AAPS News December 2012 - Is ObamaCare Here to Stay?

Volume 68, no. 12 December 2012

Democrats are exulting in their narrow victory on Nov 6, saying that ObamaCare is “now a certainty,” and the “best is yet to come” as they implement their glorious promises of healthcare for all. The fact is, however, that key parts of the Act are not in effect yet and may be blocked at the state level.

State Exchanges
The deadline for notifying the Dept. of Health and Human Services (HHS) of the state’s intention to set up a state-managed exchange has been extended from Nov 16 to Dec 14. A number of states have refused, and others are delaying a decision until HHS spells out essential benefits and other rules. As of late September, only 19 states had begun setting up exchanges or had agreed to do so (Kaiser Health News 11/9/12).

Gov. John Kasich of Ohio wrote that “due to costs and lack of control that states have under the law, operating a state-based exchange clashes with the...values that we would like to pursue.”

Gov. Rick Perry of Texas wrote that “it would not be fiscally responsible to put hard-working Texans on the financial hook for an unknown amount of money to operate a system under rules that have not even been written.”

Louisiana gave notice on Mar 23, 2011, that it would not assume the risk of building an exchange under the Patient Protection and Affordable Care Act (PPACA), and on Nov 16, 2012, sent a letter to Secretary Sebelius detailing still-unresolved questions about its legality (http://tinyurl.com/bmttslh).

“The full extent of damage the PPACA causes to small businesses, the nation’s economy, and the American health care system will only be revealed with time. The State of Louisiana has no interest in being a party to this failure by implementing a state based exchange.”

Although originally proposed by conservatives as a mechanism to give workers a wide range of choices in a defined-contribution program, the exchange idea is perverted in ObamaCare. It is turned into a means of distributing subsidies, and shoehorning customers into a narrow range of government-approved choices, writes Avik Roy (Forbes 11/19/12).

Exchanges will force millions of Americans into coverage more expensive than that which they currently own, he states. And “there’s almost no point in states setting up their own exchanges because states have no flexibility to improve on Obamacare’s creaky design”.

“Running the exchanges would be an administrative nightmare for states,” write James Capretta and Yuval Levin, “requiring a complicated set of rules, mandates, databases and interfaces to establish eligibility, funnel subsidies, and facilitate purchases.”

By refusing to create exchanges, states can effectively repeal much of the law, sparing citizens from the job-killing employer mandate, assaults on religious liberty, and in some cases the individual mandate (WSJ 11/19/12).

“The Exchange will create an unprecedented tracking system,” writes Twila Brase of the Citizens’ Council for Health Freedom. All state exchanges will funnel private data into the Federal Data Services Hub to at least five federal agencies and myriad state databases.

Health Insurance Rules
On Nov 20, HHS released long-awaited proposed rules, including 131 pages related to the health insurance market and rate reviews (http://tinyurl.com/bs59f7z).

“The floodgates are open for untold amounts of regulation in the next few months,” writes Steven Bassett. “The Burden Sharing Ministries may become a refuge for many.”

While an accurate assignment of risk based on age would give at least a six-fold premium difference, only a 3:1 ratio is allowed. There is a single age band from 0–20 years, and one for age 64 and older. From 21–63, premiums vary every year. ObamaCare is a steep levy on young people, even though 55% of uninsured Americans are under age 35, principally because health insurance is already too expensive. Avik Roy’s translation of HHS statements is: “We will drive up the cost of health insurance for most people, and spend lots more tax money in order to hide that fact from voters” (Forbes 11/21/12).

Subsidies vary with income, and changes are to be monitored by the IRS with unknown frequency. People could find themselves having to pay back a subsidy, writes John C. Parker. A $6,000 increase in income could mean the loss of $10,000 in health insurance subsidies. Divorce may be the only option for obtaining affordable insurance for children and the lower-income spouse (WSJ 10/31/12).

