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T h e N e w O f f i c i a l P u b l i c at i on o f t h e Lo s An g e l e s Co u nt y M e d i c a l A s s o c i at i on REPORTING ON THE ECONOMICS OF HEALTHCARE DELIVERY




APRIL 2013


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Volume 144 Issue 04




If medical reimbursement is a roller coaster, what we’ve seen over the past months and what’s to come could easily be the world’s biggest! We take a look at the current status of medical reimbursement and offer strategies for dealing with the changes moving forward.

16 DEPARTMENTS 6 Front Office | Practice Management

Tips, hints, advice and resources 10 transitions | Career Management


A look at the questions and challenges associated with various phases of your medical career 12 Balance | Lifestyle & Wellness

News, studies, tips and opportunities to help physicians maintain a balanced lifestyle 14 PNN | NEWS IN REVIEW

The latest headlines impacting the economics of healthcare delivery in Southern California 22 United We Stand | AT WORK FOR YOU

LACMA and CMA membership at work for you

From Your Association 4


President’s Letter | Samuel Fink, MD

24 CEO’s Letter | Rocky Delgadillo 25 LACMA News | Association Happenings

Physician Magazine (ISSN 1533-9254) is published monthly by LACMA Services Inc. (a subsidiary of the Los Angeles County Medical Association) at 707 Wilshire Boulevard, Suite 3800, Los Angeles, CA 90017. Periodicals Postage Paid at Los Angeles, California, and at additional mailing offices. Volume 143, No. 04 Copyright ©2012 by LACMA Services Inc. All rights reserved. Reproduction in whole or in part without written permission is prohibited. POSTMASTER: Send address changes to Physician Magazine, 707 Wilshire Boulevard, Suite 3800, Los Angeles, CA 9001 7. Advertising rates and information sent upon request.

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David Aizuss, MD William Averill, MD Erik Berg Stephanie Booth, MD Steven Chen, MD Jack Chou, MD Hector Flores, MD Sidney Gold, MD William Hale, MD Shelley Han Vito Imbasciani, MD Paul Kirz, MD Lawrence Kneisley Howard Krauss, MD Gideon Lowe, MD Carlos E. Martinez, MD Nassim Moradi, MD Ashish Parekh, MD Jeffrey Penso, MD Heidi Reich, MD Bob Rogers, MD Sion Roy, MD Pejman Salimpour, MD Robert Bitonte, MD Erin Wilkes, MD

time worrying about the challenges of managing a practice.

LACMA’s Board of Directors consists of a group of 30 dedicated physicians who are working hard to uphold your rights and the rights of your patients. They always welcome hearing your comments and concerns. You can contact them by emailing or calling Lisa Le, Executive Assistant, at or 213-226-0304.

Subscriptions Members of the Los Angeles County Medical Association: Physician Magazine is a benefit of your membership. Additional copies and back issues: $3 each. Nonmember subscriptions: $39 per year. Single copies: $5. To order or renew a subscription, make your check payable to Physician Magazine, 707 Wilshire Boulevard, Suite 3800, Los Angeles, CA 90017. To inform us of a delivery problem, call 213-683-9900. Acceptance of advertising in Physician Magazine in no way constitutes approval or endorsement by LACMA Services Inc. The Los Angeles County Medical Association reserves the right to reject any advertising. Opinions expressed by authors are their own and not necessarily those of Physician Magazine, LACMA Services Inc. or the Los Angeles County Medical Association. Physician Magazine reserves the right to edit all contributions for clarity and length, as well as to reject any material submitted. PM is not responsible for unsolicited manuscripts.


G r e e t i n g s! T h e N e w L AC M A has been very busy, and I will try to highlight a few of our activities that I found to be of great interest. First, I’d like to highlight a program which LACMA jointly developed with the Los Angeles County Bar Association entitled “The New Healthcare Landscape--Shared Savings or Shared Misery?” This program focused on many of the changes which will be occurring in California as the Affordable Health Care Act (Obamacare) comes into play. The Health Benefits Exchange in our state is called “Covered California” ( Covered California aims to place 2.9 million individuals in a subsidized Exchange program, and 2.1 million individuals in an unsubsidized program, or on the individual market. I don’t have to tell you that caring for five million new lives will have a significant impact on how medicine is practiced in our state. There are four levels of coverage: bronze, silver, gold and platinum...but despite naming the policies after shiny metals, reimbursement rates are projected to be “Medi-Cal plus” (whatever that means). Furthermore, the lower level policies will have the highest deductibles and copays. While these payments will be subsidized for patients at less than 250% of the federal poverty level, many of the other individuals that have these policies will have no real ability to meet their financial obligations. The concern is that these patients will have insurance cards, but few doctors willing to treat them at insurance rates that won’t even cover the cost of treatment. A perfect storm is being created with the introduction of several bills into the California Assembly and Senate this year that aim to give non-physicians such as optometrists, physician assistants and nurse practitioners additions to their scope of practice that are not justified by their level of training. Our position has always been that if ancillary health practitioners wish to become physicians, then they should go to medical school like the rest of us! LACMA and the California Medical Association will fight vigorously to ensure that patients are treated by real doctors, and that rates of payment on any insurance plan are high enough to ensure adequate primary and specialty care coverage. The concept of Accountable Care Organizations (ACOs) was also discussed. An ACO is a network of providers that are not legally in the same entity,


