Specialized computer programs can be powerful tools, as in diagnostic imaging. But central data bases, with personal identifiers for each patient and ``provider,'' rigid, nuance- obliterating codes for diagnoses and procedures, and punish ment for noncompliance are useful for one purpose: tracking.
Diagnosis, once the purview of an intellectual elite, is being reduced to the least common denominator. A ``mid-level health care provider'' records a five-digit code from the updated ICD-9 coding manual.
``Administrative simplification'' is the order of the day. A computer checks the correlation of the diagnosis with the demographics and the procedure codes [never mind with the patient's actual pathology; we are shifting from a disease to a wellness orientation]. With a large enough (100% complete) data set, the tasks of ``continuous quality improvement,'' the identification of fraud, the profiling (and recredentialing?) of providers, the allocation of resources, ``outcomes research,'' and cost containment can all be efficiently accomplished.
``Administrative simplification''-a buzz-word of the Clinton Health Security Act-eliminates paper but increases data collection, by computer. And it's back, in the House version of Kassebaum-Kennedy. Capitol Hill staff have assured AAPS representatives that the bill would not force physicians to place all patient records on a central computer, but would simply standardize electronic data transmission.
The bill does not set privacy standards Congress learned the difficulty of this task during the debate over the Bennett bill (see AAPS News Jan, Feb 1996). Instead, it states: ``The Secretary [of HHS] shall adopt standards with respect to the privacy of individually identifiable health information...'' (In conference, ``adopt'' may be changed to ``recommend.'')
The reach of ``administrative simplification'' is very broad, including``any information, whether oral or recorded in any form or medium that...is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or clearinghouse.'' The transactions to be ``simplified'' include claims, eligibility, enrollment, payment, and ``referral certification and authorization.''
The method is to establish codes and identifiers: ``The Secretary shall adopt standards providing for a standard unique health identifier for each individual, employer, health plan, and health care provider for use in the health care system.''
The standards are supposed to facilitate electronic data transfer by those who choose to utilize this method. However, these standards differ from those of the computer industry. The penalty for not using ``HTML'' language on the Internet is that you can't communicate. The penalty for violating a provision of ``administrative simplification'' is $100 per instance except that ``the total amount imposed on the person for all violations of an identical requirement or prohibition during a calendar year may not exceed $25,000.'' If failure to comply was due to inability to comply, the Secretary ``may'' provide assistance over a certain period.
According to the Health Law Institute of Boston, the ``simplification'' process will ultimately use the Social Security number, enabling all health information held anywhere in the country to be cross-referenced with other information, ``tracked,'' and assembled into a cradle-to-grave record.
Those incapable of computerizing the data themselves will have to turn it over to a ``clearinghouse,'' such as Equifax, IBM, or TRW. (Note that Working Group 10 in the Clinton Health Care Task Force concerned Information Systems.) Data can then be disseminated nationwide and internationally, ``to cooperate with national committees of other countries and with the World Health Organization and other national agencies in the studies of problems of mutual interest'' (253).
As advertised, it is administration, not diagnosis, not medicine, that is to be simplified - thereby enabling more efficient central planning, law enforcement, and lifelong tracking of immunizations, educational achievement, fraudulent practice, compliance with practice parameters, public health risks, medical expenditures, and everything necessary to the ``Healthy People 2000'' program.
This program, a federal initiative ``formed in the late 1970s to guide public health into the 21st century,'' has a Data and Surveillance Systems component that is now ``getting a boost from high technology.'' Many hospitals have already been implementing the program, for example, the WCA Hospital in Jamestown, whose CEO writes: ``The Integrated Clinical/ Hospital Information System is still very much a high priority for us. Within a couple of weeks we will have on line a physician specific data set....'' All this is part of a strategic ``integration'' strategy. The hospital has been very secretive, for all the pretensions of medical staff involvement, especially about the computer network and the intended uses of the data.
Talk about this strategy is pervasive. One attractive presentation is the lead article in a glossy new ``lifestyle'' magazine, Lake Erie Chautauqua, contributed by Dr. Lawrence Huntoon: ``For the Common Good: Creating a Healthy Community.'' The main themes are ``common vision,'' ``collaboration,'' ``universal health care,'' ``cost containment,'' and ``integrated health networks.''
