Volume 53, No. 8 August 1997


A Grand Jury indictment handed down this summer for mail fraud (penalty: 5 years imprisonment and/or $250,000 fine) and CHAMPUS fraud (penalty: 5 years imprisonment and/or $250,000 fine) reads as follows:

``Between 1989 and February of 1996, the defendant ***, a physician and health care provider specializing in family or general practice, was a physician civilian partner providing health care services to military dependants and military retirees....During the period of indictment, a provider who spent approximately 5 minutes with an established patient with a minimal problem claimed reimbursement under CPT Code 99211; approximately 10 minutes of ``face-to-face'' time with an established patient with a minor problem claimed reimbursement under CPT Code 99212; [etc. for codes 99213, 99214; 99215; 99201; 99203; 99204; 99205].

``Health care providers seeking compensation for services rendered to CHAMPUS must be able to document that the care or service shown on the claim was rendered....

``Between August of 1992 and February of 1995, the defendant, ***, devised and intended to devise a scheme or artifice to obtain money or property by means of false and fraudulent pretenses and representations, that is, in order to increase her compensation from the government, the defendant would submit CHAMPUS claims,... well knowing that the code number applied to the claim corresponded to a time unit in excess of the time actually spent with ... the patient....

``[T]he defendant, ***, for the purpose of executing the scheme and artifice ... did place, or cause to be placed, in the *** post office or depository thereof, letters or other mail matter containing false and fraudulent claim forms....''

Could your name be placed in the blanks, Doctor?

Upon receipt of the indictment, the defendant protested that it was not lawful to indict her without so much as an interview. Therefore, an interview was granted, during which law enforcers nodded and smiled as the physician explained her rationale for coding, with reference to the CPT coding manual. Time is not the controlling factor for ``E&M'' codes; complexity of the service is. Despite the defendant's perception that the interview had gone well, she promptly received a letter stating:

``After careful consideration of Dr. ***'s explanations, I find that I do not find them credible. If anything, the meeting confirmed to me that Dr. *** systematically inflated CHAMPUS billing claims. Regardless of her style of practice, she provided no reasonable explanation for how she could legitimately bill the government for 15 to 24 hours of ``face-to-face'' time per day....It is unfortunate that an otherwise capable doctor could become involved in such dire circumstances, but we have no real choice but to continue with the prosecution.''

The defendant was a very popular physician at the military base, seeing 35 to 40 patients per day (efficiently) and performing many procedures. Her monthly evaluations with her superiors, which included a review of billings, were very favorable. But one day, an active-duty military doctor turned her in. This doctor was seeing 8 to 10 patients daily while the defendant's waiting room overflowed.

The subpoena was delivered to the doctor's home at 8:00 p.m. on a winter evening by FBI agents in ``trench coats and gun belts.'' Her children were terrified. The doctor wisely declined to be ``interviewed'' without counsel. She delivered a truckload of charts covering about 65,000 office visits over 8 years of a busy practice. For a year and a half, the government reviewed records, which are still unavailable for patient care.

After the FBI came to her door, the doctor gave notice at the military base and was terminated immediately. Patients followed her to her new private office.

The defendant is threatened with delicensure, fines, imprisonment, and loss of her husband's farm, which he ``built up from scratch.'' The government, by the way, knows how many cows he has. She will be arraigned soon.

This case is but one of a number that have come to AAPS attention in recent weeks. Other situations in which physicians, if convicted, could be imprisoned include:

AAPS can provide limited legal consultation for member physicians targeted by such actions; amicus briefs, especially where constitutional issues are involved; and possibly expert witnesses on coding issues. We continue our efforts to make Congress aware of the consequences of ``anti-fraud'' legislation. We expect a rapid increase in the number of indictments as a consequence of the huge increase in prosecutorial funding included in Kassebaum-Kennedy.

What can physicians do? Will they avoid the essential factor that triggers these prosecutions? That factor is: acceptance of taxpayers' (or even of insurers') money.

When a physician files a claim, his signature makes that c laim form the equivalent of a sworn statement that he has examined the codes and knows that they are all accurate.

Given the ambiguity and complexity of the codes, is it possible to file a claim without telling a lie?

Can a Farmer Be Jailed for Refusing to Lie?

One day in 1990, a member of the Lapp family, who was in charge of filing employment forms, posted the form on the dining room bulletin board with a sticky note reading ``The Lie.'' She said she wouldn't sign it. None of the other business partners in the family were willing to sign it either.

The Lapps had achieved the American dream of owning their own farm in 1971, after a decade of hard work as sharecroppers and migrant laborers. That farm could now be seized by the IRS and the Lapps imprisoned. They do not believe this sacrifice would be too great ``for the freedom of heart in knowing that we can face God and man with this saying: `We have lived the truth'.''

The Lapps are not tax protesters. ``In the 25 years since we moved to our Cassadaga farm, we have paid, in school and property taxes, more than ten times the amount of the initial purchase price for our farm. In the 19 years we filed income tax forms, we sometimes received more money back in refund checks than we paid out. We returned the checks, or didn't cash them, because we do not believe it is honorable to receive money from the government.''

