1601 N. Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 47, No. 4 April 1991


Aetna Life Insurance Co., the Medicare carrier for the state of Georgia, has begun issuing checks for a total of $645,951 to Georgia ophthalmologists, on the order of a carrier-appointed Medicare Part B hearing officer. The ruling brought to a close a dispute over payments to participating physicians under fee screens issued in April, 1990.

Because of concerns about the fees for what Congress had designated to be ``overpaid services,'' the ophthalmologists had consulted Aetna personnel and employees of the HCFA regional office on at least three occasions. Each time, they were assured that the fee screens were correct. Nonetheless, in October, 1990, Aetna sent letters to participating physicians, demanding refunds of amounts that were allegedly overpaid due to an error in Aetna's computer program. Payments of up to $30,000 were demanded within 30 days; otherwise, Aetna would begin deducting money from outstanding Medicare payments due to participating physicians.

In response to the threat letters, members of the Georgia Ophthalmic Network, Inc., submitted a request for production of documents relevant to the development of the April fee screens and also a request for a hearing to contest the recoupment determination.

Aetna refused to produce the documents and stated that recoupment would begin immediately, before a hearing could occur.

In December, 1990, the Georgia Ophthalmic Network, Inc., along with a large number of its members, filed suit against Louis Sullivan, Secretary of HHS, and Aetna. The complaint asserted that the plaintiffs were entitled to a waiver of recoupment on the ground that they were without fault. In addition, the physicians argued that Aetna's failure to provide them with documentation and a hearing violated their constitu- tional rights under the Due Process Clause of the Fifth Amendment. The physicians asked for an injunction compelling Aetna to return the Medicare payments that had been wrongfully deducted as an ``offset.''

On December 18, 1990, the US District Court for the Northern District of Georgia dismissed the suit, stating that the Fifth Amendment did not require a hearing prior to recoupment, even though a Social Security beneficiary must be accorded a hearing before a recoupment is made. Further, the court ruled that it lacked jurisdiction because administrative remedies were available to the physicians. However, during the proceedings, the court orally demanded that the Secretary and Aetna produce the requested documents, and commented that, in its opinion, the physicians were without fault.

Pursuant to the request for hearing previously filed by the physicians, a hearing officer appointed by Aetna heard the case on January 25, 1991. In ruling in favor of the physicians, the hearing officer stated that the physicians were without fault, having relied on erroneous information from an official source. (Intermediaries and carriers under contract with HCFA in this instance were considered the equivalent of ``governmental agencies.'') Because the physicians had attempted to question the validity of the information on numerous occasions, they were considered to have exercised the proper ``degree of care.''

The hearing officer was not allowed to enter judgment regarding constitutional claims. His decision applies only to the circumstances considered in this claim and does not create a precedent for any other Medicare claim or service.

Aetna is required to forward to physicians the amounts that were wrongfully recouped, with interest. The decision cannot be appealed.

Counsel for the Georgia Ophthalmic Network, Inc., and the nearly 100 ophthalmologists were Kent Masterson Brown, AAPS General Counsel, and Henry Angel of Atlanta, GA.

Is Freedom Worth $363? $1113?

Even if Congress raises the Part B premiums of senior citizens with incomes over $125,000 (see p. 2), ``few are expected to drop out of Medicare, because they would still be receiving a substantial subsidy'' (AM News 2/18/91).

The annual subsidy would be $363, a decrease from $1113.

In return for $1113, senior citizens give up their freedom to contract for the medical treatment of their choice. Under Medicare, they must restrict themselves to consulting physicians who are still willing and able to see them-for fees that may not cover overhead and at the risk of draconian civil monetary penalties for transgressions such as coding errors.

If private insurance were available for physicians' and out- patient services, would patients be willing to pay $363 or even $1113 per year more than they do for Part B?

Why not find out? Lois Copeland, MD, an internist practicing in Hillsdale, NJ, recently authored an emergency resolution endorsed by the Medical Society of New Jersey, calling for study of the feasibility of a private alternative to Medicare Part B. Dr. Copeland, who is Chairman of the AAPS Patient- Physician Coalition, will be discussing the possibility with senior citizens groups and insurers.

