Update on Health Care Reform

Winter 2008 VOL. 2, NO. 1 

Legislative <strong>Update</strong> 

Risk, Responsibility 

and Revenue 

Data Sharing: Trust 

and Technology 

Coordinated Care: 

The Right Thing to Do 

Robert Robert Margolis, Margolis, M.D., M.D., CEO, CEO, 

HealthCare Partners Partners

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Contents 

WINTER 2008 | VOL. 2, NO. 1 

10 COVER STORY 


The Right Thing To Do 

Dr. Bob Margolis explains why the 

coordinated care model is the superior 

method for delivering high quality, 

affordable healthcare for all Californians. 

16 

Calinx Setting The Standard 

For Lab And Pharmacy Data 

In California 

20 

HER2 Testing Guidelines 

for Laboratories 

24 

Are Mystery Patients In 

Your Future? The Bright 

Medical Associates Story 

26 

Risk, Responsibility 

and Revenue 

Publisher: Valerie Okunami 

CAPG Health Editor-In-Chief: Don Crane 

Managing Editor: Lura Hawkins 

Contributing Writers: Robert Margolis, Bill Barcellona, Kathy Kim, Julie Wisniewski, Meryl D. Lualin, Carol Berry, Tammy Fischer, Wendy R. Keegan, Kenneth E. Avery, 

Francisco Moreno, Nancy Garcia, Wells Shoemaker 

For more information on advertising in CAPG Health, please call at 916-761-1853 or e-mail vokunami@sunshinemedia.com. 

Please send press releases and all other information related to this edition of CAPG Health to capghealth@capg.org and/or 

c/o: CAPG Health 

915 Wilshire Blvd. Suite 1620, 

Los Angeles, CA 90017 

President/CEO: Jim Martin Editor-in-Chief: Liz Meszaros Vice President of Marketing: Andrea Hood Vice President of Recruiting & Publisher Development: Ken 

Minniti Marketing Specialist: Kristine Aldrin Director of Publisher Development: Howard LaGraffe Recruiting Specialists: Teri Burke, Jennifer Young, Megan McCabe 

Manager of Sales Administration: Cindy Maestas Vice President of Creative Services: Tyler Hardekopf Production Director/Managing Editor: Keli Quinn Creative 

Services: Josh Bergmann, Rob Bonilla, David Drew, Gerry Dunlap, Breanna Fellows, Joanna Galuszka, Kristen Gantler, Amelia Gates, Brenda Holzworth, Tess Kane, Tanna 

Kempe, Lana May, Ryan Mills, Jodi Nielsen, Shannon Wisbon Director of Finance: Nick Cranz Financial Services: Malia Collins, Lori Elliott, Allison Jeffrey, Sharon Lardeo, 

Christian Williams, Cheng Wan Zheng Circulation Director: Holly Carnahan Circulation Manager: Beth Lalim Manager of Human Resources: Carrie Hildreth Manager of 

Information Technology: Eric Hibbs Printed by Sunshine Media Printing William H. Hibbs, Vice President & General Manager 

2 | CAPG HEALTH WINTER 2008 

28 

Graybill Medical Group 

Honored with Best Practice 

Award 

29 

Measurement Drives 

Performance Improvement 

30 

Pay for Call? The Office of the 

Inspector General Speaks 

36 

Medical Practice Valuations 

38 

Healthy Moves for Aging Well 

40 



43 

Sharp Healthcare Receives 

2007 Presidential Award For 

Quality and Performance 

Excellence 

CAPG Health is published by Sunshine Media, Inc., 8283 N. Hayden Rd., Ste 220, Scottsdale, AZ 85258 

Phone (480) 522-2900 | sunshinemedia.com 

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Advertising rates on request. Bulk third class mail paid in Tucson, AZ. 

Although every precaution is taken to ensure accuracy of published materials, CAPG Health cannot be 

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Postmaster: Please send notices on Form 3579 to P.O. Box 27427, Tucson, AZ 85726 

ON THE COVER 

Dr. Robert Margolis, CEO of Healthcare 

Partners, a highly respected and 

innovative physician-owned and operated 

medical group, IPA and MSO. 

DEPARTMENTS 

6 notes from the president 

14 legislative update 

22 did you know? 

44 corrections

2008 Healthcare Conference 

May 29 – June 1, 2008 

Presented by the California Association of Physician Groups 

Don’t miss the 2008 CAPG Healthcare Conference, a highly acclaimed annual event 

focused on excellence in coordinated healthcare. This year’s conference opens with 

former U.S. Senate Majority Leader and Nobel Peace Prize nominee George Mitchell, 

who most recently led the investigation on performance-enhancing drug use in baseball. 

The key speaker list also includes Ian Morrison, PhD, one of the most renowned futurists 

in the healthcare industry, and Francis “Jay” Crosson, M.D., founder of the Council of 

Accountable Physician Practices. Political satirist Dave Werner will present “The Lighter 

Side of Washington” at the Saturday luncheon. 

Sponsorship Opportunities 

Sponsors and Exhibitors are invited to join us and our 1,200+ attendees at the CAPG 

Conference. We off er a wide range of opportunities and many benefi ts to both Sponsors 

and Exhibitors. For more details, please contact CAPG at 213-624-CAPG (2274) and 

request our Sponsor/Exhibitor Registration Form. 

H E A L T H C A R E 

C O N F E R E N C E 

May 29–June 1, 2008 • San Diego Mariott Hotel & Marina 

For more information go to www.capg.org. Registration opens February 2008!

Notes from 

the President 

Thank you for the tremendous feedback we received on our first issue of CAPG Health. Your many responses indicate that 

this new quarterly magazine is indeed a valuable resource for our members and for health care purchasers. We hope to make 

each succeeding issue as interesting, useful and closely attuned to your needs as possible. 

2007 was a very successful year for CAPG and its members in terms of building for the future. Our most important accomplishment 

was gaining a valuable seat at the table in national discussions on the direction of health care in the United 

States. We made three trips to Washington, DC, last year and visited with a wide range of leaders, many of whom were 

unaware of CAPG and had little knowledge of how our members have transformed the concept of managed care. Because 

of this unprecedented and intensive effort, many in the national leadership now know that California’s physician groups are 

not only delivering exceptionally high-quality care, but are doing it in a cost-effective way. I can’t emphasize the importance 

of this increased awareness, particularly in light of the current national dialogue on Medicare and Medicare Advantage. 

While in Washington, we met with congressional leaders who will be addressing federal health care reform efforts, and we 

appeared before the very important House Committee on Ways & Means. We also met with regulatory agencies and other 

influential organizations, including CMS, AHRQ, Office of the National Coordinator for Health Information Technology 

and AARP. In all these cases, we had the opportunity to explain how managed care techniques can eliminate, delay or 

mitigate expensive chronic conditions. We were able to demonstrate the long-term cost difference these techniques can 

make in treating the 5% of people who generate 55% of costs. CAPG member groups have been exceedingly successful in 

delivering superior quality of care at lower long-term costs. Our challenge is to be certain the nation’s decision makers fully 

understand our delegated model as they consider changes in our health care system. 

We also continued our proactive Government Affairs effort in Sacramento, monitoring proposed legislation and providing 

regular commentary to legislators. We sponsored SB 764, which would require a study to determine the number of primary 

care physicians needed to keep up with the state’s growing population. I am proud to say we forged a strong relationship with 

Gov. Arnold Schwarzenegger, taking a public position in support of his call for universal health care coverage. The governor 

also supports our model of health care delivery. In an article in the last issue of CAPG Health, he wrote that he “embraces the 

model of coordinated care as that is the most efficient and cost-effective way to deliver health care to the greatest number 

of Californians.” There is no question that health care will be the hot topic of discussion in legislatures everywhere in the 

immediate future. And change, whether good or bad, will be mandated. It is absolutely crucial that we have a presence 

whenever and wherever those discussions take place. 

I’m particularly excited about another project started last year that exemplifies our organizational mission — to improve 

health care for Californians. Our new data-sharing program is designed to improve access to information that can aid in 

the diagnosis and/or treatment of individuals and populations. The program sets forth a “code of conduct” agreed upon by 

physician groups and health plans, which, for the first time, encourages and enables the sharing of clinical, pharmaceutical, 

disease management and other data that can benefit the groups, the plans and, most importantly, their patients. We also 

inaugurated a new Standards of Excellence program aimed at the same mission — to improve health care for Californians. 

Last year, 85 CAPG member groups participated, voluntarily assessing their performance and reaching out to attain even 

higher standards. 

CAPG is your organization, and it works because of the contributions of a talented board of directors, a variety of hardworking 

committees, a dedicated staff and members who share their views and ideas. Thanks to all of you for a rewarding 

year. 

Donald Crane 

President, CAPG 

6 | CAPG HEALTH WINTER 2008

Affiliated Doctors of Orange County (ADOC) 

Richard Flagg, M.D., Medical Director 

John Ernsberger, COO 

Affinity Medical Group 

Richard Sankary, M.D., President 

AllCare IPA 

Randy Winter, M.D., Chairman/CEO 

Matt Coury, COO 

All Care Medical Group 

Samuel Rotenberg, M.D., Medical Director 

Craig Kaner, Administrator 

Allied Physicians of California 

Thomas Lam, M.D., CEO 

Jovita Montes De Oca, COO 

Alta Bates Medical Group* 

Brian Ely, M.D., Senior Medical Director 

James Slaggert, CEO 

AltaMed Health Services Corporation 

James Cruz, M.D., Chief Medical Officer 

Castulo de la Rocha, JD, President/CEO 

AppleCare Medical Management 

Surendra Jain, M.D., Chief Medical Officer 

Vinod Jivrajka, M.D., CEO 

Arta Health Network, APMC 

Baruch Fogel, M.D., President 

Karri Traggio Rodgers, Senior Administrative 

Executive 

Bay Area Community Medical Group 

Bernard J. Katz, M.D., President and Medical 

Director 

Mark R. Needham, M.D., Chairman 

Bay Valley Medical Group, Inc.* 

Eric Kohleriter, M.D., President and Medical 

Director 

Shelley Horwitz, Administrator 

Beaver Medical Group, L.P. 

Dennis Flynn, M.D., Vice President, Medical 

Affairs 

John Goodman, President/CEO 

Bright Medical Associates, Inc.* 

William Stimmler, M.D., Chairman, Board of 

Directors 

Jennifer Jackman, CEO 

Bristol Park Medical Group, Inc.* 

Mark Schafer, M.D., Medical Director 

Patrick Kapsner, CEO 

Brown & Toland Medical Group* 

Joel Klompus, President 

Gloria Austin, CEO 

CareMore Medical Group 

Sheldon Zinberg, M.D., Chairman 

Carl Westerhoff, President/CEO 

Cedars-Sinai Medical Group* 

Stephen Deutsch, M.D., Chief 

Medical Director 

Thomas Gordon, CEO 

Centre for Health Care 

Lawrence Koenig, M.D., Medical Director 

Victoria Lister, CEO 

Organizational Members 

Children’s Physicians Medical Group 

Tanya Dansky, M.D., Medical Director 

Susan Bantz, CEO 

Choice Medical Group IPA 

Manmohan Nayyar, M.D., President 

Anna Sugi, Executive Director, Administrator 

CMS CAP Management Systems 

Megan North, CEO 

• AKM Medical Group 

• Amvi Medical Group 

• CapNet IPA 

• Exceptional Care Medical Group 

• Family Health Alliance 

• Huntington Park Mission Medical Group 

• Medicina Familia Medical Group 

• Noble Community Medical Associates 

• Premier Physician Network 

• Seoul Medical Group 

• United Care Medical Group 

Community Health Center Network 

Barbara Ramsey, M.D., Medical Director 

Patricia Aguilera, CFO/COO 

Community Medical Group/PHS* 

Marvin Kanter, M.D., CEO 

Joan Rose, Senior Administrative Executive/ 

COO 

Empire Physicians Medical Group* 

Steven Dorfman, M.D., President 

Yvonne Sonnenberg, Executive Director 

Facey Medical Foundation* 

Michael Nelson, M.D., Medical Director 

Bill Gil, President/CEO 

Family Practice Medical Group of 

San Bernardino 

Richard Moyer, M.D., Medical Director 

Anita Silingo, Administrator 

Golden Empire Managed Care, Inc.* 

Glen Singer, M.D., Medical Director 

Robert Severs, CEO 

Good Samaritan Medical Practice Association 

Glen Hollinger, M.D., Chairman, 

Board of Directors 

Kathy Hegstrom, Administrator 

Greater Newport Physicians 

Medical Group, Inc.* 

Douglas Allen, M.D., Medical Director 

Diane Laird, CEO 

HealthCare Partners* 

Robert Margolis, M.D., CEO 

Matthew Mazdyasni, CFO 

Heritage Provider Network* 

Richard Merkin, M.D., President 

Richard Lipeles 

• Bakersfield Family Medical Center 

• California Desert IPA 

• Desert Medical Group 

• Greater Covina Medical Group 

• Heritage Victor Valley Medical Group 

• High Desert Medical Group 

• Oasis IPA 

• Regal Medical Group 

• Victor Valley IPA 

High Desert Primary Care Medical Group 

Ziad El-Hajjaoui, M.D., Medical Director 

Niki Balginy, CEO 

Hill Physicians Medical Group, Inc.* 

Tom Long, M.D., Chief Medical Officer 

Steve McDermott, CEO 

Inland HealthCare Group, Inc. 

Carey Paul, M.D., President 

Lisa Perko, Controller 

John Muir Physician Network 

Richard Fraioli, M.D., Medical 

Director/Care Management 

Janiece Nolan, President/CEO 

Lakeside Medical Group, Inc. 

Francesco Federico, M.D., President/CEO 

Kerry Weiner, M.D., Executive Vice President 

Lakewood Health Plan, Inc. 

Steven Villalobos, M.D., Medical Director 

Cynthia Guzman, CPA, Chief Operating 

and Financial Officer 

Loma Linda University Health Care 

Rhodes Rigsby, M.D., Executive 

Director, Medical Affairs 

Jane Adams, Director, Quality Management 

Marin Independent Practice Association 

J. David Andrew, M.D., Medical Director 

Joel Criste, COO/CFO 

McKinley Medical Group 

Stanley Schwartz, M.D., President 

John Mukherjee, CEO 

MED3000 

Gary Proffett, M.D., Medical Director 

Lynn Stratton, CEO 

• Northridge Medical Group 

• SeaView IPA 

• Valley Care IPA 

Med Point Management 

Rick Powell, M.D., Medical Director 

Kimberly Carey, Administrator 

• Alpine Medical Group 

• Bella Vista Medical Group IPA 

• Citizens Medical Group IPA 

• El Proyecto Del Barrio, Inc. 

