Reno Declines to Appoint Independent Counsel. Just
before the deadline set by the House Judiciary Committee, and on
a weekend when press coverage would be scant, Attorney General
Janet Reno announced that Eric Holder, U.S. attorney for the
District of Columbia, would be in charge of investigating Ira
Magaziner's alleged perjury in the case of AAPS v.
Clinton (see AAPS News, March 1995).
Magaziner was not in a high enough position to be covered
automatically by the independent counsel law. However, Reno
could have asked a special three-judge court to name such a
prosecutor if she believed that the U.S. attorney had a
significant conflict of interest.
Reno said she saw no reason to disqualify the Department of
Justice even though it represented Magaziner and other
administration officials in the litigation over the Task Force.
Charles Ruff, Magaziner's attorney, said he was pleased to
hear of Reno's decision.
``We're confident that Mr. Magaziner did nothing wrong and
he will be vindicated, and we're equally confident that the U.S.
attorney will conduct a thorough and independent investigation,''
Judge Lamberth concluded in December that Magaziner made
some false statements about the working groups' members. But he
said prosecutors must decide whether to charge that he knowingly
and intentionally made false statements (Marcy Gordon, Associated
Ms. Reno's opinion about independent counsels has apparently
undergone a dramatic change now that the law can be targeted
against Democratic administration officials. (Congress exempted
itself.) Previously, she stated that such counsels were ``a
crucial element of ensuring public confidence'' in government
(Wall St J 3/7/95). While sharing Reno's aversion to
independent counsels, the Journal noted that Eric
Holder, who may be a candidate for judicial appointment, may have
difficulty examining the Magaziner case with objectivity. Holder
has gone out of his way in the past to praise Lauri Fitz-Pagado,
another controversial Clinton appointee who was accused of
concocting false testimony.
AAPS intends to urge Congress to undertake its own
independent investigation of the Task Force, with particular
attention to its funding.
After many months of inquiries, John Solomon of the
Associated Press turned up evidence of more than $4 million in
contracts awarded to develop the Clinton health-care plan, spread
over several Cabinet departments. The Congressional Budget
Office has turned up $6 million in contracts let by HHS and is
still counting. While touting the exclusion of ``special
interests'' such as physicians, the Task Force relied heavily
upon highly paid consultants who shuttled between positions of
influence in the private sector and highest levels of government,
untroubled by the ethical proprieties required of full-time civil
servants (Wash Post 2/22/95).
Payments of six figures were made despite a warning from
White House lawyers to use full-time employees, not consultants.
Memoranda documenting this warning were found on diskettes
finally made available to AAPS just as the Judge was declaring
the case of AAPS v. Clinton moot.
Fraud Dragnet Rakes in Cash. The Office of Inspector
General of HHS recorded $8 billion in settlements, collections,
and savings during FY 94. Civil monetary penalties reached a
record level of $184.9 million. There were 1,169 successful
prosecutions in FY 94, including 202 for health-care fraud and
abuse. Providers should not rely on a Magaziner-style defense of
saying that they weren't paying attention to each and every claim
and didn't know that some were erroneous.
Many facilities are now developing a compliance plan (see
Medicare Compliance Alert 1/30/95, (301)816-8950, ext.
223). If ``fraud'' is discovered, the government would like
providers to turn themselves in. However, no amnesty is allowed,
and ``rules of engagement'' have yet to be developed.
Nonetheless, companies should feel pressure to confess due to the
growing number of whistleblower qui tam lawsuits
(BNA's Health Care Policy Report 2/26/95, (800)372-
Health-care fraud is now second only to violent crime on the
Department of Justice's priority list. Beefed-up fraud units are
focusing on ``unbundling,'' ``upcoding,'' and billing for
``unnecessary'' treatment. DOJ is also looking into the practice
of waiving copayments. Certain HMO practices such as bonuses to
physicians with the fewest referrals to specialists are also
Expansions of fraud statutes may extend penalties to those
who receive payment from private insurers. U.S. attorneys are
seeking harsh prison terms with little or no chance for sentence
reduction (BNA's Medicare Report, 11/4/94).