that have the triple aims of high quality, low cost, and the responsibility for the comprehensive health needs of a large population. My sense, of course, is that low cost will be the major goal--and what is most valued by payers. An excellent presentation on Electronic Health Records pointed out the risks of “auto-populating” software programs that generate multipage notes for each visit, leading to automatic upcoding, and a visit from a not-so-friendly federal investigator. A physician in another state was recently sued for malpractice, after his EHR magically created a chart note and visit that supposedly occurred after a patient had passed away. And how does a urologist defend nineteen consecutive notes that each contain a detailed cardiac review of systems? Such a physician becomes an easy mark for a plaintiff attorney who can then point to the absurdity and probable falsification of the entire record. Please be careful! Presentations on social media, email, and texting with patients advised physicians to proceed with extreme caution, as attorneys are finding these areas to be fertile ground for lawsuits. Unless the device you are using is HIPAA compliant, secure, and password protected, you are placing yourself at significant risk. While I have responded to patient emails for the last several years, I am definitely reconsidering this decision until I can find a way of doing so securely. There are some excellent articles available at that address these issues. Another great essay is CMA ON-CALL document #3301, “Physician Use of Mobile Devices and Cloud Computing”, found at www., and free for LACMA/CMA members. LACMA continues to assertively oppose the forced transfer of dual eligible Medi-Medi patients to managed care. Our board unanimously approved the creation of a legal defense fund, should such a strategy be necessary to defend the rights of our doctors and their patients! LACMA’s legislative advocacy for this issue continues on a daily basis. Mr. Jones, the patient I wrote about in detail last month, continues to improve, having escaped the hospice services that his family were “encouraged” to use, and hopes to leave his rehabilitation facility to rejoin his daughter and family in a few weeks! I believe that I have finally completed my efforts at Medicare recertification successfully, and estimate the wasted time taken away from the care of my patients at around 25 hours. I hope to have some exciting news to share with you about a new, moneysaving LACMA member benefit in my next column! Until next month... Samuel Fink, MD, is an internist in private practice in Tarzana. He is the 141st president of the Los Angeles County Medical Association.

The Supreme Court’s Decision Didn’t Change One Thing You still need to make important decisions now about rising health insurance premiums. So what can you do? • Enroll in a qualified High-Deductible Health Plan and open a Health Savings Account. This provides significant premium savings that can help fund your HSA account. With individual-only coverage, you are eligible to contribute up to $3,250 to your account or $6,450 with family coverage, on a federally taxdeductible* basis (members age 55–64 are eligible to contribute another $1,000). • Investigate RAF Sales Health plans offer incentives through discounts off their risk adjustment factors (RAFs) for you to change health plans. Instead of large rate increases this

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Using ERISA Regulations to Challenge Overpayment Demands for providers to receive notification from an employer-sponsored health plan subject to the Employee Retirement Income Security Act of 1974 (ERISA) alleging that the plan has overpaid the provider and that the provider must immediately repay the plan. In some cases, the plan will start recouping amounts they claim are owed by withholding payment on other, unrelated claims. I t i s n o t u n co mm o n

This can be a frustrating experience for providers, particularly where the plan does not adequately explain the details of the alleged overpayment or the available procedures for challenging the overpayment determination. Providers need to be aware of their rights under ERISA to have a full and fair review of the plan’s request for repayment. It is well-settled that when a plan subject to ERISA makes an “adverse benefit determination,” such as an initial denial or underpayment of a claim for benefits, the plan must provide the following: 1. an explanation of the specific reasons why the claim was not paid in full; 2. a reference to the specific plan provisions upon which the plan relied for the denial, and a copy of the plan; 3. a description of any additional information that the plan needs in order to pay the claim; 4. a description and copies of any internal rules, guidelines, protocols or criteria that the plan relied upon in denying the claim; 5. an adequate explanation of the plan’s review and appeal procedures for the denial, including any available external appeals. 6 PHYSICIAN MA G A Z INE | A P R I L 2013

These requirements, which are set forth in regulations promulgated by the Department of Labor (DOL), are often difficult for the plans and their administrators to follow. If these requirements are not met, the provider may be able to proceed directly to court rather than having to submit to the plan’s internal appeal procedures. Providers who have received an assignment of benefits from the patient can force the plans to satisfy their obligations under these regulations, thereby obtaining significant leverage in a coverage dispute. Providers’ leverage in this regard is expected to strengthen, because the specific details of the above requirements have become even stricter under the Affordable Care Act (ACA) passed in 2010. Furthermore, under the ACA, the DOL’s appeal regulations have been extended to health insurance policies issued directly by commercial health insurers. What is not yet settled in the law is whether an “adverse benefit determination”, as defined by ERISA, also includes an overpayment demand. Health plans and their administrators have argued that an overpayment demand is not an adverse benefit determination, and therefore not subject to ERISA’s stringent notice and review requirements, because the plan is simply asserting a state law right to recover payments it made as a result of the provider’s misrepresentation, fraud or billing discrepancies. Some courts have been receptive to this argument. For example, in Tri3 Enterprises, LLC v. Aetna, Inc., the United States District Court for the District of New Jersey recently held that ERISA did not apply to Aetna’s post-payment audit determination that it had overpaid claims due to the provider’s improper coding.(1) According to that court, Aetna’s overpayment demand did not implicate a coverage decision under the employer-sponsored health plan, but rather arose in the context of fraud prevention and recovery under state law. In contrast, the United States District Court for the Northern District of Illinois recently held, in Pennsylvania Chiropractic Association v. Blue Cross Blue Shield Assoc., that the

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plan’s overpayment demands were essentially equivalent to a denial of benefits, and therefore constituted adverse benefit determinations that triggered notice and review rights under ERISA.(2) The Department of Labor has weighed in on the issue in favor of providers. In support of the provider’s appeal to the United States Court of Appeals for the Third Circuit in the Tri3 Enterprises case, the Department argued in an “amicus” brief that its regulations promulgated pursuant to ERISA apply “to all denials of benefits, whether made initially or after further review, and whether the benefit was initially granted or denied on other grounds.” According to the Department, the fact that the plan or its administrator is attempting to rectify a wrongful grant of benefits arising from an alleged fraud prevention program does not take the dispute out of the purview of ERISA’s claims regulations. The Department’s support for the providers on this issue is expected to influence the Court of Appeals decision in the Tri3 Enterprises case, which will likely be issued in late 2013.

