AAPS News May 2011 - A Roadmap for Medicine?

Volume 67, no. 5 May 2011

When looking at a roadmap, you first need to identify your destination. All roads do not lead to Washington, D.C. The road we want for medicine leads to freedom—not mercantilism, socialism, communitarianism, corporatism, or fascism.

Wrong-way signs include new federal agencies, offices, commissions, or “exchanges”—or expanded powers to old ones. Every federal agent is attached to a salary, a pension, and the ability to intrude into people’s lives and consume their time and energy as well as their tax dollars.

It’s the wrong way if it involves new directives, rule books, or reporting requirements. We want federal rules to be heading to the shredder, the bonfire, or an electronic equivalent. It’s also the wrong way if it has more fines, prisons, auditors, or SWAT teams.

The U.S. federal government has no money. If it used accrual accounting, as it requires for private entities, its books would be a red sea. It has no Constitutional authority to regulate “commerce” between entities that are not States, Indian tribes, or foreign nations. Being a cesspool of corruption itself, it has no moral authority to judge our compassion or other moral qualities. It has no medical expertise, but calls on self-appointed pretenders, most with incestuous ties to the AMA, which has been repudiated by the vast majority of America’s physicians.

A roadmap must be an accurate reflection of the terrain. It must not show the edge of the abyss as a bridge, quicksand as a paved road, or a ditch as a superhighway. A roadmap to reform needs to use honest signage. A Ponzi scheme is not a “benefit”; spending on consumption is not “investment”; draconian fines are not “savings” or “recoveries”; compliance with box-checking protocols is not “quality”; a tax is not a voluntary “contribution”; a lower rate of increase is not a “spending cut”; a choice between government-dictated menu options is not “market competition.”

To use a roadmap, you also need to know where you are. We are not in Kansas in 1939, or even 1995. We are not in a free market, or at the pinnacle of excellence, or on a luxury yacht in a calm sea of affluence that just has a few islands of neediness. We’re on a ship that was supposed to be too big and too powerful to sink. It is taking on water and is approaching a vortex.

The distances on the map need to be accurate also. It doesn’t help to advise a detour in 100 miles (or in 2021) when the iceberg or fallen bridge (or default) is dead ahead.

The Ryan Roadmap
House Budget Committee chairman Paul Ryan (R-WI) is one of the bravest men in the U.S. Congress. His Roadmap to America’s Future gets two cheers for its analysis of how American medicine got to where it is: “ever-deepening government intrusion”; tax subsidies and programs that created a third-party payment system; incentives that emphasize health care over any other aspect of health and well-being. He also recognizes that cuts must be in trillions, not billions, and that entitlements are not sustainable. In 1935, the year Social Security was enacted, Ryan points out that there were 42 working-age Americans for each retiree, and life expectancy was 60 years for men and 64 for women. Today there are only 3.3 workers per Social Security recipient, and people retire on average at age 63.6, six years sooner than in 1945.

Ryan proposes to spend $39.96 trillion over 10 years (2012-2021), $6 trillion less than Obama, and balance the federal budget—sometime after 2030. The Ryan plan also would spend more on Medicare ($7.39 trillion v. $6.46 trillion) but less on Medicaid ($2.67 trillion v. $4.35 trillion) (WSJ 4/6/11).

Ryan has accepted a lot of progressive rhetoric and redistributionist thinking, and a route that has much in common with ObamaCare or even Clintonesque “managed competition.”

He is enamored of “universal access” to “affordable coverage”—guaranteed issue and community rating. There would even be opportunities for automatic enrollment in emergency rooms, but no individual mandate.

Every American not on Medicare or a military plan would be eligible for a refundable tax credit (i.e. including those who don’t owe income tax) to help purchase insurance—which would be paid to the Plan, not the individual. Any amount left over (from $2,300 for individuals or $5,700 for a family) could be used for other health expenses.

As with ObamaCare, there would be government-dictated benefits packages and government-created “Exchanges.” And a National Health Information Network is planned to reduce errors and improve quality. Ryan eschews “heavy-handed government intervention,” preferring “private stakeholders” in a Forum for Quality and Effectiveness in Health Care “with the authority to establish and promulgate metrics to report price and quality data.” Enforcement, of course, is by a governmental agency: the new Healthcare Services Commission. The model is the Securities and Exchange Commission (SEC), which adopted the standards set by the nongovernmental Financial Accounting Standards Board (FASB), with such wonderful results for honesty, transparency, and consumer confidence in the financial industry.

Medicare reform starts in 2021, with beneficiaries now 55 years old and younger. They (actually their health plan) will get a “defined contribution” indexed to the CPI and determined by income and risk level.

Despite a sprinkling of market-based ideas, the Ryan plan for medicine, alas, appears to be another Yellow Brick Road.