• Global Care Medical Group 

• Health Care LA, IPA 

• Med Premises Medical Group 

• Mission Community IPA 

• Northeast Valley Health Corporation 

• Riverside Family Health Medical Group 

• Santa Marta Medical Group 

• Watts Health Care Corporation 

Memorial HealthCare IPA* 

Ronald Zent, M.D., Medical Director 

Ann Marie Skullr, IPA 

Administrator/Director, 

Network Development 

The Mills-Peninsula Medical Group* 

Brian Roach, M.D., President/CEO 

Kim Noon, Sr. VP of Financial Operations 

Molina Medical Centers 

Long Dang, Chief Medical Officer 

Steve O’Dell, President 

CAPG HEALTH WINTER 2008 | 7

Monarch HealthCare* 

Bart Asner, M.D., CEO 

Jay Cohen, M.D., President 

Muir Medical Group, IPA* 

Steve Kaplan, M.D., President 

Ute Burness, CEO 

MV Medical Management, Inc. 

Albert Arteaga, M.D., Medical Director 

Eva Vargas, President 

NAMM California* 

Richard Shinto, M.D./CEO 

Elizabeth Haughton, J.D., Director of 

Legal Affairs 

• ABMA Medical Corporation 

• Alta Senior Care 

• Central Valley Medical Group 

• Downey Select IPA 

• Empire Physicians Medical Group 

• Mercy Physicians Medical Group 

• PrimeCare of Chino 

• PrimeCare of Corona 

• PrimeCare of Hemet 

• PrimeCare of Inland Valley 

• PrimeCare of Moreno Valley 

• PrimeCare of Redlands 

• PrimeCare of Riverside 

• PrimeCare of Sun City 

• PrimeCare of Temecula 

• Professional Care Medical Group 

• San Luis Obispo IPA 

• Sonoma County Primary Care IPA 

• Noble AMA Select IPA 

• Robert Kennedy IPA 

• St. Francis IPA 

Omnicare Medical Group 

Ashok Raheja, M.D., Medical Director 

Toni Chavis, M.D., President 

Pacific IPA 

Thomas Chiu, M.D., President, IPA Board 

Peder Lindblom, Executive Director 

The Permanente Medical Group, Inc. 

Oakland (North)* 

Sharon Levine, M.D., Associate 

Executive Director 

Gerard Bajada, VP/Director, 

Financial Services 

Physician Associates of Greater San Gabriel 

Valley* 

Barton Wald, M.D., President/CEO 

Alan Puzarne, COO 

Physicians DataTrust 

Lisa Serratore, Vice President 

Maria C. Gonzalez, Director, 

IPA Administration 

• Greater Tri-Cities IPA 

• Noble AMA IPA 

• St. Vincent IPA 

Physicians Medical Group of Santa Cruz 

Marvin Labrie, CEO 

Cindy Martin, Director of IPA Operations 

Pioneer Medical Group, Inc.* 

William Wong, M.D., President 

John Kirk, CEO 

Preferred IPA of California 

Mark Amico, M.D., Medical Director 

Zahra Movaghar, Administrator 

Presbyterian Health Physicians 

Marvin Rice, M.D., President 

Jeff Conklin, Vice President 

ProMed Health Care Administrators 

Jeereddi Prasad, M.D., President 

Kit Thapar, M.D., CEO 

8 | CAPG HEALTH WINTER 2008 

Riverside Medical Clinic 

Steven Larson, M.D., Chairman 

Judy Carpenter, President/COO 

Riverside Physician Network 

Timothy Mackey, M.D., President 

Howard Saner, CEO 

San Bernardino Medical Group 

Thomas Hellwig, M.D., President 

James Malin, CEO 

San Diego Physicians Medical Group 

James Cordell, M.D., President 

Joyce Cook, CEO 

San Jose Medical Group* 

Dean M. Didech, M.D., Chief Medical Officer 

Ernest A. Wallerstein, CEO 

San Judas Medical Group 

Nejat Rostami, M.D., Medical Director 

David Pezeshki, M.D., Executive Director 

Sansum Santa Barbara Medical 

Foundation Clinic* 

Kurt Ransohoff, M.D., 

President/Medical Director 

Paul Jaconette, CEO 

Santé Health System, Inc* 

Mateo DeSoto, M.D., Medical Director 

Scott Wells, CEO 

Sharp Community Medical Group* 

John Jenrette, M.D., Chief Executive 

Officer/CMO 

Christopher McGlone, COO 

Sharp Mission Park Medical Group 

Louis Hogrefe, M.D., 

President/Medical Director 

Donna Mills, CEO 

Sharp Rees-Stealy Medical Group* 

Donald Balfour, III, M.D., Senior 

Physician Executive 

Donna Mills, Administrator 

Southern California Permanente 

Medical Group* 

Vito D. Imbasciani, M.D., Director 

of Government Relations 

Thomas Williamson, Business 

Administrator, Operations 

Sutter Health Foundations and 

Affiliated Groups* 

Bob Wright, President/CEO 

Tom Blinn, CEO 

• Palo Alto Medical Foundation 

• Sutter Medical Foundation 

• Sutter North Medical Foundation 

• Sutter West Medical Group 

• Sutter North Medical Group 

• Sutter Medical Group 

• Sutter Region Medical Foundation 

• Sutter Independent Physicians 

• Solano Regional Medical Group 

• Sutter Gould Foundation 

• Camino Medical Group 

• Sutter Gould Medical Group 

• Santa Cruz Medical Clinic 

• Sutter Medical Foundation—North Bay 

• Sutter Medical Group of the Redwoods 

• Physician Foundation—California 

Pacific Medical Center 

SynerMed, Inc. 

S.Y. Wong, M.D., Chairman of the Board 

James Mason, President and COO 

• Angeles IPA 

• Community Family Care 

• Employee Health Systems 

• Hollywood Presbyterian Medical Group 

• Mid County Physicians IPA 

• Multicultural IPA 

• Pacific Alliance Medical Group 

• Redlands IPA 

• Southern California Children’s Network 

Talbert Medical Group* 

Keith Wilson, M.D., President/CEO 

Michael Gam, CFO 

Torrance Hospital IPA 

Norman Panitch, M.D., Medical Director 

Marc Moser, CEO 

UC Davis Medical Group 

Allan Siefkin, M.D., Medical Director, 

Clinical Affairs 

Nabil Musallam, Senior Associate Director 

U.C.L.A. Medical Group* 

Sam Skootksy, M.D., Medical Director 

David Hartenbower, M.D., COO 

Vantage Medical Group 

Robert Dukes, M.D., Chairman/CEO 

Jay Zybelman, President 

CORPORATE PARTNERS 

Amylin Pharmaceuticals, Inc. 

Bayer Healthcare Pharmaceuticals 

Blue Cross of California 

Boehringer Ingelheim Pharmaceuticals, Inc. 

Health Net of California 

InSight Health Corporation 

Johnson & Johnson Family of Companies 

Novo Nordisk 

PacifiCare Health Systems 

SCAN Health Plan 

ASSOCIATE PARTNERS 

Amylin Pharmaceuticals, Inc. 

Cooperative of American Physicians, Inc. 

Forest Laboratories, Inc. 

Genzyme Corporation 

GlaxoSmithKline 

Keenan HealthCare 

Kindred Healthcare, Inc. 

MCI Pharma 

Medical Development Specialists, Inc. 

MedImmune, Inc. 

Mercer Human Resource Consulting 

Merck & Co. 

Odyssey Healthcare 

Pacific Medical Buildings 

Pfizer, Inc. 

Proctor & Gamble Pharmaceuticals, Inc. 

sanofi-aventis 

Schering - Plough 

The Coding Source, LLC 

AFFILIATE PARTNERS 

Altura 

Ascender Software, LLC 

California Association of Health Plans 

Catalyst Technologies, Inc. 

e2e Analytix, Inc. 

Freed & Associates 

ivpcare, Inc. 

King Medical Supply 

Lumetra 

MedVantx Inc. 

MedVentive, LLC. 

OakRidge Consultants, Inc. 

pmpm Consulting Group, Inc. 

Redlands Community Hospital 

Renta-CEO 

Sullivan/Luallin, Inc. 

The Centennial Group 

University Childrens Medical Group 

Unlimited Innovations, Inc. 

Ventegra, LLC 

* Indicates 2007-2008 Board Members

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are alike. Nobody understands that better than we do. After all, we’ve been 

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The Right Thing to Do 

By Robert Margolis, M.D., Managing Partner and CEO of HealthCare Partners, LLC 

Gov. Schwarzenegger has an aggressive health improvement 

agenda to cover all Californians, giving everyone 

access to high-quality, affordable care. The recent passage 

of legislation in the California Assembly moves us one step 

closer to this important goal. The governor’s statement that 

the coordinated care model is “the most efficient and costeffective 

way to deliver health care to the greatest number 

of Californians” is no surprise to those of us who live the 

coordinated care model every day. And, in this climate of 

rising health care costs, population growth and a clamor for 

greater access to health care, the coordinated care model 

looks better and better. Of course, successfully providing 

coordinated care requires the proper infrastructure and the 

foresight to prepare for industry changes and challenges. 

HealthCare Partners was created from the merger of 

California Primary Physicians (CPP), Huntington Medical 

Group (HMG) and Bay Shores Medical Group (BS). When CPP 

was formed back in 1975, its goal was to provide high-quality, 

1 0 | CAPG HEALTH WINTER 2008 

cover 

story 

affordable medical care. When the group sensed the shift to 

managed care, we believed that we could control costs, improve 

patient outcomes and achieve a competitive advantage by changing 

the way medicine was practiced and managed. This proactive 

approach resulted in incredible growth in patient enrollment and 

we developed even more sophisticated systems. Between 1975 

and the formation of HealthCare Partners, HMG and BS were 

also growing with similar cultures. The mergers of these successful 

medical groups set the stage for what would be a culture 

of continuous improvement at HealthCare Partners. 

WHAT IS THE COORDINATED CARE MODEL 

AND WHY IS IT SUPERIOR? 

Our belief in the superiority of the coordinated care 

model is based on a simple formula: Well-informed patients, 

working with their physicians as trusted advisors, will 

make the most appropriate decisions regarding their health 

and well-being. And evidence supports that the approach

of shared decision making creates a 

higher value — increased quality and 

satisfaction, and lower system cost. 

When the infrastructure of a coordinated 

care medical group and IPA 

is positioned to support this patient/ 

physician team and guide the patient 

appropriately through a complicated 

medical delivery system, then the 

model is best positioned to deliver 

optimal patient care and experience. 

In short, the coordinated care model 

offers these benefits: 

• It improves patient care, which is supported by informed 

choices and trusted physicians, and underpinned by formal 

quality improvement programs, electronic health records 

and transparency of results; 

• It centers care on patient needs. Trusted physician advisors 

and care management focus on the best coordination 

and resources such as prevention, disease management, 

specialty referrals and hospitalist care; and 

• It incents the right behaviors in physicians and staff, 

focusing on outcomes, quality and care standards, and 

efficiency. Incentives drive behavior, and caring professionals 

are motivated by incentives that focus on improved 

quality and satisfaction metrics, and compensation tied to 

the improved health of individual patients as well as our 

population of patients, efficiently delivered. 

To accomplish the high goals we set for ourselves within 

the coordinated care model, we have adopted a culture of 

Our commitment to our patients and our communities 

is to improve health status and quality of care 

and satisfaction with our physicians, caregivers and 

systems. 

Our belief in the superiority of the coordinated care 

model is based on a simple formula: Well-informed 

patients, working with their physicians as trusted advisors, 

will make the most appropriate decisions regarding their 

health and well-being. 

continuous improvement. Through team-based process 

design efforts, we have successfully re-engineered and fully 

automated our administrative functions, fully deployed our 

electronic health records (Allscripts) in all our California 

group offices and are making the system available to our 

affiliated IPA partners. 

We have successfully linked our systems to our core hospitals, 

ERs, urgent care centers and all ancillary providers. 

We have developed an advanced home care program to 

care for high-risk and fragile patients. 

And we have embarked on efforts to assure improvements 

in the health literacy of our patients — an important indicator 

of compliance with health care instructions. 

Our commitment to our patients and our communities is 

to improve health status and quality of care and satisfaction 

with our physicians, caregivers and systems. Coordinating 

this effort in a tough health care environment is certainly 

a challenge. But it is a challenge we 

take on with great enthusiasm, as it 

is the right thing to do. 

Robert Margolis, M.D., chairs the National 

Committee for Quality Assurance. He is also 

the Past-Chair of the Governing Board and 

a member of the Executive Committee for the 

California Association of Physician Groups. He 

is a member of the Executive Management School 

Advisory Committee, School of Public Health at 


the University of California, Los Angeles and is Chairman of the Board of 

Trustees for the California Hospital Medical Center, Los Angeles. 

Dr. Margolis has been the managing partner and CEO of HealthCare 

Partners (HCP), LLC, since the company’s formation in 1992. HCP is 

a management services organization that operates medical groups and 


independent physician networks nationally. A leader in multispecialty 

integrated and coordinated care delivery, HCP’s medical groups care for 

more than 550,000 patients. Under Dr. Margolis’ stewardship, HCP 

has become a highly respected and innovative, physician-owned and 

-operated medical group, IPA, and MSO. ■

‘Year of Healthcare 

Reform’ <strong>Update</strong> 

By Bill Barcellona, Vice President of Government Affairs, CAPG 

The “Year of Healthcare Reform” is 

technically over, but the job is not yet 

completed. As usual, we go to press once 

again in the middle of a chapter. The 

cynics keep predicting the demise of the 

plan, and the leadership continues to bring 

the ball back into play. Most recently, 

the governor and the speaker reached a 

compromise agreement and passed a bill 

out of the Assembly on December 17. 

Big, splashy news reports issued forth 

and politicians declared victory. We were 

there, but many remained on the sidelines, 

skeptical of last minute changes to the bill 

that were written in secret by legislative 

staffers. Standing in the Capitol Rotunda, 

I was struck by the large number of insiders 

who were standing beyond the press 

cameras, watching but not participating. 

Then, on December 28, the administration 

and speaker filed a ballot measure that 

comprises the funding piece of the comprehensive 

plan. The recently introduced 


funding plan was drafted in secret and was 

still under review when this article was 

written. The State Senate will hear the 

plan on January 23, after we go to press. 

A final plan has to pass the Senate and be 

signed by the governor for the new ballot 

measure to move forward. 

