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Understanding the Mental Healthcare Regulatory Environment

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Appreciating the Rules

[By Carol Miller; RN, MBA]

Carol S. MillerLocal counties and municipalities are the primary providers of state mental healthcare for patients who lack private insurance coverage for such care.

Both children and adults may be eligible to receive assistance.

These counties provide a wide range of psychiatric and counseling services to the residents in their community as well as other types of assistance such as:

  • treatment services related to substance abuse;
  • housing;
  • employment services;
  • information and education service;
  • referrals;
  • consultative services to schools, courts and other agencies;
  • after-care services; and other related activities.

mental

Rules and Regulations

Accordingly, regulations from federal, state, and county governments have an impact on the day-to-day operations, procedures and processes of a county mental health center. Traditionally, there are three main types of regulations.

Federal Regulations — The United States healthcare system is guided by programs such as those established under the Centers for Medicare and Medicaid (in the case of county mental health programs, Medicaid is especially important), Americans with Disabilities Act (ADA), Occupational Safety and Health Administration (OSHA), Health Insurance Portability and Accountability Act (HIPAA), and others.

State Regulations — These include general legislative guidelines, state management of benefits and reimbursement of the Medicaid program, and state allocations of budgets, which impact the centers’ operations.

County Regulations — Each county defines its own County Mental Health Program and decides which services will be provided or excluded.

Assessment

County facilities generally include outpatient clinics, county mental health programs, short-term psychiatric facilities, day-care centers, de-toxification centers, residential rehabilitation centers for substance abuse, long-term care psychiatric facilities, and Veterans Affairs (VA) psychiatric centers. The county centers may be co-located with other county services such as social services, occupational rehabilitation services, information technology services, human resources, maintenance services, and others or may be independently located.

Conclusion

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How to Evaluate a Managed Care Contract Proposal?

ASK AN ADVISOR

To Join -or- Not to Join is the Question

By Staff Reporters

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A new-wave West-Coast managed care organization (MCO) wanted a multi-specialty medical group to contract with them to provide medical services to all subscribers. Compensation would be in the form of a fixed-rate capitated payment system, a.k.a. per member / per month (PM/PM).

Ask an Advisor

The medical group practice administrator reviewed their request for proposal (RFP) very carefully, but is still not sure what to do. So, allow us to “crowd-source” as we ask ME-P readers, advisors and management consultants for a solution.

Key Issues

Facts to know for an informed PM/PM capitated reimbursement decision:

  • annual frequency or service-rate per 1,000 patients
  • unit cost of medical services per unit-patient
  • co-payment dollar amount per patient
  • co-payment frequency rate per 1,000 patients
  • variable cost per patient
  • under-capacity medical group office utilization rates, and
  • fixed overhead office-cost coverage [+/-].

Assessment

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A Post is not a Comment

By Ann Miller; RN, MHA

[Executive Director]

The number of comments to our ME-P posts has increased of late, and we are grateful.

Now, an increasing number of subscribers, readers and visitors are asking how they might contribute an original or modified post [not comment to a post] for our target MEP audience. And so, we offer the following guidelines.

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Essays should be original and may not be submitted to other publications, blogs or listservs without permission. Essays must target our audience and be in the following format:

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Assessment

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About URAC

Accrediting Healthcare Organizations 

By Staff Reporters

URAC, formerly known as the Utilization Review Accreditation Commission, promotes healthcare quality by accrediting healthcare organizations.

An Independent Nonprofit

URAC, an independent, nonprofit organization is well known as a leader in promoting healthcare quality through its accreditation, education, and measurement programs. URAC offers a wide range of quality benchmarking programs and services that keep pace with the rapid changes in the healthcare system, and provide a symbol of excellence for organizations to validate their commitment to quality and accountability.

Mission

URAC’s mission is to promote continuous improvement in the quality and efficiency of health care management through processes of accreditation and education.

Assessment

Through its broad-based governance structure and an inclusive standards development process, URAC ensures that all stakeholders are represented in establishing meaningful quality measures for the entire healthcare industry.

For more information, visit www.urac.org.

Conclusion

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Retirement Plan Risks for Physician-Employers

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Advantages Well Known – Disadvantages Not So

By Brian J. Knabe, MD

[Certified Medical Planner™ candidate]

A source of risk often overlooked by the physician-employer is the risk involved in offering a retirement plan.

Medical practice owners, like other small business owners, find several advantages to starting a retirement plan. The plan can be used to allow the owners to save money in a tax-advantaged manner, and a generous retirement plan can help to attract and retain quality employees.

Administration Risks 

The recent “Great Recession” and turbulence in the stock market have highlighted the risks involved in administering these plans. There is a long history of fraud and neglect in the field of retirement savings plans, and a series of legislative efforts have been enacted to counter these abuses.

Current standards are based primarily on four federal laws, the Employee Retirement Income Security Act (ERISA), the Uniform Prudent Investors Act (UPIA), the Management of Public Employee Retirement Systems Act (MPERS), and the Pension Protection Act of 2006 (PPA).

ERISA Standards 

According to ERISA standards, you may be considered a fiduciary for a retirement plan if you meet any of the following tests:

  • You exercise discretionary authority or control over plan assets or plan management.
  • You are specifically identified in the written documents of a plan as a named fiduciary.
  • You have discretionary responsibility in the administration of the plan.
  • You manage the plan or its assets or render investment advice for a fee.

Recent court decisions have found fiduciaries to be personally liable, even for acts of which they were unaware or in areas not considered within their scope of responsibility. Acting with good intentions or in good faith is not an acceptable defense. Neither is ignorance of your responsibilities.

www.CertifiedMedicalPlanner.com

Liability Mitigation 

The liability of the administrator (or business owner) can be diminished by taking these steps:

  • Act in a procedurally prudent manner.
  • Diversify investments to minimize the risk of large losses.
  • Provide sufficient information and education to employees to enable them to exercise control over their investments.
  • Offer a broad, diversified investment menu having at least three (preferably five or six) “core” alternatives, each of which must be diversified.

Assessment

The most efficient way to meet these and other requirements is to hire a retirement plan provider which is a certified as a fiduciary, and which accepts “co-fiduciary” status along with the practice owner.  The Centre for Fiduciary Excellence (CEFEX) offers certification as a fiduciary.

For more information, see www.savantcapital.com/cefex.

Savant Capital Management, Inc®

190 Buckley Drive

Rockford, IL 61107

Tel 815-227-0300

Fax 815-226-2195

bknabe@savantcapital.com

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Conclusion

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Internet Marketing for Physicians

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So, please accept this whitepaper on modern web re-design at no cost or obligation to your readers.

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Assessment

Those interested in learning more may contact me at the address below.

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Bank Deals Similar to Goldman Sach’s Gone Awry

Other Major Banks Participated, Too?