It’s Not 1995

At the last minute, Congress came to an agreement that stopped the sending of thousands of furlough notices to federal employees. Some hoped and some feared that Republicans would be blamed for a government shutdown, as they were in 1995. But things are different now (American Thinker 3/31/11).

Far more serious than a government shutdown would be hitting the debt limit of $14.29 trillion. The Treasury would have to stop payments on bond principal and interest, discontinue Social Security checks, and cease Medicare payments. At some point, the outcome would be decided not by a vote of Congress but by investors trying to cut their losses. Martin Weiss has challenged S&P, Moody’s, and Fitch to downgrade long-term U.S. debt. The government’s triple-A rating gives policymakers “a green light to perpetrate their fiscal follies” (Money and Markets 4/11/11).

In March, the Treasury had net revenue of $128 billion, and paid out 8 times as much, $1,053 billion ($1.05 trillion), mostly for redeeming Treasury securities that had matured during the month (CNSNews.com 4/4/11). Without military expenditures or the Bush tax cuts, the 2009 deficit would still have exceeded $1 trillion. Unfunded entitlements are $45 trillion to $105 trillion or more (Cato Policy Analysis 3/28/11).

ACOs Likely To Be Losers

Six pages in the Affordable Care Act (ACA) have spawned a 429-page proposed rule on Accountable Care Organizations (ACOs). According to HHS Secretary Sebelius, ACOs would save the government up to $960 million in 3 years, after paying provider incentives, and ACOs themselves would save $510 million.

To get a share of the savings, an ACO would have to meet the 65 quality performance standards. ACOs would have to repay Medicare for a portion of losses (expenditures above the benchmark). If above a certain threshold, ACOs would require approval from an antitrust enforcement agency (BNA’s HCFR 4/6/11).

Data from the Physician Group Practice (PGP) Demonstration suggest that most ACOs will lose money in the first 3 years (NEJM 4/7/11). ACOs mean payday for consultants charging $1 million to implement a strategy (Washington Post 4/2/11).

“Measurement is the first step that leads to control….” (H. James Harrington, quoted in AZMedicine, spring 2011).

OSMA Resolution on Charges to Self-insured

AAPS Past President and OSMA delegate Kenneth Christman, M.D., reports that the Ohio State Medical Association passed the following: “Resolved: that [OSMA] shall seek action to ensure that Ohio shall provide complete protection to all self-insured patients coming to not-for-profit hospitals under Section 501(c)(3), … prohibiting such hospitals from charging ‘more than the amounts generally billed to individuals who have insurance covering such care.’”

The Reference Committee rejected a resolution calling for the reversal of the AMA policy that holds it is unethical for physicians to care for their own family members—although one study reportedly showed that 98% of physicians admit to taking care of their own family.

Hospital Employment Up; Caution Advised

More than half of practicing U.S. physicians are now employed by hospitals or integrated delivery systems, a trend fueled by the intended creation of ACOs. Hospitals are hiring despite the fact that they generally lose up to $250,000/yr in the first 3 years of hiring a physician—probably because they hope to influence the flow of referrals to their specialists.

Employment comes with “more performance management than it once did,” write Robert Kocher and Nikhil Sahni., and it may be more difficult to revert to independent practice. “Employment choices that physicians make today may not be able to be undone” (NEJM 3/30/11).

One of the biggest hazards in employment contracts is a noncompete clause, which may prevent working in the area even after the hospital lays a physician off. Other gripes include lack of job security, unanticipated changes in compensation, lack of business control, and loss of clinical autonomy.

“The reality is that when you work for a hospital you are a service line,” writes family physician Victoria Rentel. “Because primary care reimbursement is relatively low, you’re a service line that feeds more lucrative service lines” (MedScape 3/2/11).

The trend is welcome to those who believe that physician sovereignty is “the dangerous persistence of an obsolete idea.” The “core condition for excellence and for meeting one’s ethical responsibilities...is collaboration and teamwork,” writes David Lawrence (Center for Policy Research No. 40, 2009). He advocates a body like the Federal Reserve Board to determine what should be covered and how it should be provided.

AAPS Calendar

May 14. Doctors Town Hall, Costa Mesa, CA.
May 20-21, workshop, board meeting, Omaha, NE.
Sep 28-Oct 1, 2011. 68th annual meeting, Atlanta, GA.


Please send along meritorious resolutions passed at your state or specialty medical association. And if you are a delegate, introduce resolutions that help the practice of private medicine!

PPACA Imposes Religious Duties; Is 1943 Reprise

Virginia Delegate Bob Marshall, chief patron of the Virginia Health Care Freedom Act, and numerous nonprofit organizations, have filed an amicus brief supporting Virginia’s challenge to the Patient Protection and Affordable Care Act (PPACA). Amici argue that the Act violates the free exercise of religion.