Doomed to Failure
Even the election may not have saved ObamaCare. When people learn of its impact, Obama’s popularity might not last long post inauguration, despite a massive public “awareness” campaign (http://tinyurl.com/b62zkoc). There are such serious flaws that Democrats will have to perform major surgery even if Republicans do nothing, writes John Goodman. Implementation as written is impossible, some say. The Administration may try to delay it to avoid massive embarrassing failure. If it follows the script of Soviet Five-Year Plans, watch for witch-hunts for wreckers and saboteurs.

ObamaCare Costs and Benefits

Medicare. The cuts in Medicare spending (“savings”) have risen from $500 billion to $716 billion, but Obama told AARP “I have strengthened Medicare as President.” The amount cut would be $768 billion if it were not offset by $48 billion in increased spending for prescription drugs (helping the 6% of seniors who touched the Medicare “donut hole”) and $4 billion on “wellness.” The ratio of cuts to new benefits is 15:1 (Forbes 10/2/12).

Health Insurance Rebates. Owing to the $1 billion in rebates insurers have had to pay because of the Act, Obama claims that repeal would aid insurers. Since insurers are expected to gain $1 trillion in revenues, their cost:benefit ratio is 1:1,000 (Reason.com 10/8/12).

Regulatory Burden: According to the American Action Forum, 85 new rulemakings due to ObamaCare have imposed $20.4 billion in costs on private entities and $7.2 billion on state budgets. According to the Federal Register, the paperwork will take about 60 million hours. For a benefit of $0, the cost: benefit ratio is infinite (http://tinyurl.com/9oosxfh).

More Employed MDs, Less Work

In the first three years after hiring a physician, a hospital loses $150,000 to $250,000 per year. After that, losses decrease by 50%, but persist. So why are hospitals hiring so aggressively? Apparently, it is in the interest of gaining control over the market for long-term advantage. Robert Kocher and Nikhil Sahni note that employed physicians will be subjected to more performance management than previously and that it will be more difficult to revert to private practice. “Employment choices that physicians make today may not be able to be undone” (NEJM 5/12/11).

Hospitals now employ about 20% of practicing physicians directly, and many more in group practices owned by health systems. Employed physicians worked an average 53.1 hours per week, compared with 54.1 for physicians in private practice, and saw 17% fewer patients. “We know that an employed physician is less productive than a practice owner,” said Mark Smith of Merritt Hawkins (AM News 10/8/12). The effect of these changes could be the equivalent of losing 44,000 physicians over the next 4 years (Forbes 10/8/12).

ObamaCare Cover-up?

In January, the federal government finalized a contract with Quality Software Services, Inc. (QSSI) to run the federal data services hub (“Hub”) that will run state-based exchanges. In September, UnitedHealth Group (UHG), which owns UnitedHealthcare, the nation’s largest insurer, purchased QSSI. UHG did not file an 8-K form disclosing the acquisition to the SEC. The information technology will transmit massive flows of socioeconomic and health information that an insurer could exploit as valuable business intelligence. One critic compared UHG’s purchase to the New York Yankee’s hiring the American League umpires (The Hill 11/3/12). On Oct 19, Sen. Orrin Hatch (R-UT) sent a letter to HHS demanding to see the contracts, the financials, and lots of other data by Oct 26. Secretary Sebelius did not meet the deadline.

Right to Disenroll Is Now AMA Policy

Thanks to the efforts of AAPS members and others in the CMA Solo Small Group Practice Forum in the California delegation to the recent House of Delegates meeting, AMA now officially supports the right to disenroll from Medicare:

“RESOLVED: That our American Medical Association support every physician’s ability to choose not to enroll in Medicare (New HOD Policy), and be it further

“RESOLVED: That our AMA seek the right of patients to collect from Medicare for covered services provided by unenrolled or disenrolled physicians (Directive to Take Action).”