By Marian Wang, ProPublica – April 16, 2010 1:36 pm EDT

As you may have heard, or read on this ME-P, Goldman Sachs is being sued for fraud [1] by the Securities and Exchange Commission [2] for allegedly misleading investors about a deal that Goldman helped structure and sell. In the civil suit, the SEC specifically faulted Goldman for failing to disclose that a hedge fund was helping create the investment while betting big the deal would fail.

According to the SEC, Goldman Sachs knew about the hedge fund’s bets, knew it played a significant role in choosing the assets in the portfolio, and yet did not tell investors about it. (Goldman Sachs has called the SEC’s accusations “completely unfounded in law and fact.” And in another more detailed statement [3], it said it “did not structure a portfolio that was designed to lose money.”) 

[picapp align=”none” wrap=”false” link=”term=Goldman+Sachs&iid=8541566″ src=”0/4/f/8/The_Goldman_Sachs_7d6f.jpg?adImageId=12513388&imageId=8541566″ width=”380″ height=”568″ /]

In ProPublica

As we reported at ProPublica last week, many other major investment banks were doing a similar thing [4].

Investment banks including JPMorgan Chase [5], Merrill Lynch [6] (now part of Bank of America), Citigroup, Deutsche Bank and UBS also created CDOs that a hedge fund named Magnetar was both helping create and betting would fail. Those investment banks marketed and sold the CDOs to investors without disclosing Magnetar’s role or the hedge fund’s interests.

Here is a list of the banks that were involved [7] in Magnetar deals, along with links to many of the prospectuses on the deals, which skip over Magnetar’s role. In all, investment banks created at least 30 CDOs with Magnetar, worth roughly $40 billion overall. Goldman’s 25 Abacus CDOs — one of which is the basis of the SEC’s lawsuit — amounted to $10.9 billion [8].

One reporter Jake Bernstein explained the investment banks’ disclosure failures on Chicago Public Radio’s This American Life [9]:

On the Magnetar Hedge Fund

The role of Magnetar, both as equity investor and in their bets against the very CDOs they helped create were not disclosed in any way to investors in the written documents about the deals. Not the marketing materials, not the prospectuses, not in the hundreds of pages that an investor could get to see information about the deal was it disclosed that it was in fact Magnetar who’d helped create the deal, and who’d bet against.

That is, of course, along the lines of what the SEC is suing Goldman Sachs for now. The SEC’s suit also says CDOs like the ones Goldman built “contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.”

Notably, the SEC did not sue the hedge fund [10] involved in Goldman’s Abacus deals — Paulson & Co. — or its manager, John Paulson. Instead, it’s going after Goldman. And as we pointed out in our reporting, there’s no evidence that what Magentar did was illegal [11].

Assessment

We’ve called the major banks involved in Magnetar CDO deals to see if they were concerned about similar lawsuits. Thus far, Bank of America, Citigroup, Deutsche, Wells Fargo (which bought Wachovia) and UBS have responded and have all declined our requests for comment. Here is Magnetar’s response [12] to our original reporting.

Conclusion

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PR Firm Behind Propaganda Videos Wins HIT Stimulus Contract

Ketchum Deep in Controversy

By Sebastian Jones and Michael Grabell

ProPublica – March 30, 2010 12:26 pm EDT

President Obama’s push for electronic medical records [1] has faced resistance from those who question whether health information technology systems can protect patient privacy. So last week, the U.S Department of Health and Human Services hired a public relations firm to try to win consumer trust.

The irony?

The firm chosen for the job — Ketchum Inc. [2] — was hip-deep in controversy a few years ago for producing a series of fake TV news stories that violated a federal ban on propaganda. The company also drew fire for channeling taxpayer funds to a conservative pundit to promote the Bush administration’s education policies.

About Ketchum

Ketchum, based in New York, is one of the world’s largest public relations firms, with a host of large corporate clients and a history of winning government contracts. Company spokeswoman Alicia Stetzer declined to answer questions about the $25.8 million contract, funded by the federal stimulus package. Nancy Szemraj, a spokeswoman for the government’s health IT initiative, said the PR firm won the contract over four other companies because of its ability to attract public acceptance. “Ketchum has a long rich history of doing outstanding communication outreach work for large social marketing endeavors,” Szemraj said. “They are very capable of moving the needle, with has to happen here.”

She noted that Ketchum’s work helped HHS enroll 35 million people in the Medicare prescription drug program. And she said all of the firm’s marketing ideas would be reviewed by senior managers at HHS.

Consumer advocates warned that the PR contract will only heighten skepticism about the security of online health records. A poll [3] conducted last year by NPR, the Kaiser Family Foundation and the Harvard School of Public Health found that roughly six in 10 Americans lack confidence in the privacy of online health records.

Public Suspicions

“The public has always been very suspicious over whether electronic health information will be safe,” said Dr. Deborah C. Peel, a physician and founder of the Coalition for Patient Privacy, which includes consumer, privacy and health groups. Peel called Ketchum a “very, very troubling choice because the last thing the public needs are more tricks being pulled on them.”

During the Bush administration, Ketchum and its former lobbying arm, the Washington Group, had several prominent Republicans on the payroll, including former New York Rep. Susan Molinari. In the last year, it has beefed up its Democratic credentials, hiring Jonathan Kopp, a member of the Obama campaign’s national media team, and Donald J. Foley, a longtime Democratic strategist.

Ketchum has continued to draw government work – particularly from HHS – despite a series of reports in 2004 [4] and 2005 [5], in which Government Accountability Office investigators found it had produced a series of video news releases that constituted “covert propaganda” because they did not disclose they were paid for by the federal government.

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The segments aired during local television broadcasts on at least 40 stations across the country. Designed to look like news reports, each concluded with a paid actor posing as a journalist reporting from Washington.

One series was produced for HHS in an effort to promote the Medicare prescription drug program to seniors. The others were paid for by the Department of Education. Overall, video news releases have become increasingly common, used by large public relations firms and companies to repackage advertisements as news. [6]

Prior Controversy

Ketchum was involved in a separate controversy in 2005, when reports surfaced that it had used taxpayer funds to pay syndicated columnist Armstrong Williams $240,000 to promote the No Child Left Behind [7] education bill during radio broadcasts as part of outreach to the African-American community.

In both instances, Ketchum defended its tactics. Stetzer referred reporters to a 2005 PR Week article, in which CEO Ray Kotcher said, “There is no indication that it was ever the intent of Ketchum or any of our people to mislead anyone.”

This time around, HHS has hired Ketchum to provide a “comprehensive campaign for communications and education,” to encourage doctors and hospitals to adopt health IT and to assure the public that their information will be safe.

Assessment

The campaign is part of the administration’s $26 billion health IT program, also backed by the stimulus package, which aims to spearhead the transition to online medical records through grants, bonuses to doctors and hospitals, and the development of national standards.

