This Just In

Sterilizer Lawsuit
Former Steris Exec Sues for Wrongful Termination
Larry J. Joslyn, a former Steris executive described as a nationally renowned expert in sterilization sciences, sued the company in an Ohio court, claiming he was wrongly fired two years ago for repeatedly voicing complaints to Steris that its sterilizers "do not sterilize per label claims and are adulterated and misbranded products" that can endanger patient health and safety, according to court documents. Steris categorically denies Mr. Joslyn's allegations.

After Steris failed to address his numerous written and oral complaints, Mr. Joslyn raised the possibility of informing regulatory agencies about willful product mislabeling and spoliation of material evidence by Steris, according to a copy of the complaint obtained by Outpatient Surgery. That's when, the complaint states, the company fired him and threatened him with legal action for violation of "confidentiality, trade secret and non-competition" clauses in his contract. The complaint refers to the Steris System 1 "and other sterilization products and practices," but only the System 1 is identified by name.

Among the documents filed with the court is a Dec. 4, 2000, memorandum written by Mr. Joslyn, in which he states that he is "ethically obligated" to tell his employers that there are inherent design flaws in the System 1's valves, fill block assembly, overflow tube, "sterile water filter" and sealing gasket.

- Bill Meltzer

HIPAAchondria
More Than Just Extra Paperwork
Just so you know, Pam Neiderer, RN, hates HIPAA. "I'll come right out and say it: I hate HIPAA," says the team leader of clinical services of the Surgical Center of York in York, Pa. "There's just so much paperwork. All that paperwork is getting things hung up."

More than a month into HIPAA's enactment, administrators are finding out there's more to the Health Insurance Portability and Accountability Act than piles of paperwork.

For example, staff at Ms. Neiderer's facility no longer use the 'S' word (SURGERY) when leaving telephone messages for patients. "We can't leave any information on their answering machines that reveals they are having surgery," says Ms. Neiderer. "It's complicating things. Because patients don't get messages, they don't show up on time or they miss appointments."

HIPAA, which limits disclosure of patients' medical information and establishes patient rights, has cost providers millions of dollars and countless hours. At the OB/GYN practice of Jeffrey Mazlin, MD, and Howard Shaw, MD, in New York, complying with HIPAA meant knocking down a wall in the small reception area. "When patients gathered in the waiting room, they could see computers, charts or the medical assistant working with her lab slips," says office manager Barbara Velez. "Even if you sent them around to the other side, there would be the same issue with patients coming to check in."

- Stephanie Wasek

CASC Update
58 Get Certificates; 42 Take Exam
CREDENTIALED ADMINISTRATORS
Fifty-eight of the 78 newly credentialed Certified Ambulatory Surgery Center (CASC) administrators received their certificates during the President's Reception at the 5th International Congress on Ambulatory Surgery in Boston. Two days earlier, 42 administrators took the second CASC exam.

Workers' Comp Surgery
California Workers' Comp Reform Seeks to Curb Outpatient Surgery
Much of the proposed legislation that would shave $1.5 billion off the skyrocketing cost of treating injured workers in California is aimed at regulating outpatient surgery centers.

One bill would cap facility fees at 120 percent of Medicare, a figure surgery centers say is unreasonably low.

"It's preposterous," says Nations Surgery Centers CEO Larry Sherman. "It's so far on the other end of the reimbursement pendulum that it would put [us] out of business."

Nations Surgery Centers, a three-year-old company that owns (in a 60-40 split with its physician-investors) and operates five surgery centers in southern California that specialize in workers' comp cases, has postponed plans to build five more centers because of the 120 percent-of-Medicare proposal, says Mr. Sherman.

Another measure that would prohibit a physician from referring a workers' comp patient to a surgery center that the physician had a financial interest in would mean physician-owners could not collect a facility fee in addition to their professional fee for workers' comp cases.

Blaming the workers' comp 'mills'
Both bills would severely hurt facilities that do workers' compensation cases, especially the small but growing number of centers that specialize in job-related injuries.