It was clear immediately that major 

stakeholders in the reform process were 

not happy with the ballot measure or the 

final version of the bill. Some of this angst 

has been ameliorated since December, 

some has not. It still appears that there is 

significant opposition to the reform plan 

by stakeholders, and even some senators. 

What is also abundantly clear, is that if 

Californians don’t do health reform for 

Gov. Schwarzenegger applauding assembly vote on landmark health care reform. 

legislative update 

The pending 2008 state budget shortfall of somewhere 

between $12 and $20 billion has driven a stake 

through the heart of the increased provider payment 

concept. 

themselves, others in Washington, DC, 

will do it for them. If the California 

process has been scary at times, the 

Washington process will be downright 

terrifying. 

The pending 2008 state budget shortfall 

of somewhere between $12 and $20 billion 

has driven a stake through the heart of 

the increased provider payment concept. 

In 2008, the Legislature will struggle the 

harsh reality that state-sponsored programs 

will most likely have to be cut, not 

expanded. The governor has announced 

that he will declare a fiscal emergency on 

January 10, triggering a 45-day legislative 

session in which the Legislature must pass 

a bill that “addresses” the current budget 

shortfall. The fiscal emergency declaration 

is based on recent legislation that is 

untested. It’s uncertain how the special 

45-day session will impact efforts to continue 

health care reform. 

Health care reform is still a work in 

progress. The problems proved far too 

complex to resolve in a single legislative 

session. And so, even though 2008 is an 

election year, the process will continue. 

Look for increasing federal intervention 

in the California reform process — especially 

in the discussion of the impact of 

ERISA pre-emption. While all this effort 

was going on in Sacramento, a federal 

court found San Francisco’s play-or-pay 

reform program violative of ERISA preemption 

laws. An appellate court panel

just recently gave the plan a thumbs-up, 

and so Healthy San Francisco lives on to 

fight another day. The event underscores 

the roller-coaster ride that is health reform 

in California. One day you’re up, the next 

down, and the beat goes on. 

Several major stakeholders have been 

alienated by the last minute, secretive 

drafting of the reform plan and the companion 

funding measure. History will 

judge whether this approach was warranted 

or not. If the plan ultimately succeeds, 

then it will appear beneficent. If not, it 

will be likely be characterized in the same 

way that HillaryCare was castigated in the 

1990s. Events have moved too quickly in 

many instances for there to be a thorough 

vetting of the concepts in the plan, and 

there are many, many unanswered questions 

and concerns. Some of this ill will 

is the result of a failure by stakeholders 

to participate in the early think tanks 

that were collecting and discussing information 

on the system and evaluating 

solutions. CAPG always attempted to 

participate and provide ideas about how 

health care can be done better, safer and 

more affordably. Much of the final reform 

plan reflects thinking that systems of 

care are necessary to improve California 

medicine. Many of the programs that are 

anticipated in ABX1 1 will rely heavily 

on coordinated care provider systems to 

implement successfully. 

You can’t discount the progress that 

was made on the plan in 2007, mostly 

through the sheer will of the governor 

and the speaker. California has just about 

got a reform concept in place. Perhaps it 

will have to linger a little longer while 

we all scratch our heads on the funding 

mechanism. But significant progress has 

been achieved, and the rest of the country 

has taken note of our example. 

In early 2008, we’ll look for a Senate 

vote confirming the plan, and a desperate 

effort to obtain the necessary one mil- 

lion signatures to qualify the companion 

funding measure for the November general 

election. Both efforts will be heavily 

opposed by stakeholders who believe the 

plan threatens the status quo. Should the 

California economy, and that of the nation 

as a whole, continue toward a recession, 

the voters will most likely continue to 

keep health care affordability and accessibility 

at the top of their agenda. 

Regulations: We are hoping that 2008 

will be a quieter year for DMHC regulatory 

development. In 2007, CAPG was 

forced to mount significant opposition 

to the timely access to care regulation. 

Two prior drafts of the regulation were 

lengthy, cumbersome and unworkable. It 

took a massive turnout of CAPG member 

groups and their clinicians to argue for a 

standard that was more reflective of current 

access systems. This past December, 

the DMHC issued a third version that 

sets performance-based access targets, 

rather than rigid, proscriptive standards. 

CAPG provided final written comments 

on December 26. While the regulatory 

package is still pending as of press time 

legislative update 

for this article, we anticipate that further 

tweaks to the format of the regulation will 

be necessary to make it more reflective of 

industry capability. 

The department also reissued a balance 

billing regulation in August. CAPG provided 

clinicians to testify and offered written 

comment. The principal problem with the 

regulation is similar to earlier legislation this 

past year (SB 981), in that the regulation set 

a default payment rate of 150% of Medicare 

for non-contracted emergent services. We 

anticipate that the department will reissue a 

revised version of the regulation sometime 

during 2008 and that there will be further 

opportunity for CAPG groups to comment. 

It is also likely that the Legislature will take 

up the consideration of SB 981 bill again 

after the 2008 session begins on January 7. 

That bill would impose a 190% of Medicare 

default payment rate. This is a controversial 

mechanism that has drawn opposition 

from all sides of the physician community 

in California. Regardless of the argument 

of default payment rates, CAPG remains 

committed to achieving the statutory prohibition 

of patient balance billing. ■ 


CALINX Setting the Standard for 

Lab and Pharmacy Data in California 

Something in It for All of Us 

By Kathy Kim, M.B.A., M.P.H., CALINX Standards Oversight Committee and Integrated Healthcare Association 

“While there may not be a docu- 

mented business case for adopting 

any standard on its own, the case for 

high-quality data needs to fit into your 

strategic direction.” 

— Dr. Fiona Wilson, Brown & Toland 

INTRODUCTION 


Medical Group 

When the California Healthcare 

Foundation reinvigorated the attempt to 

standardize data exchange three years 

ago, it was with an end in mind: to im- 

prove care by offering all of California’s 

providers accurate and timely clini- 

cal information. The challenges were 

numerous and previous attempts by 

various organizations had not been suc- 

cessful. This time around, however, the 

collaboration between providers, lab 

and pharmacy vendors, and insurers 

was solidified first, and the initiative 

thrived. Today, there are six health 

plans, over 200 provider organizations 

and two national labs sending and receiv- 

ing CALINX standard data. CALINX 

pharmacy (CALINX Rx) has achieved a 

critical mass of adoption and CALINX 

Lab is gaining ground. The hope is that 

both will be adopted across the state 

by 2008. 

CALINX Rx Status 

• Began in 2004. 

• Six health plans sending monthly/quar- 

terly files: Aetna, Blue Shield, CIGNA, 

Health Net, Blue Cross, PacifiCare. 

• 50 to over 200 provider organizations 

receiving from each health plan. 

• CALINX Rx v2.0 in use. 

CALINX Lab Status 

• Began in late 2005. 

• Two national labs sending monthly files: 

Quest and LabCorp. 

• Three health plans are receiving. 

• 55 provider organizations are receiv- 

ing. 

• One hospital system piloting. 

• CALINX Lab v1.1 in use, v1.2 approved 

and in transition. 

WHAT IS CALINX? 

The key to data’s usefulness and ac- 

cessibility lies in its standardization. 

Unfortunately, most standards are more 

like guidelines, allowing a great deal of 

flexibility in how they are implemented. 

Allowing for local customization has its 

uses; however, this flexibility also causes 

problems for larger organizations that want 

to share data efficiently across organiza- 

tional boundaries. It’s no secret that even 

the same version of HL7 from one health 

plan does not automatically integrate with 

another’s. You would still need to map the 

data with each one’s implementation guide 

in order for it to make sense. As a medical 

group, the cost of maintaining seven to 10 

health plans’ formats and data mappings 

becomes burdensome. 

CALINX has addressed these problems 

through a statewide consensus process. 

Rather than designing new standards, 

CALINX started with nationally accepted 

HL7 formats, LOINC lab vocabulary and 

NCPDP prescription standards, then 

added a uniform implementation manual, 

agreed-upon business rules and software 

tools to assist with adoption. The commit- 

ment of all stakeholder groups assured 

that the data was uniform. 

See Page 18

Continued from Page 16 

DEMONSTRATED BENEFITS 

TO STAKEHOLDERS 

Each group of stakeholders in the 

collaborative process that gave birth to 

CALINX expected to see benefits from it. 

Over the last three years, these benefits 

have been demonstrated to providers, 

health plans and national labs. 

Brown & Toland Medical Group and 

HealthCare Partners Medical Group were 

two of the early provider organizations to 

CALINX at a Glance 

Who 

Statewide collaborative with hospitals, 

medical groups, insurers, lab and pharmacy 

vendors, sponsored by California Healthcare 

Foundation and coordinated by Integrated 

Healthcare Association. Six health plans, 

over 200 provider organizations and two 

national labs have implemented CALINX lab 

or pharmacy standards. 

What 

Statewide adoption of data exchange 

standards for batched, electronic lab results 

and pharmacy data leveraging national HL7, 

NCPDP, LOINC standards with a uniform 

implementation guide, agreed upon rules of 

exchange and software to assure standards 

compliance. 

Why 

To improve provider access to accurate 

and timely clinical information. 

Benefits 

• Data from all participating sources is in 

the same format and vocabulary. 

• Agreed-upon business rules ensure data 

arrives on a regular schedule. 

• Potential to automate data improves staff 

efficiency. 

• More timely and accurate data. 

• Improves credibility with physicians. 

• Responsiveness to pay for performance, 

quality reporting and proactive disease 

management or population management 

programs. 

Resources 

To assist provider organizations in 

adopting CALINX, IHA provides tools and 

technical assistance with implementation 

at www.iha.org/calinx/entry.htm. 

For questions or to learn more about 

CALINX Standards Oversight Committee, 

please contact Dolores Yanagihara 

(dyanagihara@iha.org). 


adopt CALINX. In addition to participating 

in the committees that set the standards 

and implementation guides, they lever- 

aged the resulting data to further their 

strategic goals. Brown & Toland Medical 

Group is an IPA of 1,500 physicians in the 

San Francisco Bay Area, while HealthCare 

Partners Medical Group serves more than 

500,000 patients in the Los Angeles and 

north Orange County. 

Dr. Fiona Wilson, Vice President 

of Quality Initiatives, was motivated 

by CALINX’s potential to improve the 

quality of data. “Lack of data can take 

a physician from a high performer to 

a low performer. The more complete 

and accurate the data, the greater the 

level of comfort we can provide for 

our physicians.” 

While most doctors were not even 

aware of CALINX, the Brown & Toland 

staff knew that its use allowed them 

to process data from the health plans 

more efficiently. Ann Hardesty, Manager 

of Reporting and Analysis, noted that 

they didn’t always feel confident about 

managing quality via claims data alone. 

CPT codes and text descriptions were 

not specific enough. For example, a 

lab claim would identify a lipid panel, 

but CALINX, which includes LOINC 

codes, would identify LDL cholesterol 

specifically. This specific information 

is needed for both comprehensive dia- 

betes care and cardiac management. 

Ms. Hardesty’s motivation to adopt 

CALINX was the improved consistency 

and specificity of data from all the health 

plans that could improve their disease 

management, case management and 

quality improvement programs. She 

also said that prior to CALINX, the lag 

time for obtaining clinical information 

was sometimes five or six months, and 

the files were not received on a regular 

schedule. Now, it’s less than two month’s 

lag time, the health plans are committed 

to monthly file transfers, and she is able 

to distribute reports to physicians in a 

more timely fashion. Brown & Toland’s 

implementation of CALINX Lab is 99% 

complete, and Ms. Hardesty anticipates 

they will achieve additional benefits from 

lab data standardization as they did 

with pharmacy. 

HealthCare Partners Medical Group 

and HealthCare Partners IPA is com- 

prised of more than 2,500 primary care 

physicians and contracted specialists 

who care for more than 500,000 pa- 

tients in Los Angeles and north Orange 

County. Ed Kasch, Director of Ancillary 

Systems, credits CALINX with helping 

make HealthCare Partners’ electronic 

physician portal more efficient and 

useful. In the past, paper pay-for-perfor- 

mance reports, with lab and pharmacy 

data, were distributed approximately 

three times per year; however, this was 

too infrequent to allow point-of-care 

reminders to help physicians manage 

their patients. 

In September 2006, HealthCare 

Par t n er s implemented full pay - 

for-performance reporting through 

its physician portal, supported by 

CALINX-fed pharmacy data and a 

proprietary lab results feed. In ad- 

dition, full patient pharmacy history 

was added to the physician portal in 

July 2007. HealthCare Partners is now 

working on providing comprehensive 

lab data based on the CALINX lab 

feeds received from its contracted labs. 

These developments allow HealthCare 

Partners to provide electronic data, 

including lists of patients requiring 

disease management and noncompliant 

patients, to their physicians for action 

on an on-demand basis. 

The efficiency with which HealthCare 

Partners’ IT department was able

to process monthly files from health 

plans was a factor in the feasibility of 

the physician portal. “Where it used 

to take two to three weeks each month 

to process these files, now we are able 

to automate the data loads, and the 

information is available as soon as the 

medical group receives it.” Mr. Kasch 

credits the tools provided by CHCF and 

the reliable CALINX standard with 

making the implementation process 

straightforward. “We were able to 

implement this automated process with 

CALINX-formatted files with existing 

data warehouse staff. It didn’t require 

additional staff or a new programming 

skill set.” 

In addition to making the collection 

and integration of data more efficient, 

CALINX can also help provider organi- 

zations improve their responsiveness on 

pay for performance (P4P) and other 

quality programs. Take the example of 

a medical group that collects hemo- 

globin A1-c results for comprehensive 

diabetes care, both a HEDIS and P4P 

requirement. Generally, these results 

are not available through administra- 

tive data alone. This requires health 

plans and provider organizations to 

conduct manual chart reviews. For 

HEDIS, organizations conduct a sam- 

pling of members’ charts to supplement 

their electronic administrative data. 

However, P4P requires data on the 

entire patient population, and manual 

chart reviews are unfeasible and there- 

fore not allowed. Hence, providers’ 

performance on these measures in 

the past has been quite paltry. With 

the advent of the CALINX standard 

and adoption by two national lab 

companies, the industry now has the 

opportunity to use electronic data to 

fulfill this requirement. This benefits 

both providers and health plans. 

HEALTH PLANS 

The benefits of CALINX for health 

plans are similar to those for provid- 

ers. First, health plans can make better 

use of the data they collect for qual- 

ity improvement since it is uniform. 

Second, they are able to respond to 

the increased requests from purchas- 

ers to provide comprehensive clinical 

data such as lab results for disease 

management. 