``[Bureaucrats] have interposed ... their rules and regula- tions between our patients and ourselves, driving a wedge that threatens to destroy our relationship,'' she writes. ``Doctors will soon be unable to serve the population over the age of 65, unless that population joins us in an effort to rise up against government tyranny ... [and fight for our] constitutional rights.''

From Capitol Hill

Increase in Part B Premium Proposed. The Bush Administration budget proposes tripling Part B premiums for seniors with incomes greater than $125,000 per year. The increased premium of $1,104 would still cover only 75% of the cost of the benefit.

The first-year income of $50 million would roughly equal the cost of starting the program, but over five years, it is expected to net $1.2 billion. The change would affect about 600,000 seniors-the ``same people'' who would save $13 billion in a capital gains tax rate cut, according to Budget Committee Chairman Leon Panetta (D-CA).

The proposal raises the issue of means testing, and is not expected to be popular with senior citizens. Ways and Means Chairman Dan Rostenkowski (D-IL) calls it an ``insult to seniors.'' Rostenkowski was chased down the street in his home district by seniors protesting the Medicare catastrophic insurance program, which called for a $850 premium for the ``rich'' (Health Legislation 2/13/91).

HCFA Pushing ``Managed Care''. In an effort to wean more senior citizens from fee-for-service care, HCFA proposes a $50 million program to encourage enrollment in ``coordinated care'' mechanisms. To reduce resistance, HCFA will offer rebates and impose fewer restrictions. The fact that only one million of the 33 million Medicare beneficiaries eligible to enroll in prepaid HMOs have done so may indicate that seniors, too, care about freedom of choice.

Insurers to Do Credentialing. Kentucky Blue Cross/Blue Shield Medical Director James Holloway, MD, has chosen credentialing as the method for carrying out his mandate to assure quality of care. Certain procedures (including laparo- scopic cholecystectomy and reading MRI scans) will not be covered by Medicare unless the physician meets carrier-specified criteria, for example, a minimum yearly case load. The AMA has no problem with this idea, as long as state medical societies have input into changes (Part B News 2/18/91). Other carriers, such as Tennessee's Equicor, are expected to follow suit.

Billing Limits Expanded. New billing limits will encompass the following services that were not previously subject to payment restrictions: radiation therapy, diagnostic tests, outpatient physical and occupational therapy, and services ``incident to'' a physician's services. A HCFA official was uncertain whether the limits would apply even if the services were performed by a nonphysician (Part B News 2/4/91).

MAACs Not Necessarily Out. Although most MAACs were phased out January 1, 1991, to be replaced by the new balance billing limits, physicians should note that the MAAC still applies if it is lower than the new billing limit.

No Words, Please. The revised form 1500 for submitting Medicare claims will no longer have room for a narrative description of the diagnosis, reflecting the requirement to use ICD-9 codes. It is not yet certain when physicians will be forced to use the new form (discarding their stocks of the current form). The ICD-9 and CPT-4 codes are supposed to ``validate each other.''

AMA, PPRC Squabble over Codes. For ``evaluation and management'' claims, the Physicians' Payment Review Commission thinks that five ``level of service'' codes tell it all. The AMA thinks that many more descriptors are needed to include information on time, site of encounter, nature of the patient's problem, etc. The AMA is conducting a research study to test the codes. Failure to settle the conflict would make it difficult to implement the relative value fee schedule.

Apparently, neither the AMA nor the PPRC has considered a third option that could eliminate codes and deal with the infinite variety of patients and services: allowing the patient and doctor to agree on a price (i.e. freedom of contract).

OMB Wants Money First, Hearings Later. The Office of Management and Budget (OMB) thinks that civil monetary penalties are preferable to revocations of certificates and other sanctions against laboratories that violate federal regulations. Sanctions can be applied more quickly. Allowing the laboratory to have a hearing before being forced to pay would destroy this advantage (BNA's Medicare Report 2/22/91).