Link: http://www.propublica.org/ion/stimulus/item/pr-firm-behind-propaganda-videos-wins-stimulus-contract

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Treasury Officials and Investment Firms Cozy Up for Business

The State of Oregon

By Marian Wang, ProPublica – April 12, 2010 4:13 pm EDT

Over the weekend, several stories about troubled state and local pension funds were published. In Seattle, officials are chasing down information about $20 million the city invested in a now-insolvent hedge fund [1]. And, in California, cities’ investments have not paid off as expected [2], forcing some local governments to cut other programs to pay for pensions. Across the country, the downturn has put a strain on many states’ fiscal health, and has caused extreme losses in higher-risk investments like pension funds. But, not so in Oregon, where investments are doing well, and state investment officers are doing even better.

[picapp align=”none” wrap=”false” link=”term=hedge+fund&iid=6715184″ src=”2/0/7/9/Swiss_Village_Becomes_85fc.jpg?adImageId=12469045&imageId=6715184″ width=”380″ height=”262″ /]

Why Oregon?

The Oregonian reports that state investment officers are being wined and dined by the private investment firms [3] whose services to the state they oversee. State Treasury officers, paid on average “just shy of $200,000 last year,” were treated to resort hotels, first-class airfare and high-end dinners—“all in the name of public service.”

The cozy relationship, reports the Oregonian, raises questions about whether the first-class treatment skews officers’ ability to oversee the investment firms that treat them so lavishly. For their part, the firms stand to gain quite a bit if they stay in the good graces of state Treasury officers:

Public investors such as Oregon are lucrative customers. Besides the cash to invest, investment firms collect huge fees for their day-to-day work. Oregon’s pension system alone paid $335 million in investment fees and expenses last year … The concept is much like an individual investor figuring out how to put spare cash to work in profitable ways. Except Oregon has billions in cash. Profits from investments cover state retiree pensions and care for Oregon’s injured and disabled workers.

Assessment

Oregon Treasurer Ted Wheeler announced last week that he was reviewing travel protocols, though Oregon Treaury’s chief investment officer Ron Schmitz has said high-end travel is “necessary normal business practice.” “We consider none of it luxurious,” he told the newspaper. But that’s not what it sounds like from communications between investment officers and the investment firms.

“I’m only packing my swimsuit, Tevas, and sun tan lotion and you guys will just have to find me on the beach or surfing the waves,” one Treasury employee wrote to a firm representative. The firm ended up paying for his stay in a Four Seasons Resort in Mexico.

Conclusion

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The 2010 Chronic Care and Prevention Congress

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The Future of Population Health and Disease Management in 2010, and Beyond

[By Ann Miller; RN, MHA]

According to our two new books, Forward contributor David B. Nash MD MBA FACP Dean, Jefferson School of Population Heath at Thomas Jefferson University, states that chronic diseases are the nation’s most overwhelming healthcare cost drivers.

The Statistics

In fact, we’ve all heard the statistics which suggest that 75% of health care costs are spent on chronic care treatments.

Chronic Care and Prevention

And so, the upcoming Chronic Care and Prevention Congress will seek to lead the nation in developing best practices for the treatment and prevention of chronic disease. David will give the Opening Keynote Address on Thursday, May 13th 2010 entitled The Future of Population Health and Disease Management in 2010 and Beyond.

Other Topics and Issues to be Addressed

  • Aligning Reimbursement Models and Financial Incentives
  • Physician Engagement and the Patient-Centered Medical Homes
  • Consumer Engagement and Behavioral Modification
  • Innovative Health Information Technology Applications
  • Best Management Practices in Diabetes, Obesity, Cardiology and Renal Disease

The Themes

We believe you will walk away from the Congress with the ability to connect the dots, drawing together the key themes of population health, disease management, chronic care coordination, and much more.

Registration Information

For more information regarding the Congress or to register with the $895 rate, please contact World Congress directly at 800-767-9499 or visit http://www.worldcongress.com/Events/

Assessment

We hope to see you there and report back to us on your thoughts and impressions.

Foreword.Nash

Conclusion

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Behind the Financial Reform Push

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Of Worries on Warring Regulators

By Jeff Gerth, ProPublica – April 14, 2010 12:07 pm EDT

Backers of financial regulatory reform are gearing up for the final stretch in a yearlong effort to construct a new, streamlined architecture. But, recent reports and testimony about the financial crisis suggest a crucial ingredient in any new structure is in short supply: cooperation among the watchdogs.

Office of Thrift Supervision

A proposal to eliminate one regulator seen by many as particularly weak—the Office of Thrift Supervision—could alleviate some friction. A soon-to-be-released federal examination of the Washington Mutual collapse found that OTS resisted efforts by a more skeptical regulator, the Federal Deposit Insurance Corporation, to take a closer look at WaMu, according to an account in The New York Times [1].

Reform legislation pending in the Senate [2] (PDF) would also create new agencies, including a financial stability council to assess risk and a consumer protection watchdog. To work as envisioned, the agencies would need new levels of information sharing and decision making. By contrast, history suggests agencies can be stingy with what they know and eager to point blame at sister regulators.

Fall of the House of Lehman

Lehman Brothers, the investment bank that collapsed in September 2008, presents a case in point.

A lengthy examiner’s report [3] for the judge overseeing Lehman’s bankruptcy found that the Federal Reserve Board and the Securities and Exchange Commission kept crucial data from each other even though they had “overlapping” functions. The heads of the Federal Reserve and the SEC reached a formal sharing agreement in July 2008, but the two regulators “did not share all material information that each collected about Lehman’s liquidity.”

SEC Queries

The SEC, asked by the Federal Reserve Bank of New York to provide data on Lehman’s commercial real estate exposure and liquidity, “affirmatively declined to share” the information because it was still in draft form, the bankruptcy report found. The reserve bank never turned down an information request from the SEC, but bank officials “did not perceive any duty to volunteer” information about a $7 billion shortfall in Lehman’s liquidity they uncovered in August 2008.

The reason? The report says it was “because the SEC did not always share information” with them. One official at the Federal Reserve Bank of New York told the examiner “there was not a warm audience” for information sharing between the New York Fed and the SEC.

Lehman fell under the scrutiny of the Fed after it was allowed to tap Fed lending facilities, normally reserved for banks, in the spring of 2008.

Oh … the Irony

Ironically, examiners at the Office of Thrift Supervision, which regulated Lehman’s bank subsidiary, concluded in July 2008 that Lehman had violated its own risk limits by placing an “outsized bet” on commercial real estate. But, the OTS appears as a bit player in the autopsy of Lehman’s collapse; top Federal Reserve officials “considered the SEC to be Lehman’s regulator,” the bankruptcy report found.

One of those officials, Timothy Geithner, was president of the Federal Reserve Bank of New York from 2003 until early 2009, when he became secretary of the Treasury. Shortly after he joined the cabinet, Geithner was asked by a senator about the Fed’s supervisory responsibility [4] in connection with the collapse of institutions like Lehman and the insurance giant AIG.

