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Political Turmoil:  DRG's, HIPAA and the Doctor-Patient Relationship
Institutional panic purposely precipitated by federal policies
produces health-care chaos and political turmoil.

“Prospective reimbursement" for health care is a misleading approach to curtailing health care costs because it pretends to economize, but merely budgets.  There is a great difference between limiting expenditures on the one hand, versus increasing the health value produced by each dollar on the other.  The concept of "Diagnosis Related  Groups" is indefensible as a means of putting dollar values on health care, worse than the faulty old "procedure codes" (which come closer to the idea of an itemized statement of goods and services provided, or costs entailed).

"Diagnosis Related Groups" is as faulty as any other stereotype, implying that a diagnostic label reflects the reality of  a patient's needs and experience.  "Labels limit," as Carl Rogers said.  There may be more variation within a group than between groups.  We need a method truly to evaluate the skill or contribution to health a clinician or clinical team may contribute.1  Prospective reimbursement and DRG's are merely axes meant to chop away funds, either from providers who grasp for them or from afflicted persons who need them.

What was a mere proposal for research purposes, to study health expenditures in order to understand them better, was immediately expropriated by the insurers (including Medicare, the government insurer) to take control of spending.  Any savings with Medicare makes more resources available for health care or less loss to the taxpayer-underwriter.  Any cost-cutting by the private insurance companies goes into their pockets, diminishes resources available for health purposes.

HIPAA (the Health Insurance Portability and Accountability Act of 1996) is unnecessary, ineffective, and the most outrageously and incalculably expensive inadvertent misbehavior our culture and economy could ever come up with.  The “health insurance portability” part was gutted by politicians from the act long before it was finalized.  No guarantee of carrying your insurance coverage from job to job was ever enacted.  Decades later it has not been.  The “HIP” of “HIPAA” remains only as an acronym.

Clinicians and others were bound by law and by ethics long before 1996 to protect confidentiality for each patient.  The only parties from which patients needed protection were the private insurance companies who would use confidential information to deny claims as “pre-existing conditions” or “not covered by the policy”.  Insurance companies are so rich and powerful they can appropriate such information at will, despite any law.  In fact, their lobbyists write our laws.  So, the “AA” of “HIPAA”, though useless, became the rule which intimidated health care institutions into a panicked stampede to grab the dollars they thought they could get hold of, or at least to protect themselves from the fines which were threatened.

The incalculable costs came not through guarantees of insurability (for that was withdrawn, never offered to the American people), nor from any increased delivery of health care, but from the creation of whole new industries to do the pointless task of enforcement (which was never pursued, for it would have had to be used against the insurers), but especially extensive annual training of every employee whose job touched health even peripherally, and internal coaching for every health care organization which requires millions more administrative employees (perhaps an economic “stimulus” ploy creating more sinecures and feather-bedding).

An incalculable expense from both DRG’s and HIPAA has been and will be the development and application of massive computer software, hardware and paperware (for “paperless” continues to kill even more trees).  Every health care organization large and small (including individual doctor’s offices which have been driven out of existence thereby), every insurer or processor (of whom there are now incalculable layers upon layers) and a vast flood of government agencies use these computer programs, training programs and oversight programs to grab money, keep money and to avoid paying out money, all in competition with each other.  Not one patient has benefited from any of this.

More destructive than Reagan Administration policies or the most well-intentioned programs promoted by Hilary Clinton or Ted Kennedy, is the phenomenon of institutional panic which is a reaction to them, a drastic change in hospitals' attitudes toward health care responsibility, seeking dollar rewards for the limiting of care, seeking approval for obedient behavior toward policies which are not only poorly conceived but which are not yet fully activated in the forms which are feared (“socialized medicine”).  Institutions want to follow all the formal rules of arbitrary administration policies, but at the same time spend much of their resources to collect top dollar from "cost-cutting" programs.  The phenomenon of institutional panic is a tragedy perpetrated by institutions directly, not by the federal government.  It can be avoided.

Our behaviors make a great difference, not only as individuals but as institutions, as Edmund Pellegrino outlined in his notes on "Hospitals as Moral Agents."2  To act with integrity at times of chaos and transition may be difficult, but the success of the clinical enterprise has always depended on exacting ethical behavior on the part of individual professionals and groups or institutions.  To abandon our principles now is to abandon the enterprise itself.  We know very well the principles of ethical clinical behavior, that they are applied similarly by individual clinicians and the institutions within which we all work for the sake of each real individual patient, but it doesn’t require the insane chicanery of DRG’s or HIPAA to accomplish economy or equity (nor do these accomplish those).