``They talk about `an organizational philosophy that makes the health of the community the center of everything we do','' Dr. Huntoon observes. ``Note how the individual patient is no longer the center of our concern.''
AAPS has contacted dozens of congressional offices and professional committee staffers. Staffers claim that the intented target is not physicians who make errors, but repeat offenders showing a pattern of abuse. It remains to be seen whether the final language will reflect their expressed intentions. We and others have been assured that there will be a ``knowing and willful'' standard for criminal convictions. However, it appears that civil monetary penalties will still be increased from $2,000 to $10,000 per item, and the standard of proof for civil penalties will probably be to show that the doctor ``should have known.'' While that might be defined to mean acting in ``reckless disregard of the truth'' or in ``deliberate ignorance,'' these terms are also subject to interpretation. Does failure to read every paragraph in Medicare carrier bulletins constitute ``deliberate ignorance''?
At least as serious are the problems with ``administrative simplification'' (see p. 1), which AAPS is also emphasizing in congressional meetings.
The best possible fate for Kassebaum-Kennedy, in our view, is oblivion. Without a strong MSA provision, it perpetuates the cause of the portability problem-the tax code, which drives most Americans into expensive employer-provided ``insurance'' (pre- payment) plans.
AAPS recommends that Congress should investigate the relationship between fraud and the assignment of benefits. A 1993 study by the Health Insurance Association of America determined that 43% of cases of provider fraud were billings for fraudulent diagnoses or dates; 34% were billings for services not rendered, and 21% were for waiving deductibles and copayments. Thus, the vast majority of fraud results from direct payments to providers instead of to beneficiaries. Congressmen have been quite receptive to this idea; remind them at every opportunity.
Managed Care and Patients' Rights. At hearings on managed care before the House Commerce Committee Health Subcommittee, AAPS distributed results of our recent member survey and copies of the Patients' Bill of Rights. Alan deMeurers (whose wife died after her HMO denied a bone marrow transplant) testified on behalf of AAPS, bringing a patient's view to CNN, C-SPAN, and the Congressional Record. Rep. Linda Smith (R-WA) has written the Patients' Bill of Rights into a congressional resolution. AAPS has also written a national disclosure bill similar to that passed in Washington State with the help of the state chapter.
The AAPS Patient's Handbook has been quoted in Forbes (Brigid McMenamin, ``It Can't Happen Here,'' May 20, 1996) and Consumer's Research magazines and mentioned on dozens of radio talk shows, reaching several million people.
Other AAPS media and educational efforts include public service announcements; a debate between media consultant Kathryn Serkes and managed-care executives on the Jim Bohannon Show (carried on 400 radio stations); a feature story in the September issue of Glamour magazine; and contributions to an ABC Prime Time Live program on managed care in July.
Privacy. AAPS presented testimony for the record on a draft version of the Health Information Protection Act, proposed by Rep. Steve Horn (R-CA). Concerns include: the creation of a new entity called a ``health information trustee''; the potential for converting the medical record into a tool for coercive social engineering and law enforcement without the patient's knowledge or consent; loss of the right to sue for damages due to the disclosure of protected information; and criminal and civil pena- lties disproportionate to the offense.
A copy of the testimony is available on request (call 800- 419-4777) or at the Internet address above.
Of 520 AAPS members responding to our recent survey, 92% said that they would prefer not to accept managed care.
Of the 284 physicians who do have some managed care contracts, only one physician said that he believed in the concept. The rest joined plans because their patients joined (51%); their group or hospital forced them (32%); or they felt it was necessary for economic survival (61%) [some gave more than one reason]. Of the 206 physicians who stated they do not contract with managed care, 52% said it interfered with the patient-physician relationship, 35% objected to the bureaucracy, and only 26% stated that the rate of payment was too low.
About 41% of respondents also belong to the AMA, and 75 and 76%, respectively, to state or county medical societies. The AAPS was selected by 89% as the society that best represented their interests; only 3% chose the AMA.
Regarding positions taken by AAPS, 41% were supportive ``always,'' 57% ``usually,'' and 0.8% ``sometimes.'' Regarding positions taken by the AMA, 2% were supportive ``always,'' 13% ``usually,'' 72% ``sometimes,'' and 8% ``never.''