Recently, a New York internist-rheumatologist who signed on
with a community clinic was sentenced to 46 months in jail, a
repayment of $612,855, and Medicare/Medicaid exclusion for 10
years. He noticed that the lab was upcoding claims and billing
for unordered tests. He asked his physician's assistant to tell
the lab to stop and wrote a letter to the lab with similar
instructions. Seven weeks later, he left the clinic ``after
beginning to see that there was something wrong,'' but did not
report problems to the authorities. Unfortunately, he didn't
keep copies of his letters and was convicted of filing false
Medicaid claims (Medicare Compliance Alert 1/30/95).
Physicians are responsible for all claims and forms that
they sign. It appears that anyone who accepts government money
(directly or indirectly) is at risk for being targeted by a
vindictive prosecutor in the IG's office. Honest errors or
oversights could be construed as fraud.
The AAPS Nonparticipation Policy, adopted in 1965, states
the belief that the proper course for physicians is to decline to
execute forms necessary for the implementation of government
medicine. In 1990, Congress enacted a law requiring physicians
to submit forms if their patients desired to obtain
Medicare benefits. AAPS opposes that law. The AAPS position is
that insurance benefits should be paid directly to the
beneficiary (the patient) and that patients or their
representatives should submit the claims for their
HCFA Enforcing Balance-Billing Limits. Some
nonparticipating physicians have received letters demanding
refunds to patients who paid more than the limiting charge for
services rendered several years ago. One physician was ordered
to refund various sums to more than 700 patients, under threat of
sanctions. Note that the case of Stewart v. Sullivan
offers no protection if a Medicare claim was submitted
for a service.
Limited Legal Consultation Service Available. AAPS may
be able to help with questions about Medicare regulations,
medical staff bylaws, contracts, and other practice issues
(not medical liability). Call us at (800)635-1196. If
the question is within the scope of our service, we will refer it
to an attorney.
Private Contracting by an Anesthesiologist. I was
unable to attend the annual meeting but have enjoyed the
audiocassettes of many of the talks. One of the questions was
asked by an anesthesiologist interested in the logistics of
private contracting. I have contracted privately with several
patients and plan to become more aggressive with contracting as
the surgeons develop an understanding of the need for this. While
I don't advise other physicians to privately contract, I
would be happy to answer any questions directed to you or AAPS
about my own practice. The basics are as follows:
1) Explain contracting to primary care physicians referring
to the surgeons you work with. Their day-to-day paperwork game
with Medicare dwarfs that of the anesthesiologist. They will
privately contract just to avoid the paperwork demands. They will
educate their patients, so the idea of private contracting won't
come as a shock.
2) Explain to the patients that they would not want
anesthesia service worth no more than Medicare pays (around $70
for anesthesia for a total knee replacement).
3) Tell the surgeons you work with that you have managed to
keep your fees reasonable by not cost shifting. Refusing to give
mandated discounts based on age will save their younger patients
money. The Medicare beneficiaries have accepted this explanation
I have been referred patients by patients that I have
contracted with. Their idea is that since they are going to pay
for the service out of their own pocket, it must be worth
having....Rather than lose patients because of contracting,
surgeons are calling me asking when I can be available to provide
contracted anesthesia care for certain patients.
G. Keith Smith, MD, Oklahoma City, OK
Oh No We Don't...Recently I experienced the final straw
in a long series of unsettling events....The first came while I
chaired our hospital transfusion review committee, which was
instructed by the administration to develop a separate consent
form for transfusions, even though they were already covered in
our general surgical consent form. When I asked if the separate
form would provide extra protection from litigation, I was told
``No, but we just need to do this.''
When my specialty board introduced a ``voluntary''
recertification examination, I asked if we had any evidence that
such recertification improves quality of care or patient
outcomes. The answer was a knowing nod and ``we just need to do
this.'' When all the blood and body fluid precaution signs were
removed, it was because ``we just need to do this.'' When a
restraint policy requiring a full-page questionnaire to be
completed daily was applied to intubated, ventilated, critically
ill patients in the SICU, I asked why. The answer given at all
administrative levels: ``We just need to do this.''
I suggest that we no longer accept this answer. If we
physicians cannot understand the real reasons for all these
changes, then we are not intellectually fit to practice our
profession....If critical information continues to be withheld
from us, we can only assume that there must exist some hidden
agenda that would be unacceptable to us.
Philip S. Gibbs, M.D., Lebanon, IN
An Indicated Abortion. I hope we can abort socialized
medicine for it is the result of incest (big government and big
insurance companies) and rape (medical profession).