Blue Shield of California led the way 

in promoting adoption by asking pro- 

vider organizations to submit their lab 

results data only in CALINX format in 

2007. Michael Higgins, Blue Shield’s 

Director of Medical Informatics, was 

concerned that smaller labs and hospi- 

tals might find integrating clinical data 

from laboratory information systems 

with administrative data from billing 

systems a challenge and a barrier to 

converting to CALINX. So, he started 

testing the use of CALINX on large data 

sets with just one reference laboratory. 

When this proved successful, three 

more were added, and another five will 

implement this summer. On a small 

scale at least, it seems these smaller 

labs and hospital labs were prepared 

to undertake this conversion. 

Wellpoint is another health plan sup- 

porter. Director of Health Informatics 

Peter Lee became involved at the onset 

and helped launch the pharmacy standard, 

which is now widely used. He noted that 

the need for CALINX is even more critical 

to lab data because there are numerous 

tests and varying ways of reporting results. 

“For health plans, it would be difficult to 

store all available results given such varia- 

tion. Since the national labs have already 

implemented CALINX, this will make the 

job much easier for those who need to make 

use of the results. But there are numerous 

smaller volume labs, such as hospitals, 

that are not using CALINX today. We 

would have to do a manual process for 

incorporating those results, and that is just 

not feasible.” 

LABS 

Two national laboratory vendors, 

Quest and LabCorp, have voluntarily 

adopted CALINX, providing files in this 

format at the request of their custom- 

ers. LabCorp noted that it takes only 

a few weeks to fulfill a request once a 

medical group makes it and there is no 

additional cost. They have also found 

that customers are able to use the 

CALINX implementation tool quite eas- 

ily, and since it applies to lab data from 

any vendor, it is very beneficial. Pam 

Sherry, LabCorp’s Senior Vice President 

of Communications said, “Being on the 

ground floor of this initiative to stan- 

dardize data in California is important 

for us because it sets the stage for what 

may happen nationally.” 

CONCLUSION 

CALINX has achieved key milestones 

in the path to statewide health informa- 

tion exchange: endorsement by over 65 

organizations of a uniform standard 

for lab and pharmacy, a critical mass 

of adoption by over 200 organizations 

for pharmacy and an ongoing push for 

lab to increase the number of adopt- 

ers beyond the first 35. The California 

Healthcare Foundation and Integrated 

Healthcare Association, along with the 

endorsers of CALINX encourage all 

provider organizations, health plans 

and labs to join in adopting CALINX 

to reap the benefits of standardized lab 

and pharmacy data. 

To assist provider organizations in 

adopting CALINX, CHCF provides tools 

and technical assistance available at 

www.iha.org/calinx/entry.htm. ■ 


HER2 Testing Guidelines 

for Laboratories 

By Julie Wisniewski, M.P.H., Managed Care Manager, Genzyme Genetics 

A recent study reported by an ASCO/ 

CAP expert panel determined that an 

estimated 20% of HER2 tests performed, 

either by immunohistochemistry (IHC) 

or fluorescence in-situ hybridization 

(FISH), may be falsely positive. 1 In an 

effort to combat this figure, in January 

2007, ASCO/CAP released new guideline 

recommendations designed to improve the 

accuracy of HER2 test results in breast 

cancer. This announcement marked the 

first time ASCO and CAP collaborated to 

implement testing guidelines for laboratories 

and pathologists nationwide. 

The new guideline recommendations 

HER2 testing by immunohistocheistry (IHC) 


represent great news for patients and 

their physicians. Once implemented 

within a laboratory environment, they 

should immediately help improve the 

accuracy of HER2 test results. This improved 

level of accuracy will go a long 

way towards restoring clinical confidence 

in the results generated by CAP-accredited 

laboratories. 

THE IMPORTANCE 

OF HER2 TESTING 

Testing positive for HER2 is associated 

with higher recurrence rates and mortality 

in patients with breast cancer who do 

not receive any adjuvant systemic therapy. 

HER2 status is also associated with a 

patient’s resistance or sensitivity to endocrine 

therapies and chemotherapy agents, 

respectively. As a result, accurate HER2 

test results can play a significant role in 

helping a physician determine the appropriate 

course of therapy for a patient. 

While in the process of developing 

the new guidelines, ASCO/CAP identified 

several factors that most impacted 

testing variation: specimen preparation, 

nonstandardized lab procedures, reagent 

variability, quality control procedures and 

interpretation criteria. The expert panel

also established procedures whereby a 

valid initial assessment of HER2 tumor 

status can be made using either IHC or 

FISH testing methods. 

HOW DO THE NEW 

GUIDELINES IMPACT 

MANAGED CARE 

ORGANIZATIONS? 

To ensure the accuracy of the tests 

performed on breast tumors present in 

your members, it is highly recommended 

to contract with a laboratory that is CAPaccredited 

to perform HER2 testing by 

IHC and/or FISH. 

The importance of working with an 

accredited reference laboratory cannot 

be understated. In December 2006, 

UnitedHealthcare publicly announced 

that, because of the release of these new 

guidelines, they would pay for HER2 

retesting for their members with breast 

cancer, so long as the test is performed by 

a high-quality laboratory. 

To help ensure high-quality, cost-effective 

Steps to Achieve 

Accreditation 

• All HER2 assays must be validated. 

Validation is defined as at least 95% 

concordance when compared with one of 

the following: 

1. A validated HER2 testing method 

performed in the same laboratory. 

2. A validated HER2 testing method 

performed in another laboratory. 

3. Validated reference laboratory results. 

• Ongoing proficiency testing, monitoring 

and full reporting of HER2 assay methods 

and results are required. 

• Samples must be fixed in formalin or 

another fixative 95% compliant with 

formalin-fixed tissues. Tissue fixation time 

should be between six and 48 hours. 

• For optimal internal validation, the 

validation test must be completed prior 

to the tests being offered, and ongoing 

validation should be performed biannually. 

CAP-accredited labs must participate in 

an external proficiency testing program 

that includes at least two testing events 

(via mail) each year and an on-site 

inspection every other year, with an 

annual requirement for self-inspection. 

HER2 testing by Fluorescence in situhybridization (FISH) 

care to members, it is likely many other managed 

care organizations will also find ways 

to incorporate the new guidelines in their 

contracts and coverage policies. 

LABORATORIES NEED TO 

TAKE STEPS TO ACHIEVE 

ACCREDITATION 

ASCO and CAP are requiring the 

testing industry to transition to the new 

guidelines by January 2008. To obtain 

CAP accreditation, test methods must be 

validated, standard operating procedures 

must be used, personnel must be trained, 

an internal quality assurance plan must be 

implemented (including evidence of the 

plan’s use) and external proficiency tests 

must be successfully performed. 

NEW GUIDELINES 

REPRESENT POSITIVE 

STEP FOR PATIENT CARE 

Instituting the new recommendations 

is not a simple process for laboratories to 

undertake. It can be time consuming and 

expensive, but the benefits far outweigh 

any short-term obstacles. Achieving 

compliance can literally change the 

course of treatment for a patient with 

breast cancer. These new guidelines 

clearly have the patient, physician and 

managed care organization’s best interests 

in mind. 

Genzyme is a CAPG Partner, and has achieved 

compliance with the new ASCO/CAP HER2 testing 

guidelines. For questions about Genzyme’s 

level of preparedness, please contact the author at 

julie.wisniewski@genzyme.com. ■ 

References 

1. Wolff, A.C. et al., American Society of Clinical 

Oncology/College of American Pathologists 

guideline recommendations for human epidermal 

growth factor receptor 2 testing in breast cancer. 

J Clin Oncol 2007; 25:118-45. 


LIFE EXPECTANCY 

TICKS UP AGAIN 

The life expectancy for a child born in the 

United States in 2005 was 77.9 years, the 

highest ever, states the Centers for Disease 

Control and Prevention (CDC). The CDC 

attributes the gains to better prevention 

and treatment of three leading killers 

— heart disease, cancer and stroke. While 

deaths from these diseases fell, death rates 


for Alzheimer’s disease and Parkinson’s 

disease both increased, according to a report 

released today by the CDC, “Deaths: 

Preliminary Data for 2005.” 

HEALTH CARE SPENDING 

SHOWS REGIONAL 

DIFFERENCES 

U.S. residents in the Northeast spend more 

on health care per capita than those in other 

If you could analyze 233,000 claims in 

an hour, wouldn’t you be at ease too? 

Our Virtual Examiner ® solution automates cost containment by monitoring 

the internal claims process to detect fraud and abuse, and maximize 

financial recoveries. Find out how we can put your concerns to rest by 

visiting www.pcgsoftware.com, or by calling (877) 789-1291. 

did you know? 

P roblems with health 

literacy affect millions 

of Americans, including 

older adults. 

areas of the nation, according to a study published 

recently on the website of the journal 

Health Affairs, the Wall Street Journal reports 

(Zhang, Wall Street Journal, 9/18). 

California versus Massachusetts 

According to the AP/Chronicle, California 

and Massachusetts have significant differences 

in their health care spending 

patterns, a comparison that is noteworthy 

because of health care reform efforts in the 

two states. Per capita health care spending 

in California was 12% below the national 

average, compared with 27% above the 

national average for Massachusetts. 

The report found that relative to 

Massachusetts, California had: 

• A lower-than-average share of state residents 

younger than age 65; 

• An above-average proportion of the population 

being uninsured; and 

• A higher percentage of state residents 

receiving coverage through HMOs. 

WHY ARE THE HEALTH 

LITERACY NEEDS OF OLDER 

ADULTS IMPORTANT? 

Problems with health literacy affect 

millions of Americans, including older 

adults. More than 77 million U.S. adults 

have basic or below basic health literacy 

skills. 1 For the growing population of 

older Americans aged 65 years or older 

— expected to reach more than 71 million 

by 2030 2 — difficulties with health 

literacy can complicate already challenging 

health problems. ■ 

1. Kutner M, Greenberg E, Jin Y, Paulsen C. The 

Health Literacy of America’s Adults: Results From the 

2003 National Assessment of Adult Literacy (NCES–483). 

U.S. Department of Education. Washington, DC: National 

Center for Education Statistics; 2006. 

2. U.S. Administration on Aging. Statistics on the 

Aging Population. Available at www.aoa.gov. Accessed 

July 2007.

Are Mystery Patients in Your Future? 

The Bright Medical Associates Story 

By Meryl D. Luallin, Partner, Sullivan/Luallin, Inc., President, PCG Software 

Everyone knows that satisfaction surveys 

tell you if your patients are pleased with 

“the caring concern” of your nurses, the 

doctor’s “willingness to listen” and other 

key aspects of a visit to a physician. 

Surveys even go so far as to report 

the percent of your patients who would 


enthusiastically recommend their doctor 

to friends or family. But survey results 

are limited to providing only dry statistics 

and benchmark comparisons to other 

practices. What survey reports lack is 

the “flavor” of a patient’s visit with 

the doctor. 

Yuliana Pantoja, Bright Medical Associates employee on the phone with a patient. 

Recognizing that there was more to 

learn about patients’ perceptions of 

their care experience, Bright Medical 

Associates, a 45-provider practice 

located in Whittier, CA, engaged 

Sullivan /Luallin, Inc. to conduct a 

series of “mystery patient” visits over

a period of five months. “Mystery 

patients” (the name is adapted from 

“mystery shoppers,” employed by 

large retail organizations to assess the 

service aspects of a typical customer 

purchase) are experienced profession- 

als who schedule appointments and go 

through the medical encounter from 

registration to checkout. 

At Bright, the first step in the pro- 

cess had the faux patients telephone to 

schedule appointments with all of the 

group’s providers using a structured 

checklist. The checklist ascertained a 

range of behaviors, including whether 

the call was answered in a cheerful, 

unhurried manner by an individual who 

gave his or her name, whether the caller 

was offered appointment time options, 

directions to the practice and other 

service dimensions. 

Using a variety of symptoms from 

anemia to acne, the mystery patients 

scheduled appointments with pediatri- 

cians, cardiologists, orthopaedists, 

OB/GYNs and primary care physicians. 

Next, the mystery patients visited 

each of the providers at Bright’s various 

locations, using a customized checklist 

to assess all aspects of the encounter, in- 

cluding check-in procedures, friendliness 

of the reception staff, timeliness of the 

provider, caring concern of the medical 

assistant, provider communication skills 

and checkout procedures. 

In addition, the mystery patients noted 

the overall practice environment in terms 

of orderliness, comfort, noise levels and 

other environmental issues. Also as- 

sessed were bathroom cleanliness and 

overall signage. 

The mystery patient reports were sub- 

mitted monthly and used by department 

managers to give feedback to physicians 

and staff. In cases where individuals 

had performed beyond expectations, 

a common occur- 

rence, the supervisor 

used the feedback to 

give well-deserved 

“pats on the back.” 

In other cases, the 

manager was able 

to make timely in- 

t e r v e n tio n s a n d 

change performance 

quickly. 

Bright’s manage- 

ment team was pleased to learn that the 

majority of mystery callers requesting an 

appointment were greeted by a friendly 

voice asking, “May I help you?” Mystery 

patients also reported that setting the ap- 

pointment was easy and that they’d feel 

welcome on the day of the visit. However, 

more than half the time, the operator 

neither gave the location name nor asked 

if the new patient needed directions to 

the site. 

On-site patient experiences were mostly 

positive, as noted by comments that the 

reception areas were clean and orderly. 

Further, most of the receptionists made 

a positive first impression by greeting the 

mystery patients with good eye contact 

and smiles. Unfortunately, as typical of 

most medical groups, name tags were 

visible less than half the time, either be- 

cause they were worn on a chain, which 

hung low (and out of sight on a staff 

member seated at a front desk) or not 

worn at all. 

Medical assistants, who are members 

of the care team and usually interact 

with the patient prior to the physician, 

have an opportunity to set the tone of the 

encounter. Frequently these staff mem- 

bers are juggling many tasks and may not 

focus on the need to smile and introduce 

themselves to new patients. While most 

employees smiled, the majority of Bright 

medical assistants missed the chance to 

make a positive impression by telling the 

patient their name and welcoming the 

individual to the practice. 

Overall, the provider phase of the visit 

was rated highly by the mystery patients, 

all of whom said that the doctor greeted 

them with a friendly handshake and 

“allowed them to finish describing the 

problem” and “explained things in an 

understandable way.” Once again, typi- 

cal of most physicians, very few patients 

received any written instructions or hand- 

outs pertaining to their symptoms. 

Finally, it was puzzling that a fair 

number of the providers didn’t end the 

encounter with a “warm, friendly hand- 

shake or touch,” an obvious cue that the 

visit was over. 

