Commentary on "trends" is always tricky in the extreme, with healthcare presenting the most precipitous of conceptual slopes. Yet, physicians and other medical providers yearn for prognostications that herald certainty, order, and rescue from the ravages of managed care. These thoughts will fail to meet those expectations, but they will force the reader to confront some very disturbing evolutions in healthcare delivery. Hopefully, events and recent behaviors of the federal government will allow the reader to discern patterns to light the way to the coming world of direct contracting in the next decade.

Several trends in the healthcare marketplace which seem totally unrelated are now converging at a rapid rate and will forever change the way physicians practice medicine. At the point of intersection is the U.S. government. The U.S. through its regulatory powers will reshape and mold the delivery of healthcare as it addresses "Waste, Fraud & Abuse," compliance programs, false claims, and physician unionization.

How many Managed Care CEOs or provider panel physicians have longed for billing systems that would adjudicate as conceived and pay as promptly as designed? The healthcare landscape reveals the derelict wreckage of too many companies in their information systems. Yet, the vast majority of carriers and medical providers have mastered the technical intricacies of payment, sometimes anecdotally, even "perfectly." For these reasons, DOJ claims automated payment systems allow thieves to bill "correctly" and in the center of mass. Or, as Secretary Shalala, Department of Health and Human Services contends, "sloppy" billing is a major contributor to WFA, and HCFA must focus on billers and carriers who just pay bills and never deny reimbursement. Guaranteed reimbursable diagnoses built into billing programs that were so highly touted not so long ago are now red flags for federal auditors.

Chief among the Federal weapons against WFA in the past two years has been the introduction of compliance programs. Applicable by law to all healthcare funded with federal monies, the Office of Inspector General (OIG) is the primary enforcer. Compliance programs were first introduced into healthcare with the promulgation of the United States Sentencing Commission Guidelines Manual, 8A1.2 (Nov. 1995). There, the Commission wrote, " 'Compliance' is compromise between random and aggressive enforcement and better self monitoring."

In turn, the OIG recently wrote in the Provider Self-Disclosure Protocol in October 1998: "The OIG believes that…participants in the federal healthcare programs…have an ethical and legal duty to ensure the integrity of their dealings with these programs. This duty includes…instituting a compliance program." Providers now find themselves forced to engage in the expense and administration of compliance programs that have lead to a burgeoning industry which identifies risk areas, detects suspected non-compliance, takes prompt corrective action, and urges providers to come forward to report overpayments. All of this doctrine is counter-intuitive to providers and their traditional attorneys schooled in not admitting anything to the government.

Those words are not found in a Federal Government pamphlet, but rather in an advertisement placed in a well-respected healthcare periodical by a plaintiff's law firm seeking clients with actions under the Federal False Claims Act (FCA). "Qui tam, or whistleblower suits have dramatically increased detection of and monetary recoveries for healthcare fraud. Under the FCA, in certain circumstances private individuals can file an action on behalf of the United States, and obtain part of any recovery by the government in the action. The qui tam statute provides strong financial incentives to expose fraudulent activities." - DOJ Healthcare Fraud Report Fiscal Year 1997.

First passed in 1863 to combat unscrupulous suppliers to the Union Army, the FCA has turned into the most feared weapon of the Federal Government in the war against healthcare fraud. Newsmagazine reports literally act as recruiting tools for individuals who have been victimized or even assisted by those intent on defrauding the government. The most famous of these cases have been the Columbia HCA / Quorum , Labcorp, and other "Labscam" cases. Even the elderly are now tantalized by the lure of up to 30% of the recoveries made from prosecution of fraudulent claims. Due to the sums of dollars that are paid out, healthcare will continue to attract the attention of the trial bar, federal prosecutors, and those interested in making quick money.

To the average practitioner, these events do not bode well. No single practitioner could easily sustain a judgment that includes civil penalties of $5-10,000 per false claim plus double to treble damages for the government's alleged losses. While qui tam cases begin their lives as civil cases, referral to the Federal government almost always begins a parallel track of criminal grand jury investigations. Case law has now shown that a qui tam plaintiff can include the perpetrator of the fraudulent activity, such as a biller, while the doctor or hospital suffers the financial ruin and criminal penalties. Do practitioners have anything to worry about from elderly patients, third party billers, competitors, or carriers and the allegations they could bring through these actions? Absolutely, but, the same legal daggers also are pointed at billers and carriers.

One of the most unique evolutions in healthcare has recently occurred in qui tam prosecutions against nursing home operators. FCA recently has been applied to address cases where "inadequate" care is provided under federally funded programs. This doctrine is now being applied against carriers and HMOs that operate under capitated payment arrangements and resulted in several consent decrees. Those applications spawned a companion application of FCA against a carrier for denial of payment. Here, the allegations set forth that a carrier had received funds for payment to providers, but had failed to make those payments timely because of overloaded or inoperable computer payment billing systems. The carrier profited by playing the float from income generated by the retained provider funds.

According to federal prosecutors in this area, the evolution of FCA will next take them deeper into quality of care issues. They are now developing legal doctrines and strategies that contend denial of care exists when a plan knows or should have known that it is delivering less care than it contracted for and disregards its duties, all the while certifying compliance with federal standards of care. Red flags will be attached to those plans that promote less care through bonuses and incentives. The obvious defense against such allegations for denial of care is for plans to completely tie their denials for reimbursement or care to standardized national treatment guidelines.

That headline introduced a recent newswire article claiming the resolve of 15,000 doctors to join together under the National Doctors Alliance, as part of the Service Employees International Union. With that action came an official vow to spend $1 million over the next year to recruit more physicians and dentists. Why? Doctors are frustrated by stepped up HMO control over their practices and incomes. And provider associations at the state and national levels have been unable to stem the encroachment. Even with continued AMA opposition, nationwide 38,000 to 45,000 doctors belong to unions. Almost all work full time for hospitals or HMOs and are residents or interns. Half of the nation's doctors now work in salaried positions, with 80% of recent graduates taking such jobs.

Surprisingly, the Federal Government cannot yet be seen as a proponent of physician unionization. Even with the current administration's ties to organized labor, the current DOJ interpretation of the National Labor Relations Act is that physicians are independent contractors and not employees. This interpretation is in line with the position of HMOs and the business community. As such, any effort to collectively bargain with an HMO has been met with strong legal reaction from the Federal Trade Commission and DOJ for antitrust violations.