“The individual mandate coerces a kind of altruism, transforming a personal duty to help others into a coerced civil duty.”

The mandate is not commerce-based. “In fact, PPACA contains no Congressional findings about interstate commerce” except one related to minimum essential coverage. The mandate is mischaracterized as being imposed upon individual “participants in the health care market [to] have insurance to pay for the services they consume.” Rather, the mandate requires prepayment for services whether or not any obligation to pay is incurred. It is not “commercial and economic in nature,” but a “moral imperative” to participate in order to further the purported “greater good.”

Congress has the authority to regulate commerce, i.e. to set the rules, but not to engage in commerce. “PPACA, itself, creates a national commercial enterprise designed to manage and control health care workers and facilities and health insurance companies.”

In 1943, a “wholly Federal system of social insurance with the Surgeon General in the role of a gatekeeper for the provision of medical care” was proposed. Morris Fishbein, then the AMA’s chief editorialist, said this would make the Surgeon General a “virtual Gauleiter” of American medicine. As a result of such opposition, the “national health insurance” proposal was abandoned in favor of the 1944 Public Health Services Act, which was not predicated on “the financing of personal health services.”

Now, 67 years later PPACA amends the Public Health Services Act, and not only finances personal health services but “places the federal government in full control of the definition, deliverance and management of those services.” This time, the Secretary of HHS is vested with czar-like powers.

The “public option,” never really abandoned by the Obama Administration, is back, amici write, in §1334(a), which was inserted into PPACA in the budget reconciliation process. The Office of Personnel Management (OPM) is required to sponsor at least two national health insurance plans beginning in 2014. These need not meet the same requirements as private plans.
By characterizing the premium as a tax, the Government necessarily takes the position that the private company to which the premium is paid is functioning as an agent of the federal government, amici state. This supports the proposition that PPACA is an unconstitutional commercial enterprise.

For these and other reasons, Marshall et al. argue that PPACA is unconstitutional. See http://scr.bi/etx9bR.

Settlements Drive Malpractice Crisis

The malpractice crisis will continue as long as defensible claims are paid, writes malpractice carrier executive Peter Leone. Such payments signal the plaintiff’s bar to find high-value claims with or without deviation from the standard of care. They also create a society of experts willing to compromise their colleagues, and result in across-the-board premium increases.

“Our current system has been bastardized by the plaintiff’s bar with the judiciary as a willing co-conspirator,” writes Leone.

An Entitlement Is Obligatory, Judge Rules

Reversing her earlier opinion in Hall v. Sebelius, Judge Rosemary Collyer of the U.S. District Court for the District of Columbia ruled that Americans may not turn down Medicare Part A benefits without also relinquishing all Social Security payments.

“Congressional intent...was to provide ‘mandatory’ benefits under Medicare Part A for those receiving Social Security Retirement benefits,” Collyer writes.

She concludes: “Plaintiffs are trapped in a government program intended for their benefit. They disagree and wish to escape. The Court can find no loophole or requirement that the Secretary provide such a pathway.”

Plaintiffs argued that being “entitled” to Social Security benefits does not mean “required to accept,” and the same should apply to Medicare. While acknowledging that this plain English reading of the word “has its attractions,” the Judge holds that in the Medicare context “entitled” does not mean “capable of being rejected.” The difference, in her convoluted reasoning, is that one must specifically apply for Social Security, but once one has done so, Medicare Part A enrollment is automatic.

The Obama Administration fought the suit vehemently. The government fisc would benefit if some seniors paid for their own care. But the goal is not to save money or offer choice. “The goal is to force all Americans into the same program to fulfill [liberals’] egalitarian dreams (WSJ 3/24/11).

A Way Out

Texas dermatologist Richard Swint, M.D., did not “revalidate” his Medicare enrollment, so his billing “privileges” were revoked for one year, after which he could apply for reinstatement. The questions below are from Dr. Swint, and the answers from Jimmy Sigmund, Associate Regional Administrator, CMS Division of Financial Management and Fee for Service Operations, Region VI, in a letter to Senator John Cornyn:

Q 1: If patients file on CMS-1490S, is the physician required to file a form 1500 with Medicare?

A: Normally, the answer to this question would be yes; however, … [in Dr. Swint’s situation], the answer is no….

Q 2: If patients file on CMS-1490S, is the physician under threat of a $10,000 fine, civil monetary and other penalties, or is the physician exempt?

A: Refer to answer in question # one. Because Dr. Swint’s provider number has been revoked, he is not currently subject to the mandatory claims submission rules with the associated fines and penalties.

