Tokos to Cooperate With AMA Ethics Probe : Medicine: Firm’s payments to physicians to be investigated.

Faced with the latest in a growing string of controversies that have dogged their company recently, officials of Tokos Medical Corp. said Wednesday they will cooperate with an American Medical Assn. ethics probe of the firm’s policy of reimbursement payments to some physicians.

The investigation by the AMA’s Council on Ethics and Judicial Affairs is scheduled to begin Friday in Nashville, Tenn., during the medical association’s semiannual gathering, an AMA attorney said.

A decision on whether Tokos’ “reimbursement schedule,” offered to about 100 doctors in Utah and Colorado, violates the assocation’s code of ethics would not force the company to change its policy. But it would prevent doctors from accepting such reimbursements.

Tokos President Craig T. Davenport said that, while he does not think his company has violated the ethics code, Tokos would most likely abide by any decision made by the council.

“If there is something here, we will take it into consideration,” Davenport said. “If they feel strongly about it, we will cooperate.”

Tokos has seen its stock take a series of roller-coaster rides recently, partly because of recurring criticism of its products--a monitoring device that can detect whether a pregnant woman is experiencing the onset of premature labor and drugs to stem premature birth. The company also provides nursing services for pregnant women threatened with premature labor.

Tokos’ stock fell 34% last month on a report of anticipated weak earnings. The company said at the time that its business fell off after an August report by the American College of Obstetricians and Gynecologists questioned the effectiveness of prenatal monitoring devices.

The latest controversy, which became public on Tuesday, had a much smaller effect on Wall Street. The stock was down $1.25 a share at one point during Wednesday’s trading on the NASDAQ market, but it later rebounded somewhat to close at $15.625 a share, down 63 cents.

The latest controversy centers on a letter sent to the AMA by a physician who questioned whether the reimbursement policy outlined in a Tokos letter to him was in violation of the medical association’s code of ethics, AMA general counsel Kirk Johnson said.

In the letter, Tokos offered to reimburse certain physicians for a variety of services.

Those services included $100 for “home uterine activity monitoring,” $200 for “infusion activity” and $100 for “fertility treatment.”

Davenport pointed out that the vast majority of the 12,000 physicians now using Tokos’ services were not offered such reimbursements.

Those who did were generally in rural areas and were offered reimbursements for services that the doctors paid for in advance, Davenport said. The letter also asked for proof of services rendered before a reimbursement check would be sent.

But AMA’s Johnson said that the association has questions about whether a company such as Tokos should pay certain doctors fees for services that it usually provides anyhow, such as for use of a monitoring device.

“We have strong concerns,” said Johnson, adding, however, that the association “hasn’t drawn definite conclusions yet.”

Johnson said that the association is concerned, first, whether the “reimbursement schedule could turn out to be an inducement to use the service.”

If there is found to be any inducement by paying doctors $100 to use the monitoring device, then Tokos is violating the ethics code, Johnson said.

He also questioned whether allowing Tokos nurses to review patients’ medical histories is a violation of the doctor-patient relationship.

Although the scope of the investigation will focus on Tokos, any decision by the association’s ethics council could set a far-reaching precedent for the home health care industry, which is gaining popularity.

“It does have implications,” Kirk Johnson, the AMA’s general counsel, said of the Tokos situation. Home health care, he said, “is an area that has grown substantially.”

Almost all home health care agencies rely on referrals and review of medical charts to operate. Doctors generally refer a patient to a home health care company, which then provides nursing services. The home nurses often need to review patients’ charts to understand and follow prescribed courses of treatment.

Johnson said that a decision in the Tokos case could mean new guidelines for the evolving industry.

“We still have to separate the business side from the professional side,” Johnson said. “The AMA doesn’t want any doubt in anybody’s mind that it will come out on the patient’s side.”