Regardless of how the Court of Appeals rules in Tri3 Enterprises, providers should be aware of their rights under ERISA when they receive either an initial denial or a post-payment, retroactive denial. Providers who receive demands for repayment should carefully consider whether the repayment demand complies with ERISA’s requirement for full and fair review. If it does not, then the provider may have grounds to file a lawsuit against the plan. Furthermore, the provider should put the onus on the plan to comply with the stringent ERISA regulations during the course of any internal appeals, including by requesting copies of documents that the plan relied on to assess the overpayment. For more information on ERISA claims procedures and providers’ rights to challenge overpayment, please feel free to contact Fenton Nelson. (1) Tri3 Enterprises, LLC v. Aetna, Inc., 2012 WL 1416530, Case No. 11-3921 (D. N.J., April 24, 2012). (2) Pennsylvania Chiropractic Association v. Blue Cross Blue Shield Assoc., 2012 WL 4866497, Case No. 09-C-5619 (N.D. Ill., Oct. 12, 2012).

risk tip

When Prescribing Drugs, a Physician Has a Duty to Warn Patients Prescribing physicians have a primary duty to warn patients about the risks and complications of prescribed medications. While legal arguments have been made that the drug manufacturer should be responsible for this duty to warn, courts continue to hold physicians accountable. In a recent lawsuit, a patient claimed a prescribed medication caused lupus-like symptoms and that the manufacturing company, along with three physicians, failed to adequately warn of the drug’s risks and in fact overemphasized its benefits. Two physician defendants settled with the patient, while the third physician was dismissed. The trial resulted in a $4.7 million jury verdict against the manufacturer. The company appealed, claiming it had no duty to directly warn the patient after providing the patient’s prescribing physician with adequate warning. Based on the legal doctrine of “learned intermediary,” the court ruled in favor of the manufacturer. The doctrine states that a prescribing physician acts as a “learned intermediary” between manufacturer and patient: the manufacturer has a duty to inform the physician about drug uses and hazards, and in turn the physician has a duty to relay to each patient the dangers of using the prescribed medication. As such, the prescribing physician has the responsibility or “duty to warn” a patient of a prescription drug’s side effects.


Review these tips to ensure you fulfill your duty to warn: • Stay abreast of FDA prescription drug warnings and recalls. • Use PDR Network as a reference for FDA-approved drug labeling and as a source for drug safety information. • Be aware of prescription drug manufacturer product disclosures and warnings. • Determine if additional information about the drug is available, including studies suggesting dangers that the FDA has yet to act on. • Require that patients provide a list of all prescription and over-the-counter drugs being taken. • Advise patients of other available medications and the medical rationale for the one being prescribed. • Counsel patients about the difference between brand-name and generic drugs. • Inform patients of potential drug-food and drugdrug interactions. • Document all disclosures and warnings made to patients. • Instruct patients to read drug labels. • Provide patients with written, simplified dosing instructions. • Obtain written informed consent when prescribing for off-label use. • Date and archive product manufacturer disclosures and warnings. • Seek legal or risk management guidance when uncertainty arises. Contributed by The Doctors Company. For more patient safety articles and practice tips, visit

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Mentors Remain a Valuable Resource been instrumental in helping young and up-and-coming doctors set and achieve career goals and help them navigate the bureaucracy of medicine. A professor’s research, however, suggests that younger and established doctors don’t always see eye to eye when it comes to their profession and careers.

M e n t o r s t r a d i t i o n a l ly h av e

“I found some very meaningful differences between later career and younger and early career doctors related to value emphasis,” said Timothy Hoff, associate professor of management, Healthcare Systems and Health Policy at Northeastern University in Boston, Mass. Hoff interviewed 90 primary care doctors of all ages and ethnic backgrounds who worked in different size medical practices, as well as medical students and fellows, across the country in 2008/2009 to learn about their work experiences in their everyday lives, how they viewed their careers, what they wanted to accomplish in medicine and how they viewed their profession as primary care doctors. He found that the generational gap in terms of how doctors perceived their profession, work and careers were quite profound. Older doctors had trouble identifying and understanding younger doctors, which Hoff said, made mentoring difficult at times. “Younger doctors were much more interested and valued the ability to have a reasonable job where 1 0 P H Y S I C I A N M A G A Z I N E | A P R I L 2013

they could leave and go home at night and not have to deal with the job until the next day,” Hoff found. By contrast, “older doctors spent most of their careers in a job that went 24/7 and were comfortable with the idea of doing their jobs that way.” It’s not like younger doctors were less dedicated to their careers and profession. It came down to a perception issue that younger doctors simply strived for more of a work-life balance. LACMA’s Speed Mentoring Program offers younger doctors an unprecedented opportunity to identify a mentor who has a good balance of similarities and differences to guide them along their career paths. Career advisors say that the best mentors should add to doctors’ existing skills set to help them balance their strengths and identify weak areas to help them grow. A mentor should also be a willing participant and resource for questions. In the program, up-and-coming doctors get to meet with doctors of all specialties and ask them questions also to see which doctor may be a good fit to connect for mentoring. During this time of healthcare reform, it is especially critical for younger doctors to network and identify doctors who can help them navigate the new way of doing medicine, such as working as part of a healthcare team and providing quality care at lower costs. Hoff said with primary care attracting more women among their ranks, there is a need for more role models to guide young doctors in things like how to juggle their careers and desire to start a family. “Primary care is becoming female-dominated,” Hoff said. “Many had conflicting events being mothers and trying to be full-time doctors. My sense from the study is that there is a real value for more female physician role models who are in the later stages of their careers.” Hoff is the author of the book titled “Practice Under Pressure: Primary Care Physicians and Their Medicine in the 21st Century.”


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Margin: Restoring Emotional,

Physical, Financial and Time Reserves to Overloaded Lives

of uncertainty, physicians’ concern about how they’ll be affected by healthcare reform is likely to push many into “overload.” They’ll suffer the consequences of margins getting squeezed. But there is a healthier way. During

Dr. Richard Swenson, author of the best-selling book “Margin: Restoring Emotional, Physical, Financial and Time Reserves to Overloaded Lives,” defines “margin” as the space between our load and our limits. The physician turned best-selling author recently met with LACMA doctors in Los Angeles County to discuss the importance of restoring what he calls “margins” in the areas of emotional energy, physical energy, time and finances. He defines the concept of margins below. “Margins is having the world facing you,” Dr. Swenson said. “If you’re at 80 or 90%, you have a little space. At 100%, you’re maxed out; and at 120%, you are overloaded.” That’s when people’s reserves disappear and problems arise, from being easily frustrated or disor-




ganized, to sleep disturbances, overeating or not eating enough, to chronic fatigue. Many people show multiple symptoms. Dr. Swenson said while doctors have always had problems with overload, the changing healthcare environment is likely to exacerbate the issue. “So much change is happening in such a short period of time that it will be crushing to physicians,” Dr. Swenson predicted. Dr. Troy Elander, LACMA’s past president, echoed Dr. Swenson’s view. “We are asked to squeeze more into a shorter period of time,” Dr. Elander said. He applauded Dr. Swenson’s call on physicians to take a step back and gain perspective. The book offers 75 practical prescriptions for restoring margin in the key areas.

