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Doctor testing group under fire

By Jennifer Haberkorn
5/14/15 3:45 PM EDT

The physician certification organization at the center of a controversy over its practices and financing contends in newly filed federal documents and interviews that it is financially sound.

The American Board of Internal Medicine — a nonprofit that certifies internists and 20 groups of sub-specialists — and its related foundation had $48 million in cash on hand for the fiscal year that ended last June, according to documents the groups filed with the IRS on Thursday. These are the most recent documents available and do not reflect any changes during the past 11 months.

“We are a fully financially sound organization by any number of metrics. We would not want anyone to have concerns about our financial stability,” CEO Richard Baron told POLITICO. “We want people to know that we run an important program that speaks to doctors keeping up [with the latest practices] and doctors being well trained and doctors having expertise.”
ABIM has been under fire in recent months — most notably in Newsweek stories in March and April — because of allegations that financial problems were prompting it to impose unnecessary tests at too-high prices and for topics that are not relevant to some doctors’ practices.

Certification fees come on top of “costs for travel to testing centers, review courses, and time spent away from practice,” Paul Teirstein, president of a group of doctors that has formed a separate program, wrote in the New England Journal of Medicine in January. “The ABIM should focus on efficacy while cutting its costs and lowering its fees.”
As part of its effort to shore up its reputation and relationship with physicians, ABIM sent POLITICO a copy of its financial reports — called 990s in the nonprofit world — for the organization and foundation shortly after they were filed with the IRS.

The documents show a sharp decline in the two entities’ combined net income — or “revenue less expenses” — from $19.7 million in 2013 to a negative $1.8 million in the fiscal year that ended mid-2014. Officials attribute the drop to the cost of new products, including coverage of new sub-specialties, as well as to lower stock market returns and the transfer of some investments.

ABIM points to other elements of the filings as evidence of its financial strength: Its cash balance covers more than 10 months of operating costs; current assets are more than three times current liabilities; and cash and receivables equal nearly half of liabilities. They say all are important factors for an organization that until recently allowed physicians to pay a one-time fee for 10 years of services. Physicians now have the option of paying annually.
Baron said ABIM’s financial status has been misrepresented in recent months. The filings, “when read fairly and openly, support that we’re a financially strong organization,” he said.
The organization reported that it spent $30 million in total compensation for more than 250 employees in 2013, up from $27 million in the prior year. Baron’s baseline salary as CEO is $568,000, according to officials.

ABIM certification has long been crucial for internists and specialists since many hospitals won’t let them see patients at a facility without it. But some doctors have argued that the ABIM tests were irrelevant to their practices and alleged that the organization was merely lining its pockets whenever a physician had to take — or retake — a test. As failure rates rose in certain areas, so did outrage.

In January 2014, ABIM set new requirements on a more frequent testing cycle than the 10-year standard that had been in place. In February, amid a physician revolt, the association apologized and rescinded some of those requirements.

The breakaway group of doctors, which formed the National Board of Physicians and Surgeons, is trying to establish a low-cost testing program that it says better targets what a physician needs to know to be at the top of his or her game.

The latest 990 filings, which cover ABIM financial figures through last June, would not reflect any hit the organization has suffered because of NBPS. In its last fiscal year, the filings show ABIM collected $54.2 million in revenue on its certification and re-certification programs. That’s about on par with the $55 million it collected in the prior year.
Baron said the group’s current financial status is “very similar” to the numbers reported Thursday.

“The ratios we track are quite similar,” he said. “The ability of our revenues to support our expenses and our long-term liabilities are quite similar.”
ABIM has made several changes in response to criticism by physicians and the media. A luxury condo in Philadelphia, which sparked questions about the organization’s need for such a property, was put on the market late last year, Baron said.

And ABIM no longer pays for spousal travel for its CEO, he said. If one of its executives receives an honorarium for speaking, the money goes to ABIM — not the employee. Baron said both policy changes were made when he assumed his position mid-2013.

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