On March 8, it was the State Senate’s turn at bat on AB 1073… and they hit it out of the park. By a vote of 25 - 8, the Senate passed AB 1073, WHA-backed legislation that will reinstate a cap of $750,000 on non-economic damage awards. Last week the bill cleared the State Assembly by an overwhelming majority of 74-22. Votes in both houses generously surpass what is needed to override a veto, which WHA hopes will not be necessary.

Wisconsin Hospital Association President Steve Brenton praised the Senate for passing a bill that helps to ensure all Wisconsin citizens will have access to medical services, including specialties that are considered high risk, such as neurosurgery and obstetrics.

"We have said all along that it is our desire to dispense with politics and move ahead with a straightforward bill that reinstates an effective cap. That is exactly what the Wisconsin Legislature accomplished and in an overwhelmingly bipartisan fashion," Brenton said. "We simply can’t sit around and watch our state slip into the medical access crisis that has gripped states like Pennsylvania, Oregon, Illinois and others that lost caps. With Governor Doyle’s signature, we will be able to avoid that."

WHA has made passage of AB 1073 its highest priority for the 2005-06 legislative session. The bill includes the following notable features:

• Is 68 percent higher than Wisconsin’s previous cap, which was overturned by the Wisconsin Supreme Court in July because it was too low.
• Includes 17 years worth of inflationary increases over the previous cap. It would have taken until 2023 to reach $750,000 with inflationary indexing under the previous cap.
• Requires a review of a cap amount every two years by the Board of Governors to the Injured

Patients and Families Compensation Fund (IPFCF). Board findings must be reported to the Wisconsin Legislature.

• Has an extensive, evidence-based legislative record that provides a solid, rational basis for a cap, as required by the Court.
• Has been extensively reviewed by Professor Gordon Baldwin, a nationally renowned constitutional scholar at the UW Law School.

"Despite frantic lobbying and political threats leveled by the Wisconsin Academy of Trial Lawyers, the Senate stood firm and did the right thing, and we commend legislators on both sides of the aisle who put partisan differences aside to enact this crucial public policy," said WHA Senior Vice President Eric Borgerding. "Governor Doyle asked for a constitutional bill with bi-partisan support, and that is exactly what is now before him. It is time to get this done and we urge him to sign it soon."

In supporting passage of AB 1073, WHA noted that in the seven months since the non-economic damage caps were overturned:

• The number of million dollar lawsuits filed since the cap was overturned is up over 22 percent;
• Four jury awards exceeding the previous damage cap have been handed down (compared to nine such awards the previous 10 years);
• Injured Patient and Families Compensation Fund premiums increased 25 percent this year; state and local bar associations are offering seminars on how to take advantage of the absence of a damage cap; and,
• Physician recruiters all across Wisconsin are reporting that out-of-state physicians are canceling appointments or simply refusing to consider practicing in Wisconsin due to the loss of the cap.

Three other important tort reform bills also passed the Senate this week. AB 1071 – statute of limitations in certain medical malpractice cases, AB 1072 – allowing evidence of collateral source payments, and AB 1074 – imposing a cap on attorney fees to ensure victims receive a greater portion of their damage award. These bills passed the Assembly the previous week and now go to Governor Doyle.

How Did Your Senator Vote on AB 1073?

VOTING AGAINST (8):

Breske (D)
Carpenter (D)
Decker (D)
Hansen (D)
Plale (D)
Robson (D)
Taylor (D)
Wirch (D)

VOTING FOR (25):

Brown (R)
Coggs (D)
Cowles (R)
Darling (R)
Ellis (R)
Erpenbach (D)
Fitzgerald (R)
Grothman (R)
Harsdorf (R)
Jauch (D)
Kanavas (R)
Kapanke (R)
Kedzie (R)
Lasee (R)
Lassa (D)
Lazich (R)
Leibham (R)
Miller (D)
Olsen (R)
Reynolds (R)
Risser (D)
Roessler (R)
Schultz (R)
Stepp (R)
Zien (R)

From the Milwaukee Journal Sentinel
Posted: March 9, 2006

It has taken two tries, but the Legislature has finally arrived at a reasonable compromise on a cap on pain-and-suffering awards in medical malpractice cases. Unlike the previous cap that was vetoed by Gov. Jim Doyle, we believe this cap is far more equitable and deserves the Governor’s signature.