“I just want to point out,” Geithner told the Senate Finance Committee, “the Federal Reserve was not given responsibility for overseeing investment banks, insurance companies, hedge funds, non-bank financial systems that were a critical part of making this crisis so intense.”

networking_0

Fed Responsibilities

The Fed is responsible for supervising bank holding companies, such as Citigroup. Those holding companies include investment banks and, as a sister regulator quietly pointed out last week, the Fed shared responsibility with the SEC for overseeing the risky practices of Citigroup’s broker dealer.

John C. Dugan, who oversees nationally chartered banks as comptroller of the currency, told the Financial Crisis Inquiry Commission [5] (PDF) last week that most of the problems that led to a massive bailout for Citigroup took place under the umbrella of the weaker holding company regulated by the Fed—not at Citibank, the banking subsidiary under Dugan’s authority.

Most of the losses, Dugan said at the end of a lengthy report to the commission, were in subprime lending, leveraged loans and the structuring and warehousing of CDOs (collateralized debt obligations) that are supervised, either all or in part, “by the Federal Reserve.”

Geithner has acknowledged [6] that he could have done a better job of supervising Citigroup during his tenure at the New York Fed.

Assessment

If the Senate bill becomes law, Geithner would sit atop the new financial stability council, whose members will include representatives of several different agencies—including the Fed, the SEC and the Office of the Comptroller of the Currency.

Conclusion

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Do We Have A False Sense of HIT Security?

Data Breaches More Common than Realized

By Darrell K. Pruitt; DDS

Here is an article titled “Report: Healthcare Organizations may have a False Sense of Data Security,” written by Neil Versel for FierceHealthIT.

http://www.fiercehealthit.com/story/report-healthcare-organizations-may-have-false-sense-data-security/2010-04-12?sms_ss=twitter#ixzz0kzNS6lq

Versel describes the results of a study commissioned by Nashville, Tenn-based Kroll Fraud Solutions. Kroll estimates that 19% of healthcare organizations in the nation suffered a data breach in the last 12 months. That number is up from 13% a year ago. It is based on this information that I estimate that in the last year, at least 24 million dental patients in the nation have been unknowingly exposed to the danger of identity theft. Everyone agrees that the only ethical thing for a dentist to do if he or she knows that patients’ identities have been exposed is to notify the patients and HHS. The shameful fact is, data breaches in dentistry are not being reported.

Enter the Dentists  

But, who can blame American dentists for underreporting breaches without first blaming the heavy-handed, stakeholder-friendly system that forces honest professionals to be dishonest? If a dentist self-reports a breach of 500 or more patients’ Protected Health Information (PHI) it can easily bankrupt a practice. The harm to one’s reputation in the community is just too great a disincentive for even the best of us, even without the added expense of patient notification, subsequent fines and lawsuits. It’s ugly, but that’s the hard, hidden truth about HITECH-HIPAA in dentistry – a piece of lame, one-sided “feel good” legislation that rather than preventing data breaches in dentists’ offices, it drives them underground. As healthcare providers, we should have warned our patients about the growing danger from electronic dental records long ago. Besides me, there are no practicing dentists discussing the topic. Why?

Accepting Ownership of the Dilemma  

Would anyone like to argue that the bi-partisan federal mandate for an interoperable, national eHR system relieves dentists of their obligations to the Hippocratic Oath? Let’s face it: Dentists’ computers continue to threaten up to 20% of dental patients in the nation. We cannot ignore it any longer, doctors.  Once we finally accept ownership of our problem, what are we going to do about it? I’ve suggested that we use common sense and simply remove the dangerous information from dental patients’ files. Anyone see any problem with this idea? Anyone have a better solution?

Assessment 

So what do the leaders of the ADA think of de-identification?

 

Conclusion

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How One Hedge Fund Helped Keep the Bubble Going

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On the Magnetar Trade

By Jesse Eisinger and Jake Bernstein, ProPublica – April 9, 2010 1:00 pm EDT

In late 2005, the booming U.S. housing market seemed to be slowing. The Federal Reserve had begun raising interest rates. Subprime mortgage company shares were falling. Investors began to balk at buying complex mortgage securities. The housing bubble, which had propelled a historic growth in home prices, seemed poised to deflate. And if it had, the great financial crisis of 2008, which produced the Great Recession of 2008-09, might have come sooner and been less severe.

Precise Timing

At just that moment, a few savvy financial engineers at a suburban Chicago hedge fund [1] helped revive the Wall Street money machine, spawning billions of dollars of securities ultimately backed by home mortgages.

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When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers.

Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began.

The Magnetar Trade

How Magnetar pulled this off is one of the untold stories of the meltdown. Only a small group of Wall Street insiders was privy to what became known as the Magnetar Trade [2]. Nearly all of those approached by ProPublica declined to talk on the record, fearing their careers would be hurt if they spoke publicly. But interviews with participants, e-mails [3], thousands of pages of documents and details about the securities that until now have not been publicly disclosed shed light on an arcane, secretive corner of Wall Street.

According to bankers and others involved, the Magnetar Trade worked this way: The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations — CDOs. If housing prices kept rising, this would provide a solid return for many years. But that’s not what hedge funds are after. They want outsized gains, the sooner the better, and Magnetar set itself up for a huge win: It placed bets that portions of its own deals would fail.

Chance Enhancement

Along the way, it did something to enhance the chances of that happening, according to several people with direct knowledge of the deals. They say Magnetar pressed to include riskier assets in their CDOs that would make the investments more vulnerable to failure. The hedge fund acknowledges it bet against its own deals but says the majority of its short positions, as they are known on Wall Street, involved similar CDOs that it did not own. Magnetar says it never selected the assets that went into its CDOs.

Magnetar says it was “market neutral,” meaning it would make money whether housing rose or fell. (Read their full statement. [4]) Dozens of Wall Street professionals, including many who had direct dealings with Magnetar, are skeptical of that assertion. They understood the Magnetar Trade as a bet against the subprime mortgage securities market. Why else, they ask, would a hedge fund sponsor tens of billions of dollars of new CDOs at a time of rising uncertainty about housing?

Key details of the Magnetar Trade remain shrouded in secrecy and the fund declined to respond to most of our questions. Magnetar invested in 30 CDOs from the spring of 2006 to the summer of 2007, though it declined to name them. ProPublica has identified 26 [5].

Independent Analysis

An independent analysis [6] commissioned by ProPublica shows that these deals defaulted faster and at a higher rate compared to other similar CDOs. According to the analysis, 96 percent of the Magnetar deals were in default by the end of 2008, compared with 68 percent for comparable CDOs. The study [6] was conducted by PF2 Securities Evaluations, a CDO valuation firm. (Magnetar says defaults don’t necessarily indicate the quality of the underlying CDO assets.)

From what we’ve learned, there was nothing illegal in what Magnetar did; it was playing by the rules in place at the time. And the hedge fund didn’t cause the housing bubble or the financial crisis. But the Magnetar Trade does illustrate the perverse incentives and reckless behavior that characterized the last days of the boom.