A “Whereas” clause stated that CMS overstepped its regulatory authority by claiming, in an anonymous email published by the AMA, that a physician must either enroll in Medicare or provide a Medicare-covered service for free.

Supporting documentation from the Forum stated that physicians could disenroll by completing CMS Form 855i, sections 1A, 13, and 15. Section 1A has a box to check that reads: “you are voluntarily terminating your Medicare enrollment.” The disenrolled doctor “doesn’t have anything to do with Medicare.” Patients may seek reimbursement from Medicare by filing Form 1490S, or from a secondary insurer. “A number of our colleagues run their practices just like that right now.”

Physicians whose patients file Form 1490S should be prepared to receive letters from the carrier threatening a $2,000 fine for not obeying the mandatory claims-submission requirement. We know of a physician who has received a dozen identical threat letters, but of no serious efforts to collect.

The Forum writes: “Earlier this year, a Freedom of Information Act request was sent to Medicare, asking for the names of nonenrolled physicians who have been fined or sanctioned. Medicare has not produced a single name of any such physician.” See: http://tinyurl.com/bqylpy8.

Flashback: Politics of Medicine in the UK

“Physicians agreed to collaborate in running the NHS on condition that...the clinical freedom of all doctors would be preserved…. In theory, [clinical freedom] has been preserved, but in practice, such freedom may be illusory, since the treatment of patients is often subject to the constraints of a third party…. Indeed, Hampton believes that clinical freedom is dead and that no one need regret its passing…. Medical care should be limited to what is of proved value and the medical profession should set opinion aside” (Lister J, N Engl J Med 1986 ; 315: 168-174).

The Labour Party has always been opposed to private practice, Lister noted, and tried to do away with it.

AAPS Calendar

Feb 1-2. AAPS v TMB hearing; regional meeting, Austin, TX.

Sept 25-28, 2013. 70th annual meeting, Denver, CO.


Help stop ObamaCare in your state! Click here to read AAPS action alert: Tell Your Governor to Say NO.

Surgeon in Prison; Picked Wrong CPT Code

Dr. John Natale, 63, a vascular surgeon from Arlington, Ill., has started serving a 10-month term in federal prison after conviction on two counts of “making false statements” in connection with surgeries performed between August 2002 and October 2004. He had saved the lives of five patients who had an expected 90% mortality, using an aneurysm repair procedure for which no precise CPT code exists. The government had also discovered, in some 2,400 operative reports, two inaccurate statements.

At sentencing, Judge Rebecca Pallmeyer stated: “It’s hard for me to imagine that there was some motivation other than to pad the bill in Dr. Natale’s operative notes.” Natale’s attempt to explain how he had made the errors was considered to be “obstruction of justice.” Cross-examination at trial revealed that a transcribed dictation was missing the preposition “to.”

The prosecutor urged the judge to impose prison time because of the need to deter Medicare fraud, and the need for the sentence to reflect the seriousness of the crime and respect for the law. “My sense is, still today, that the doctor doesn’t really believe that he actually committed an offense.”

The Judge referred to “just a razor-thin margin on the Supreme Court upholding the recent Affordable Healthcare Act [sic].” Because the federal budget is so compromised, accurate coding is of extraordinary importance.

At trial, the prosecutor asked: “Now, when you enrolled in Medicare, you agreed to submit truthful and accurate claims…, didn’t you, sir?” But the doctor had used the term “bypass” for something that was a bypass only functionally, not technically, and he had billed for a repair involving the femoral artery, when it actually was the common iliac—for which he would have been paid more. Therefore, the government wants him never to practice medicine again, although he never lost a patient in surgery.

Doctor Acquitted on Drug Distribution Charges

After prosecutors destroyed his life for 5 years, a jury acquitted John Costino, Jr., D.O., of Wildwood, N.J., in 2 hours. The charges involved seven visits of two phony patients, undercover agents claiming to be exotic dancers. Dr. Costino prescribed Percocet for what he believed to be genuine pain related to their work. Defense attorney John Tumelty said he believed the doctor was targeted because he is one of the few doctors in the area who prescribes Suboxone (Press of Atlantic City 11/8/12).