Mystery patient feedback is invalu- 

able. It provides detailed descriptions 

of personal experiences that go beyond 

the dry data of a survey. Bright learned 

who of their providers and staff members 

consistently went the “extra step” for 

patients. Conversely, once they found 

which individuals weren’t performing at 

the expected service levels they had the 

opportunity to make improvements. 

Sullivan/Luallin, Inc., CAPG’s pre- 

ferred provider for patient satisfaction 

surveys and customer service training, 

has been an associate member for more 

than 15 years and can be reached at 

(619) 283-8988. ■ 


Risk, Responsibility and Revenue 

Managed Care Service Providers Reform Health Care Through 

Cost Containment, Fraud Detection and Better Billing 

By Carol Berry, President, PCG Software 

The staff at most payer organizations may 

not have taken the Hippocratic oath, but they 

do have a fiduciary responsibility. For the good 

of patients, physicians, health plans and the 

greater communities they serve, payers must 

make a concerted effort to spend health care 

dollars wisely. Given the complexities of health 

care finance, compounded by constant regulatory 

and policy change, some tasks that should 

be basic tend to get lost in the shuffle. 

To ensure that premium dollars are well 

spent, a revenue integrity initiative should 

cover three primary areas at a minimum. 

Primarily, payers should have the ability to 

audit large volumes of claims data for improper 

coding and accurate reimbursement. 

Secondarily, payers should have the organizational 

intelligence necessary to identify and 

protect against intentional fraud and abuse. 

Thirdly, payers should be equipped with tools 

to better educate providers in an effort to prevent 

future errors in both claims submission 

and overall billing practices. 

Unfortunately, it’s been largely impractical 

to pursue these revenue integrity measures 

thoroughly until recently. But with the latest 

health care information technologies, 

California payers have begun to take on these 

responsibilities and more. 

COST CONTAINMENT 

INFORMATION IS 

NEGOTIATING POWER 

In recent years, physicians have come to 

expect clear, objective justification to accompany 

denials or rejections of their charges, and 

rightfully so. For fairness and consistency, some 

payers are augmenting their claims adjudication 

systems with new solutions that flag unclean 

claims and identify coding errors. 

Organizations like ProMed HCA, a company 

that provides managed care services to 

independent practice associations and medical 

groups, did just that in 2005. In addition to 

saving money and introducing a powerful negotiating 

tool, the software helps both ProMed 

and its providers save time and effort. Rather 

than debating reimbursement rates endlessly, groups in California, even infamous organized 

See Page 28 


ProMed can now edit and audit claims quickly 

and show providers clean, authoritative data to 

support its findings. 

The Virtual Examiner application from 

Malibu-based PCG Software provides a single 

source of information for reimbursement rates, 

coding rules, insurance regulations and abusive 

billing pattern profiling. 

Whether they’re under fee for service, 

subcapitation or fixed monthly contracts, all 

physicians want to know what they’re earning 

in comparison to the Medicare rate. This 

need to evaluate compensation is just one way 

ProMed uses PCG’s software when working 

with IPA physicians. Ongoing use of the software 

has produced multiple benefits for the 

organization, including education to providers 

on correct billing procedures, a vital negotiation 

tool and improved claims processing. 

TAKING A BITE OUT 

OF HEALTH CARE CRIME 

Fraud and abuse have become big business 

in California. According to the New York Times, 

12 different Blue Cross and Blue Shield plans 

collaborated with federal authorities in 2005 

to stop a scam that drew thousands of patients 

from 47 states to California for unnecessary 

procedures. This web of outpatient clinics 

had attempted to bill more than $1.3 billion in 

fraudulent claims, a revenue figure that would 

put this enterprise just barely out of reach of 

the Fortune 1,000 ranking of America’s largest 

corporations. 

In another case of fraudulent billing, the 

Orange County Register reported on the case 

of one Arizona couple that both allegedly 

underwent endoscopies at a clinic in Buena 

Park on a Saturday, colonoscopies the next 

day and surgery for sweaty palms the following 

Saturday. 

The National Health Care Anti-Fraud 

Association conservatively estimates that fraud 

consumes at least 3% of total health care expenditures. 

Some sources report a rate of 10% 

or about $200 billion annually. From the mafia 

in New Jersey to Russian and Eurasian mob 

crime syndicates are in on the action. 

Of course, abuse is rarely perpetrated on 

such a grand scale — or at such great risk to 

patients. But small-scale fraud adds up over 

time. Most organizations are unaware that 

the majority of payers’ claims adjudication 

systems are merely automation tools intended 

to expedite claims processing. They’re effective 

as far as they go, but they lack the intelligence 

to detect systematic fraud. 

The new generation of revenue integrity 

technologies can help organizations at financial 

risk by analyzing hundreds of thousands of 

claims at a time and searching the data for certain 

outliers and patterns of abuse. Among the 

top categories of abuse payers need to protect 

against or be aware of are “spiking,” “churning” 

and “trending.” 

Generally, doctors submit a consistent 

volume of claims each month. But most adjudication 

software applications do not monitor 

volumes by group and provider over time. With 

a tool like Virtual Examiner, investigators will 

see a provider whose volume “spikes” all of 

sudden by hundreds of claims. 

Intentional fraud will often require churning: 

filing claims for an impossible number of 

encounters or services provided in a given time 

frame. Revenue integrity technologies can target 

potential outliers, such as four urinalyses on 

one office visit or claims representing 48 total 

hours of psychiatric care in one day. 

The various levels of E&M billing should 

follow a predictable bell curve for most 

physicians. Software can easily review 

trending data by group or provider, compare 

codes against comparable providers or CMS 

standards, and identify those billing disproportionately 

at the highest level. In some cases, 

it may be justified. In other cases, payers will 

want to see the relevant medical records and 

documentation. 

Increasingly, revenue integrity technologies 

are crucial tools for providers as well as payers. 

Errors are one thing, but providers who are 

dedicated to become better billers realize that 

a higher percentage of clean claims heading out



the door can equate to quicker reimbursement 

in the long run. These technologies allow payers 

to equip their providers with remittance 

advice and reimbursement recommendations 

to assist in scrubbing future claims. This means 

that payers can now help to update their providers’ 

billing systems so future claims will not be 

returned unpaid. 

Cost containment and sophisticated fraud 

detection capabilities are well within reach 

for payers these days. The technology can 

review huge hundreds of thousands of claims 

per hour, evaluating them against tens of millions 

of edits. 

Actually, it’s a part of their charter that all 

delegated-risk programs that reimburse claims 

using federal or state dollars are required to 

maintain fraud and abuse prevention initiatives. 

Having this kind technology not only 

makes payers compliant; it makes prevention 

effective. 

Increasingly, the results are being used as 

a tool for investigators to protect premium 

dollars and to strengthen payer-physician 

relationships. In California, as elsewhere, any 

measure that promotes revenue integrity is 

welcome news. 

Carol Berry is President of PCG Software in 

Malibu. She can be reached at cberry@pcgsoftware. 

com. ProMed HCA, a member of CAPG, 

serves Los Angeles, San Bernardino and 

Riverside counties. ■ 


Graybill Medical Group Honored 

with Best Practice Award 

Use of Information Technology Enables Practice to 

Enhance Operations and Quality of Patient Care 

Graybill Medical Group today announced 

it was named a winner in the second annual 

NextGen Best Practice Award competition. 

The award — given by NextGen Healthcare, 

a leading provider of fully integrated healthcare 

information systems — honors clients who have 

demonstrated exemplary use of the NextGen 

ambulatory solutions suite. Graybill Medical 

Group won the “mid-sized practice” category, 

which focused on medical practices with more 

than 11 but less than 50 physicians on staff. 

Graybill fully 

i m p l e m e n t e d 

NextGen’s image 

control system 

(ICS), electronic 

medical records 

(EMR) and enterprise 

practice 

m a n a g e m e n t 

Leslie Chapman, 

Finance Director 

( EPM) systems 

in October 2004. 

Since that time, it 

has experienced many operational benefits 

including increased staff efficiency and a reduction 

of office expenses. The technology has also 

benefited the practice’s patients by enhancing 

the quality of care. For example, the reduction 

in medication errors due to illegible handwriting 

is a result of utilizing the fax management 

tool for prescribing. Other benefits related to 

patient care include: 

• Enhanced ability to report, measure and 

schedule patients for key clinical parameters 

such as childhood immunizations, breast 

cancer screening, management of asthma, 

cholesterol management and diabetes. 

• The ability to access information from any 

George Rodriguez, Greybill Medical Director 

Mariann Gesino – Business Office Manager, 

Leslie Chapman, Finance Director and Carol 

Sweda – Front Office Manager 

site or remote location allows for immediate 

patient response and treatment. 

“This year we are celebrating 75 years of 

service to the Escondido community, and this 

award helps represent the ongoing commitment 

to our patients we have established,” said 

George Rodriquez M.D., Medical Director. 

“We are very pleased with the benefits we have 

experienced as a result of the technology and 

are eager to see our success continue as we 

expand to utilize the full functionality of the 

NextGen suite of products.” 

NextGen Best Practice Award applications 

were judged by NextGen Healthcare staff and 

third-party consultants, and then voted on by 

clients to determine the winners in their respective 

size classes (small, medium and large). 

Award recipients were recognized last month 

during a ceremony at the NextGen Healthcare 

Users’ Group Meeting at Disney’s Coronado 

Springs Resort in Orlando. 

Established in 1932, Graybill Medical Group is 

the largest primary care medical group in San Diego’s 

North County and provides care to over 150,000 

patients yearly. The group’s 40+ physicians and 

practitioners have offices in Escondido, Fallbrook 

and San Marcos. A top 10 percentile-rated group in 

patient satisfaction, Graybill implemented its Premier 

Patient Scheduling system, which greatly enhances 

the patient being seen on a timely scheduled basis by 

their primary care physician. Graybill was the first to 

implement a fully integrated electronic medical record 

and practice management system in San Diego. For 

more information, visit www.graybill.org. ■

Measurement Drives Performance 

Improvement and Delivers Dividends in 

Patient and Physician Satisfaction 

By Tammy Fisher, Senior Manager, Pacific Business Group on Health 

In California and nationally, policymakers, 

purchasers and consumers are 

seeking greater transparency in the health 

care marketplace. These stakeholders are 

demanding more scrutiny of both health 

plans and physicians. Such pressure, and 

a desire to improve health care quality, is 

leading physician groups to participate in 

measurement efforts and to disclose their 

performance scores in public forums. 

California physician groups have led the 

charge to improve quality through measurement. 

Indeed, recognizing the value of 

accountability, medical groups have opted 

to participate in the California Cooperative 

Healthcare Reporting Initiative (CCHRI) 

patient assessment survey (PAS) since 

2001, well before other states. The Pacific 

Business Group on Health (PBGH), in 

partnership with the Center for the Study 

of Systems and the Health Institute, has 

worked with physician groups on this measurement 

effort since its inception. 

In 2006, eight major California health 

plans and 149 physician organizations collaborated 

in the PAS project. In total, these 

participating groups served 11.6 million 

commercially insured HMO and POS patients, 

or 94.4% of the total HMO/POS 

commercial population in California. 

Physician group participation in measurement 

through CCHRI lays the groundwork 

for improved accountability and transparency 

in the health care marketplace by 

making quality performance data available 

to purchasers and the public. PAS results 

are reported to the state Department of 

Managed Health Care and available to 

consumers through the Office of the Patient 

Advocate website (www.opa.ca.gov). 

PAS data can also be used to structure 

incentive and reward efforts such the 

Integrated Healthcare Association’s (IHA) 

pay-for-performance program. Under this 

statewide program, HMO health plans dispensed 

$55 million in payouts to physician 

groups based on IHA quality metrics. In 

2006, 25% to 42.5% of this total was based 

specifically on patient experience scores. 

PATIENT EXPERIENCE 

AND OUTCOMES 

The PAS gets to the heart of the patient 

experience by evaluating access to 

care, coordination of care, doctor-patient 

interaction and overall ratings of care. 

These metrics are important because they 

gauge more than just patient satisfaction. 

Research shows that these patient experience 

domains are associated with a number 

of secondary outcomes such as physician 

retention, office efficiencies and improved 

patient compliance and adherence to recommended 

therapies. 

In particular, doctor-patient 

communication is a key 

factor in patient retention 

and patient satisfaction. A 

study of Massachusetts state 

employees found that a poor 

relationship between patients 

and their primary care physician 

— which was a function 

of trust, communication and 

personal interaction — motivated 

20% to leave their PCP. 

Moreover, poor communication 

is a contributing factor in 

a majority of malpractice lawsuits, whereas 

improved communication improves physician 

satisfaction and retention. 

Results from the PAS show that measurement 

is a powerful tool that can facilitate 

improvement even in multifaceted and 

complex areas such as physician-patient 

interaction. California results show a modest 

but consistent year-to-year performance 

improvement across physician organizations 

(1.2-9.9%). 

PAS data further indicate that the area 

most correlated with patient rating of care is 

doctor-patient communication — a key finding 

that has helped medical groups prioritize 

their quality improvement efforts on this 

pivotal domain in order to achieve maximum 

patient ratings. 

LEVERAGING MEASUREMENT 

TO 

DRIVE IMPROVEMENT 

Sutter Medical Network (SMN), which is 

comprised of several medical groups affiliated 

with Sutter Health, has used performance 

measurement as the backbone of an ambitious 

effort to improve patient and physician 

satisfaction across its physician network. 

SMN recognized that physicians with 

higher patient satisfaction scores tend to 

demonstrate more advanced skills in patient 

communication, agenda setting, empathy 

and partnership. Concerned that patient 

dissatisfaction with the physician-patient 

relationship may lead to disenrollment 

from a primary care doctor’s practice, a 

higher medical malpractice risk and other 

undesirable outcomes, Sutter launched an 

initiative to address PCP communication 

in 2006. 

According to Rosemary Jordan, SMN’s 

Bay Area Director, the program grew out 

of lessons learned from previous failed attempts. 

“We tried workshops and handout 

materials for a couple years and it really 

See Page 31 


Pay for Call? The Office of the 

Inspector General Speaks 

By Wendy R. Keegan, Associate at Nossaman Guthner Knox & Elliott LLP 

The Emergency Medical Treatment 

and Active Labor Act (EMTALA) 

requires hospitals to provide emergency 

treatment to patients regardless 

of their ability to pay. However, because 

EMTALA does not extend this obligation 

to physicians, many hospitals are finding 

themselves between a rock and a hard 

place due to shortages of physician specialists 

and the increasing unwillingness 

of physicians to provide emergency care 

without compensation. Some hospitals 

have responded to this quandary by 

entering into transfer agreements with 

neighboring hospitals, while others have 

established minimum call coverage requirements 

for medical staff membership 

through hospital and medical staff policies. 

