement hope that it will deter the use of high-risk commercial blood. Some paid blood, however, is not commercial blood and in fact may be safer than volunteer blood. The labelling strategy for hepatitis control, therefore, has negative as well as positive attributes. This Article considers the efficacy of blood labelling as a hepatitis control measure and proposes an alternative strategy--the periodic publicizing of hepatitis rates of facilities that perform transfusions--that, if practiced responsibly, could significantly decrease hepatitis transmission rates.     

Medical liability and health care reform

We examine the impact of the Affordable Care Act (ACA) on medical liability and the controversy over whether federal medical reform including a damages cap could make a useful contribution to health care reform. By providing guaranteed access to health care insurance at community rates, the ACA could reduce the problem of under-compensation resulting from damages caps. However, it may also exacerbate the problem of under-claiming in the malpractice system, thereby reducing incentives to invest in loss prevention activities. Shifting losses from liability insurers to health insurers could further undermine the already weak deterrent effect of the medical liability system. Republicans in Congress and physician groups both pushed for the adoption of a federal damages cap as part of health care reform. Physician support for damages caps could be explained by concerns about the insurance cycle and the consequent instability of the market. Our own study presented here suggests that there is greater insurance market stability in states with caps on non-economic damages. Republicans in Congress argued that the enactment of damages caps would reduce aggregate health care costs. The Congressional Budget Office included savings from reduced health care utilization in its estimates of cost savings that would result from the enactment of a federal damages cap. But notwithstanding recent opinions offered by the CBO, it is not clear that caps will significantly reduce health care costs or that any savings will be passed on to consumers. The ACA included funding for state level demonstration projects for promising reforms such as offer and disclosure and health courts, but at this time the benefits of these reforms are also uncertain. There is a need for further studies on these issues.     

Special report on reimbursement. The safe harbor for small investment interests: where do joint ventures go from here?

There is no specific federal self-referral legislation presently proposed or in effect that statutorily prohibits providers from referring Medicare or other patients to entities in which the referrers have an investment interest, except for existing "Stark" legislation, which applies only to clinical laboratory services, effective January 1, 1992. (See Newsletter, Vol. 6, No. 1, January 1991, at 3.) Thus, health care joint ventures are not per se illegal. The publication of the Safe Harbor Regulations does nothing to change this fundamental fact, and it should not cause providers to abandon existing joint ventures, or planned ones, in a "knee-jerk" fashion, without careful analysis. Of course, there is no guarantee that expanded "Stark" legislation, or some other new self-referral legislation, will not be enacted in the future to prohibit providers from referring patients to entities in which they have an investment interest. Because of this uncertainty, all health care joint ventures should contain "unwinding" provisions to govern the rights and obligations of investors in the event that the venture is required to, or the participants voluntarily elect to, dissolve. Any new venture being contemplated should plan for dissolution, and existing ventures should undertake an internal review of their charter documents to assess whether the rights and duties of all participants upon dissolution are properly spelled out. If not, amendments should be made now, while all participants are on good terms. A failure to agree in advance upon such important issues is an invitation to discord, and possibly even litigation.     

Medically futile care: the role of the physician in setting limits.

In an effort to clarify the concept of "medically futile care," two types of futile care are identified: 1) care that produces no demonstrable effect; and 2) care that produces an effect that is believed by the speaker to be of no net benefit. It is the second type of futile care, when a patient or surrogate and the clinician disagree over the benefit that the patient will receive from an intervention, that is most interesting morally and that cannot properly be labelled medically futile. As such, decisions to limit access to care deemed futile should not rest with medical professionals. This Article argues for a limited duty of clinicians to provide life-prolonging and some other fundamental care that is equitably funded and desired by the patient while competent, even if the clinician believes that such interventions will produce no net benefit.     