AAPS Files Amicus on Contraception Mandate

AAPS has joined with the American Association of Pro-life Obstetricians & Gynecologists and several other medical organizations in filing a brief amicus curiae in the case of State of Nebraska v. HHS before the Eighth Circuit Court of Appeals. The case challenges regulations implementing the ACA mandate for all insurance plans to cover “all preventive care and screenings for women.” The regulation interprets this to mean all items the FDA considers to be contraceptives, including drugs and devices with known life-ending mechanisms of action, such as ella.

An Advance Notice of Proposed Rulemaking (ANPRM) requires insurers to offer plans that do not include contraception to those who are eligible for this “accommodation.” Yet, simultaneously, “the issuer must additionally provide to the participants and beneficiaries covered under the plan separate health insurance coverage consisting solely of coverage for contraceptive services...without charge to the organization, group health plan, or plan participants or beneficiaries.”

In other words, the “accommodation” still requires that employers facilitate objectionable insurance coverage or be subject to a penalty. The objecting employer must arrange for health insurance and, according to the ANPRM, the plan participants and beneficiaries will be automatically enrolled (“without an application or enrollment process”) in contraceptive coverage without cost sharing. The ANPRM is purportedly accomplishing an economic impossibility: providing the mandated drug or devices without cost to employer or employee. Someone has to pay. The idea that the cost will not be passed along in premium increases is clearly suspect. Amici argue that the ANPRM is merely an attempt by HHS to obscure the nature of the mandate—an unprecedented violation of religious liberty (http://tinyurl.com/clhycak).

AAPS Supports Pharmacists’ Freedom

With the aid of the Bioethics Defense Fund, AAPS and other medical groups filed a brief amicus curiae in the Ninth Circuit in support of pharmacists in Stormans v Selecky. The case concerns the right of pharmacists to decline to stock or dispense drugs that have the capacity to terminate human life as one possible mechanism of action. Amici argue:

Despite the plurality of views in our society about the moral status of the human being at the embryonic and fetal stages of development, the resolution of this case in favor of the Appellee Pharmacists’ rights of conscience does not require this Court to decide the moral worth or legal rights of the human embryo prior to uterine implantation. This Court need only recognize that a pharmacist, like any healthcare provider, is a professional entitled to make a judgment to refrain from actions that violates his or her conscience as informed by both science and religion (http://tinyurl.com/c74at7o).

Delinquent Overpayments Targeted

If CMS overpayments are not returned within 120 days, the Treasury Dept. will take collection action, including liens on the provider’s bank accounts and assets, such as his practice and his home. His NPI will be flagged and barred from receiving further CMS payments. A practice that hires a provider who is delinquent in returning overpayments could find itself liable in a False Claims Act case. If you don’t have new hires sign a document in which they state they are not aware of any compliance issues, you are complicit in their fraudulent billing (MPCA 10/29/12).

Watch for Traps in Contracts

Physicians report that insurers, e.g. UHC, Blue Cross, Blue Shield, and Anthem, are urging them to sign, on short notice, contract provisions that enroll them as Medicaid providers. The San Diego County Medical Society warns that “some plans may require you formally to notify them in writing if you do not wish to participate since the new agreement may not require a signature.”


Retroactive and Infinite Taxes. New York State employers who thought they had paid their taxes in full for past years were told in July to pay up on a retroactive tax based on payroll for the fourth quarter of 2010 through third quarter of 2011. This “Interest Assessment Surcharge” is needed to pay interest on the $4 billion the state borrowed from the federal unemployment insurance trust fund since 2009. Owing to the recession, current tax receipts are inadequate to cover this interest. What if the federal government becomes unable to pay interest on its past deficits?