We also think, as do the Republican and Democratic lawmakers who approved the $750,000 cap, that it is far more likely to withstand constitutional scrutiny by the Wisconsin Supreme Court, the key issue here.

It was that scrutiny that doomed the state’s original cap of $445,775, when indexed for inflation. The high court ruled 4-3 in July that the old cap was unconstitutional, prompting the Legislature to come up with a two-tiered alternative: $450,000 for adults and $550,000 for those younger than 18.

Although we initially believed the $450,000 cap achieved a reasonable middle ground, Doyle vetoed it, noting in part that it was only slightly higher than the old cap and thus likely to also be overturned by the high court.

In hindsight, we believe the Governor made the right call. The issue is especially thorny because of the belief by many - and not without cause - that any cap is unfair to people who have suffered because of egregious medical errors.

While we sympathize with those concerns, we believe that a cap on non-economic damages, such as pain and suffering, is needed to protect physicians and other health care providers from possible unreasonable jury awards. Such awards are not as common as many people might imagine, but they drive up medical malpractice premiums nonetheless.

When combined with other factors, including inadequate Medicaid reimbursement, those higher premiums could very well make it more difficult to retain and recruit physicians and thus exacerbate the problem of health care access, especially in already underserved urban and rural parts of the state.

There are two other points worth noting. First, the $750,000 cap would be one of the highest in the nation. Second, Wisconsin has no cap on economic damages, so patients who have suffered because of medical errors can be fully and fairly compensated for medical costs and other financial hardships.

Critics of caps, including the Center for Justice and Democracy, make some good arguments. The best is that jury awards, legal fees and insurance make up only a tiny percentage of total health spending. They also argue that the increase in insurance rates seen in 2001 and 2002 now seems to be leveling off, reducing the need for caps.

Even so, we think that Wisconsin’s cap on non-economic damages, coupled with the state’s unique Injured Patients and Families Compensation Fund, served Wisconsin health care providers and consumers well overall. The Legislature was right to revise the cap to meet constitutional objections.

As to that last critical point, at the request of the Wisconsin Hospital Association and Wisconsin Medical Society, Gordon Baldwin, a prominent constitutional scholar, reviewed the new cap and determined "it is rational and reasonable and will overcome the Wisconsin Supreme Court’s objections." We hope the Governor agrees.

Opponents of consumer-driven health plans, especially high-deductible HSAs, vigorously maintain that such plans are not a panacea for addressing either access to care or health care costs. The critics are right…to a point. HSAs are not a panacea for either of those difficult public policy challenges…but they do represent a legitimate opportunity to address fundamental flaws in the way we purchase health care services, thus improving access to care for some populations and moderating the growth in health care costs.

Regarding the "access" issue, there is irrefutable proof that a significant number of newly enrolled high-deductible health plan (HSA) beneficiaries had no previous health insurance. The hundreds of thousands of newly insured would likely "beg to differ" with those who suggest that their access has not been positively affected by the HSA phenomena. And importantly, one in two new purchasers in the individual market have household incomes of less than $50,000.

Regarding health care costs, there really are only two ways to significantly address higher costs: increase competition and reduce utilization of health care services by making consumers the direct purchasers of at least some of their health care—or—ration care through strictly enforced benefit schedules and limiting access to specialists and diagnostic procedures. Since Americans are unlikely to embrace rationing, the focus on at least some level of consumerism makes a lot of sense.