Confess Now, a HCFA official urged, if you have charged a relative-such as your grandfather's new wife or your brother's ex-wife-for any service covered under Medicare. Tell your carrier you made a mistake-and give the money back. It will be worse for you if you get caught. A new HCFA policy, which expands the definition of a ``relative,'' applies retroactively to Nov. 13, 1989 [another ex post facto law?]. Members of a related patient's household, such as domestic servants, also fall under the billing exclusion. In-law and step relationships survive both divorce and death.

Lab Regulations Driving Up Costs. The cost of complying with federal regulations, such as a limit on the number of slides that a cytotechnologist may read, has doubled the price of Pap smears, possibly placing them beyond the reach of women at highest risk for cervical cancer (Ariz Daily Star 3/3/91).

Nationally, quality assurance requirements could cost $4 billion per year ($4000 per laboratory).

Data Bank Cost Overrun. Data bank fees will have to be tripled, from $2 to $6 per query to raise the $6 million that HHS now estimates is needed. Since starting operation in September, 1990, the National Practitioner Data Bank has received 324,000 inquiries from hospitals.

Health Insurance Costs for Self-Employed. S. 88, introduced by Senator Dave Durenberger (R-MN) and Tom Daschle (D- SD), would provide permanent authority for the tax deduction for health insurance costs for self-employed persons and their families. S. 139 would also increase the deduction, now 25%, to 100%.

Abortion. H.R. 25 and S. 25, introduced by Rep. Don Edwards (D-CA) and Sen. George Mitchell (D-CA), would provide that no state could restrict a woman's right to terminate a pregnancy before fetal viability or at any other time if the woman's life or health was at stake. (States could impose requirements that are ``medically necessary'' to protect the life or health of women.)

H.R. 83 would prohibit the use of federal funds for abor- tions except where the life of the mother was endangered.

Pennsylvania Ban on Balance Billing Upheld;

Medical Society to Appeal

Ruling that a Pennsylvania law that bans Medicare balance billing is not unconstitutional, the US District Court for the Western District of Pennsylvania granted summary judgment for the defendants (the Pennsylvania State Board of Medicine) on Jan. 30, 1991 (Pennsylvania Medical Society v. Marconis, DC WPa, No. 90- 193-E). The Pennsylvania Health Care Practitioner's Medicare Fee Control Act, which went into effect Sept. 8, 1990, prohibits physicians or other providers from charging any Medicare patient an amount in excess of Medicare's ``reasonable charge'' for most physician services.

The medical society argued that the state law violated the Supremacy Clause of the US Constitution because Congress gives physicians the option of billing more than the Medicare approved charge, subject to certain limits.

Judge Glenn E. Mencer noted that federal law preempts state law if: (1) Congress expressly states its intention to preempt; (2) Congress ``occupies the field'' through extensive regulation; and (3) there is ``actual conflict'' between state and federal law.

In rejecting the argument that the pervasiveness of Medicare regulation shows that Congress ``occupies the field'', Judge Mencer stated: ``Comprehensiveness alone is insufficient to preempt....As elaborate as Medicare may be, its mere existence does not clearly manifest an intent to displace state law'' (BNA's Medicare Report 2/8/91).

Judge Mencer also ruled that the plaintiffs failed to prove that Congress intended to guarantee freedom from state interference in the decision to balance bill, even though ``participation'' was voluntary from the federal standpoint.

The court did not perceive a threat of oppressive state regulation because state legislation is ``more politically responsive'' and ``offers the opportunity to fine-tune affordability and access balances'' (ibid.)

The Pennsylvania Medical Society plans to appeal the ruling. The Society believes that the law will decrease the availability of services to rural and inner-city residents and discourage physicians from establishing a practice in the state.

State mandatory assignment laws continue to proliferate. Votes may occur soon in Montana and New Jersey.


AHLF Thanks Louisiana Physicians Guild

The Louisiana Physicians Guild recently contributed over $10,000 to the American Health Legal Foundation.

This contribution will be extremely helpful in supporting ongoing litigation, as physicians in Ohio challenge an ex post facto law (a retroactive prohibition against direct billing for laboratory tests) and Florida-licensed physicians challenge the Birth-Related Neurological Injury Compensation Plan.