Thomas D. Wilson, MPH, the president of the 124-member California Ambulatory Surgery Association (CASA), says that 20 to 40 "rogue" surgery centers that specialize in workers' comp cases and submit exorbitantly high bills are to blame for the proposed legislation. Mr. Wilson claims that these facilities, most of them newer and almost exclusively devoted to treating workers' comp patients, brazenly bill as high as $12,000 for an epidural for pain management, $30,000 for a shoulder repair and $45,000 for an ACL repair.

"A very small group of facilities have taken billing to a new art level," says Mr. Wilson, the principal at the Monterey Peninsula Surgery Center. "They're poisoning the well for all surgery centers in the state."

Rather than submitting a global bill for a workers' comp case, these facilities submit pages and pages of itemized bills to payers, says Mr. Wilson. "They bill these much like how you check out of a supermarket," he says. "They itemize every little thing."

Itemizing, says Mr. Sherman, "is a good way to justify what you really did" and "to show that you really used all of the different inventory items."

CASA considers such aggressive billing tactics, though not illegal, highly unethical.

"What's the matter with somebody getting $8,000 for a knee when there isn't a fee schedule?" asks Mr. Sherman. "We do live in a free enterprise system. That's what this land's about."

CASA supports a fair and reasonable workers' compensation outpatient surgery fee schedule, but it may not get is wish. SB 228, the bill that would reimburse 120 percent of Medicare's fee schedule, means surgery centers could only bill around $350 for an epidural under fluoroscopy on an injured worker rather than the customary $2,000. Or $900 for a knee surgery rather than $6,000.

"That wouldn't even cover supplies," says Mr. Wilson. "So our ACL patients will go to the hospital and stay overnight."

Adds Mr. Sherman: "We can do a knee surgery for $900 ' out of a garage. We are not opposed to a reasonable fee schedule, but a Medicare-based fee schedule would put a good number of centers in California out of business."

CASA is lobbying lawmakers to model California's workers' comp fixed-fee schedule after Oregon's, which pays 250 to 275 percent of Medicare's fees, moves endoscopic, arthroscopic and other high-technology procedures into higher groupers and allows a separate charge for surgical implants.

Banning self referral
Equally controversial are three bills that would make it a crime for a physician to perform workers' comp surgeries in a facility in which he has an ownership interest or investment. Proponents of these bills say laws are needed to close loopholes that forbid self-referral in most medical specialties but allow it for physician-owned outpatient surgery services.

"The problem is that legislators don't understand that the loopholes exist for a reason - to provide patients with better access to surgical health care by enabling physicians to take cases to a venue other than the hospital," says James Pertsch, MD of San Mateo, Calif., a plastic surgeon and hand surgery specialist who performs a lot of workers' compensation cases. Dr. Pertsch notes that before a workers' comp case can be reimbursed, case managers from insurance companies have to review the diagnosis and approve reimbursement.

Opponents say this legislation would force cases back into the hospital, reducing access to surgery and increasing waiting times for procedures. The legislation would not prevent fraud, says Dr. Pertsch, noting that there is no evidence of a correlation between unnecessary surgery and facility ownership. "An unethical surgeon who is an ASC owner and wants to cheat the system can still perform unnecessary surgery in the hospital for his physician's fee," says Dr. Pertsch.

Far-reaching ramifications?
Could California's anti-self-referral workers' comp legislation set a bad legal precedent for measures geared against physician-ownership of other ASC specialties, both in California and elsewhere? Be concerned, but don't push the panic button, says healthcare attorney Eric Zimmerman, Esq.

If the measures pass, physician-owned ASCs that do workers' comp would struggle to comply with conflicting federal and state laws. On the federal level, the Office of Inspector General expects physician owners of ASCs to use their ASCs to perform outpatient surgery on their own patients. The California laws would create different expectations for different specialties. "If ever there was an area where federal standards should preempt local ones, this is it," says Mr. Zimmerman. "If the workers' comp referral bills become law, California will be out of step with the rest of the country."

- Dan O'Connor and Bill Meltzer

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