Major Players

Magnetar worked with major banks, including Merrill Lynch, Citigroup, and UBS. At least nine banks helped Magnetar hatch deals. Merrill Lynch, Citigroup and UBS all did multiple deals with Magnetar. JPMorgan Chase, often lauded for having avoided the worst of the CDO craze, actually ended up doing one of the riskiest deals with Magnetar, in May 2007, nearly a year after housing prices started to decline. According to marketing material and prospectuses [5], the banks didn’t disclose to CDO investors the role Magnetar played.

Many of the bankers who worked on these deals personally benefited, earning millions in annual bonuses. The banks booked profits at the outset. But those gains were fleeting. As it turned out, the banks that assembled and marketed the Magnetar CDOs had trouble selling them. And when the crash came, they were among the biggest losers.

Assessment

Of course, some bankers involved in the Magnetar Trade now regret what they did. We showed one of the many people fired as a result of the CDO collapse a list of unusually risky mortgage bonds included in a Magnetar deal he had worked on. The deal was a disaster. He shook his head at being reminded of the details and said: “After looking at this, I deserved to lose my job.”

Magnetar wasn’t the only market player to come up with clever ways to bet against housing. Many articles and books, including a bestseller by Michael Lewis [7], have recounted how a few investors saw trouble coming and bet big. Such short bets can be helpful; they can serve as a counterweight to manias and keep bubbles from expanding.

Magnetar’s approach had the opposite effect — by helping create investments it also bet against, the hedge fund was actually fueling the market. Magnetar wasn’t alone in that: A few other hedge funds also created CDOs they bet against. And, as the New York Times has reported, Goldman Sachs did too. But Magnetar industrialized the process, creating more and bigger CDOs.

Conclusion

Several journalists have alluded to the Magnetar Trade in recent years, but until now none has assembled a full narrative. Yves Smith, a prominent financial blogger who has reported on aspects of the Magnetar Trade, writes in her new book, “Econned,” [8] that “Magnetar went into the business of creating subprime CDOs on an unheard of scale. If the world had been spared their cunning, the insanity of 2006-2007 would have been less extreme and the unwinding milder.”

And so, your thoughts and comments on this ME-P are appreciated. Dr. Mike Burry, please opine. All feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe. It is fast, free and secure.

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Good Night H. Ed Roberts MD

Medical Inventor, Bio-Engineering Pioneer and Colleague

[September 13, 1941 – April 1, 2010]

By Dr. David Edward Marcinko; MBA

[Publisher-in-Chief]

According to Wikipedia, Henry Edward “Ed” Roberts MD was an American engineer, entrepreneur and medical doctor who designed the first commercially successful personal computer in 1975. He is most often known as the “father of the PC.” He founded Micro Instrumentation and Telemetry Systems [MITS]) in 1970 to sell electronics kits to model rocketry hobbyists, but the first successful product was an electronic calculator kit that was featured on the cover of the November 1971 issue of Popular Electronics magazine. The calculators were very successful and sales topped one million dollars in 1973. But, a brutal calculator price war left the company deeply in debt by 1974. Roberts then developed the Altair 8800 personal computer that used the new Intel 8080 microprocessor. This was featured on the cover of the January 1975 issue of Popular Electronics, and hobbyists flooded MITS with orders for this $397 computer kit. Bill Gates and Paul Allen joined MITS to develop software and Altair BASIC was Microsoft’s first product. Roberts sold MITS in 1977 and retired to Georgia where he farmed, studied medicine and eventually became a small-town doctor after commencing medical school at age 39.

Link: http://en.wikipedia.org/wiki/Ed_Roberts_(computer_engineer)

My Connection to Ed

Almost 20 years ago, I co-founded a small medical education software company, for a tiny niche market. My partner was a computer “whiz kid”. I was the chief executive, brain-child and enfant terrible. We are still in business today.

Nevertheless, I decided to contact Ed because I had just received my first PC [Intel® 286 microprocessor] from a publishing company who had contracted with me to write a medical textbook; remember DOS and WordPerfect? I was also very familiar with Microsoft lore, especially relative to business thought and competitive analysis. Regular readers of the ME-P may even recall my mention of attending lectures by Michael Porter PhD [father of competitive analysis] while dating a girl who was attending Wharton Business School while I was a medical student in Philadelphia, back-in-the-day.

Anyway, I took it upon myself to write Ed for some advice. Remember, this was before the commercial internet was widely available. I used medicine as a mutual point of interest. Anyway; after no response, the incident was quickly forgotten because of a busy lifestyle, new medical practice, book-project, etc. I follow-upped about a year later and this time received an encouraging written reply from Ed. I treasure the letter to this day, almost as much as the ones I have from Louis Rukeyser [TV fame-died in 2006] and his uber-investor guest, Sir John Marks Templeton [son is a surgeon] who died in 2008. In 2005, Templeton wrote a brief memorandum predicting that within five years there would be financial chaos in the world. It was eventually made public in 2010.

Assessment

Ed practiced as an internist until his death, in Cochran – a city near Macon, GA. The population was 4,455 at the 2000 census. It is a very poor county in South Georgia, and many, if not most of Ed’s patients were on Medicaid and/or Medicare. He loved them dearly, and they loved him, too!

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Although perhaps not as famous as Gates and Allen; we say with all due respect and admiration – good night Dr. Roberts – and thank you for the personal computer … your love of medicine and mankind … and for reaching out to me so very long ago!

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“Go Elsewhere for Health Care”

What One Doctor Tells Obama Supporters

By Staff Reporters

[picapp align=”none” wrap=”false” link=”term=tea+party&iid=8445957″ src=”5/e/f/6/Tea_Party_Express_6ebb.jpg?adImageId=12359612&imageId=8445957″ width=”380″ height=”253″ /]

According to Stephen Hudak, of the Orlando Sentinel, a Mount Dora doctor [Jack Cassell MD] posted a sign telling Obama health care supporters to go elsewhere for medical care.

http://startthinkingright.wordpress.com/2010/04/02/doctor-cassell-if-you-voted-for-obama-seek-urologic-care-elsewhere/

Timeline for Healthcare Implementation

Timeline of Major Provisions in the Democrats’ Health Care Package

Conclusion

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Tim Geithner’s Letter Shows Opposition to Fixed Capital Requirements for Banks

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In Financial Reform Bill

By Marian Wang, ProPublica – April 2, 2010 2:10 pm EDT

Remember how earlier this week, in a post about financial reform and liquidity requirements [1], we noted how vague [2] Treasury Secretary Tim Geithner was being with The New York Times about setting hard and fast rules about how much cash should be required to hold?

Here’s what we excerpted from the Times on Tuesday: Mr. Geithner insists that if there is one change that needs to be made to the banking system to protect it against another high-stakes bank run like the one that claimed the life of Lehman Brothers, increasing capital requirements is it.

Bank

Pinning Down Geithner

But try pinning down Mr. Geithner, or anyone else in the Beltway, on how much capital banks should be required to keep, or even how the word “capital” should be defined, and certainties disappear.