Asked why they left the AMA, 220 physicians wrote in a response. The most common reasons: ``the AMA doesn't represent me'' (72); ``AMA support of government-controlled medicine'' (35); and ``AMA support of abortion'' (22).
National security and law enforcement officers are gravely concerned about America's vulnerability to terrorist strikes against our computer networks, on which we are far more dependent than any other nation. Chaos could result from disabling 911 phone service, rerouting trains onto collision courses, wiping out bank records, collapsing power grids, disrupting oil and natural gas pipelines, and commandeering broadcast channels to deliver threats. The Defense Information Systems Agency has estimated 250,000 attacks by hackers on the Pentagon's unclassified systems in 1995, and 160,000 successful entries (USA Today,, 6/5/96).
On June 10, Senators Graham (D-FL) and Baucus (D-MT) introduced the Medicare Anti-Fraud Act of 1996 and the Medicare Restore Trust Act of 1996, seemingly motivated by the impending bankruptcy of Medicare. Predictably, they increase penalties in current laws and enhance the investigatory powers of government. Centralized data base collection is key.
Maryland physicians plan to make another attempt, in the next legislature, to pass a consent requirement for data collection by the Health Care Access and Cost Commission (HCACC), the effort having failed this year (see AAPS News May 1996). Jennifer Katze, M.D., who chairs the Ad Hoc Committee on Privacy and HCACC Consent of the Maryland Psychiatric Society, reports:
A 1993 study by Equifax determined that US citizens hold privacy as a much higher priority than cost containment; 96% ranked privacy as a foremost concern and felt that current trends in data collection unjustifiably jeopardize that liberty. In a separate Time/CNN poll, 87% of Americans responded that patients should be asked for permission every time any information about them is used.
``HCACC has shown a disinclination for the public to be aware of this massive data base,'' Dr. Katze states, ``and remains distressed about the publicity it is receiving.''
HCACC's legislative memos have been misleading, she notes. For example, HCACC calls the data collection ``anony mous,'' when the proper term is ``encoded,'' the realistic corollary being that the information can be decoded. HCACC states that there are legal penalties for deliberate breaches of confidentiality, but the Medical Records Act cannot be used as the basis for an action for damages against HCACC itself, according to a March, 1996, opinion from the Attorney General. HCACC's own security plan, in its first and only publicly available draft, recommends only counseling for an employee's unintentional breach of confidentiality, even though a patient could be irreparably damaged.
As a result of legislative pressure, HCACC made the concession of deleting the actual date of birth from the records, retaining only the month and year. Yet computer experts testified that the change meant that it would take only a fraction of a second longer to achieve electronic decoding.
It is claimed that the data are needed for research and planning. Yet despite the significant error rates in such data, HCACC has no plans to verify data and correct errors. Further, the data are skewed from the start by HCACC's decision to omit data on primary care delivered under capitated arrangements.
For further information, contact Dr. Katze at (410)823- 3031 or the Maryland Psychiatric Society at (410)625- 0232.
Planks from the Communist
Of note, Ohio had amended the statute that previously permitted balance billing for those beneficiaries with family incomes greater than 600% of federal poverty levels.
The Court did recognize the right to private contract outside of Medicare under the Ohio statute, without making an interpretation of the federal statute: ``[T]he statute now makes plain that it only applies once a Medicare claim has been filed, and that it imposes no independent requirement of filing a claim; if no claim is filed, the Ohio prohibition on balance billing is simply not activated.'' And, ``any such [claims filing] requirement is imposed by the Medicare Act itself, not by the Ohio balance-billing ban.''
The court also found that ``the constitutional right to privacy does not extend to protect the plaintiffs' desire not to disclose their private financial information under these circumstances.'' Furthermore, it considered price controls to be a valid use of the state's police power because ``we think a health provider's billing practices are inextricably linked to public access to medical care-that is, public health.''