Still others have resorted to paying 

physicians for emergency department call 

coverage and uninsured patient services. 

Such call coverage agreements are not 

inexpensive or simple. According to the 

California Hospital Association, hospitals 

in California pay over $600 million 

a year in on-call coverage payments. 

Further, agreements between hospitals 

and physicians are tightly regulated by 

federal and state laws, and therefore, 

must be carefully structured. 

The Office of the Inspector General 

(OIG) recently issued its first opinion 

regarding application of the federal antikickback 

law to emergency department 

call coverage agreements, providing 

welcome guidance to hospitals that have, 

or are considering, such arrangements. 

The anti-kickback law broadly prohibits 

the payment or receipt of compensation 

for referrals, and carves out numerous 

safe harbors for arrangements deemed to 


pose little risk of fraud and abuse. Though 

it is not necessary for an arrangement 

between a hospital and physician to fit 

within a safe harbor, doing so provides 

reassurance against exposure to possible 

civil monetary penalties, imprisonment 

and automatic exclusion from federal 

health care programs. 

The arrangement at issue in OIG 

Advisory Opinion No. 07-10 is typical 

of many call coverage arrangements that 

fall just short of meeting the four corners 

of an anti-kickback safe harbor, making 

the OIG’s reasoning and conclusion of 

particular interest. Under the arrangement, 

physicians participate in a monthly 

call schedule, respond to calls within a 

prescribed time, provide 1.5 days per 

month of coverage gratis, provide followup 

care to patients admitted through 

the ED regardless of their ability to pay 

and participate in the hospital’s quality 

assurance programs. The hospital, in 

turn, pays physicians a per diem based on 

whether coverage occurred on a weekday 

or weekend and the extent of each specialty’s 

responsibility for uncompensated 

care responsibilities. An independent 

consultant reviewed the per diem stipends 

and concluded that they were consistent 

with fair market value. 

At the outset of its opinion, the OIG 

recognized that hospitals face increasing 

pressure to compensate physicians 

for call coverage and that there were 

legitimate reasons to do so, as described 

above. It noted, however, that the proliferation 

of such arrangements creates 

the risk that physicians might unlawfully 

demand compensation for call coverage 

as a condition for doing business at the 

hospital, or that a hospital might illegally 

use such arrangements to entice physicians 

to join or remain on the hospital’s 

staff or to refer business to the hospital. 

Thus, the OIG emphasized that the facts 

and circumstances of each call coverage 

arrangement must be evaluated to assure 

that compensation is fair market value for 

actual and necessary items or services, 

and that compensation is not determined 

in a way that considers the volume or 

value of referrals or other business generated 

between the parties. 

After considering the background and 

details of the arrangement in question, 

the OIG ultimately approved it, based 

on several key findings. First, the OIG 

found merit in the hospital’s position 

that the per diem payments to physicians 

were fair market value for actual services 

needed and provided because physicians 

were required to do more than just be 

“on call” — they were obligated to provide 

“substantial, quantifiable services” 

that justified the per diem payments under 

the arrangement. 

Second, the OIG determined that the 

hospital’s understaffed ED and its consequent 

outsourcing of emergency care 

was indicative of a legitimate, unmet 

need for on call coverage and uncompensated 

care services. 

Third, several features of the call 

coverage arrangement minimized the 

risk of fraud and abuse, including that 

participation in the arrangement was 

offered uniformly to all physicians in 

the relevant specialties; call obligations 

were divided among participating physicians 

as equally as possible (so as not to 

reward high referrers); physicians were

equired to provide inpatient follow-up 

care to every patient admitted after being 

seen in the ED regardless of ability to 

pay (reducing the risk of “cherry-picking” 

patients); and physicians were required 

to document services in medical records 

(thereby promoting transparency and 

accountability). 

Fourth, the OIG determined that the 

hospital’s call coverage arrangement 

promoted the hospital’s charitable mission 

by facilitating better emergency and 

uncompensated care to patients in the 

hospital’s community. 

Finally, as icing on the cake, the OIG 

commented that all costs associated with 

the arrangement were absorbed by the 

hospital and were not passed on to federal 

health care programs. 

CONCLUSIONS AND 

RECOMMENDATIONS 

Some questions remain in the wake of 

OIG Advisory Opinion No. 07-10, such 

as determining at what point it becomes 

appropriate to compensate physicians 

for providing ED coverage and uncompensated 

care; the extent to which the 

fair market value must be documented 

and supported (i.e., whether an outside 

consultant opinion is always necessary); 

and the level of substantial, quantifiable 

services, in addition to “being on call,” 

that should be a part of a call coverage 

arrangement. Nevertheless, for hospitals 

considering call coverage arrangements 

as a mechanism for assuring sufficient 

emergency department coverage and 

uncompensated care services, the OIG’s 

analysis and conclusions provide guidance 

as to how they might best be developed. 

Wendy R. Keegan is an associate in the 

firm’s Sacramento office. Her practice focuses 

on health care law, regulatory compliance 

and policy matters. She can be reached at 

wkeegan@nossaman.com. ■ 


wasn’t showing a marked improvement. We 

realized we hadn’t hit on the intervention 

that would really change physician behavior,” 

she said. But the new program included a 

comprehensive and intensive approach — a 

14-hour program spread over seven sessions. 

The goal: To improve physician and patient 

satisfaction, efficiency and clinical outcomes 

through enhanced agenda setting, empathy 

and patient partnership skills. 

In 2006, SMN codeveloped and launched 

this pilot program with Mills-Peninsula 

Medical Group (MPMG) using a clinician 

facilitator, Larry Baker, Ph.D. Ten primary 

care physicians were selected for the 

program, which was designed to foster peerto-peer 

learning through role playing, panel 

discussions and small group interactions. 

Physicians learned how to elicit the patients’ 

complete list of concerns early in the 

visit and to establish and prioritize a shared 

agenda. In addition, participants learned 

how to express empathy, or understanding 

of the patient’s situation and its challenges 

— something that some physicians said they 

had previously struggled with. 

“It’s really hard in busy practices with 

constant interruptions to really be able to 

focus on some very basic skills, to incorporate 

these new skills and practice them 

over time. This program gives physicians 

a chance to take the time to learn and 

to move these new skills into their daily 

practice with patients,” said Sharon Katz, 

Vice President of Medical Management 

for MPMG. 

R e s u l t s f r o m t h e i n i t i a l p i - 

lot program exceeded MPMG’s and 

SMN’s expectations. 

“In the first group, we saw clear improvements 

in patient and physician satisfaction. 

Physicians said they felt more confident 

about their interactions with patients, and 

they were going home earlier, ” said Katz. 

“Moreover, they had a better understanding 

of their patients’ needs and were more 

effective in including their patients in developing 

a shared plan for their visit. It was a 

win-win for both patients and physicians.” 

Given these promising results, SMN 

has since expanded the program to the 

Palo Alto Medical Clinic and offered a 

second training at MPMG. Additionally, 

MPMG physicians who have completed 

the training continue to meet on a regular 

basis to reinforce their learning and share 

their implementation experiences with 

new participants. In 2008, the California 

Quality Collaborative — a joint program of 

PBGH and CAPG — will offer a program 

in January 2008 to help other physician 

groups launch their own patient experience 

improvement programs. 

WHAT HAVE WE LEARNED? 

SMN’s success demonstrates the importance 

of coupling measurement efforts with 

effective improvement strategies. Public 

reporting and performance rewards alone 

are unlikely to drive dramatic, sustainable 

changes across a broad range of patient-centered 

measures. Instead, improvement will 

require the essential component of training 

and assistance paired with incentives like 

pay for performance. 

Fortunately, California’s unique system 

for delivering health care enables this kind 

of change. The delegated model, under 

which organized groups of physicians accept 

responsibility for managing the care 

of HMO enrollees, has been successful 

in lowering costs and improving quality. 

This care management function enables 

physician groups to take ownership of 

improvement initiatives and to provide 

the infrastructure, both strategic and 

tactical, to foster leaps in patient experience. 

Furthermore, efforts such as the 

California Quality Collaborative, which 

links California Medical Groups and IPAs 

together and connects them with experts 

to improve exchange of best practice information 

in an open forum, further enhance 

California’s progress in this area. 

A ll of t hese factors — as well 

as the leadership and commitment of 

physician groups — will help to foster 

a more transparent, effective, 

higher quality and accountable health care 

delivery system. 

Tammy Fischer is a Senior Manager in the Quality 

Measurement and Improvement Department of the 

Pacific Business Group on Health. She is a Director 

for programs offered through the California Quality 

Collaborative. ■ 


Read this information carefully before 

you start taking VYTORIN. Review this 

information each time you refi ll your 

prescription for VYTORIN as there may 

be new information. This information 

does not take the place of talking with 

your doctor about your medical 

condition or your treatment. If you 

have any questions about VYTORIN, 

ask your doctor. Only your doctor can 

determine if VYTORIN is right for you. 

What is VYTORIN? 

VYTORIN is a medicine used to lower 

levels of total cholesterol, LDL (bad) 

cholesterol, and fatty substances called 

triglycerides in the blood. In addition, 

VYTORIN raises levels of HDL (good) 

cholesterol. It is used for patients who 

cannot control their cholesterol levels 

by diet alone. You should stay on a 

cholesterol-lowering diet while taking 

this medicine. 

VYTORIN works to reduce your 

cholesterol in two ways. It reduces the 

cholesterol absorbed in your digestive 

tract, as well as the cholesterol your 

body makes by itself. VYTORIN does 

not help you lose weight. 

Who should not take VYTORIN? 

Do not take VYTORIN: 

• If you are allergic to ezetimibe or 

simvastatin, the active ingredients in 

VYTORIN, or to the inactive ingredients. 

For a list of inactive ingredients, see 

the “Inactive ingredients” section at 

the end of this information sheet. 

• If you have active liver disease or 

repeated blood tests indicating 

possible liver problems. 

• If you are pregnant, or think you may 

be pregnant, or planning to become 

pregnant or breast-feeding. 

VYTORIN is not recommended for use 

in children under 10 years of age. 

What should I tell my doctor before 

and while taking VYTORIN? 

Tell your doctor right away if you 

experience unexplained muscle pain, 

tenderness, or weakness. This is because 

on rare occasions, muscle problems 

can be serious, including muscle breakdown 

resulting in kidney damage. 

The risk of muscle breakdown is 

greater at higher doses of VYTORIN. 

The risk of muscle breakdown is greater 

in patients with kidney problems. 

Taking VYTORIN with certain substances 

can increase the risk of muscle problems. 

It is particularly important to tell your 

doctor if you are taking any of the 

following: 

• cyclosporine 

VYTORIN ® (ezetimibe/simvastatin) Tablets 

Patient Information about VYTORIN (VI-tor-in) 

Generic name: ezetimibe/simvastatin tablets 

• danazol 

• antifungal agents (such as 

itraconazole or ketoconazole) 

• fi bric acid derivatives (such as 

gemfi brozil, bezafi brate, or fenofi brate) 

• the antibiotics erythromycin, 

clarithromycin, and telithromycin 

• HIV protease inhibitors (such as indinavir, 

nelfi navir, ritonavir, and saquinavir) 

• the antidepressant nefazodone 

• amiodarone (a drug used to treat an 

irregular heartbeat) 

• verapamil (a drug used to treat high 

blood pressure, chest pain associated 

with heart disease, or other heart 

conditions) 

• large doses (≥1 g/day) of niacin or 

nicotinic acid 

• large quantities of grapefruit juice 

(>1 quart daily) 

It is also important to tell your doctor if 

you are taking coumarin anticoagulants 

(drugs that prevent blood clots, such as 

warfarin). 

Tell your doctor about any prescription 

and nonprescription medicines you are 

taking or plan to take, including natural 

or herbal remedies. 

Tell your doctor about all your medical 

conditions including allergies. 

Tell your doctor if you: 

• drink substantial quantities of alcohol 

or ever had liver problems. VYTORIN 

may not be right for you. 

• are pregnant or plan to become 

pregnant. Do not use VYTORIN if you 

are pregnant, trying to become pregnant 

or suspect that you are pregnant. If 

you become pregnant while taking 

VYTORIN, stop taking it and contact 

your doctor immediately. 

• are breast-feeding. Do not use 

VYTORIN if you are breast-feeding. 

Tell other doctors prescribing a new 

medication that you are taking VYTORIN. 

How should I take VYTORIN? 

• Take VYTORIN once a day, in the 

evening, with or without food. 

• Try to take VYTORIN as prescribed. 

If you miss a dose, do not take an 

extra dose. Just resume your usual 

schedule. 

• Continue to follow a cholesterollowering 

diet while taking VYTORIN. 

Ask your doctor if you need diet 

information. 

• Keep taking VYTORIN unless your 

doctor tells you to stop. If you stop 

taking VYTORIN, your cholesterol 

may rise again. 

What should I do in case of an overdose? 

Contact your doctor immediately. 

What are the possible side effects of 

VYTORIN? 

See your doctor regularly to check your 

cholesterol level and to check for side 

effects. Your doctor may do blood tests 

to check your liver before you start 

taking VYTORIN and during treatment. 

In clinical studies patients reported the 

following common side effects while 

taking VYTORIN: headache and muscle 

pain (see What should I tell my doctor 

before and while taking VYTORIN?). 

The following side effects have been 

reported in general use with either 

ezetimibe or simvastatin tablets (tablets 

that contain the active ingredients of 

VYTORIN): 

• allergic reactions including swelling 

of the face, lips, tongue, and/or throat 

that may cause diffi culty in breathing 

or swallowing (which may require 

treatment right away), rash, hives; 

joint pain; muscle pain; alterations 

in some laboratory blood tests; 

liver problems; infl ammation of 

the pancreas; nausea; gallstones; 

infl ammation of the gallbladder. 

Tell your doctor if you are having these 

or any other medical problems while 

on VYTORIN. This is not a complete list 

of side effects. For a complete list, ask 

your doctor or pharmacist. 

General Information about VYTORIN 

Medicines are sometimes prescribed 

for conditions that are not mentioned 

in patient information leafl ets. Do not 

use VYTORIN for a condition for which it 

was not prescribed. Do not give VYTORIN 

to other people, even if they have the same 

condition you have. It may harm them. 

This summarizes the most important 

information about VYTORIN. If you 

would like more information, talk with 

your doctor. You can ask your pharmacist 

or doctor for information about VYTORIN 

that is written for health professionals. 

For additional information, visit the 

following web site: vytorin.com. 

Inactive ingredients: 

Butylated hydroxyanisole NF, citric 

acid monohydrate USP, croscarmellose 

sodium NF, hydroxypropyl methyl - 

cellulose USP, lactose monohydrate NF, 

magnesium stearate NF, microcrystalline 

cellulose NF, and propyl gallate NF. 