7 Tips for Healthier Living

1. Healthcare technologies are becoming ubiquitous, but that doesn’t mean that all gadgets should intrude upon the sanctity of your private home. 2. Periodically take a vacation and do nothing. Recharge your batteries. 3. Create boundaries in your life. If you’re on call, you’re expected to be available, but set boundaries in your home. This isn’t about selfishness. It’s about protecting your reserves. 4. Self-prescribe these three healing freebies often: Laughter, music and nature. Kids laugh 400 times a day.

5. Create and foster your social support system. They are health enhancing, but hard to keep up in today’s world. If you have close friends, plant those systems. They will reimburse you in times of difficulty. 6. Simplicity. Einstein had many suits, but they were all the same. To have less means to have more. 7. Contentment. There is no sense of contentment in our society today. Trying to feel at ease with what you are and what you have can offer you peace.

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reporting on the economics of healthcare delivery

Physicians Gain Affordable Care Act Insight

The University of California, Irvine’s 22nd annual Healthcare Forecast Conference recently gave local physicians a unique opportunity to gain more insight on what to expect under the Affordable Care Act.

LA Doctors Discuss Sequestration with Sen. Warner

On Feb. 21, about 30 Los Angeles physicians, including LACMA members, met with U.S. Sen. Mark Warner, D-Virginia, at the Santa Monica home of Nimish and Nancy Patel to discuss the importance of avoiding a series of automatic spending cuts known as sequestration.

Medicare Advantage Changes Coming

Payments for Medicare Advantage insurance plans will be lowered under the proposed rules announced by The Centers for Medicare and Medicaid Services. The announcement drew an immediate response from local physicians, insurance companies and analysts.

Empowerment Dinner Seeks to Aid Young Physicians

About 75 physicians recently attended the Physician Advocacy and Empowerment Dinner, which aimed to provide younger physicians with the critical tools to navigate the changing healthcare environment.

Jury Selection Begins in Anthem Blue Cross Suit

Overutilization Driving Up Healthcare Costs

A new report by a coalition of leading medical societies suggests that doctors in California and around the nation are performing tests and elective procedures that often are unneeded. It also says doctors are charging more for these services than their international counterparts, driving up healthcare costs.

LACMA Leaders Criticize Physician Groups’ Action on Duals Issue

LACMA’s leadership said the recent action by the California Association of Physician Groups (CAPG), urging state and local leaders to swiftly enact the dual eligible demonstration project, would be detrimental to Los Angeles County’s health system and the doctor-patient relationships.

Medi-Cal Expansion Plans Concern LA Health Dept. Head

The head of the Los Angeles County Department of Health Services recently expressed concern over the planned Medi-Cal expansion, saying the realignment of funding from the state threatens the local health safety net.

ChapCare Signs Agreement with PointCarePA

San Mateo-based Community Health Alliance of Pasadena (ChapCare) signed an agreement with PointCarePA, a reimbursement software provider, to enroll and educate uninsured members in the San Gabriel Valley community.

On Feb. 22, jury selection began in a Los Angeles Superior Court case filed by Dr. Jeffrey Nordella, the medical director of Porter Ranch Quality Care of California, against Anthem Blue Cross. Nordella claims that Anthem Blue Cross excludes primary care doctors who advocate for patient care from its preferred provider network.

National Commission Favors New Healthcare Models, End of Fee-for-Service

Local Web-based EHR Companies Compete for Business

Local Physician Supports CURES Update

Two makers of a free web-based electronic healthcare record system are vying for the attention of primary care and specialty doctors in Los Angeles County and elsewhere who are looking to solve medical problems quickly online. 1 4 PHYSICIAN MA G A Z INE | A P R I L 2013

The National Commission on Physician Payment Reform recently called for eliminating the fee-for-service model within seven years in favor of fast-tracking new healthcare models, all of which would impact reimbursement for local doctors. Dr. Marshall Morgan, LACMA’s president-elect, supports California Attorney Geneneral Kamala D. Harris’ efforts to get funding to improve the state database system called CURES, saying the database is useful, especially for emergency room doctors wanting to access patient information.

Architect behind Duals Demo Project to Hear from Local Physicians

Infrastructure and Investment

Dr. Samuel Fink, LACMA’s president, recently issued a letter to LACMA members and to all physicians in the Los Angeles County regarding an upcoming meeting to address the issue of dual eligibles in the Los Angeles County: “As you may know, LACMA has been leading the fight against the State’s plan to automatically enroll Los Angeles County’s dual eligible patients into managed care. LACMA and its allies have lobbied Congress members and CMS, preventing the State from moving forward on its ill-conceived plan. We need to make sure that our voices continue to be heard.”

Verdugo Hills to Merge with Keck Medical Center Verdugo Hills Hospital announced last week that it completed its merger with USC’s Keck Medical Center.

Study Identifies Local Doctors on Drug Company Payrolls

L.A. Officials Consider Move to Ease Overcrowding Los Angeles officials are considering adding 150 beds at the severely overcrowded County-USC Medical Center, according to news reports. The hospital, which opened in 2008, has experienced wait times that average 12 hours in the ER, which Supervisor Gloria Molina from the Board of Supervisors called “dangerously overcrowded.”

A new study identified two Long Beach doctors who together received more than a half million dollars from pharmaceutical companies between 2009 and 2012. Thus far, disclosures by major drug companies of doctors on their payrolls have been voluntary, but a federal mandate will require it in 2014.

Long Beach-Based Facility Expands Long Beachbased for-profit Molina Medical is expanding, doubling the size of its Norwood Avenue location with plans to open a new clinic this summer on Mack Road, as well as looking for a bigger space on Citrus Heights, according to news reports.


L.A. Doctors Consider Direct Pay

Rising insurance costs and shrinking reimbursement rates are driving some primary care doctors in Los Angeles County and elsewhere to consider direct pay, or concierge medicine.