Recent proposals by President Bush are an effort to reduce health costs by expanding tax incentives to purchase insurance policies that have high deductibles and co-insurance rates. Such plans provide protections against catastrophic expenses but require individuals to use some of their own money to finance routine costs. Progressive employers are likely to offer employees a supplemental "wellness" benefit to ensure that up-front money is available for annual physicals, etc. (WHA does this).

It should be noted that most HSA critics favor a significantly increased role for government as it relates to financing health care. And they generally rebuff efforts to explain just how a government established global budget will not lead to rationing. But every conceivable example of government-financed care in fact uses some level of rationing or cost shifting to enforce the global budget. So, until opponents tell us how government-financed health care can be more successful than at least a modest level of "consumerism," we should embrace HSAs…not as a panacea but as a mechanism to improve access to care and moderate health care cost increases.

Steve Brenton
President

SPECIAL NOTE: The WHA Member Survey will be distributed directly to hospital and health system CEOs, in both electronic and written formats, on Thursday, March 23, with responses due by April 17. Please watch for additional information.

During the months of discussion and work leading up to passage of Assembly Bill 1073, legislators were among those advocating for the need to restore a cap. Here are just a few excerpts from correspondence from several legislators.

From Rep. Jennifer Shilling (D-La Crosse) in a letter to the editor that ran in the La Crosse Tribune on March 5, 2006…

Rep. Shilling voted in favor of AB 1073.

From Rep. Frank Lasee (R-Green Bay) in his Lasee’s Notes from 3-7-06…

When the Wisconsin Supreme Court struck down Wisconsin’s law limiting the size of medical malpractice awards last July, we knew we had a problem…We tried passing slightly higher limits, indexed to inflation – Governor Doyle vetoed those. Now we’re trying again, with even higher limits - $750,000. A commission will recommend increases, if any, every two years…

I certainly feel for people who have been victims of malpractice and for their families. No amount of money will ever be enough to replace a loved one. They should be compensated, and have been reasonably in the past. Yet we have to limit non-economic damages. Without limits, insurance rates will rise quickly, because insurance companies won’t have any way to predict their costs. It happened in Oregon – when Oregon’s cap was struck down, malpractice premiums jumped 80 percent. In turn, the cost of high-risk procedures like delivering babies jumped 31 percent. On the other hand, malpractice insurance rates in Texas have fallen every year since that state put limits into effect. Someone has to pay the bills.

Rep. Lasee voted in favor of AB 1073.

From Rep. Jeff Fitzgerald (R-Horicon) regarding AB 1073…

…this [restoring a cap] is a topic that you and I both deeply value, I wanted to be the first to tell you that the Wisconsin State Assembly has just passed (again) limits to non-economic damages in medical malpractice lawsuits, this time in the form of Assembly Bill 1073, which places a $750,000 limit on such jury rewards. This time, the vote was 74-22….

As the Senate author, you can rest assured that my brother, Senator Scott Fitzgerald, will be leading the fight in the State Senate on this vital piece of legislation. In the meanwhile, you may wish to contact Governor Doyle in advance to ask for his support of the very reasonable caps created in AB 1073.

Rep. Fitzgerald voted in favor of AB 1073.

WHA thanks these legislators and the many others who voted on a bipartisan and overwhelming basis in support of AB 1073.

Action Item: Call Governor Doyle Today!

AB 1073 restoring a $750,000 cap on non-economic damages has overwhelmingly passed the Senate by a 25-8 vote and the Assembly by a 74-22 vote. It now moves to Governor Doyle.

Please contact Governor Doyle immediately and urge him to sign AB 1073 into law!  Call Governor Doyle at 608-266-1212. Email Governor Doyle by logging on to WHA at www.wha.org/speakUp/emailLegislator.aspx.

Find out more on AB 1073 by accessing our "Condition Critical: The Looming Medical Liability Crisis in Wisconsin" pamphlet online at: www.wha.org/medliabilitybrochure.pdf.

Contact Jenny Boese at 608-268-1816 or jboese@wha.org with questions.