Issued November 2006 

Manufactured for: 

Merck/Schering-Plough Pharmaceuticals 

North Wales, PA 19454, USA 

20750140(1)(004)-VYT

Upcoming 

CAPG Information Technology Committee Meeting 

February 12, 2008 

Los Angeles CAPG office 

For more information, contact CAPG at (213) 642-CAPG. 

CAPG Contracts Committee Meeting – So. California 




CAPG Northern California General Membership Meeting 


Hilton Oakland Airport Hotel 


Third National Pay-for-Performance Summit 

February 27-29, 2008 

Los Angeles, sponsored by Integrated Healthcare Association 

For more information, contact www.pfpsummit.com. 

CAPG Human Resources Committee Meeting 

March 4, 2008 



Leadership and Management in Geriatrics 

March 14-15, 2008 

Hilton Executive Meeting Center, Long Beach, CA 

For more information, contact Susan Kwan at skwan@mednet. 

ucla.edu or go to www.geronet.ucla.edu/centers/LMG08_ 

Brochure_final.pdf. 

CAPG Pharmaceutical Care Committee Meeting 

March 18, 2008 



Inland Empire Collaborative Conference 

March 20, 2008 

Doubletree Hotel Ontario Airport 

For more information, contact Roza Do 

at rdo@pbgh.org or (213) 239-5049. 

CAPG Medi-Cal Managed Care Committee Meeting 

April 1, 2008 



CAPG Medical Policy Committee Meeting 

April 8, 2008 



CAPG San Diego Regional Meeting 

April 9, 2008 

San Diego, CA 


CAPG Public Relations Committee Meeting 

April 15, 2008 


For more information, contact CAPG at (213) 642-CAPG.

Events 

CAPG Contracts Committee Meeting – No. Cal 

April 17, 2008 

Hilton Oakland Airport Hotel 


California Council on Gerontology & Geriatrics (CCGG) 

2008 Annual Conference 

Gerontology and Geriatrics: Critical Components of California’s 

Workforce 

Friday, April 18, 2008 

Doubletree Hotel Sacramento - Sacramento, CA 

For more information, please call CCGG at (310) 312-0531 or 

e-mail to CCGGOFFICE@UCLA.EDU. 

CAPG Information Technology 

Committee Meeting 

April 29, 2008 



CAPG Inland Empire 

Regional Meeting 

May 7, 2008 

Riverside, CA 


CAPG Southern California 

General Membership Meeting 

May 13, 2008 



CAPG Annual Healthcare Conference 

May 29-June 1, 2008 

San Diego Marriott Hotel & Marina 

For more information, contact CAPG at (213) 642-CAPG or 

go to www.capg.org. 

If you have an event to submit for this column, please 

do so at CAPGHealth@CAPG.org. Please include the 

name of the event, the date, location and where to get 

additional information.

Medical Practice Valuations 

Use More Than One Valuation Method, 

and Get a Second Opinion 

By Kenneth E. Avery, Vice President, Medical Development Specialists 

The health care market is undergoing 

shrinking reimbursements from 

Medicare and Medicaid programs, leading 

many solo practitioners to reduce 

expenses by banding together to form 

medical groups. The acquisition of small 

practices by larger groups requires practice 

valuations. 

A medical practice’s value has numerous 

components. Its reputation in the 

community is vitally important, and its 

specialty, location, equipment and supplies, 

earning capacity, goodwill, office 

lease terms and recent financial trends 

must all be considered in arriving at the 

entity’s fair market value. 

The IRS also has a significant influence 

on the valuation of medical practices. 

For example, a nonprofit hospital may 

not pay more than fair market value for a 

medical practice, or it might lose its taxexempt 

status by reason of inurement. 

The IRS recognizes three approaches 

for measuring a medical practice’s fair 

market value: 

1. Income approaches: Capitalization 

of excess earnings, known as the 

“historical method. Discounted cash 

flow, or “future projection method” 

2. Market approach, a comparison to 

other similar practice transactions 

3. Cost approach, which assesses the 

replacement value 

To ensure a correct valuation, the IRS 

may require that the income approach 

be tested against the results of a second 

approach. Following are some recent 

transactions in which a second opinion 

was requested. 

CENTRAL CALIFORNIA COAST 

A five-physician internal medicine 


group was considering acquisition by 

a large medical group. The accounting 

firm hired by the potential acquirer to 

value the smaller group was instructed 

to conduct the appraisal using only the 

discounted cash flow valuation method. 

The smaller group was instructed to 

conduct the appraisal using only the 

discounted cash flow valuation method. 

The smaller group was being offered 

a purchase price of $400,000 or an 

amount equal to its accounts receivable 

balance. In other words, the smaller 

group would have been purchased with 

its own money 

The physicians hired an appraiser to 

give them a second opinion. This valuation 

utilized all four methods described 

above, and concluded that the group’s 

value was nearly $1 million, including 

accounts receivable. A meeting was arranged 

to compare the two valuations, 

and the $1 million valuation was agreed 

upon, after the assumptions used in the 

first valuation were revised. This second 

valuation earned the physicians more 

than $500,000. 

Lessons learned: 

• Be sure that several methods are used in 

the valuation process to create a range 

of value, providing a reality check for 

the conclusion. 

• Determine whether your appraised 

value includes your cash or accounts 

receivable. 

CHICAGO SUBURBS 

Eight Chicago-area hospitals were 

combining to form a large health system. 

One of the individual member hospital’s 

MSO was selected to serve the new organization, 

and was valued at $3 million 

by a national consulting firm. 

However, another appraiser called in 

to offer a second opinion identified many 

additional assets, including policy and 

procedure manuals, provider manuals, 

computer systems and software, extensive 

employee training and marketing 

materials. It was finally agreed that the 

fair market value of the MSO was $6 million, 

increasing the value to the MSO’s 

shareholders by $3 million. 

Lesson learned: Valuations should 

identify all the tangible and intangible 

assets of a practice. 

NORTHERN 

CALIFORNIA COAST 

A for-profit hospital commissioned 

an appraisal of a four-physician primary 

care medical group that was having 

financial difficulties. The appraiser 

recommended that the hospital acquire 

the group’s assets by assuming its liabilities, 

thus relieving the physicians 

of their debt. The physicians ordered 

a second appraisal, which included the 

physician’s growth plans and synergies 

from a strategic affiliation with a strong 

capital partner. The consultants who 

prepared the second appraisal helped the 

physicians affiliate with a large not-forprofit 

hospital in the area, and increased 

the value of the practice to the physicians 

by $500,000. 

Lesson learned: The assumptions 

used in the financial projections should 

include growth plans and synergies with 

strategic affiliations. 

NEW YORK CITY AREA 

A national practice management com- 

See Page 42

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Coast’s mission is to establish a collaborative 

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medical group’s practice objectives in order to 

customize a flexible business solution to suit their needs. Utilizing the latest technology we 

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challenges to provide consistent and stable management services. As health care 

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energies and attention on patient care. 

What Sets Us Apart 

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� Member advocacy program - Member issues are always handled by a live person 

� Highest level in delegated activities. 99-100% scores in all delegated activities. 

� On-site and telephonic provider services. Training, education and problem solving 

for services and systems. We’re always here for you and your providers. 

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Healthy Moves 

for Aging Well 

By Francisco Moreno, Supervising Care Manager, AltaMed Health Service and Nancy Garcia, M.S.G., 

Supervising Care Manager, AltaMed Health Service 

AltaMed Health Service Corporation’s 

Multipurpose Senior Service Program 

(MSSP)/Integrated Care Management 

Program (ICMP) has been participating in 

the Healthy Moves for Aging Well Physical 

Activity Intervention since April 2006. 

Healthy Moves (HM) was developed and 

tested by Partners in Care Foundation (PICF) 

to enhance the activity level of frail high-risk 

sedentary seniors living at home. As long as 

an agency is ready and willing to implement 

the innovation, has the capacity and resources 

to promote and support change, and has goals 

that are compatible to those of the Healthy 

Moves Intervention. HM has the potential 

to be effectively adapted by any agency that 

serves the senior population in their homes 

(Partners in Care, 2007, Healthy Moves for 

Aging Well). 

Statistics show that only 31% of older 

adults ages 65 to 74, and only 23% of those 

aged 75+, engage in regular physical activity. 

There is an average decline in physical 

functioning of 10% each decade between 

ages 60 to 90. Physical activity can extend life 

expectancy 28% for frail elderly. The additional 

benefits of physical activity include that 

it strengthens cardiovascular system (heart, 

lungs and blood vessels), improves balance, 

strength and flexibility, enhances endurance 

and stamina, reduces fatigue, improves sleep, 

reduces anxiety and depression, helps regain 

function and reduces risk for falls. Barriers 

that are cited for older adults’ lack of participation 

in exercise include belief that lack of 

activity is a natural part of aging, exercise is 

harmful for older adults, exercise “at my age” 

is embarrassing, time constraints, overprotective 

relatives and friends, no interest or 

motivation, and not knowing how to exercise 

(Simmons et al, 2006, Engaging Frail Care 

Management Clients in Physical Activity). 


Top row, left to right: Francisco Moreno, 

SWCM; Claudia Gallegos, SCM; Fannie 

Gurrola, SWCM; Daisy Rios, SWCM; two 

PICF volunteers, Alejandrina Alcala, data 

support, Melissa Santos, data support; Mario 

Alvarado, SWCM; Rayma Halloran, NCM; 

Elizabeth Velador, SWCM; Monica Hoyos, 

SWCM; and Veronica Pimentel, SWCM. 

Bottom row, left to right: Anwar Zoueihid, 

SCM; Hugo Romo, M.P.H., Director of Care 

Management; Carol Crecy, Director, Center 

for Communication and Consumer Services, 

U.S. Administration on Aging; and June 

Simmons, LCSW, CEO of Partners in Care 

Foundation. 

AltaMed’s MSSP/ICMP Care Management 

Department, under the leadership of 

Hugo Romo, M.P.H., Director of Care 

Management; Anwar Zoueihid, M.S., supervising 

care manager (SCM), AltaMed Project 

Lead; and Francisco Moreno, supervising 

care manager, volunteered to participate in 

the intervention in 2006, due to its ability 

to provide many participants that meet the 

criteria for HM. MSSP provided many participants 

that met the HM criteria. ICMP 

serves a younger population (18+), as well as 

an elderly population, therefore not as many 

clients were eligible for HM. Overall, ICMP 

enrolled 46 clients, while MSSP enrolled 367 

for a total of 413. 

Criteria for Healthy Moves include that 

participants be 65 years of age or older, enrolled 

in a care management program, need 

assistance with two to four activities of daily 

living (ADLs), be motivated to participate, 

have cognitive ability enough to follow directions, 

have a caregiver, if not, must be able 

to stand unassisted in order to be able to 

exercise alone safely (Partners in Care, 2007, 

Healthy Moves for Aging Well). 

Advanced exercises and chair-bound exercises 

are offered to seniors through this 

intervention program for which care managers 

received training on how to present 

the material to clients. Additionally, care 

managers also received training on “Brief 

Negotiation” techniques, designed to help 

clients make and sustain changes in physical 

activity in brief clinical encounters. Funding 

for the HM program came from the John A. 

Hartford Foundation and national leadership 

and oversight from the National Council on 

the Aging. A regional advisory team in Los 

Angeles developed and conducted a pilot 

project in which AltaMed’s MSSP/ICMP 

also participated. HM is recognized as an 

official evidence-based health promotion 

program by the federal Administration on 

Aging. The Center for Healthy Aging at 

the National Council on the Aging provides 

national leadership and oversight for the 

intervention. Evaluation is conducted by the 

University of Southern California (USC) 

Andrus Gerontology and the Institute for 

Change Research Center of Partners in Care 

(Partners in Care, 2007, Healthy Moves for 

Aging Well). 

AltaMed MSSP/ICMP initiated its involvement 

with Healthy Moves in April 

2006. Project manager Jennifer Wieckowski, 

M.S.G., coordinated training sessions for 

the social work care managers on benefits of 

HM intervention and how it would be implemented 

for the MSSP/ICMP clients. MSSP 

Social Work Care Manager (SWCM) Nancy 

Garcia, M.S.G., served as MSSP/ICMP 

HM liaison for PICF. Ms. Garcia tracked

Daisy Rios, Care Manager, with an MSSP 

client. 

enrollments of clients into HM, which were 

reported quarterly to the PICF project manager. 

Two MSSP interns assisted Ms. Garcia 

with record keeping, including filing and 

contacting clients on a monthly basis. 

It was determined by AltaMed’s director 

of care management, AltaMed project lead 

and the PICF project manager before the 

initiation of HM at AltaMed that the goal for 

ICMP/MSSP would be to enroll 200 participants 

into the HM program. MSSP/ICMP 

staff enrolled 93 clients the first quarter, 69 

the second, 114 third quarter and 137 the 

final quarter, for a total of 413, more than 

any other agency enrolled. 

On June 23, June Simmons, LCSW, CEO 

of Partners in Care Foundation, met with 

MSSP/ICMP care managers and received 

feedback about MSSP/ICMP’s successful 

enrollment rate. At that time, Ms. Simmons 

stated that AltaMed was the most successful 

site in the Healthy Moves intervention 

and that the Archstone Foundation and the 

National Council on the Aging are extremely 

impressed with AltaMed’s leadership in the 

intervention project. 

Currently, MSSP/ICMP staff are still 

doing “follow-ups” for clients that were 

enrolled in the final quarter of enrollment 

into the HM program. Clients continue to 

be educated by staff about the benefits of 

carrying out the HM exercises. Handouts are 

used by staff to continue to educate existing 

clients about the benefits of the exercises in 

their everyday lives. One MSSP care manager 

stated how helpful Healthy Moves was 

to his client. The client stated that Healthy 

Moves helped her so much with confidence 

and strengthening her body that eventually 

she enrolled herself into Bally’s total fitness 

gym to use their cardio-vascular fitness 

equipment. Due to improved functional 

ability, this client eventually disenrolled 

from MSSP. Other participants stated that 

Healthy Move’s simple exercises helped 

them improve their balance and flexibility, 

allowing them to be more independent and 

carry out more ADLs. AltaMed is currently 

looking at the possibility of replicating this 

intervention in our adult day health centers 

(ADHC), Program of All-Inclusive Care for 

the Elderly (PACE) and our clinics. ■ 

References 

Partners in Care (2007) Healthy Moves for Aging Well 

Retrieved November 2 from the World Wide Web: 

www.picf.org/landing_pages/22,3.html. 