Discount airfares: Alaska: call your travel agent or 800-445-4435 refer to meeting ID number CMR 1662 Delta: call Chris at Arizona Travel, 800-553-5471
In the first conviction of its kind, Blue Shield of California agreed to plead guilty to three felonies and pay a fine of $1.5 million. Employees in the Medicare division concealed evidence of claims processing errors by altering or discarding documents, replacing documents with corrected and backdated documents, and ``structuring'' supposedly random samples to exclude erroneous claims. The fine, the maximum allowable by law, is less than 0.63% of the payments (more than $40 million/yr) received during the period of illegal activity (1988- 1994). Blue Shield continues to have a good working relation ship with HCFA and has been awarded a contract to offer an HMO product to senior citizens (BNA's Medicare Rpt 5/3/96).
According to Ms. Dunphy, ``This is a major initiative of HCFA to develop a better tracking system, obtain information about all physicians and providers of medical services and hopefully reduce the potential for fraudulent practices.''
Physicians, who have committed no crime other than the practice of their profession, will be treated much like parollees under this new tracking system. Ms. Dunphy also let it slip that ``many other insurers will also begin to use this single number to simplify your office billing practices.''
Some Medicare carriers are offering ``free'' software and
``connection to a medical link clearinghouse at no cost.'' I, of
course, have irreverently declined.
Lawrence R. Huntoon, M.D., Ph.D.
Master Politician. In the 1960s, social engineers led by Edward Kennedy were invited by their counterparts to tour the province of Ontario. In a series of meetings, some televised, they extolled the virtues of their newly designed medical miracle called Medicare. The citizens of Canada, we were told, deserved no less. Entranced by the propaganda, we allowed full medical socialism to sweep the country by storm.
Twenty-five years later, Canada's system is broke and imploding. Even severe rationing and a national sales tax failed miserably, and in a desperate move social engineers introduced and passed Bill 26. This permits bureaucrats to force doctors to reimburse government for ``medically unnecessary'' treatments, suspend payments to doctors during investigatioins, revoke hospital privileges, and publicize the names of scofflaw doctors, all without an appeals process. You get the idea. And so apparently did the crafters of our new Kassebaum-Kennedy bill. It seems the Canadian students have now become the teachers. Senator Kennedy is still the master craftsman.
Bill 26 and the KK bill are so similar that collusion
between U.S. and Canadian bureaucrats is a foregone conclu
sion. Perhaps we should pay more attention to the players in
Ottawa to learn the latest socialist games in Washington.
Unless stopped, the best is yet to come.
Calvin S. Ennis, MD., Escatawpa, MS
Power of the Tax Code. In a totalitarian state, the government enforces unpopular public policies through fear of the police state. In a democracy, the politicians use the income tax code to enforce the same misguided policies. Karl Marx understood this. The second plank of his Communist Manifesto calls for a heavy progressive or graduated income tax (see p. 3). Our founding fathers also understood this, and that is why the original U.S. Constitution forbids an income tax.
The income tax is anti-savings; this impacts working families most severely. An average family with a gross taxable income of $40,000 faces an income tax rate of 28% ($11,000), plus a payroll tax of $3,000, leaving a disposable income of $26,000. However, the actual cost to the employer is $52,000 (``employer's share'' of the payroll tax $3,000 plus $5,000 in job-based medical insurance plus $4,000 in job-based retire ment). Thus, the average worker only receives half of what he earns. A worker who could save half of what is taxed away during 40 working years would retire a millionaire.
The key to true reform is to repeal the 16th Amend
Bert A. Loftman, M.D., Atlanta, GA
Physicians Will Resign. The Kennedy-Kassebaum
measures to prevent fraud and abuse are so arbitrary and
unreasonable that it is truly unbelievable for Congress to
consider them. If this bill becomes law, many physicians
(including me) who have had led honest and decent lives would
resign from Medicare rather than submit to its humiliation.
Such Draconian measures ultimately undermine people's faith
in the fairness of the government....The law that was passed to
prevent abuse and fraud will someday become the instrument
of abuse and fraud against the very people it was supposed to
K.P.S. Kamath, M.D., Cape Girardeau, MO
Oct 10-12. 53rd annual meeting, La Jolla, CA.