Turns out he had a lot more to say on the subject than what he told the Times. Mike Konczal [3], blogging for Ezra Klein, unearthed a letter Geithner sent to a lawmaker in January, explaining his hesitancy—really, his opposition—to setting fixed capital requirements in current financial reform proposals. From the letter [4]:

Although the Administration strongly supports imposing a simple, non-risk-based leverage constraint on banks, bank holding companies, and other major financial firms, we do not believe that codifying a specific numerical leverage requirement in statute would be appropriate.

Assessment

So when Geithner said, “We have not made a judgment yet on the number,” what he really was thinking—if this letter is any indication—is that as far as financial reform legislation itself goes, he doesn’t want a number, period. And when it comes to actually imposing tighter capital requirements on financial institutions, he wants the Treasury, the Fed or some combination of regulators to have a free hand to pick and change the number. In other words, pretty close to the way things are now.

Conclusion

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Queries for the ADA Member Service Center

Four Questions for Consideration

[By Darrell K. Pruitt; DDS]

Dear ME-P Readers

I’m considering these four questions for the ADA Member Service Center to break the ice. What do you think?

Question 1 – The FTC’s Red Flags Rule is due to be enforced on June 10. If the Rule is not delayed for a fifth time and a dentist has a contractual relationship with CareCredit/GE or similar healthcare financing service, will that mean he or she will become a covered entity obligated to additional paperwork, liability and expense?

Question 2 – According to the “ADA National Oral Health Agenda” found on the Advocacy page, it states that one of the ways the ADA intends to reduce the cost of dental care is to promote health information technology. This goal was first posted several years ago. Considering the ever increasing liability of data breaches in healthcare, can consumers still expect to save money in dental care by visiting a paperless practice?

Question 3 – Am I correct to assume that soon the ADA.org Website will include the capability for direct discussions between members and leadership?

Question 4 – If interactive functions are indeed to be included in the new ADA Website, will there be any topics concerning ADA policy that will be closed to questions from membership?

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Editors Note: The incredible power of the internet is illustrated with this post relative to the phenomenon of “crowd-sourcing.” In this context, the term means to harvest the reach of social networking, like this ME-P, to solve a problem, or ask for input or opinions.

IOW: A knowledge seeker asks a question and participants respond.  PeerClip.com is an example of how “wisdom of the crowds” allows you to follow the latest opinions on interesting topics. In the medical practice management arena, you can also participate at the: www.BusinessofMedicalPractice.com, our newest 850 page book available this Fall.

Channel Surfing the ME-P Have you visited our other topic channels? Established to facilitate idea exchange and link our community together, the value of these topics is dependent upon your input. Please take a minute to visit. And, to prevent that annoying spam, we ask that you register. It is fast, free and secure.

Conclusion

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Financial Advisory Reform Going Down in Flames

A [False] Hobson’s Choice*

By Staff Reporters

In political Washington DC, according to Ian Salisbury, almost anything will fly if you can make an argument it will benefit the middle class. It worked in the fight against requiring advisors to act in clients’ best interests … Say what?

Is this the case of a classic Hobson’s choice?

[picapp align=”none” wrap=”false” link=”term=bank+reform&iid=8227139″ src=”c/3/0/3/Sen_Dodd_Discusses_655e.jpg?adImageId=12270785&imageId=8227139″ width=”380″ height=”570″ /]

The Strategy

Yep, its true! At least, this strategy worked for the National Association of Insurance and Financial Advisors [NAIFA], which fought a recent proposal that would have made all financial advisors act in clients’ best interests … you know – the “F” word.

Assessment

It seems that there are few protections for the public from unscrupulous FAs, stockbrokers, and insurance agents. And, few wish to become fiduciaries.

http://www.fa-mag.com/online-extras/5406-a-phony-argument.html

*A Hobson’s choice is a free, usually economic, choice in which only one option is offered.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Please visit: www.CertifiedMedicalPlanner.com

As former certified financial planner, insurance agent, stockbroker, surgeon and this ME-P publisher Dr. David Edward Marcinko MBA, CMP™ has always opined to physician colleagues: it is “buyer-beware” out there!

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How You Can Investigate Your State’s Oversight of Its Nurses

Reporting Recipe

By Charles Ornstein and Tracy Weber, ProPublica – March 3, 2010 5:38 pm EDT

cropped-me-p-mast-head-nurses.jpg

Nursing boards – and other agencies that oversee such professionals as pharmacists, dentists and mortgage brokers – do not get nearly enough scrutiny. These boards are charged with protecting consumers from unscrupulous or incompetent professionals, but some provide almost no public information about what they do or how they’re run. They are sometimes led by ill-qualified political appointees and lack sufficient personnel. But should these boring bureaucracies fail, the implications for your health, finances, and home can be dire.

Assessment

We realize that many newsrooms face competing priorities and limited resources, so we’re making our reporting recipe public.

Visit our special site with our complete how-to investigation guide [1], with information on all 50 states.

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Modern Retirement Planning and “Banding” for Physicians

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The “AgeBander” Approach Presents a More Accurate Portrayal

[By Somnath Basu, PhD, MBA]

A convergence of mega-trends will forever change the face of retirement planning and raise its importance in the pantheon of physician retirement planning and most all employee benefits. Chief among them: longer life expectancy, advances in medicine, healthier lifestyles and mounting concern about years of abysmally low savings rates.

What it all Means in Practical Terms

What this means in practical terms for future retired physicians and most all retirees is the need for employers, service providers and financial advisers [FAs] to plot a more accurate and thoughtful course to planning for retirement that acknowledges the necessity of pursuing an “age-banded” approach. The idea behind this new approach is that individuals undergo various changes in lifestyles during retirement that last for finite or “age-banded”, periods.

Example:

For example, doctors like most people spend more time and money on leisurely activities early on in retirement, while health care needs dominate the latter years. Further, the costs associated with these lifestyles also change at differential inflation rates than from the basic inflation rate. While the basic inflation rate is about 3%, the U.S. Census Bureau noted that annual recreation costs increased at 7.14% though most of the 1990s. Health care costs also increased by much higher rates than the basic rate. Since the traditional model bundles all costs (including leisure, health care, basic living, etc) and extrapolates at the basic rate, it tends to underestimate retirement expenses. The traditional model’s “static” approach to retirement can have dangerous implications since it may lead to under-funded retirement plans, especially those earmarked for the critical years.

A Flawed Model?

In a research paper published by the Association for Financial Counseling and Planning Education, I detailed the reasons why an age-banded approach is superior to the traditional view of retirement planning. This new model provides for a more accurate portrayal of retirement expenses and an algorithm to calculate the income-replacement ratio, as well as smaller resource requirements and greater flexibility in managing risk. It also allows easier incorporation of long-term care insurance (LTCI) and significantly reduces funding needs. Indeed, the funding needs of a husband and wife who are both age 60 and presumably five years away from retirement are reduced by more than 16% and contributions for a 35-year-old single woman are reduced by 42% compared with previous approaches.