Revisiting the duty of care of the nonprofit director

The current corporate responsibility environment has prompted interested stakeholders, including legislators and state charity law officials, to more closely evaluate what constitutes the proper exercise of the "duty of care" by the director of a nonprofit corporation. The authors review recent developments affecting duty-of-care obligations and conclude that corporate responsibility and related concepts are likely to require directors to give greater consideration to the exercise of their "oversight" obligations as subsumed within the duty of care. The Article identifies a number of recent instances in which state charity law officials and other third parties have raised issues associated with the proper exercise of directors' oversight obligation, and concludes that directors of nonprofits will require greater counseling on their duty-of-care obligations in order to reduce their liability profile in an increasingly contentious environment.     

State Medicaid reform under Section 1115 demonstration authority

Given the complexity of federal Medicaid law and the limitations it imposes on state flexibility, it is likely that states will continue to ask the Secretary to grant waivers under Section 1115 to allow them to pursue new approaches to health care reform. The results of currently operational Section 1115 projects involving statewide managed care systems will be useful in evaluating the Medicaid reform measures currently under discussion in other states and at the federal level. In particular, the ability of the states to control Medicaid and indigent care costs and to utilize federal dollars more efficiently should prove important in evaluating a block grant approach to federal Medicaid funding. Moreover, Section 1115 project results that bear on the sufficiency of various Medicaid capitation rate methodologies will also be of value as more states expand the use of managed care arrangements for their Medicaid populations.     

Health care financing among the elderly: who really pays the bills?

This paper investigates the issue of who pays the health care bills of the elderly by considering the types of subsidized health insurance protection enjoyed by the noninstitutionalized elderly and the way that increased Medicare cost-sharing efforts in the 1980s are affecting those without additional health insurance subsidies. In making this examination we estimate the out-of-pocket health care expenditures of the elderly either directly or as nonsubsidized medigap premiums by income level, taking into account four types of health insurance subsidies received by elderly persons: Medicare, Medicaid, Veterans Administration health care, and subsidized health insurance from either current or former employers. We find that increased cost sharing is likely to fall most heavily on those elderly least likely to afford it: the poor and near-poor elderly who have only Medicare as a health insurance subsidy, particularly those who are older and sicker and who use Medicare services more heavily. These persons are caught between well-intentioned federal cost-cutting efforts and the often confusing panoply of health insurance programs for the aged, and they will bear an inequitably large portion of any future Medicare cost-sharing initiatives.     

Policy Innovation or Vertical Integration? A View of Immigration Federalism from the States

Since 2005, state legislatures have passed hundreds of immigration bills, and state officials have argued that their efforts attempt to solve immigration crises caused by federal inaction. The state–federal clash over immigration seems to confirm scholarship suggesting deepening lines of conflict in the federal system since the 1990s. The question remains, however, whether this explosion in state immigration laws signifies a move by states to tailor their own solutions to immigration issues. This article explores whether states are serving as laboratories of innovation for immigration policy. The study analyzes over five hundred immigration bills passed between January 2006 and December 2008, and engages in a comparative analysis of three immigration policy areas (immigration law enforcement, employment regulations, and drivers' licenses) where there exist varying degrees of state autonomy from national policy and thus distinctive possibilities for states to offer creative approaches to immigration issues. The findings suggest little evidence of policy innovation at the state level, although a handful of states are challenging federal supremacy in immigration matters.     

Family caregivers: a shadow workforce in the geriatric health care system?

Based on two years of fieldwork, conducted between March 2003 and March 2005 in the health care industry of the northeastern United States, this study shows that the work of family caregivers of elders goes far beyond previously recognized care in the home to acknowledge care inside health care facilities and in conjunction with community services. It reveals that family caregivers--untrained, undersupported, and unseen--constitute a "shadow workforce," acting as geriatric case managers, medical record keepers, paramedics, and patient advocates to fill dangerous gaps in a system that is uncoordinated, fragmented, bureaucratic, and often depersonalized. Detailed examination of what family caregivers actually do in traversing multiple domains reveals the extent of their contribution to and the weaknesses in the present geriatric health care system. It suggests that the experiences of family caregivers must be central to the creation of new policies and a more coordinated system that uses the complex work of family caregivers by providing the training and support that they need.