Sept 17-20, 1997. 54th annual meeting, Chicago, IL
A split is developing in the Democratic ranks on this issue. Senators Paul Simon and Carol Moseley- Braun have been critical of Kennedy, without naming him, noting that MSAs passed the Illinois state legislature unanimously two years ago, and similar legislation passed in 18 states. Likewise, 24 Democratic members of Congress have sent a June 21st letter to President Clinton asking him to accept the compromise hammered out by the House members:
In a Workplace Pulse Survey conducted on May 20th by the Marketing Research Institute for Colonial Life and Accident Insurance and the Employers Council for Flexible Compensation, 87% of the respondents said that Congress should allow MSAs to be tax free, and 83% think that the government fails to give sufficient breaks to workers to encourage them to provide for their future health care needs. Moreover, about 40% of full-time workers would be likely to change jobs if Congress passed legislation guaranteeing portability in health insurance, which is why Kennedy Kassebaum was taken up in the Senate and the House in the first place. This ``man in the street'' sentiment is going to be tough to overturn in a full-scale debate after the bill is vetoed by the White House that promised Americans health care reform. When ordinary folks think about health care reform, they think about portability and getting and keeping private insurance, not something that looks like Hillary's charts and graphs, the blueprint for an East German processing plant.
Why then is Kennedy being so stubborn? The reason: MSAs are the chief obstacle to a national health insurance system, something that Senator Kennedy now and forever has always wanted. On the other hand, a bill without serious tax changes, giving individuals and families direct tax relief for the purchase of medical services, coupled with an even heavier regulatory regime over the insurance market, is just the recipe for the glacial movement toward a Canadian-style national health insurance system. Don't take our word for it. Listen to Senator Kennedy himself, who is candid and clear about the long-term strategy. As quoted in the July 1st edition of the Wall Street Journal, Senator Kennedy said:
So, remember the stakes of the big debate. For the liberals, ready to risk the public outrage and political fallout that will come over killing a portability bill, there is a method to this madness.
They have The Formula: load up the system with regulations and mandates that drive costs up. Then, complain about how private health insurance cannot control costs. Argue for price controls and, after that ancient fraud fails, as it has for precisely 40 centuries now, then push for a ``comprehensive'' solution: Single Payer. That's the game plan. Kennedy clearly understands the stakes of the game.
Too many Congressional Republicans, prattling on about portability and administrative simplification and the market effectiveness of the private corporations, never did, and still don't, have a clue what this fight is about. Indeed, the continuing ``health care reform'' debate resembles a gigantic World War I style trench warfare, with huge legislative battles and heavy political casualties on both sides. The damaged terrain is strewn with studies and reports and rhetorical talking points, with shell-shocked budget analysts wandering aimlessly over the landscape. Most of the combatants really don't know what the fighting is really all about. They are clueless. Some think its about ``portability''; others think its about ``guaran teed issue''; some think its about ``cost control''; and yet others, when the trench whistle is blown, and they are ready to go over the top, think that they are about to give it all they got for the good of medicine. These are invariably the doctors, the real innocents abroad, who somehow would like all the unpleasant political fighting to stop, and the policy wonks to shut up and go away, so they can go back to doing what they would like to do and do best: and just take care of patients. That's what it should be all about, but it's not.
The general staffs on both sides of the trenches know, however, what the seemingly endless fighting is all about, and they both have clear objectives. The advocates of socialized medicine are clear about what they want; every health care reform measure is to be checked and rechecked, carefully calibrated even, as to whether it brings them closer or further away from the Canadian Paradise of ``free care'' for all. The ``free marketeers,'' who periodically fight with each other over trivialities or even obscure points of doctrine that ordinary folks neither understand nor would care about even if they did, want an end to the gross market distortions created by Congress and sustained by the corporate controlled health insurance market, now controlling health care costs through a systematic reduction in employee compensation and a ``managed care'' rationing of medical services.
At the end of the day, there is no compromise between the two general staffs. That is why the politics of health care will turn increasingly bitter and why increasingly, the politics will become, ever more obviously, a zero-sum game for the contestants.