Clinical action takes place in the relationship between the person who is patient and the person who is clinician.  Perversions of this central truth are the only causes of outrageous expense and abuse in health care.  It is not technology which causes insane expenses, but our unrealistic expectations.  Unbalanced and ignorant approaches in the clinical relationship result in disruption of communication with the patient, which cascades into reduplication of procedures, iatrogenic complications and malpractice, which in turn lead to unbelievable costs of protection  against malpractice claims, directly and in the form of “overcure" (“CYA”).

The universal truth of the clinical relationship in all societies at all times, is that when some one of us is hurt or ill, pained or confused, she or he must depend on someone else to make sense of what is happening.  The clinician must be ready to act for the patient's sake, to help that person regain health or autonomy (or realistically to recognize processes of degeneration to minimize  their pain and destructiveness), to comfort and attend to the moment of death if need be, and even beyond the death of the patient to explain the meaning for the family and the society, to stand loyal to them, to comfort them.

The paradigm of the clinical relationship is that it is between individual persons, but clinical action in the hospital involves a large team of clinicians even in the simplest circumstance.  (See “The Clinical Team”.)  The team must be coordinated, but the game may be lost any time the ball is dropped by any one of that team--including administrators, technicians, clerks or non-clinical service personnel.  If it is difficult to succeed in processes of diagnosis and treatment under simple circumstances, it certainly can seem impossible in the complex setting of the hospital.  Factors which distract us from paying attention to the patient's real needs and awareness must be understood and contained, or the basic purposes of all clinical action will be lost.

"Diagnosis Related Groups" had a drastic effect on patient care even before they were put into limited effect.  In most every institution the prominent document on the patient's chart became the computer-generated "differential diagnosis" engineered to pick the most high-priced DRG, with the pseudo-clinical requirement that the physician sign it as if she or he were doing a clinical task rather than a fiscal one.  Social service departments which had served to promote the coherent integration and continuation of clinical care for each patient became converted into "hit squads" to get patients out the back door almost before they came through  the  front.  Clinical nursing staffs were drastically cut, but many nurses came to do "utilization review" for various  agencies, stamping charts with authoritative-looking judgments about when patients should have been discharged (often unsigned), never communicating with the physician directly, never using the clinical skills they might share for the sake of the patient.

I was not the only one to predict that the imposition of Diagnosis Related Groups would disrupt the clinical relationship.3 We have indeed seen disruptions, but need more thorough assessment to have any chance for stability in hospital care  some time this  century.

Nurses seemed depressed and confused as they tried to knit together care while the motivations of those around them changed.  They began again to retreat into the defeatist defenses, "That's not in my job description.  I only work here.  I don't know about that."  Patients and their families are increasingly frustrated and angry as they sense the pressure to end the hospitalization rather than to complete processes of diagnosis and treatment.  Physicians are feeling even more powerless than they had, struggling to make sense not only of pathology but of bureaucracy.

1.  A nurse who has been known to be energetic and proud is seen to be lethargic at the desk.  When asked how a certain patient is she says, "I don't know."  When asked how she is she says, "Not so well."  When asked why, she says, "I used to get to know the patients and felt I was doing something important for them.  Now, before I can understand how they are or what they need they are discharged, no matter how they feel.  I am afraid any skill I had is no longer useful."

2. A woman has turned eighty and has fallen, complains of pain in her back.  Her son reports she is eating poorly, concerned about recurrence of abdominal pain for which she had two surgeries in the past year.  She has severe hypertension, anemia and other abnormal conditions.  The  admitting diagnosis is "pelvic fracture, undisplaced."  Nursing and social service staffs push for discharge when the utilization review nurse writes in the chart an unsigned demand for "discharge planning" on the second hospital day.  The son is alienated, the  patient shamed.  The physician tries to convey that the most disabling aspect is depression centered on turning eighty, that moral support, furosemide and physical therapy for a few days will predictably prevent a fourth admission to the hospital in six months, that shaming the patient out of the hospital will predictably intensify her depression.