EHR Reimbursements to Local Doctors, Hospitals Going Down

Local doctors and hospitals that participate in the Medicare portion of the federal electronic health record incentive payment program could lose thousands of dollars as a result of the 2% cut to Medicare reimbursement under sequestration, according to recent news reports.

Health Net Foundation Expands Care to Underserved

Health Net Foundation, Inc., the charitable foundation of Health Net, Inc., is giving $150,000 in grants to Northeast Valley Health Corp. and 27 other federally qualified health centers and community clinics in Los Angeles County to start a program that provides care for the underserved population.

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ER ST A O C ER LL O R With many uncertainties remaining with the implementation of the Affordable Care Act, Los Angeles County physicians have been on quite the roller coaster ride as they face the ins and outs of several key issues regarding healthcare reimbursement: Medicare, the dual eligible demonstration project, rising consolidations and Accountable Care Organizations (ACOs), and the primary care doctor shortage; as well as the influx of millions of newly insured Californians with its coinciding effect on MediMedicare Cal reimbursement. Here While physicians we take a closer look at have sidestepped drastic Medicare paythe status of these ment cuts for 2013, doctor groups and lawmakers are critical issues gearing up for yet another battle to scrap a reimbursement formula as they stand everyone agrees has been broken beyond repair: The so-called “doc fix.” today.

payment cuts is a source of mounting frustration. According to a 2010 American Medical Association survey of more than 9,000 doctors, one in five physicians are restricting the number of Medicare patients, while an even higher number - one in three - primary care doctors are limiting the numbers. To date, 14 short-term fixes have been passed since 2002 as a stopgap measure to prevent major cuts in physician Medicare reimbursement. B










Under the automatic cuts in federal spending, better known as “sequestration,” which went into effect on March 1, doctors are facing a 2% cut in Medicare starting April 1. The deal Congress passed on Jan. 1 to avoid the fiscal cliff by raising some taxes and putting off automatic budget cuts stopped a 26.5% doctor pay cut, but also did not raise the Medicare reimbursement to physicians. It also didn’t erase lawmakers’ enacted reimbursement formula, which sets Medicare physician payment rates through a formula based on economic growth, known as the “sustainable growth rate (SGR).” Since the first pay cut of 4.8% back in 2002, Congress has staved off the scheduled cuts every year. Each deferral just increased the size and price tag of the fix needed the next time: Last January, the Congressional Budget Office estimated the cost of the doc fix at $316 billion, which it revised to $245 billion last August. For physicians, the prospect of facing big

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Physician groups continue to lobby Congress to repeal the SGR and to enact a permanent fix. The current doc fix is set to expire on Dec. 31.

Dual Eligible Demonstration Project

The so-called dual eligible demonstration project also remains a major concern for doctors for a wide variety of reasons. The pilot program requires patients who are eligible for both Medicare and Medi-Cal to enroll patients into Medi-Cal managed care plans. With Los Angeles being home to 60% of dual eligibles and an estimated 500,000 residents in Los Angeles County qualifying for medical insurance under healthcare reform in 2014, this project would add a major burden on local safety net clinics and medical providers caring for the underserved population. Some say that this alone could lead doctors to leave the profession. Others worry about disruption of care. The project’s implementation could start as early as September 1, with Medi-Cal proposing to shift more than 3 million beneficiaries between now and 2015. LACMA is continuing its fight to remove Los Angeles County from the dual eligible project.


The passage of the Patient Protection and Accountable Care Act of 2010 began the move to “value-based accountable care.” This is likely to continue regardless of the outcome of the Supreme Court decision on the constitutionality of ACOs, which are networks of hospitals and physicians who agree to care for patients in a team-based approach. As hospital systems and medical groups continue to consolidate, so do ACOs. More doctors are becoming employees. Experts say small medical practices and single medical practices will have a tough time staying afloat due to rising healthcare costs, competitiveness and the complications of health reform. Under the ACO model, doctors and other healthcare providers and hospitals are now accountable for the quality, effectiveness and efficiency of the care they provide. Under Medicare’s Value-based Purchasing program, which started in October 2012, the Centers for Medicare and Medicaid Services (CMS) began withholding pay, which will reach 1 8 PHYSICIAN MA G A Z INE | A P R I L 2013

2% of base payments by 2017. Hospitals can earn back a portion of the cut based on quality indicators, including care provided by doctors. This October, the Medicare bundled payments pilot—episodic payment shared among providers—will also become effective. While reimbursement details are not yet available, all of these initiatives involve performance risks that hold doctors and other healthcare providers accountable for the care they provide.

Millions of Newly Insured Amid Doctor Shortage

Health reform will give an estimated 34 million more Americans access to health insurance. A recent study found that the growing and aging population, along with hundreds of thousands of people obtaining health coverage in California alone, will create the need for 52,000 primary care doctors within the U.S. by the year 2025. With many primary care doctors entering retirement age and not enough young doctors to follow in their footsteps, some organizations, including the Association of American Medical Colleges, predict a severe doctor shortage. Dr. George Ma, past president of LACMA and an internist in Los Angeles, said primary doctors are the most essential under healthcare reform, “because they emphasize preventive care.” Under the CMS’ newly released 2013 physician payment rule, primary care doctors’ pay is expected to rise. Specialists, however, will see a pay cut, which some doctors believe will make it challenging to stay in practice. Under the rule, family physicians’ pay will go up 7%. Other primary care providers will also likely see a 3% to 5% rise in pay, in part from the “transitional care” CPT codes, which reimburse doctors for coordinating care in the 30 days after a patient is discharged from a hospital or skilled nursing facility, CMS reported earlier this year. Cardiologists, nuclear medicine specialists, ophthalmologists, pathologists, physical medicine specialists and vascular surgeons were expected to see a 2% to 6% pay cut in Medicare fees. The Affordable Care Act also included a temporary rate hike for certain primary care physicians in the state Medicaid programs.