I also noticed that the long-distance bill on my office phone consisted entirely of a plethora of taxes. Dividing the tax by the $0.00 usage fee gives an infinite level of taxation. As with ObamaCare taxing people for not having insurance, I am being taxed for not using my phone.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

Stealing from the Offering Plate. “Not for profit” hospitals rarely file their IRS form 990 on time. I believe these hospitals purposefully remain years behind to avoid any scrutiny of their current financial condition. allows them to claim “critical losses” and “impending bankruptcy” and other such lies, lies that are primarily responsible for bringing us ObamaCare. Remember all these “critical access” hospitals were going broke from seeing all of the uninsured folks in their emergency rooms? Yet few big hospital emergency rooms don’t have a building crane in front of them signaling their expansion of this portal to bankruptcy.

An article in the St. Louis Post-Dispatch stops short of outing one not-for-profit system’s participation in the uncompensated care scam, but provides much information on the lavish compensation of its executives.
G. Keith Smith, M.D., Oklahoma City, OK http://SurgeryCenterOK.com

Volunteers Help; FEMA Useless. While FEMA and the Red Cross were next to invisible after superstorm Sandy (some FEMA stations were shuttered due to inclement weather), and some crews were idled for days awaiting authorization, volunteers were hard at work. These included members of the Hallowed Sons, a Bay Ridge motorcycle club, according to an article in Frontpagemag.com (http://tinyurl.com/d2rayua). We saw the same thing. Dozens of trucks in parking lots standing idle. Non-government volunteers can be flexible; they do not have to answer to an employer. It seems that once there is a paycheck, the motivation to help is diminished, as the pay is the same whether one worked very hard or very little. Human nature is like that.
Alieta Eck, M.D., Somerset, NJ

Destroying Insurance. Basic principles of insurance include an expectation of increased losses and costs when insurance is used to manage risk because insurance stimulates moral and attitudinal hazards. These costs are generally small, kept in check by the cost of the insurance and the coverage stipulations. The symbiotic effect of cost: benefit is hijacked with a mandate/penalty. When consumers can’t choose because they are mandated/forced to buy insurance, insurance is no longer a tool. It has been honed into a weapon—a weapon of mass wealth destruction/redistribution. Principled policy would never mandate insurance.
Janice Michaud, Manhattan Beach, CA

Health Insurance an Endangered Species. Unlike other members of the species (such as property and casualty insurance), political predators have been killing off health insurance. In the economic ecosystem, the primary function of insurance is risk assessment. It provides a service by measuring the risk of society’s choices and providing a means to mitigate it. As a byproduct, it tends to steer people away from risky choices. In a way, insurance companies get paid to discriminate: they determine how much each risk pool participant needs to kick in to cover the likely claims. If they cannot do this, they will act like escrow agents rather than insurers, gathering money from plan participants and distributing it to providers. There will be more and more pressure for laws regulating personal behavior in order to decrease costs.
Jeffrey Singer, M.D., Phoenix, AZ

A Problem of Definition. I have never thought we should insure the uninsured. As a lifetime insurance planner, I understand a concept that most Americans don’t get: If you don’t pay for insurance with your own money, directly or indirectly, it is not insurance. It is welfare. Insurance is risk hedging, which requires that you give up something of value (cash, labor, etc.) in exchange for another party’s bearing some of the risk. Medicare, Medicaid, SCHIP, and the like are not insurance programs.
Blake Woodard, Health Benefits Reform Group

How Much Do We Owe? According to an annual report by the U.S. Treasury, the federal government recognizes an outstanding debt of $17.5 trillion: $10.2 trillion in government debt plus retirement benefits owed to federal employees. Social Security and Medicare are not included because they are part of current law, and Congress can change them at any time. As a taxpayer I am liable for all the promises government has made to its employees. However, those employees are not necessarily liable for the promises they have made to me while collecting 45 years worth of taxes.
John Goodman, Ph.D., National Center for Policy Analysis http://bit.ly/QO6cES