The grassroots machine at St. Joseph’s Hospital in Chippewa Falls was once again in motion, this time working to restore a cap on non-economic damages. Not only did CEO David Fish author a letter to the editor in the Eau Claire Leader Telegram, the hospital has also sent Governor Doyle over 300 letters of support for AB 1073 over the last several days. Thank you, St. Joe’s!

Read the letter to the editor from St. Joseph’s CEO David Fish that ran in the March 1, 2006, Leader Telegram…

Most of us want doctors available when needed, and high-quality care we can afford. Wisconsin has done well satisfying both of these basic needs.

Many other states haven’t been so fortunate, specifically when it comes to access to care, and specialty care such as surgery or obstetrics. In rural Illinois, surgeons trained to treat head injuries simply can’t be found. That’s not the case in Wisconsin - yet.

There is a major difference between states like Illinois with an access crisis and states like Wisconsin with reasonable availability of medical care. This is what it means to have a stable liability environment. States without legal reforms - such as a reasonable limit on non-economic "pain and suffering" awards - are in crisis. The American Medical Association’s research bears this out: 21 states are in crisis, directly affecting how patients can see a physician when needed.

It’s not all that surprising that physicians facing six-figure insurance premiums often decide to limit their practice to less risky medical care, close their practice or move to a state where legal reforms provide liability insurance stability.

In part due to the $350,000 cap on pain and suffering awards passed in 1995, Wisconsin’s environment was the envy of the nation. That has meant patients could get specialty care without driving halfway across the state.

When the Wisconsin Supreme Court declared the pain and suffering cap unconstitutional last July, it harmed our ability to remain stable. Physicians who fled a crisis state to provide care in Wisconsin quickly warned us of what was coming: more lawsuits and million dollar pain and suffering awards.

In February, those warnings became reality. A jury in Dane County awarded a plaintiff more than

$8 million following an unfortunate surgical outcome - with more than $4 million awarded in pain and suffering - an amount almost 10 times higher than what the cap would have allowed.

It’s important to note that nobody is advocating for a cap on economic damages - those for lost wages, medical costs and the like. This remains unlimited in Wisconsin through the Injured Patients and Families Compensation Fund, into which all private practice physicians pay a yearly assessment.

We also have heard that hospitals and clinics are having trouble recruiting physicians from other states because of our unlimited liability exposure. This is a dire change in attitude, especially as our state’s population ages and requires more medical care. There is already a shortage of physicians, and liability woes will only exacerbate that problem.

With the cost of health care already a major issue, does anyone expect that gigantic legal awards will keep costs in check? Of course not. Common sense dictates that all health care organizations will have to reassess their potential legal liabilities. When the cost of running a business increases, those costs are generally passed on to customers in the form of higher prices.

The state’s largest physician organization, the Wisconsin Medical Society, has worked with constitutional experts and members of both political parties in the Legislature to propose a pain and suffering cap that will allow for reasonable awards while also restoring stability to the health care system. The legislation being debated calls for a $750,000 cap on these damages - more than double the 1995 cap level.

This compromise is a reasonable way to ensure Wisconsin does not slide into the lawsuit abyss of other states. Gov. Jim Doyle and the Legislature have an opportunity to stop this looming crisis in its tracks, and protect our ability to get high quality health care in our own backyard. Please let them know that this public policy is in the best interests of Wisconsin patients.

Gary L. Bryant, M.D., a physician at Gundersen Lutheran, is chairman of the board of directors of the Wisconsin Medical Society.

By now AHA members should have received materials for AHA’s Annual Meeting, which will be held April 30 - May 3 in Washington, DC. Time has been set aside during the meeting on Wednesday, May 3 so individuals can meet with their Members of Congress.

The AHA Annual Meeting provides valued educational opportunities as well as providing Wisconsin hospital leaders the opportunity to network with peers from across the country, hear from key policymakers (such as Newt Gingrich and Cong. Peter King this year), and, most importantly, meet with Wisconsin Congressional members on issues of importance to community hospitals.