David H. Turner, M.D. Chattanooga, TN
Ethical Inversion. [Medical research, hospitals,
doctors, nurses, etc. have but one reason for being]: the sick
person.... But in today's ``health care system,'' the ``System''
is paramount. A sick person is a the expensive, bothersome,
inferior, stupid, inanimate, subject, client - a pest to be
tolerated, an obstructive intrusion. So his life and habits must
be engineered, restricted, and controlled by his betters to make
him compliant, cost- and resource-effective. Properly defined,
this is veterinary medicine - the ``betters'' being the owners,
and you and I are the farm animals.....The patient is only the
necessary excuse for the wielding of power....[Current changes
have the purpose of making] the ``System'' so expensive,
cumbersome, and intolerable that the preconceived desired end
(more government) can be proffered as the solution to the problem
that big government created in the first place.
Curtis W. Caine, M.D., Jackson, MS
To Congressman Archer, on Managed Care.... Under
managed care, especially under capitation, doctors and hospitals
take on the insurance risk....Their goals and ethics will have to
change to those of the insurance industry. Managed care sets up
financial reward to those who withhold care. Is there any other
segment of our economy in which the payment goes for goods or
services not delivered? The financial and ethical foundations in
medicine are deteriorating....such structures decay much more
easily than they are rebuilt.
James Pendleton, MD, Abington, PA
May 6 Regional meeting, Boise, ID: A Free-Market Solution to
Health Care Price Distortion and the Corporate Socialized
Medicine Managed Care Malignancy. Call 800-635-1196 for
Oct 12-14 52nd Annual Meeting, Falls Church, VA.
Legislative AlertVoices of Moderation
Reflecting on the legal and tort reforms being pursued in
the House of Representatives, Mr. George Bushnell of the American
Bar Association (ABA)-an organization formally on record against
reform inspired by Adam Smith or free-market thinking-has
referred to the new Congressional leadership as ``Reptilian
Bastards.'' (Newt, take note!)
Bushnell is a public-relations dream come true for
proponents of tort reform. Just the kind of rhetoric that
America's uproariously funny and overwhelmingly popular legal
profession needs right now.
Medicare's Monster Budget
Medicare and Medicaid are among the federal government's
fastest growing entitlement programs. Recent calculations of the
costs and the threat of fiscal insolvency are adding to the
urgency of Congressional reforms. Newsweek economist
Robert Samuelson reports that between 1980 and 1995, Medicare
rose from 5.8 percent of federal spending to 11.5 percent. Right
now, Social Security at $334 billion and Medicare at $176 billion
alone account for 39 percent of non-interest federal spending
($1.3 trillion). The Congressional Budget Office (CBO) projects
that spending on Social Security and Medicare will grow from $510
billion to $719 billion, a rise of 41 percent, while the number
of beneficiaries will increase by about 7 percent.
Medicare Part A is projected by government actuaries to go
broke shortly after the turn of the century. These reports have
been surfacing in Congress for years, and like water in the
mailroom of the Titanic are considered unpleasant news, best
ignored for the time being or largely dismissed by politicians
traveling in First Class.
Likewise, the costs for Medicare Part B, which covers
physicians' services, is continuing to grow at a rapid rate, in
spite of all the ``cost-containment'' mechanisms (including the
RBRVS nonsense) that Congress has imposed. The Medicare price
control system has been an epic failure.
In a singularly powerful column, Robert J. Samuelson
(Washington Post, 3/8/95) notes that the biggest problem
facing Capitol Hill is an utter misunderstanding of the financial
dynamics of the program, particularly among the elderly. This is
borne out by public opinion analysts, who report that in general
the public doesn't even know the difference between Medicare and
Medicaid. Of all the federal programs that ought to be cut,
cutting Medicare gets the least public support. It is the
ultimate Sacred Cow.
Many of the elderly believe that they have paid for the
benefits that they are receiving. Not so, says Samuelson:
``New retirees will receive an average of $5 in Medicare
hospital benefits for every dollar they contributed, calculates
Guy King, former actuary of the Health Care Financing
Administration (HCFA)....We are a nation in denial. There's a
sanctioned avoidance of problems that almost everyone knows will
worsen with time. Spending on the elderly, though heavy now, is
not crushing. As the baby boom nears retirement, though, it will
become so....The real crusher is Medicare. Similar projections
show it is growing from 2.5 percent to 7.1 percent of GDP by
2030... To cover the increases-and the existing deficit-would
require that federal taxes be increased by about half. In
today's terms, that's a $650 billion tax increase.''