Traditional Retirement Planning Weaknesses

There are five inherent weaknesses to the traditional approach to retirement planning. They include the assumption that all living expenses will increase at the overall rate of inflation as measured by the Consumer Price Index (CPI), bundling all expenses together and not allowing them to change based on the life-cycle, estimating those expenses as a fixed percentage (replacement ratio) of pre-retirement costs, investing in low-return assets and failing to consider contingencies such as LTCI benefits, which can have a significant impact on the amount of funding required for retirement.

Financial Advisory Estimates

When financial planners estimate how much income a client needs in retirement, the calculation hinges on their income just prior to retirement. The pre-retirement income is adjusted downward by 10% to 35%. This adjustment reflects the income necessary to maintain one’s standard of living and incorporates reductions in taxes and other work-related expenses that cease upon retirement. Unfortunately, there’s no objective way to estimate the replacement ratio. Aggressive financial planners typically use large ratios and conservative planners use smaller ones.

30-year Retirement Window

Under the age-banded model, an individual typically lives about 30 years in retirement (e.g., age 65 to 95) and experiences a lifestyle change every 10 years at 65, 75 and 85. Of course, both the retirement period and the width of the age bands are arbitrary but can be subjectively changed to fit each retiree as closely as possible. In addition, a number of steps are taken to produce a clearer picture of retirement costs by categorizing them based on taxes, living expenses, health care and leisure, as well as calculating anticipated expenses using the appropriate rate of inflation for each category, which is adjusted to reflect post-retirement lifestyle changes.

Those expenses are extrapolated through 30 years of retirement and the present value of post-retirement expenses are calculated at an amount deemed sufficient to finance the three following decade (each age band). Instead of discounting these values to the year of retirement (the traditional model), the age banding considers them to be three retirement portfolios that require funding.

Since the portfolio required to fund the expenses during the years 86 to 95 is 20 years behind the first band (66 to 75), investors can seek marginally higher rates of return to reflect the longer terms. Contributions toward these amounts can now be calculated.

Example:

For example, the couple mentioned earlier is able to seek higher rates of return for longer-term investment portfolios which more than mitigate the effects of escalating health care costs. In the case  of the 35-year-old single woman, since the funds required for these three portfolios are 30, 40 and 50 years away she should be willing to take on more risk since she has ample time to manage the portfolio risk.

The expenses for the age-banded method become considerably higher at the latter stages of retirement as compared to the traditional model. This is desirable since the over-funding is associated with an age at which one cannot afford to be out of funds. The higher estimate of the age band comes from higher inflation rates for health care and the incorporation of lifestyle changes that imply accelerated costs such as increased leisure spending upon retirement and higher health care costs in the latter years.

Thus, these higher costs are not only more realistic but they incorporate the dynamics of a retired life, unlike the traditional model. Incredible as it might seem, the ability to assume a marginally higher risk leads to an actual decrease in the funding requirements versus the traditional plan.

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Assessment

One caveat that doctors need to know, and that financial planners will need to keep in mind, is that their clients may be reticent to buy equities when markets are underperforming. Clear explanations are required regarding why it may still be beneficial for the long run and that the risk will be managed on an ongoing basis. But, the results will be well worth the effort for the multiple stakeholders involved in assuring that tomorrow’s retirees are able to live more comfortable after their working years. It’s a small price to pay for the peace of mind associated with knowing retirement expenses will be portrayed more accurately and plan participants will be afforded greater flexibility in managing their risk.

Table [Comparison of growth in retirement expenses]

Link: Age-Banded Retirement Planning FINAL[1]

Editor’s Note: Somnath Basu PhD is program director of the California Institute of Finance in the School of Business at California Lutheran University where he’s also a professor of finance. He can be reached at (805) 493 3980 or basu@callutheran.edu. See the agebander at work at www.agebander.com

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Financial advisors please chime in on the debate? Is Basu correct; why or why not? Review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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***

Dr. Deborah Peel vs. Ms. Mary Grealy on Patient Privacy

Physician versus Lobbyist

By Darrell K. Pruitt; DDS

On March 23, 2010 Dr. Deborah Peel, a psychiatrist in private practice and the founder of Patient Privacy Rights (www.patientprivacyrights.org) posted an opinion piece titled: “Your Medical Records Aren’t Secure” in the Wall Street Journal.

http://online.wsj.com/article/SB10001424052748703580904575132111888664060.html

Her still popular article soon picked up 217 comments – reflecting respectable interest in the conundrum. Since then, her message of caution has gained momentum on the Internet in the security industry, and has even spilled over into appearances on Fox News, MSNBC and PBS in the last week.

Dr. Peel’s Case

Dr. Peel argues that even though the President claims digital health records will reduce costs and improve quality, they could undermine safe and effective care if patients become afraid to confide in their doctors.

“The solution is to insist upon technologies that protect a patient’s right to consent to share any personal data. A step in this direction is to demand that no federal stimulus dollars be used to develop electronic systems that do not have these technologies.”

It is easy to understand why Dr. Peel’s opinions draw the ire of HIT stakeholders both inside and outside government.

Dr. Peel concludes:

“Privacy has been essential to the ethical practice of medicine since the time of Hippocrates in fifth century B.C. The success of health-care reform and electronic record systems requires the same foundation of informed consent patients have always had with paper records systems. But if we squander billions on a health-care system no one trusts, millions will seek treatment outside the system or not at all. The resulting data, filled with errors and omissions, will be worth less than the paper it isn’t written on.” 

Dr. Peel is currently on a campaign to encourage Americans to sign her “Do not disclose” petition.

http://patientprivacyrights.org/do-not-disclose/

HIT Stakeholders Speak Up

Recently, the Wall Street Journal featured an opposing opinion to Dr. Peel’s in an article titled “Industry Rep Calls Patient Privacy ‘Overblown’ Worry”

http://online.wsj.com/article/SB10001424052748704094104575144110418562490.html?mod=googlenews_wsj#articleTabs%3Darticle

Ms. Grealy’s Case

Mary R. Grealy, President of the Healthcare Leadership Council, a coalition of chief executives from the health-care industry, posted her objections to Dr. Peel’s warnings about the dangers of digital records versus paper:

“Dr. Peel seeks to frighten people into believing electronic health records are more vulnerable than paper ones, which is not the case. She fails to acknowledge the important role of the HIPAA in protecting health information, or the extraordinary steps hospitals, health plans and physicians have taken to assure confidentiality. Building upon HIPAA, federal laws adopted this year strongly encourage encryption of data included in electronic health records and have imposed new criminal and civil penalties for violating an individual’s privacy.” 

“More importantly, though, if Dr. Peel’s prescription for this hyperbolic problem were to be followed, it’s actually our health that will be less secure. Burdening patients with the responsibility of deciding what health information should be divulged and what should be shielded from medical professionals brings an infinite array of possible consequences. Would the average patient know what information a surgeon needs in order to perform a complex procedure? It’s highly doubtful”.