The battle is wearing the contestants down. If you follow the behavior of House members, once regarded as tough conservatives, they have been surrendering to their Senate colleagues on the installment plan. They have given up on medical malpractice relief for physicians. They have given up on the small-group market insurance reform, the multiple- employer welfare arrangements, and the option of association plans for small business, and they have watered down their original MSA proposal substantially. The last offer was a proposal to restrict the MSA to firms of 50 employees or less and then make it a demonstration program rather than a real step for real tax equity. Worse, the latest discussions included a proposal to load up the MSAs with so many qualifiers and conditions that they would be rendered virtually useless.
More and more conservatives on Capitol Hill are coming to the conclusion that the House Republicans may have already gone too far, bending over backward to get a bill. And many are concerned that Senator Nancy Kassebaum and her Senate colleagues, who out of collegial affection are desperate to get a bill passed with her name on it before she leaves her Senate seat, will come back once more, asking for another round of concessions to the Kennedy team in the Senate, and the ever undependable Clinton White House.
The White House, shell-shocked by the ongoing White- water mess and the latest round of inquiries into why they had the FBI files of 700 Reagan and Bush personnel, is a protean thing. One can depend on the message to change according to the broader political fortunes of the chief. Now, for example, the White House team is saying that they are not in principle opposed to MSAs as long as they are structured in such a way that they can't really accomplish what they are intended to accomplish in the first place. It's like the vaunted end of the era of Big Government.
Kennedy's strength in the process has been directly aided by the divisions among his chief Congressional opponents, divisions among Republicans in the Senate and divisions between the Senate Republicans and their House counterparts. The White House does not want to sign a bill with a strong MSA provision, and they have the luxury of depending on Senator Kennedy to do the job of killing the accounts, and the bill itself, if that is what it takes. As noted, Senator Kennedy, like so many liberals in Congress, wants a single-payer system, along a Canadian-style model, and they are not prepared to erect a middle class tax break, like MSAs, that will render the imposition of a Canadian-style system a political impossibility.
The conservatives in the House are also being pressured by the MSAs-At-Any-Cost Caucus, who see the Medical Savings Account as the next best thing to 5-cent beer, and are willing to put up with just about anything that liberals will impose on the final version of the bill if they can get their free-market foot in the door. From the standpoint of conservatives in Congress, the longer the unofficial conference between House and Senate drags on, the more the bill is becoming the equivalent of a classic Nothing Burger.
Congress can, of course, keep putting off the day of reckoning by putting clamps on Medicare spending, which simply shifts costs into the private sector, assuring that taxpayers pay three times for Medicare instead of only twice. However, no one has devised a policy to make the population younger. And partisan rhetoric to the contrary, the official recommendations on Capitol Hill are modest. Nobody has proposed cutting back the actual amount spent on Medicare (just ``cuts'' in the rate of growth) or a change in the inher ently inefficient structure: an open-ended federal entitlement.
It would help to reduce the burden of waste and fraud, which GAO estimates to constitute about 10% of the cost (about $18 billion). More regulations are not the answer; the system already labors under 22,000 pages of rules, regulations and guidelines. Neither is the Kennedy-Kassebaum method that includes rewards to informants who report fraud. Just what the system needs: more Keystone Cops. The real answer is to change the incentives in the system, bypassing carriers and providers and giving benefits directly to the beneficiaries.
The longer a solution is delayed, the worse the ultimate outcome will be. When the trust fund starts to bleed, it will turn into a hemorrhage. The deficit in 2005 would accumulate to over $400 billion, and would rise at a rate of $100 billion per year. According to the Trustees, the cost of bailing it out then will be about $4000 in new taxes annually for every American household. In Medicare Part B, the fiscal situation for taxpayers is actually worse. By 2005, taxpayers will be paying 84% of the total costs, and the cumulative taxpayer subsidy between 1996 and 2005 alone will reach $950 billion, or roughly $10,000 in taxes for the average household.
How are we going to pay for this? Hillary should ask Eleanor Roosevelt.
Where would retirees be without Medicare? If the average income earner invested his $1,000 annual Medicare payroll tax at a return of 7%, it would compound over 40 years to give a capital accumulation of $200,000-four times the average Medicare per capita hospitalization expenditure.
To see the full dimensions of the rip-off, add in the retirement and disability portions of the tax. Investing the entire 15.3% payroll tax over an entire working life would produce a nation of 100 million millionaires (Paul Craig Roberts, Business Week 5/27/96).