Medi-Cal Challenges

At the same time, a 10% cut to Medi-Cal, which a three-judge panel ruled legal, spells trouble for many California physicians, given that an estimated 3 million more Californians could become eligible for Medi-Cal under health reform. California doctors and other groups continue to challenge the decision. Surveys show that less than half of all primary doctors in California treat Medi-Cal patients, and less than one-third of specialists do, because the reimbursement rate is among the lowest in the country. On March 7, legislation to expand health

coverage to an estimated one million lowincome California moved one step closer to passing. Both the Assembly and Senate passed bills that would extend healthcare coverage to people earning below 138% of the federal poverty level beginning in 2014. Los Angeles health officials, however, worry that under the current proposal thousands of people still won’t qualify for Med-Cal under the expansion. If the state of California is taking back funds from counties that have depended on these monies to care for the insured in public hospitals, community clinics and health centers, these institutions will be in financial distress. “2013 will be a watershed year for the U.S. healthcare system,” said Lou Goodman, president of the Physicians Foundation, a nonprofit group that seeks to advance the work of doctors. “It is clear that lawmakers need to work closely with physicians to ensure that we are all well prepared to meet the demands of 30 million new patients in the healthcare system and to effectively address the impending doctor shortage and growing patient access crisis,” Goodman added.

Surviving The Ride With all these ins and outs, doctors, especially those in private practice or small medical groups, need to be ready for reimbursement based on outcomes rather than number of tests and services provided. Experts believe that payers will want to pay less for better quality care and reward doctors for providing quality, cost-effective care at lower-than anticipated rates. Providers who are proactive now to streamline these processes will come out winners. Here are some strategies doctors can use to get on the right track now.

Don’t Rely on Fee-for-Service Alone

Small doctor practices and solo practitioners need to rethink the traditional fee-forservice model and be proactive about finding new revenue sources and economies of scale. Experts recommend coordinating care and trying to reduce costs while trying to improve patient care. Identifying alternative sources of income will be key.

Negotiate With Existing Payers

Pursuing value-based payments and incentives could potentially boost your reimbursement as fee-for-service declines. One way to do that is to be proactive with existing payers. (continued) Kip Piper, a healthcare consultant in Washington, recommends approaching existing payers by telling them you will show (continued)

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This 100% federally funded increase was intended to recruit more physicians to treat the rising number of low-income patients joining the healthcare system. According to the California Medical Association, states must also incorporate the increased payment rates into their contracts with managed care plans, so that primary care physicians contracting with Medi-Cal managed care plans see higher rates.

feat u r e | t he r ei m bu r s ement ro ller coa ster

that you can provide better care at less cost in return for more pay or shared savings. “It’s an opportunity to revise how you practice and how you use the staff and so forth,” Piper said in a news article.

Start Self-Monitoring

In addition to assessing payers, doctors are well served to start evaluating their practice’s readiness to participate in value-based pay. A good start is to measure how well your practice manages and controls the costs of caring for patient populations with chronic conditions as well as rates of preventive health services, such as whether all pediatric patients receive their recommended immunizations. “It’s looking at those preventive-care requirements that more and more health plans are implementing and then paying quality incentives for,” said Mary Witt, senior vice president of the healthcare management and consulting company The Camden Group, in a recent article.

Ask for ComparisonRelated Information

Experts say it’s also a good idea for doctors in private practices to start monitoring

how their performance measures up to nearby practices. The best way to do that is to ask payers for comparison-related information. Medicare, for instance, sent “feedback” reports to many practices detailing quality and cost performance of their physicians at other practices. “What you need to be able to do as a physician practice is to be increasingly aware of the performance of your own clinic compared to both absolute metrics and compared to the performance of others,” said Piper.

Set Expectations

After you have put your measuring and monitoring systems in place, the next step is to try to improve your performance by setting expectations in your practice. This could lead to value-based opportunities. For instance, doctors with electronic medical records can keep track of different chronic diseases and what you do to manage these diseases. By managing disease effectively, doctors can show these to their insurers, which in turn, may entice health plans to start working with you and develop incentives, the experts noted.

How to Get Payers’ Attention Step Up Monitoring

Institute processes to continually identify patients who need services related to measures before they come into your practice.

Improve Care Coordination As payers begin offering incentives to practices that take on a more team-based, coordinated-care approach, consider hiring nurse practitioners, physician assistants, and/ or care coordinators. In some cases, payers may help fund these new staff members.

Increase Patient Outreach and Engagement Encourage patients to fill their prescriptions, adhere to referrals, and come to the office regularly for preventive services.

Cultivate New Relationships Consider forging partnerships with other practices to share resources and cut costs. This can help with developing best clinical practices as well.


L.A. Doctors Consider Direct Pay Rising insurance costs and shrinking reimbursement rates are driving some primary care doctors in Los Angeles County and elsewhere to consider direct pay, or concierge medicine. A recent survey of 13,575 physicians nationwide showed that 6.8% of all doctors consider concierge medicine. The majority of doctors, or 77% were primary care doctors. In California 6.7% of doctors are looking at concierge medicine, according to Merritt Hawkins, which conducted the survey. Dr. Thomas LaGrelius, a primary care doctor in Torrance, and a past president and chair of the American Academy of Private Physicians, said the concierge model allows doctors to “deliver better care to patients and to have a more fulfilling practice.” He said most primary doctors typically see 3,000 patients a year. He sees 600 patients a year in his practice. The benefits to patients include personalized attention, such as same-day or next-day appointments, text message responses and comprehensive checkups. “The membership fee funds the practice and allows the doctor to manage about one-fifth as many patients as in a conventional practice, and thus spend about five times as much time working with each patient,” said LaGrelius. The annual fee charged by a fee-for-noncovered-service design concierge practices like Dr. LaGrelius’ does not pay for any insurance-covered medical services. Instead, these are billed to the patient and/or the patient’s health insurance separately. This type of concierge model constitutes about 80% of all concierge practices, according to LaGrelius. Dr. William Lang, located in Marina del Rey, and Dr. Steven Krems, with offices near LAX, rank among a smaller percentage of doctors who will be moving toward the hybrid concierge model. This model merges traditional and concierge programs, allowing doctors to continue to care for all patients, including those with Medicare or other government or private insurance plans, Lang and Krems announced in a March 6 press release. About 5,000 physicians nationwide practice concierge medicine, according to news reports. LaGrelius said that doctors are leaving the profession because they are frustrated with the bureaucracy of medicine. “We are currently losing 4,000 to 5,000 primary care doctors and are training less than 2,000 a year,” he said. He feels that concierge medicine offers doctors a viable solution to conventional medicine. It offers better care that leads to cost savings, when patients are kept out of hospitals and have fewer surgeries.