Last year over 20 Wisconsin hospital leaders attended the Annual Meeting and visited with every member (or their staff) in Wisconsin’s Congressional Delegation.

A year ago Covenant Healthcare launched the Community Health Initiative: a project aimed at assessing community health needs on Milwaukee’s underserved north side, and exploring prospective organizational partnerships to best address those needs.

Subsequent analysis revealed many significant findings, including:

• 50 percent of households in the area are at or below an annual income of $34,999.
• Nearly three-fourths of Emergency Department visits appeared to be manageable in urgent or primary care settings.
• There is a shortage of approximately 72 primary care physicians in Milwaukee.

In response to these findings, Covenant is now in the process of fine-tuning and expanding its community health presence.

Existing outreach task forces, program initiatives, screenings, and educational offerings, through which Covenant already has established a significant presence in the community, are being modified to better address the special needs of particular populations. Covenant is also working to ensure maximum concentration of its philanthropic funds toward priority community needs.

Covenant aggressively pursues new community partnerships as well. One example is it’s collaborative agreement with Milwaukee Health Services, Inc. (MHSI), a Federally Qualified Community Health Center well poised to provide primary care to underserved residents.

Covenant’s support will include:

• Physician recruitment
• Financial support for strategic planning to expand services
• Staff training
• Fund development support
• Back up staffing in high demand areas such as radiology

Covenant and Milwaukee Health Services will also cooperate to assist patients in establishing a permanent primary care provider in the community with the goal of reducing hospitalizations and reliance on Emergency Departments for treatment of non-emergent and common chronic conditions.

Residents and community officials have been highly supportive of the partnership, including City of Milwaukee Commissioner of Health, Bevan K. Baker. "The commitment Covenant Healthcare and Milwaukee Health Services are making to increase primary care to the underserved in our community is to be applauded," says Baker. "This is the kind of collaborative solution that should be replicated across the community."

Through an exclusive arrangement with a national vision provider, WHA Financial Solutions can now extend "Contact Fill" to all Wisconsin hospitals. Contact Fill provides participants with discount pricing on contact lens prescriptions and the convenience of having their lenses delivered right to their door.

This program is being rolled-out at no cost to employers. Financial Solutions supplies the program brochure and ordering information. Employers distribute the material to their employees.

Enhancements Announced to Current Proprietary Vision Plans
Financial Solutions offers Wisconsin hospitals two proprietary vision programs that offer a higher level of benefits than standard programs at extremely competitive rates. And now the benefits are even better!

• Increased frame benefits to levels unmatched in the industry
• Additional discounts on lens options (e.g., scratch resistant or tinted lenses)

Contact Michelle White at 800-362-7121 or mwhite@wha.org to offer these valuable benefits to your employees.

Wheaton Franciscan Services, Inc., the parent organization for Covenant Healthcare in Milwaukee and All Saints Healthcare in Racine, announced significant changes this week to further integrate services and improve operational efficiency. A broad scope of changes will be implemented over the next several months that will position the organization for success, promote the use of best practices across services in Milwaukee and Racine, and reduce overall operating expenses by approximately $15 million annually.

"As leaders in Catholic health care, it is incumbent upon us to continuously seek the most effective ways to ensure we are able to fulfill our mission and meet the needs of the communities we serve," says John Oliverio, president & CEO, Wheaton Franciscan Healthcare. Oliverio will continue as president & CEO for the Wheaton Franciscan System with his primary office location in Milwaukee.

All sites and services will come under the common name of Wheaton Franciscan Healthcare. The name of the parent organization will change immediately, and the name change will be launched in southeast Wisconsin on July 1, 2006. The Wheaton Franciscan Healthcare name will replace the regional system names of Covenant Healthcare and All Saints Healthcare. Wheaton Franciscan Healthcare will be the predominant name for each care delivery site and program. The system is also consolidating the Covenant and All Saints medical groups into a single organization, called Wheaton Franciscan Medical Group effective July 1, 2006.

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