Simmons, June, Wieckowski, Jennifer, Zoueihid, 

Anwar (2006) Engaging Frail Care Management Clients 

in Physical Activity Healthy Moves for Aging Well 

– Partners in Care. 




By Wells Shoemaker, M.D., Medical Director, CAPG 

CAPG’s board of directors culminated 

six months of intensive collaborative effort 

in September 2007 by approving a “Code of 

Conduct” for expanded, bi-directional data 

sharing between medical groups and six 

major health insurance plans (Aetna, Blue 

Cross, Blue Shield, CIGNA, Health Net and 

UnitedHealthcare). 

On November 5, 2007, CAPG CEO Don 

Crane and executive representatives of each 

of the six plans signed the unprecedented 

agreement in a formal ceremony at the 

CAPG offices in Los Angeles. A delegation 

of CAPG board members attended. Director 

Cindy Ehnes of DMHC, Tom Williams 

of IHA and Diane Stewart of PBGH and 

California Quality Collaborative (CQC) 

offered remarks. 

Feedback has been positive from industry 

observers, highlighting the prospect of 

coordinated care, which better utilizes the 

complementary strengths of statewide health 

plans and CAPG’s local and regional physician 

groups. Additionally, plans and groups 

expect a more accurate documentation of 

quality of care metrics in California systems 

in comparison to other states. 

Taking the code from good intentions to 

successful operation will occupy substantial 

outreach effort in the first quarter of 2008. 

(See No. 9 below for more details.) 

FREQUENTLY 

ASKED QUESTIONS 

1. What exactly is it? The code lays out 

principles encouraging CAPG’s medical 

groups to forward expanded information 

to the plans, and vice versa, with conditions 

and cautions. The overriding goal is 

to improve coordination of patient care and 

timely delivery of necessary services. Until 

recently, some of this information was not 

exchanged completely, which was regarded 

by important audiences as a potential weakness 

in the delegated model of care.* 

2. Information such as? From the 


groups, that includes laboratory results 

and internal registry information for 

chronic illness and preventive care. 

From the plans, it includes timely pharmacy 

information, institutional claims 

experience (hospital, infusion center, 

ER), out-of-network and out-of-area 

services, vision examinations, limited 

behavioral contact information and initial 

health assessments. 

3. Why was a code necessary? Issues 

of confidentiality, HIPAA compliance 

and differing business philosophies had 

impeded information sharing in both directions. 

It is likely that some patients may 

not have received all of the mainstream 

services that might have improved their 

health status and productivity. Without a 

uniform code, only mincing gains were 

considered achievable. The collaborators 

sought instead a major leap forward, 

which is why all of the major plans were 

engaged from the beginning. 

4. Who really cares about this? 

• Purchasers of health insurance expect 

the full array of promised services 

to be available to their employees and 

their families. They expect maximum 

coordination between partners in the 

delegated model of care,* and they 

expect interventions to be accurate, 

rapid and complete. Purchasers bristled 

at the revelation that information 

was not being shared consistently. 

• Plans embrace transparency and 

public performance reporting, but 

they want their performance scores 

to reflect the true picture, not a 

diminished artifact. They are held accountable 

to purchasers that chronic 

care management activities will reach 

all appropriate beneficiaries. 

• Medical Groups and IPAs are in the 

business of delivering frontline care, 

and they want their providers to be 

fully equipped to make evidence-based 

decisions for each individual patient. 

While seeking coordination, groups 

also strive to avoid the distraction of 

inaccurate communications to both 

patients and physicians. 

• Government is embarking upon 

health care reform in a troubled time, 

when health care deficiencies represent 

a threat to the state and nation’s 

economic security. There is a definite 

appeal of accountable “medical homes” 

with a locally credible, technologically 

keen “central intelligence” to support 

best scientific practices, but policy 

makers want hard proof. The ability 

to truly coordinate data-based care is 

a test, which our model must pass if 

we are to maintain our station. 

5. Will the code endanger confidentiality? 

No. While fully complying with 

HIPAA, the code explicitly rejects any 

inappropriate use of information by plans, 

groups and individual practitioners. 

6. Why couldn’t one side “just do it” 

without collaboration? Plans have 

tremendous strengths by virtue of responsibility 

for populations of millions 

of patients, with sophisticated systems 

that smaller, local medical groups can 

rarely afford. Groups, on the other hand, 

have effective methods of engaging local 

practitioners for quality improvement, 

building upon trust and local credibility. 

These two strengths logically reinforce 

each other as long as communication stays 

open. Neither side can fully succeed in 

isolation. 

7. Does the code endanger competition? 

Not at all. Plans and groups alike 

pursue the shared goals of quality and affordability, 

but the free enterprise system 

should also ideally stimulate innovation, 

diligence and efficiency. Patients will be 

the true beneficiaries, with higher starting 

points from all parties. 

See Page 42

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From left to right: Peter Welch, CIGNA; Steven Lynch, Healthnet; Brian Sassi, Blue Cross of 

California; Gerald Bishop, M.D., Aetna; Michael Anne Brown, M.D., Blue Shield; Don Crane, 

CAPG; Cindy Ehnes, DMHC; David Hansen, UnitedHealthcare. 

8. What does this do to disease management? 

The data-sharing negotiations 

threatened to stall over the medical 

groups’ irritation with disconnected, 

remote disease management vendors 

“pinging” upon patients and frontline 

physicians. All parties have agreed to 

enter a one-year collaborative process 

under the aegis of the California Quality 

Collaborative, modeled after a successful 

effort in Minnesota. The workgroup 

will seek changes that will improve the 

accuracy, acceptance, coordination and 

reach of disease management. 

9. What happens next? Converting 

noble philosophical intentions into better 

service is, of course, the real test. 

Conventional wisdom reminds us that the 

devil resides in the details. In the weeks 

following the signing ceremony, steps 

have been quietly undertaken by stakeholders 

from groups, plans, purchasers 

and laboratories to operationalize the data 

transfer. Several imperatives emerged: 

• Process must be simple, uniform 

to the degree possible and 

cycle automatically. 

• M i n i ma l new overhead c ost 

to groups 

• Data should flow in a format, which 

will satisfy multiple reporting specifications 

(NCQA, HEDIS, P4P). 

• Data files should be easily “opened” 


and practical to apply by parties at 

both ends. 

• HIPAA compliant, of course 

• S uppor t t he ef for t s D isease 

Management Coordination workgroup 

being convened by CQC in 

early 2008. 

• CAPG groups can expect a toolkit in 

late January to facilitate the transmission 

and receipt of the newly enriched, 

two-directional flow. ■ 

* What is the delegated model? California has 

created a system for health care delivery unlike 

that of the other 49 states. Statewide and national 

health plans sell health insurance policies for prepaid, 

comprehensive “HMO” care to employers 

and families, but delegate most of the oversight of 

care and quality improvement to tightly organized 

local medical groups. These groups must fulfill an 

exhaustive list of qualifications and ongoing external 

audits and performance measures. Since the care is 

prepaid, all parties share both ethical and business 

incentives to: 

• Keep populations healthy with preventive care; 

• Cope with chronic illnesses using the best modern 

knowledge; 

• Intervene early when problems arise; 

• Use scientific evidence and sophisticated computerized 

tools to drive decisions; and 

• Keep excellent coverage affordable. 

Unlike PPO and other types of coverage, plans and 

groups in the delegated model embrace extensive 

performance measurement and public reporting of 

quality, patient satisfaction and efficiency. 


pany was acquiring a large MSO that 

owned an 80% interest in a subsidiary 

MSO. The transaction required the 

subsidiary’s 20 % minority owners to 

sell their interest, for which the majority 

shareholders’ appraisers offered 

them $500,000. Not satisfied with 

the first appraisal, the minority shareholders 

got a second appraisal, which 

determined that the market value of 

the smaller MSO was nearly double the 

first appraisal. 

It was finally agreed that the value of 

the minority shares was $950,000. 

Lesson learned: It isn’t sufficient to 

state an amount that a buyer is willing 

to pay for your practice. How much are 

other buyers willing to pay for your 

practice? Fair market value is the amount 

agreed upon between a willing buyer and 

a willing seller, both having knowledge 

of all relevant facts, and neither being 

under any compulsion to buy or sell. 

CONCLUSION 

Any appraisal of a practice should utilize 

several methods to create a range of 

values that provides a reality check for 

the conclusion. Your clients may have 

an idea of what it would cost to create 

their practice today, and what practices 

like theirs are selling for, but in the 

final analysis, if they are not satisfied 

with a potential acquirer’s valuation 

of their practice, it may be prudent to 

advise them to hire an appraiser and 

get a second opinion on the value of 

their practice. 

Medical Development Specialists is experienced 

in providing certified, fair market 

valuations to its hospital, medical group 

and physician clients. You are invited to call 

Kenneth E. Avery, CPA, Vice President of 

Medical Development Specialists, at (310) 

531-8228 with your questions regarding fair 

market valuations of medical groups, solo 

practices, imaging centers, surgery centers and 

other types of health care organizations. ■

Sharp HealthCare Receives 2007 Presidential 

Award for Quality and Performance Excellence 

President George W. Bush and 

Commerce Secretary Carlos Gutierrez 

recently announced Sharp HealthCare as 

one of five organizations to receive the 

2007 Malcolm Baldrige National Quality 

Award, the nation’s highest presidential 

honor for quality and organizational per- 

formance excellence. 

In addition to Sharp, the 2007 Baldrige 

Award recipients include Pro-Tec Coating 

Co., Mercy Health System, the city 

of Coral Springs and the U.S. Army 

Armament Research, Development and 

Engineering Center. 

“Sharp has been on a six-year journey to 

transform the health care experience for 

employees, physicians and patients,” said 

Mike Murphy, President and CEO of Sharp 

HealthCare, which is one of the largest 

health care systems in Southern California. 

“The Baldrige criteria and our unwavering 

commitment to quality, satisfaction and 

continuous improvement have helped us 

toward our vision to be the best place to 

work, practice medicine and receive care, 

and ultimately, to be the best health care 

system in the universe. We believe we are 

changing health care for the better, and the 

Baldrige evaluation process and recogni- 

tion have fanned the flames of enthusiasm 

to continue on our quest.” 

At the forefront of Sharp’s commitment 

to excellence is The Sharp Experience, a 

sweeping performance improvement initia- 

tive launched in 2001. This initiative has 

resulted in numerous advances in clinical 

outcomes, patient safety enhancements 

and organizational and service improve- 

ments. These include best-practice blood 

sugar control in patients with diabetes, 

technological innovations for patient 

safety, sustained improvements from use 

of Lean Six Sigma, employee turnover 

rates well below the industry average, 

physician satisfaction consistently in the 

top decile nationwide and significantly 

improved patient satisfaction across the 

entire Sharp system. 

In addition to receiving the 2007 Baldrige 

Award, Sharp HealthCare was the first 

health care system to be named a gold-level 

award recipient by the California Council 

for Excellence (CCE) for the California 

Awards for Performance Excellence 

(CAPE) program, the state-level affiliate 

of the Baldrige Award, in 2006. 

SHARP HEALTHCARE NAMED 2007 

BALDRIGE RECIPIENT 

Sharp and the other 2007 Baldrige Award 

recipients were selected from among 84 

applicants. All of the applicants were eval- 

uated rigorously by an independent board 

of examiners in seven areas: leadership, 

strategic planning, customer and market 

Sharp Staff 

Michael W. Murphy, 

President and CEO of 

Sharp HealthCare 

Sharp Surgery 

focus, measure- 

ment, analysis 

and knowledge 

m a n a g e m e n t , 

human resource 

focus, process 

management and 

results. The eval- 

uation process 

for the 2007 Baldrige Award recipients 

included about 1,000 hours of review and 

an on-site visit by teams of examiners to 

clarify questions and verify information in 

the applications. 


ABOUT THE MALCOLM BALDRIGE 

NATIONAL QUALITY AWARD 

Named after Malcolm Baldrige, the 

26th Secretary of Commerce, the Baldrige 

Award was established by Congress in 

1987 to enhance the competitiveness 

and performance of U.S. businesses and 

NICU Sharp 

Corrections from Fall 2007 issue: 

• Several changes were made to update the CAPG Member List on pages 7 and 8. 

• In the Standards of Excellence article, the wrong graph was shown for Domain II — Health IT. 

See correct graph provided below. 

• The correct website for CAPG Associate Partner Cooperative of American Physicians, Inc. is 

www.cap-mpt.com. 


expanded in 1998 to include education 

and health care. This year, nonprofit or- 

ganizations, including charities, trade and 

professional associations, and govern- 

ment agencies, will be eligible to receive 

a Baldrige Award. The award promotes 

excellence in organizational performance, 

recognizes the 

achievements and 

results of U.S. 

o r g a n iz a t i o n s 

and publicizes 

successful perfor- 

mance strategies. 

The award may 

b e p r e s e n t e d 

to five types of 

organizations : 

manufacturers, 

s e r v i c e c o m - 

panies, small businesses, education 

organizations and health care organiza- 

tions. The award is not given for specific 

products or services. Since 1988, 72 

organizations have received Baldrige 

Awards. 

The Baldrige program is managed by 

NIST in conjunction with the private sec- 

tor. As a nonregulatory agency of the U.S. 

Department of Commerce’s Technology 

Administration, NIST promotes U.S. 

innovation and industrial competitive- 

ness by advancing measurement science, 

standards and technology in ways that 

enhance economic security and improve 

our quality of life. 

ABOUT SHARP HEALTHCARE 

Ranked as the No. 1 integrated health 

care system in California by Modern 

Healthcare, Sharp HealthCare is San 

Diego’s most comprehensive health care 

delivery system. It is recognized for clinical 

excellence for services in cardiac, cancer 

and multiorgan transplantation, as well as 

orthopaedics, rehabilitation, behavioral 

health and women’s health. The Sharp 

system includes four acute-care hospitals, 

three specialty hospitals, three affiliated 

medical groups and a health plan. 

To learn more about Sharp, visit 

www.sharp.com. ■ 

advertisers’ index 

Brown & Toland 

Medical Group .......................Back Cover 

Cigna .......................................................17 

Coast Healthcare Management, LLC ...... 37 

Genzyme ................................................. 27 

Health Access 

Solutions ....................Inside Front Cover 

John Muir Physician Network ................... 1 

JTS Communities ................................... 23 

Kindred Hospitals ..................................... 3 

Madison Healthcare Insurance 

Services, Inc. ...............Inside Back Cover 

PCG Software ........................................ 22 

RelayHealth ............................................ 41 

The SCPIE Companies .............................. 9 

Vytorin .............................................. 32,33

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