The importance of the Florida case is highlighted by recent proposals in other states and in Congress to force physicians to pay, through licensure fees, for Medicaid, the care of the uninsured, and the cost of our tort system.


Blue Cross, Blue Shield Sued in West Virginia

Blue Cross and Blue Shield of West Virginia, the first such plan ever to be liquidated, collapsed in October, 1990, owing an estimated $40 million to providers and about $5 million to 250,000 former subscribers. The Blues face a federal lawsuit instigated by ten hospitals and a class-action suit from subscribers.

The lawsuits allege that the national Blues allowed the West Virginia plan to continue operating despite inability to meet financial responsibility standards. The Blues respond that they acted with the approval of the governor, the attorney general, and the insurance commissioner. The insurer claims that it had to pay for losses attributed to Medicare, Medicaid, and the state's Public Employees Insurance Assn, and that the hospitals made a $105 million profit.


Bankruptcy No Escape

Civil monetary penalties for Medicare ``fraud and abuse'' can quickly mount to a level that could drive a physician to bankruptcy court. But while the physician might be freed from the claims of his other creditors, he will still be in hock to the Dept. of HHS. In a revised answer to the question about the effect of bankruptcy (see AAPS News, March 1991), Thomas Daly of Wilkes, Artis, Hedrick & Lane in Washington, DC, writes:

Civil money fines imposed under Medicare fraud and abuse provisions do survive bankruptcy proceedings. Section 523 (a)(7) of the Federal Bankruptcy Act exempts from discharge a ``fine, penalty or forfeiture'' imposed by a governmental unit. Exempting these types of fines or penalties from discharge under bankruptcy is based on the policy assumption that these debts arise from behavior which the government is attempting to deter. Discharging this type of debt would, to some extent, frustrate their deterrent effect.

Is Cooperation the Answer?

Dr. James Todd, Executive Vice President of the AMA, plans to set a new direction: ``James Sammons was absolutely perfect for his era in the old political world of dog eat dog. Now we have an entirely different era,...where cooperation becomes increasingly important'' (Med World News 1/91).

Another approach is described by Sherman McCoy, the yuppie protagonist of Bonfire of the Vanities, who becomes a professional defendant after being stripped of his freedom and every external garment of his social identity. He compares his situation with that of a house pet that's been turned into a vicious watchdog:

They don't alter that dog's personality with dog biscuits or pills. They chain it up, and they beat it, and they bait it, and they taunt it, and they beat it some more....The dog doesn't cling to the notion that he's a fabulous house pet in some terrific dog show, the way the man does. The dog gets the idea. The dog knows when it's time to turn into an animal and fight.

  --Thomas Wolfe

On Following Orders

In the middle of the night, the King decided to inspect a military installation, unannounced. The guard saw the approaching shadow, pointed his gun and ordered the ``alto-la'.'' The shadow passed the checkpoint without answering the ``chi va la'.'' About to shoot, the soldier suddenly recognized His Majesty. He lowered his gun and snapped to attention. The following day, he was courtmartialed and served many years in a military prison.

The obvious implication is that orders are to be obeyed, not discussed, and that he who issues them is responsible for the consequences, not he who carries them out.

Too logical to last, this old-fashioned thinking was supplanted after World War II by the Nuremberg Doctrine. The little guy is expected to obey only laws and orders that he feels meet acceptable moral standards and be responsible for the consequences.

....What we see is that the little guy is made to be the scapegoat no matter which way he goes.

G.I.M.S. Newsletter, 2/15/91

[Questions for discussion: Is Medicare the King? Are doctors soldiers in uniform?--Ed.]


Why You Should Calculate Your RVS Fees

``Come October, 1991, you'll have to live with it for five years,'' said a representative of Aetna speaking to the Pima County Medical Society in Tucson. ``You have only 60 days to comment after the numbers are published in the Federal Register. You won't be able to get a `bad data review' from the carrier because the carriers have nothing to do with this.''

Some specialties will be ``hit really hard''-for example, internists in California.