“In a broader sense, draconian restrictions on the essential flow of medical information would have society-wide repercussions. It would affect the ability of public health officials to report and track incidences of disease. It would undermine the Food and Drug Administration’s capability to monitor the quality and safety of medical products, and product recalls would be hampered”.

“Perhaps most importantly, medical research into lifesaving cures and treatments would be severely hindered by restricted access to health information. Stymieing the necessary transfer of data contained in one diagnosis, one prescription or one lab test could mean the difference between life and death. That is a very high price to pay in order to address overblown privacy concerns”.

Mary R. Grealy

[Washington]

_____________________________________

Assessment

Mary Grealy doesn’t have a petition to sign.

Whereas Dr. Peel turns to patients for support, Ms. Grealy, President of the Healthcare Leadership Council, a coalition of chief executives from the health-care industry, turns to Washington.

Conclusion

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Data Show Little-Known Bank Regulator Goes Easy on Enforcement

Office of the Comptroller of the Currency

By Marian Wang, ProPublica – March 29, 2010 12:51 pm EDT

The New York Times business section had a piece recently about a little-known bank regulator [1] called the Office of the Comptroller of the Currency. It points out that while the Federal Reserve has shouldered most of the criticism directed toward bank regulators, because of its relative obscurity, the OCC [2] has escaped much of the scrutiny.

[picapp align=”none” wrap=”false” link=”term=John+C.+Dugan&iid=5559429″ src=”b/6/1/5/House_committee_examines_a74a.JPG?adImageId=11861248&imageId=5559429″ width=”380″ height=”500″ /]

John C. Dugan

The Times piece focuses mostly on John C. Dugan, the former bank lobbyist who heads the agency. It highlights criticism that Dugan is too pro-bank, and goes back and forth between criticism and Dugan’s response. Mr. Dugan bristles at the notion that he is too easy on banks and says his agency’s record on consumer protection has been “vigorous and sustained.” He says it is a “cheap shot” to suggest that his lobbying years color his viewpoint and that it demeans his employees and his years of public service. In point-counterpoint situations, what’s often helpful is hard data [3]. The Times brings it into the story later on, with statistics on the OCC’s formal enforcement orders against banks.

Assessment

The OCC has both formal and informal enforcement orders against banks. The Times’ chart shows that the agency rarely takes formal enforcement action against banks, and even more rarely doles out actual penalties to the banks in the form of fines, restitutions or refunds to consumers. The agency defended its small number of enforcement actions, saying it works closely with banks [4] to fix problems while they’re small, so as not to require stronger measures.

Conclusion

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ME-P Security Status Update

On Posts, Comments, e-Mails and Viruses – Oh My!

By Hope Rachel Hetico; RN, MHA, CMP™

[Managing Editor]

D-oh!  If you’re having trouble posting to the ME-P, or receiving annoying and non-sense spam, you’re not alone.

Over the last 96 hours, we’ve received numerous emails from members letting us know that they’re having problems leaving comments, or receiving blast emails from the site [Several even darkly accused us of censorship and other crimes against democracy]. No; not us, for we believe that sunlight is the best disinfectant.

Based on the reports we’re getting from around the web, the problem appears to be an issue with marketing messages not intentionally sent by us and caused by a pervasive, but not malicious, nasty little computer virus. Fortunately, we believe the situation has been completely rectified, and are working on even stronger preventative firewalls. So, please accept our apologies.

And so, for the time being, if you’d like to comment on a post, you can also do so privately at: www.BusinessofMedicalPractice.com or mail us at: MarcinkoAdvisors@msn.com

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Podcast: How the Health Care Bill Comparison News Application Came Together

A Problica Podcast

By Mike Webb, ProPublica – March 26, 2010 12:32 pm EDT

Last week, Olga Pierce and Jeff Larson created a side-by-side comparison of the health care bills [1] to help people see the exact changes in the legislation. Larson developed a news application that highlighted the changed, added or deleted provisions of the bill and Pierce had the unenviable task of going through the 2,000-plus page bill to decipher what the changes were. 

[picapp align=”none” wrap=”false” link=”term=insurance&iid=8337859″ src=”9/d/c/c/President_Obama_Signs_196b.JPG?adImageId=11862302&imageId=8337859″ width=”380″ height=”454″ /]

Assessment

We talked to the pair, as well as to ProPublica’s editor of news applications, Scott Klein, about how and why they did it and the challenges they faced in turning it around so quickly.

Articles related to this podcast:

Why You Should Check Out the Health Care Bills Side by Side [2]

Eye on Health Care Reform [3]

Download this episode

Conclusion

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More on Lehman Brothers and Repo 105

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The Auditors Attempt to Explain

By Marian Wang, ProPublica – March 25, 2010 4:18 pm

Ever since we began following the storyline of “Repo 105”, a sly balance-sheet maneuver performed by Lehman Brothers that helped it hide billions in dodgy assets, we noted that Lehman auditor Ernst & Young had some explaining to do. That explaining has begun.

The Contrarian Pundit

Contrarian Pundit posted a letter that Ernst & Young sent out yesterday, defending itself: not to the media, but to its clients. Check out both pages of the letter (PDFs).

A Few More Choice Bits

Lehman’s bankruptcy was the result of a series of unprecedented adverse events in the financial markets. The months leading up to Lehman’s bankruptcy were among the most turbulent periods in our economic history. Lehman’s bankruptcy was caused by a collapse in its liquidity, which was in turn caused by declining asset values and loss of market confidence in Lehman. It was not caused by accounting issues or disclosure issues.

Assessment

While no specific disclosures around Repo 105 transactions were reflected in Lehman’s financial statement footnotes, the 2007 audited financial statements were presented in accordance with US GAAP, and clearly portrayed Lehman as a leveraged entity operating in a risky and volatile industry. In other words, we at Ernst & Young didn’t point out that Lehman was doing things to hide its risks, but you should’ve known Lehman was in trouble anyway. Felix Salmon points out that at least they’re no longer denying that they knew about Repo 105.

Link: http://www.propublica.org/ion/blog/item/more-on-lehman-and-repo-105-the-auditors-attempt-to-explain

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Taxing Sin to Modify Behavior and Raise Revenue‏

NIHCM Expert Voices

By Nancy Chockley PhD [President & CEO]
[NIHCM Foundation]

Sin taxes on tobacco and alcohol have a long history in the U.S., and many credit cigarette taxes as being the single most effective strategy in achieving our dramatic reductions in smoking.  Similar taxes have been proposed in recent years as one weapon in our fight against rising obesity rates, and a new study has just added support for this policy by showing that higher prices for sweetened sodas are associated with lower caloric intake, lower weight, and better health.

Rationale Reviews

In his essay, Dr. Jonathan Gruber reviews the rationales for and experience with sin taxes for cigarettes and alcoholic beverages, and offers his insights on using sin taxes to combat obesity.

http://www.nihcm.org/pdf/ExpertVoices_Gruber_April2010.pdf

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Other recent “Expert Voices” essays on health reform include:

Assessment

I hope you enjoy reading these essays and those that follow, down-line.

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