As the Lapp family grew and their business expanded, forms and record-keeping became unbearably burdensome. Finally, it became literally impossible to give a ``true and complete statement of all salaries, wages, and earnings,'' including any exchanges of ``produce, eggs, milk, ... and the value of meals and lodging.'' The Lapps believe in sharing (``bartering'') with family or anyone in the community.

Further, writes Susan Lapp, ``we could not accept being forced into being agents of the government who were required to enforce IRS and Labor Laws that were both heartless and unprincipled....[B]y our voluntary compliance to nonsense, we would only be strengthening these cruel and mindless government forces.''

An action against the Lapps was initiated in 1996 by Douglas Stelmach, an IRS officer. The Lapps believe they owe no taxes but refuse to complete forms. The Lapp family held a public forum on June 20, 1997, attended by more than 100 concerned citizens. Invited public officials, including Douglas Stelmach, declined to attend. [A copy of the remarkable testimony by the Lapps is available on request from AAPS.]

``I'm going to tell you what my public forum is...I'm referring you for a date in federal court,'' said Stelmach.?

To the Lapps, the issue is not money, but freedom. The threat is monopoly government. The strategy for overcoming it does not involve hate or a militia. Jacob Lapp writes:

``Stop thinking and acting as if there were nothing to do to stop this monopoly man's destructive rampage. There is. I do not ask that you hurt him. That would be too close to condescending to his level. I do not ask that you vote him out of office. That would be futile; as long as that office remains, there would be someone like him to fill it. I ask that you seize the moral high ground by expressing no malice toward him. He may well be thinking he is doing the right things.

``I ask that you withdraw the support that he stands on. He will then topple of his own weight and bruise his big nose....I ask that you help me paint him in his true colors...

``I and my family will be free and so will you.

``Until then...the productive sector of society will walk around on their knees, saying `Daddy, may I?' ''

Jacob Lapp refused to appear in court on June 26.

The normal procedure is for the judge to issue a bench warrant for the arrest of a defendant who fails to appear. As yet, the judge has not done so. Instead, he demanded that the IRS meet with the Lapps to work things out.

The Lapps have no firearms; still, the IRS refused to meet with them without an armed guard. A public meeting place is being arranged.

Action Plan for the Month

CALL House members and conference committee members today; urge them to support seniors' right to contract privately with physicians. See enclosed Legislative Supplement and Action Alert.

Nominating Committee Report

Nominations for 97/98, to be presented at the 54th annual meeting, are as follows:

President: V.L. Goltry, M.D., of Boise, ID
President-Elect: James Weaver, M.D., of Durham, NC
Secretary: W. Daniel Jordan, M.D., of Atlanta, GA
Treasurer: R. Lowell Campbell, M.D., of Corsicana, TX.
Directors: John Boyles, M.D., of Dayton, OH; Dexter Blome, M.D., of Zanesville, OH; Nino Camardese, M.D., of Norwalk, OH; Robert Cihak, M.D., of Aberdeen, WA; Robert Gervais, M.D., of Mesa, AZ; Don Printz, M.D., of Lilburn, GA; and Robert Urban, M.D., of Belle Vernon, PA.

Errors and Fraud at the IRS

Critics allege that the IRS cheats on audits, probably more often than Americans cheat on their returns, making more than 10 million unjustified demands each year for additional payments or penalties. If an IRS employee misrepresents tax law in order to commandeer more money, he can get a bonus. The IRS is immune from legal liability for errors or abuses (Wall St J 4/11/- 97). More aggressive tactics are needed for collections as the tax burden increases. An average household earning $35,000 to $45,000 per year pays more than $19,000 in total taxes-$5,000 more than they pay for food, clothing, and housing combined. That is why so many households need two wage-earners to make ends meet.

Tax policy analysts also charge the agency with major incompetence. The error rate in processing claims is a staggering 20%. The agency has allegedly ``misplaced'' 6,400 computer tapes, each containing thousands of taxpayer files (Investor's Business Daily 4/11/97). The GAO is unable to track the path taken by $1.3 trillion collected in 1995 from IRS Service Centers to the Treasury (USA Today 3/6/97).


If this nation is to be preserved..., then the vast apparatus of bribery and coercion we call the federal government must be reduced to its dimensions of 60 or 70 or 100 years ago. We have all been corrupted by government, but there remains a militant minority that is convinced that we could solve our problems, if the federal government would only stay in Washingon, D.C.

Thomas Fleming, Chronicles, August 1995

P‚rez Requests Rehearing

In sustaining the conviction of Edgardo P‚rez-DeLeon under the Michigan False Claims Act, the Michigan Court of Appeals (171788) assumed the truth of a prosecutorial theory different from the one argued in the lower court (Case No. 92-64429FH, see AAPS News Oct '94, Feb '95, Feb '96). Mr. P‚rez was convicted of using the code for office visit for services that did not include a physical examination (despite evidence from coding manuals that Mr. P‚rez's interpretation of CPT codes was quite legitimate). However, the appeals court judges stated that the convictions were for ``office visits when patients were not in the office.''