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Act NOW to Avoid Medicare Penalties in 2015 cma staff

six years, the Centers for Medicare and Medicaid Services (CMS) has launched a number of initiatives that offer physicians the opportunity to increase their net revenue by participating in quality reporting programs. Until now, these programs have been voluntary and physicians have received bonuses for participating. That’s about to change. Failure to participate now means physicians could face significant penalties. Ov e r t h e pa s t

The American Academy of Family Physicians estimates that participating in these initiatives in 2013, rather than waiting until 2014, could save a physician $19,000 in avoided penalties. To help physicians understand the bonuses and penalties associated with key Medicare initiatives, the California Medical Association (CMA) will be hosting a free webinar for members ($99 for nonmembers), “Quality Reporting Programs: What Physicians Need to Physicians who do not demonstrate Know and Do Now meaningful use by 2015 will be subject to Improve Care and to Medicare payment penalties. These Avoid Penalties.” During the April reductions increase from 1-2% of total 9 webinar, particiMedicare charges in 2015, to 2% in pants will learn di2016 and 3-5% in 2017 and beyond. rectly from CMS Medicaid rates will not be adjusted for failure to achieve meaningful use. Region 9 Chief Medical Officer Betsy L.Thompson, MD, about the major quality reporting and e-health incentive programs currently under way for eligible professionals. The session will cover the basics of the Physician Quality Reporting System, the Medicare and Medicaid Electronic Health Records Incentive Programs, the Medicare E-Prescribing Incentive Program and the new value-based payment modifier. The content will be geared toward physicians, nurse practitioners and physician assistants and what they need to know, although other healthcare professionals and medical office staff are welcome to attend. If you are not already familiar with each of these programs, the time to learn about them is now. Below is a brief summary of the programs and key dates that will be discussed in the CMA webinar. 2 2 PHYSICIAN MA G A Z INE | A P R I L 2013

Meaningful Use Meaningful use is the set of criteria on which physicians must report in order to receive federal incentive payments for EHR adoption under the Medicare and Medicaid Electronic Health Records (EHR) Incentive Programs. Meaningful use is also the necessary foundation for all impending payment changes involving patient-centered medical homes, accountable care organizations, bundled payments and value-based purchasing. Bonuses: For the Medicare EHR incentive program, your cumulative payment amount depends on the first year of participation. Physicians who start participating in 2013 can receive up to $39,000; physicians who start in 2014, up to $24,000.The last year to begin participation in the Medicare EHR incentive program is 2014. For the Medicaid (Medi-Cal) incentive program, physicians can receive up to $63,750. Penalties: Physicians who do not demonstrate meaningful use by 2015 will be subject to Medicare payment penalties. These reductions increase from 1-2% of total Medicare charges in 2015, to 2% in 2016 and 3-5% in 2017 and beyond. Medicaid rates will not be adjusted for failure to achieve meaningful use.

Electronic Prescribing Medicare’s e-prescribing program provides incentive payments for physicians who e-prescribe and payment penalties for physicians who do not. Bonuses: This year is the last year to receive a bonus for e-prescribing.To qualify for the 0.5% bonus in 2013, you must have successfully reported eprescribing activity for at least 25 patient visits between January 1 and December 31, 2012. Penalties: Starting in 2012, physicians who did

Physician Quality Reporting System The Physician Quality Reporting System (PQRS) is a voluntary quality reporting program that provides incentive payments to eligible professionals who report data on quality measures for services provided to Medicare beneficiaries. Bonuses: Physicians must report on three individual measures or one measures group to receive a 0.5% bonus. Physicians participating in a maintenance-of-certification program are eligible for an extra 0.5% bonus, for a total bonus of 1%. Penalties: The Affordable Care Act calls for PQRS payment penalties starting in 2015. In the 2012 Medicare Physician Fee Schedule, CMS announced that 2015 program penalties will be based on 2013 performance. Therefore, physicians who do not successfully report on at least one individual measure in 2013 or elect to participate in the administrative claims reporting option will receive a 1.5% payment penalty in 2015. The penalty goes up to 2% in 2016 and beyond.

not always simple to understand. CMA’s webinar will give physicians the information they need to successfully participate in each program. During the webinar, Dr. Thompson will help participants understand which programs they are eligible for, the associated incentives and penalties for each program, and the deadlines and requirements for participation. The webinar will be presented on Tuesday, April 9, at two convenient times: 12:15 to 1:45 p.m. and again from 6:00 to 7:30 p.m. Participation is free for CMA members. Nonmembers can register for $99. If you are unable to participate in the live webinar, it will be archived for on-demand viewing shortly after the live event in CMA’s online resource library at CMA members will be able to receive 1.5 CME credits if they participate in the live webinar and successfully answer the post-session CME questions. For more information, or to register, visit Contact: CMA’s member service center, (800) 786-4262 or

Value-Based Payment Modifier Program The value-based payment modifier was mandated by Congress under the Affordable Care Act. It will adjust physician payment based on the quality and cost of the care they provide. It will take effect in 2015 using 2013 data for groups of 100 or more physicians. By 2017, this modifier will be implemented for all physicians. Bonuses: Participating physicians may receive bonuses based on their quality and cost scores. Penalties: Participating physicians may be penalized up to 1% based on their quality and cost scores. Physicians who choose not to participate will be docked 1%. Each of these programs has specific deadlines and reporting requirements, some of which are overlapping, and are A P R I L 2013 | w w w. p h y s i c i a n s n e w s n e t w o r k .c o m 2 3

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not electronically transmit their prescriptions became subject to payment penalties on all Medicare allowed charges. The penalty in 2013 is 1.5%, and in 2014, 2%.