The case for a serious restructuring of Medicare is
building. Congressman Bill Thomas (R-CA), the new Chairman of
the House Ways and Means Subcommittee on Health, says he favors a
Medicare voucher option.
The President's position in the State of the Union address
was that he would ``protect Medicare'' from congressional budget
cutting. The Administration has recently gone farther than
simply arguing against spending cuts or even spending restraint.
Bruce Vladeck, administrator of HCFA, has made it plain that
vouchers are not even on the table as a viable option, from the
Administration's standpoint. AARP has vowed an all-out war on
any serious Medicare spending cuts.
Gingrich's ``rethinking'' initiative got an added boost from
Senator Robert Packwood (R-OR), chairman of the Senate Finance
Committee. He recently stated that restraint in the growth of
Medicare and Medicaid would have to yield approximately $400
billion over the next seven years if the budget is to be
Historically, Congress has addressed cost increases in
Medicare by freezes in payments to physicians and hospitals.
Less frequently, Congress has proposed changes in cost sharing
requirements for beneficiaries. Currently, in Medicare Part B,
the taxpayers, by law, fund up to 75 percent of the cost of the
premium. The original understanding, when Medicare was enacted
in 1965, was that the taxpayers would pay 50 percent of the
premiums. At the same time that the taxpayer share has
increased, Congress has imposed caps on deductibles, so that
these are dramatically different from the higher level found in
private health plans.
In other words, the Congressional ``cost-containment''
strategy equals cost shifting. The public is not likely to be in
the mood for even more cost shifting, once they understand the
ERISA: Fawell's First Step
Representative Harris Fawell (R-IL), has introduced the
``ERISA Targeted Health Insurance Reform Act of 1995'' (H.R.
995). This is likely to be the first in a series of incremental
While liberals in Congress are calling for a restrictions on
ERISA, Fawell is going in exactly the opposite direction. He
believes that ERISA has enabled private companies to pursue cost-
The bill seeks to broaden medical insurance accessibility to
uninsured families by removing state regulatory barriers and to
improve the purchasing power of employers by creating ERISA
Multiple Employers Health Plans.
The bill also includes provisions on portability,
limitations on preexisting conditions exclusions, guaranteed
renewability, utilization review, and fiscal solvency
As students of previous insurance reform proposals know, it
will be critical to pay close attention to the details.
Serious Spending Cuts
The new guys-at least the ones in the House-are serious.
One must appreciate the simple fact that for decades, the
Congressional appropriations process has been largely a federal
spending machine. Programs have been reauthorized by the House
committees of jurisdiction, and the House Appropriations
Committee routinely maintained or increased federal spending on
these programs without so much as a by-your-leave. The rosters
of public hearings were packed with advocates of higher spending.
Every program was increased based on its presumed goodness in the
perception of those who were served by it, including those who
gained politically by its continued prosperity.
Moreover, there is a general rule, studiously observed in
polite company, to use a special language for increases and
decreases-language that has absolutely nothing in common with the
ordinary meaning of language.
When little Johnny gets an increase in the allowance paid by
his taxpaying Mommy and Daddy, and the increase is 25 cents
rather than 50 cents, it is not likely that little Johnny will
explode in moral outrage over a cut in his allowance.
But official Washington is different. It is the only place in
the universe where a spending increase can, with a
straight and studiously anguished face, be called a
decrease, and where a growth in a program can
be called a cut if the growth is not as fast as somebody
thinks it should be.
It's as if the entire process had been on automatic pilot.
And for all practical purposes it has been.
But new members of the House seem determined to be impolite.
The House Subcommittee on Labor and Health and Human Services,
chaired by Ernest Istook (R-OK) cut 135 programs, amounting to
$5.9 billion in spending reductions. The total appropriations
rescissions amounted to $17.5 billion. This took nerve-although
it is but a small fraction of what needs to be done.
The National Health Service Corps has been cut by 10%.
According to the GAO, 7 percent of the students are in default
and 13 percent have met their obligations through financial
payment rather than service. GAO reports that HHS has no long-
term retention data to judge the impact of the program.