There will be one fee per procedure, regardless of specialty. The malpractice costs for the geographic region will be a weighted average of costs for a $100,000/$300,000 policy to a selected low-risk, medium-risk, and high-risk specialty.

HCFA is aiming to have a conversion factor of $1. In order to get a budget-neutral fee scale, they will probably manipulate the other numbers.

To obtain your copy of the model fee schedule for 7000 procedures, write: Superintendent of Documents, US Government Printing Office, Washington, DC 20402 or call 202-783-3238. Ask for the April model fee schedule. Then send your comments to the address given in the schedule.

Will this elicit 60,000 comments, as CLIA did?


New Members

AAPS welcomes Drs. Steve Anderson of Chattanooga, TN; Michael D. Barnard of Shelton, WA; Robert E. Belvin of Rome, GA; James E. Bland of Clarksburg, WV; Bruce Brezel of Shelton, WA; Richard M. Browning of Paris, TX; Abraham R. Byrd, III of Tucson, AZ; William B. Cameron of Huntsville, AL; Norman Chapin of Warren, MI; Robert J. Cihak or Aberdeen, WA; Thomas L. Clary of Oak Ridge, TN; Thomas R. Conklin of Reno, NV; Gary Connel of North Platte, NE; Millard S. Costilow of Winona, MS; Noel Curry of Rancho Mirage, CA; Mary S. David of Dyersburg, TN; Harry Dawson, Jr. of Rome, GA; Russell DuQuette of Scottsdale, AZ; Charles B. Dye of Oak Ridge, TN; Stephen Evans of Roswell, NM; Arthur Gardikes of Centerville, OH; William Kelley George of Galveston, TX; John Greisman of Encinitas, CA; Tom Henry of Flagstaff, AZ; Thomas Herrick of North Kansas City, MO; James A. Holleran of Setauket, NY; William Holsey of Tucson, AZ; Robert G. Howard of Oak Ridge, TN; William P. Hyde of Quincy, IL; Phillip Isbell of Denton, TX; J. Mark Knopp of Indianapolis, IN; John J. Korba of Bowling Green, KY; Elizabeth B. Korte of Carthage, IL; John E. Leach of Columbus, OH; Kurt L. Leimbach of Quincy, IL; Deborah Lewis of Raleigh, NC; Ronald B. Lorenc of Bridgeton, NJ; Alley Loy of Oak Ridge, TN; Ken Luckmann of Oak Ridge, TN; Chris- topher L. Marlowe of Toledo, OH; William Martin of Oak Ridge, TN; John R. Mayer of Indianapolis, IN; James K. McKechnie of Charleston, IL; Victor McLaughlin of Oak Ridge, TN; Cletus J. McMahon of Oak Ridge, TN; Trent McNeeley of Norris, TN; Thomas H. Metcalf of Oak Ridge, TN; Joanne Michaelson of Bettendorf, IA; Ken Miller of Oak Ridge, TN; James J. Monks of Midland, NJ; Gary Muncy of Chesterfield, MO; Rifat Nawas of Monroe, LA; William B. Parsons, Jr. of Scottsdale, AZ; Randall E. Pearson of Oak Ridge, TN; Kurt Vander Ploeg of Pella, IA; Ronald K. Riesz of Venice, FL; Kent Scholl of Dayton, OH; Gene Soloway of Whittier, CA; Scott Stegbauer of Walterboro, SC; George Stevens of Oak Ridge, TN; Joe Stubbs of Valdosta, GA; Ira Duke Thompson of Huntsville, AL; Sharon Tiefenbrunn of St. Louis, MO; Tom Upchurch of Oak Ridge, TN; Robert Walker of Oak Ridge, TN; and Joel White of Walnut Creek, CA.


AAPS Calendar

Apr. 26, 1991. Medicolegal seminar, cosponsored by St. Louis Metropolitan Medical Society, St. Louis Airport Marriott, St. Louis, MO. Call 314-371-5225 to register.

Apr. 27, 1991. Board of Directors meeting, St. Louis, MO.

Oct. 17-19, 1991. Annual meeting, Lexington, KY.