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ceo’s letter

LACMA CONTINUES THE FIGHT... T h i s s p r i n g , L AC M A continues its fight to remove one of the most controversial entitlement-reform problems facing doctors in Los Angeles County – the so-called dual eligibles demonstration project. Los Angeles County is home to a disproportionate number of dual eligibles, or individuals who qualify for both Medicare and Medicaid. If the demonstration project were to be implemented in the state of California as currently structured, it would add a significant burden to our safety net clinics and drive patients away from the medical providers they know and trust. LACMA continues its efforts toward finding a resolution that would work for Los Angeles doctors and the state of California. The California Podiatric Medical Association also recently joined forces with LACMA to stop the initiative. Last year, LACMA started this process, and in January 2013, we met with key legislators and stakeholders in Washington, D.C., to gain their support in removing Los Angeles County from this project. After hearing the concerns of our doctors, several legislators vowed their support, asking us to provide suggestions for improvement. Most recently, we welcomed the opportunity to address our concerns with Jane Ogle, deputy director at the California Department of Health Services. There are major concerns that remain. With an estimated 500,000 more residents in Los Angeles County qualifying for medical insurance under health care reform in 2014, there simply are not enough doctors in the County to care for the tremendous influx of new patients. But many doctors, concerned about the disruption of care to patients, have indicated that it’s be very difficult to effectively serve patients if the demonstration project became effective. What it boils down to is the concern about patients who would be enrolled in the program without their consent. The dual eligibles project is simply moving too quickly and affecting too many patients. But we know that change in government policy requires tenacity.ß

As it is the season of spring, a time of rebirth and renewal, LACMA will stay the course. Rocky Delgadillo

Rocky Delgadillo Chief Executive Officer



LACMA and LACBA Joint Meeting Focuses on Key Physician Issues A joint meeting with members of LACMA and the Los Angeles County Bar Association held March 7 shed light on key issues local physicians will be faced with in the changing healthcare environment. Dr. Robert Bitonte, past president of LACMA, said LACMA’s healthcare attorneys and physicians talked about new and emerging collaborations and liability issues. “The most important thing here is that there will a whole new scrutiny regarding profit sharing and liability for patient care,” Bitonte said. “The answer wasn’t presented at the meeting, but the increased scrutiny raised physicians’ awareness.” Bitonte advises LACMA physicians to use “extreme caution” when it comes to electronic communication and to consult their malpractice carriers. “Proceed with extreme caution with all new integrations and be sure not to be in violation of other laws, such as antitrust, kickback and Stark rules,” he added. LACMA and LACBA will continue their educational meetings in April with a discussion on Medicare enrollment issues.

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San Gabriel Physicians Meet With Architect of Dual Eligibles Program

On March 21st, approximately 70 San Gabriel Valley physicians and medical community leaders gathered at Almansor Court to hear from Jane Ogle, the architect of the State’s dual eligible program and the individual in charge of implementing it and voice their concerns over the pending project. Assembly members Richard Pan, M.D., and Ed Chau, Dr. Stan Toy, CEO, Greater El Monte Community Hospital and Dr. Dennis Chan, Director of Utiliza-


tion Management for Allied Physicians of California, IPA also presented on other key areas of healthcare reform and the impact new programs will have on the delivery of care in the San Gabriel Valley. LACMA members voiced their concerns at the end of the program questioning how new healthcare reform initiatives would potentially threaten the sacred doctor patient relationship.

Second Annual Speed Mentoring Event On March 7, 2013, LACMA Bay District 5 held the second annual Speed Mentoring Event with the UCLA David Geffen School of Medicine at UCLA. Twenty-three second-year medical students were in attendance. They are all about to embark on their two years of clinical rotations. Seventeen physicians, most of whom are LACMA members, represented the following specialties: psychiatry, pediatrics, obstetrics and gynecology, dermatology, emergency medicine, oncology, orthopedic surgery, ophthalmology, neurology, family practice, anesthesiology, and geriatrics. There was a good mixture of solo and group practicing physicians and of those who have been in practice for many years and younger physicians who are only a few years past their residency training. Each medical student had the opportunity to interact with 10 different physicians on a one-to-one basis for 10 minutes. Laurie Reynard, MD, physician from LACMA Bay District 5, was integral in recruiting the physician mentors for the event. Mitsue Yokota, Career and Well-Being Advisor from the Student Affairs Office, did an outstanding job of organizing and conducting the event.

NEW! Exclusive Clinic Supply Program for LACMA Members LACMA has partnered with Medline Industries to be your one source for all your clinic supplies and offer you FREE access to reduced rates on virtually everything physicians need to run a private practice.

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Have You Renewed Your 2013 Membership? By Not Renewing, You Choose To: Cancel our industry clout communicated locally, in Sacramento and Washington DC provided by our lobbyists representing you. This affects MICRA protection. A recent study found that just doubling MICRA’s cap to $500,000 could cost consumers and taxpayers in California $9.5 billion a year in higher health care costs, all while impacting the cost of your medical liability rates.

Cancel access to free Reimbursement Assistance, Jury Duty Assistance, Medical-Legal Resources and E.H.R./H.I.T. support for your practice. Our staff members helped California physicians recoup over $2.7 million in unpaid/underpaid claims. How much could you be saving?

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A P R I L 2013 | w w w. p h y s i c i a n s n e w s n e t w o r k .c o m 3 1

c l a s s i fi ed | jo b boa rd

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short-term fixes have been passed as a stopgap measure to prevent major cuts in physician Medicare reimbursement since 2002.



The amount that 62% of physicians estimate they provide in uncompensated care in the course of a year.


% of primary care providers in California do not accept Medicare patients.

Three in Ten

physicians name reimbursement issues as one of the top two least satisfying factors of medical practice.

by t he n u mbers | R EI M BU R SEM ENT

% of physicians indicate cost/reimbursement or time issues have compelled them to close their practice to any category of patient.

Thirty Six

Forty Seven

More than 50% of physicians have limited the access of Medicare patients to their practices or are planning to do so.

13% 4 in10

Average Medi-Cal acceptance rate in Los Angeles (across five specialties) prior to healthcare reform was

of all Medicare spending and 22% of all healthcare spending is comprised of direct payments to physicians.


2012, physicians faced over 10,500 alleged HIPAA violations. Make sure you’re prepared. In

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April 2013  

The official publication of the Los Angeles County Medical Association. Reporting on the economics of healthcare delivery.

April 2013  

The official publication of the Los Angeles County Medical Association. Reporting on the economics of healthcare delivery.