The Subcommittee voted to freeze spending for Rural Health
Research. The program ``provides no direct services to patients
and serves only to support state bureaucracies. Similar research
is also conducted at HCFA and AHCPR.''
The Subcommittee reduced by 25 percent the FY95 increase in
the ``Ryan White AIDS Care'' program, a savings of $13 million.
The Ryan White programs have already received $1.5 billion ($1500
million). The Public Health Service is spending $2.7 billion on
AIDS research and treatment in FY95, and overall the federal
government is spending $5.9 billion.
All $2 million of the FY95 funds to the HHS ``organ
transplantation'' program have been cut. This program does not
finance organ transplants. It supports a registry, a network,
and outreach activities.
All the remaining FY95 funds ($4 million) were cut from the
HHS ``trauma care'' program. This programs provides no direct
care to patients, but just funds state bureaucracies.
About $1.4 million will be saved by cutting the HHS ``health
data analysis'' program, which provided data directly linked to
the development of the Clinton health-care plan.
Botching Dr. Foster's Nomination
Please follow this carefully, using a Number 2 pencil:
First, the President's position on abortion is that it should be
``safe, legal, and rare.'' The First Lady's position, stated
shortly before the November election (possibly in another attempt
to reinvent the Administration's image) is that abortion is
morally wrong. As she remarked in an interview in the October
31st issue of Newsweek, abortion is ``wrong,'' but it
should not be ``criminalized.''
Next, the President announces his intention to appoint Dr.
Henry Foster to succeed Dr. Joycelyn Elders, who said that ``pro-
lifers should get over their love affair with the fetus.''
Then the White House Staff (the team that keeps repeating
that the Clinton health-care plan was ``mischaracterized'' as a
government-run system) tells Senator Nancy Kassebaum that Dr.
Foster performed one, and only one abortion. That might have fit
the pristine Clintonian ``safe, legal, and rare'' standard.
Then, well, it's not one, but maybe a dozen. Well, no, it's
not a dozen but maybe as many as 39. Meanwhile, reports surface
that it could be many more. (This kind of stuff dogged Senator
Joseph R. McCarthy in the 1950s: How many Communists did you say
were really in the State Department?)
Senator Barbara Mikulski (D-MD), staunch ``abortion rights
supporter,'' says that the kids on the White House staff
``botched'' the Foster nomination. Senator Joseph Biden (D-DE)
said ditto, and he won't vote for it. Later, he changes his
position. Senator Arlen Specter (R-PA), also an ``abortion
rights supporter,'' says that truthfulness is the issue. Ditto
Senator Dan Coats (R-IN), manifestly not an abortion
rights supporter. Ditto Senate Majority Leader Bob Dole.
In the meantime, White House Chief of Staff Leon Panetta,
whose visage these days seems to register a perpetual case of
indigestion, is forced to defend the White House on national
television. Dr. Foster did nothing wrong, and abortion is a
``legal procedure.'' This type of argument has remarkably low
political octane, probably not enough to power up the Foster
nomination. It is rather like saying that the sun is ``remarka-
The Washington Post reports that the ``pro-choice
community'' is outraged that the debate has been framed in a way
that suggests that abortion is ``somehow wrong'' (which is the
Hillary position, right?) Questioned by the national media, Dr.
Foster also says that he ``abhors'' abortion (also the Hillary
Realizing that this debate over the number or circumstances
of Dr. Foster's abortions is not productive, the White House
repositions itself for counterattack: Foster's opponents are
``extremists.'' In other words, focus attention on the
opposition, not on the subject of the controversy. Opposition to
abortion (the Hillary position on the moral but not the legal
plane) is not sufficient for characterizing one's opposition as
morally suspect. The real underlying opposition to Dr. Foster
is-of course-based on race.
Dr. Foster contributes immensely to the civility of the
debate by telling a Washington audience that ``white right-wing
extremists'' are opposing his nomination, meanwhile stating that
the reference to ``whites'' was a mere slip of the tongue (like
Meanwhile, new issues surface, including Dr. Foster's
sterilization practices and the extent of his knowledge about a
particularly unpleasant affair involving the nontreatment of men
Fascinating Senate hearing are slated for April. It may be
good competition for O.J. and his lawyers, all doing their best
to restore America's confidence in the legal profession.
(AAPS favors abolishing the position of Surgeon General, a
post now used primarily to lend medical credibility to Admini-
stration social policy.)