Q 3: If the physician is not exempt from government threat; and filing of CMS-Form 1500, then the patient’s right to choose their physician (guaranteed by Congressional law) has been violated, because the patient can only choose a physician who has contracted with the government.

A: Refer to response in question #2. Under Medicare traditional fee for service reimbursement, physicians do not contract with the government or the Medicare contractor. In order to submit claims to the Medicare program…, physicians are required to submit the appropriate enrollment application. Under any circumstances, the patient always has the right to choose his/her physician.” [N.B. some patients are being reimbursed.]


The Cost of Inaction. By 2019, the maximum penalty for noncompliance with “meaningful use” and the Physician Quality Reporting System will be 7% for physicians still participating in Medicare (MSSNY’s News of New York vol. 67 no. 4). Unlike with the scheduled 25% to 30% cuts from the sustained growth rate (SGR) formula, don’t expect the AMA to organize protests to help these noncompliant physicians. The cost of compliance will far exceed any bonuses for electronic records, as the major cost over time will be systems maintenance, which is not and never will be reimbursed by Medicare. Government’s goal is to get as many physicians as possible to swallow the hook.

Physicians who hope to cash in from being compliant sheep should take note that Medicare will not allow them to collect bonuses from all three so-called quality initiatives in any given year.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

The Worst Study Ever. In the April issue of Commentary, neuroradiologist Scott Atlas does a very good dissection of the despicable and deceitful WHO study that compared the quality of healthcare around the world and asserted that the U.S. ranked 37th in quality and first in cost. The study was a fraud and a setup to promote socialism and statism. WHO didn’t even collect data from many of the countries ranked and started off with a requirement that any good ranking would demand single-payer state healthcare. The study was put out in 2000 and followed on a 10-year drumbeat about patient safety that produced the 2000 Institute of Medicine monograph To Err Is Human. This was based on equally inadequate and deceitful studies by a clique of gurus including Donald Berwick. When these two frauds were planted in the environment of a socialist political fever swamp, is it a surprise that both political parties keep saying U.S. medicine is broken?
John Dale Dunn, M.D., J.D., Brownwood, TX

“Health” Care. Despite a mountain of evidence that so-called preventive care does not pay for itself, ObamaCare mandates that a laundry list of services be provided free. The values in this “value-based” insurance may not be ones that you share. Other countries with “universal” care seem to overprovide to the healthy and underprovide to the sick. Unregulated hospitals are likely to spend more than half the health budget on 5% of the population. If you are Minister of Health, you can’t afford to spend 50% of the budget on 5% of the voters—who may die before the next election or be too sick to vote. Redistribution from the sick to the healthy makes political sense even if it makes no medical sense.
John Goodman, Dallas, TX

Insurance Is Not Care. Having insurance has little to do with getting medical services. I don’t know why people focus on it so much. There is a not small number of people in the U.S. who simply can’t cope with an insurance policy. They may be illiterate, emotionally dysfunctional, drug addicted, or simply not bright enough. Many of them simply go to the ER when they are feeling poorly because they know that that’s where the doctors are. It doesn’t matter whether they have an insurance card or not.
Greg Scandlen, Hagerstown, MD

The ACO Final Rule. The accountable care organization contract is a one-sided conditional contract that is essentially an employment contract with CMS. Although CMS is effectively the employer, and sets all the terms and conditions, it bears none of the costs of the ACO while claiming 60% of the savings bonus. The conditions, such as the savings threshold, are uncertain. Should any physician commit 3 years to such an arrangement?
Michael V. Riesberg, M.D., Pensacola, FL

ACO Guidelines. The creation of technocrat panels is a classic step on the road to serfdom, according to F.A. Hayek. Those who can’t get their way by proving their point scientifically find patrons in government who will enforce their way if it serves the broader collectivist agenda. No committee, however well appointed and representative of various specialties, can morally plan and enforce state-controlled medicine. Such committees have no role in the patient-physician relationship except to provide information for consideration by actual practicing doctors. But we know they will not produce guidelines, but rather edicts that must be followed by doctors in ACOs if they wish to beg for their bonuses or, more accurately, avoid the penalties.
David McKalip, M.D., St. Petersburg, FL

Jenga. As people talk about dismantling ObamaCare piece by piece, I keep hearing references to a game called Jenga. Players build a tower out of wooden blocks. Then each player pulls out a piece until someone pulls out the piece that causes the whole thing to come tumbling down.
Grace-Marie Turner, Galen Institute, Washington, D.C.

AMA Wants More Penalties. An AMA Reference Committee turned our resolution opposing the individual mandate into one calling for higher penalties to force compliance. We got the original passed after a floor fight, but single-payer advocates blocked it by getting it referred to the Board of Trustees.
Robert Sewell, M.D., Southlake, TX