3.  A physician is called by a colleague who serves as advisor to a utilization review nurse:

    "Your patient should be out of the hospital.”

    “Thanks, but I will not know whether he should be discharged or remain longer until I see the results of tests being performed as we speak.  What do you think of his condition?"

    "I know nothing of the case, only what the nurse told me."

    "I wish she would talk to me."

    "I do too, but that isn't how it's done.  She put a stamp on the chart yesterday, and you didn't comply with it."

    "Sorry, I don't have a stamp--but I answer my phone around the clock."

DRG's explosively changed our society's approach to accomplishing coherence in processes of diagnosis and treatment, changed the setting away from the hospital, changed responsibility from the professional to the impersonal distant regulator—exactly what we said we were afraid of in “socialized medicine”  This is the opposite of socialized medicine, a profit-driven way to drive the sick and injured away from care.  We need to reassess the value of traditions of caring with respect to our educations, experiences, institutions and humaneness.  We can economize without destroying the machinery with which we have done good work in the past.

I knew what would be the outcomes of these change in the personal principles of health care.  At that time the Public Health Service and the Prospective Payment Assessment Commission promised to convene or plan conferences to consider protection of quality of care.4  Studies of first year results were slow in coming, but they reflected the unreliability of DRG's as then enforced, though it was denied blatantly by its federal administration.  State and local politicians like Richard Lamm of Colorado continued to wield the shield of “cost-cutting” while they evaded responsibility to formulate coherent and humane policy.  It is not a question of personality or parties; had Ted Kennedy been elected in 1980, the results would have been the same.  Politicians glibly blame traditional medical and hospital establishments for rising costs, who indeed share responsibility as Paul Starr has long ago helped us understand.5

Organized medicine, hospital organizations and the insurance industry have colluded with politicians for decades to exploit the simple clinical enterprise for profit and power, but economic simplicity comes from focusing on a single purpose, to care for the patient.  Now we have a burgeoning of commercial interests which thrive on confusion of values.  What is overlooked is that the value of clinical techniques and understanding is reposited in the persons of clinical professionals, now long since cast aside.  Perhaps some correction of current policies will come, the first of which could be the acknowledgement that DRG's and HIPAA have been counter-productive and terribly expensive—not at all effective as cost-cutting or health-protecting measures.

No improvement can possibly be had unless health care institutions themselves seek not to obey questionable policies, but actively to question them, assess their effects, report insistently to sincere bureaucrats (public servants) the problems we encounter, and expect and demand coherent responses for the sake of patients whose care depends on the ethical fiber of institutions and the persons who participate in them.

In summary, I recommend health care professionals and institutions make their first priority quality care aimed toward the real needs of each patient, avoiding reduplication and unnecessary procedures.  We need to protect the patient by insisting that utilization review processes communicate directly to coordinated clinicians in every case before problems or questions arise.  We must assess the added costs of utilization review, balance that against savings from limitation of inappropriate hospitalization.  Essentially, I encourage all of us in health care to pay attention to the patient.


1Janet Rogers McClain and Marianne Sweeney Selhat, "Twenty Cases:  What Nursing Costs per DRG," Nursing Management, October, 1984.
American Psychatric Association study on DRG's, as reported in  the American Journal of Psychiatry, February, 1986.
There are ongoing attempts to establish dollar value tables for "cognitive" clinical work, as opposed to “procedures“.

2 Edmund Pellegrino, M.D., "Hospitals as Moral Agents," from Humanism and the Physician, University of Tennessee, Knoxville, 1979, pp. 141-52.

3 "The Myth of the Marketplace" and correspondence with Ronald Reagan and Edward N. Brandt, 1981-1984, reflect my concern.  Roger Egeberg, MD stayed in Washington at the Institute of Sciences, fretting knowingly.

4 Communication with Bill Cloud, Public Health Service, DHHS, Rm. 7406, H.H. Humphrey, 200 Independence Ave. SW, Washington, D.C. 20201.  Please feel free to write or call the Public Health Service--they need your help, and you pay their salaries  and expenses.

5 Paul Starr, The Social Transformation of American Medicine, Basic Books, 1986.  He is the only other writer I know who refers to the experiences of Michael Shadid, MD, organizer of a pre-paid health care plan in Elk City, Oklahoma in 1928 and the decades following.  His efforts were attacked and eventually defeated by organized medicine.

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