Mr. P‚rez filed a petition for rehearing on the basis that the Court's opinion was based on a palpable error: ``This Court incorrectly has assumed that the patients were not present when in fact [they] were present and no untainted evidence to the contrary [was] presented at trial.''

If the new prosecutorial theory were correct, the prosecution would have had 1,345 potential res gestae witnesses. Of these, the prosecution called exactly one (1), and she testified that she had come to the office to bring a form.

Mr. P‚rez argues that his constitutional rights were violated in that he was not notified of the charges against him prior to trial. Moreover, he states that the prosecution maliciously concealed exculpatory evidence.

Krizek Case Remanded

On appeal to the U.S. Court of Appeals for the D.C. Circuit, a civil suit brought against Washington, D.C., psychiatrist George Krizek, M.D., under the False Claims Act (1997 WL 215996 (D.C.Cir.)) has been remanded to District Court to recalculate damages. (See AAPS News Oct '96).

The government contended that each CPT code should be treated as a separate claim, leading it to seek ``an astronomical $81 million worth of damages for alleged actual demands of $245,392.'' The Court ruled that one ``claim'' consists of one HCFA 1500 form.

For psychiatric codes, time spent with patients is a key issue. Mrs. Krizek ``made no effort to establish how much time Dr. Krizek spent with any particular patient.'' Dr. Krizek's failure to review bills submitted on his behalf was ruled to be ``reckless disregard.'' The Court observed that ``an FCA violation may be established without reference to the subjective intent of the defendant.''

Dr. Bartz Sues Attorney General

Two years after a raid on his office, Nicholas Bartz, D.O., was cleared when a judge ruled that the ``insurance fraud'' case against him was so flimsy it should never have been brought to trial. He was accused of unlawfully billing for a joint ``aspiration or injection,'' when he had only done an injection, and of not spending enough time on an osteopathic manipulation (for which time is not an issue). The alleged amount of fraud was less than $300, but the proceedings cost the accused physician hundreds of thousands of dollars in legal fees and lost work.

Dr. Bartz has filed suit against Michigan Attorney General Frank J. Kelley and Blue Cross & Blue Shield of Michigan, alleging malicious prosecution.

The investigators seized dozens of patients' records, far more than authorized by the search warrant, and have yet to return them or to release copies. Patients are concerned about loss of confidentiality as well as their ongoing care.

Prosecutor Misuses Seized Funds, Kills Himself

Somerset County prosecutor Nicholas Bissell apparently based decisions about targets for investigation and prosecution on the amount of money that could be seized from them. A narcotics detective quoted him as saying: ``The kitty is getting low. Go out and find some money cases.''

Over a five-year period, Bissell reportedly misused $1.5 million of the $3.2 million seized, as on improper bonuses rather than law-enforcement efforts.

While awaiting sentencing on a federal conviction for fraud and tax evasion, he fled New Jersey. When caught by federal marshalls in a Nevada hotel room, he shot himself.

``I can't do ten years,'' he said (NY Times 6/18/97).

FDA May Seize Lasers

For two years, 15 ophthalmologists, members of the Society for the Advancement of Laser Technology, have negotiated in good faith with the FDA, expecting approval of imported Summit 801(e) excimer lasers used for refractive surgery. These are virtually identical to approved models (from which Summit Technology can extract higher profits).

Then the FDA suddenly did an about-face, leading to the suspicion that ``the whole negotiation process [was] a cruel hoax by FDA to flush out any unidentified physicians using 801(e) excimer lasers.'' SALT claims that the custom lasers the physicians are using are safer than the approved devices.

The arbitrary actions of the FDA suggest corruption and influence pedaling by vendors seeking to monopolize the excimer laser market. The FDA is, in effect, seeking to micro-manage the practice of medicine.

SALT believes that a court challenge is winnable, but it would be extremely expensive.

Not a Scheme to Defraud?

ABC News recently reported that the centralized Medicare electronic claims processing computer is $65 million over budget, still doesn't work right, and will need another $65 million to fix. (Meanwhile, HCFA has spent 7 months and thousands of dollars arguing over the use of code 99223 vs. 99222, for a difference of $28.98, enough to get a physician jailed for fraud.) But HCFA has a cost-free fix for errors by carriers: the ``required Electronic Data Interchange (EDI) Enrollment Form'' (contract) under which the ``provider'' must agree to ``research and correct claim discrepancies'' (such as those caused by Medicare carrier errors). Only the provider, not HCFA, is bound to be ``accurate, complete, and truthful.'' Certification of same, under penalty of fine or imprisonment, is by use of the HCFA-assigned unique identifier number, which constitutes an electronic signature.

AAPS Director Lawrence Huntoon, M.D., asks: what happens if I don't sign their atrocious form? What happens if I submit claims (as required by law), but they refuse to accept them because I haven't signed the form? Would they be breaking the law? Dr. Huntoon also warns that signing the form would preclude a physician from complaining about Medicare- created problems because he could not divulge any information about a Medicare beneficiary except to HCFA.

Members' Page

Stopped at Random. In my spare time, I do what I can to help the Lapps, some local farmers who are making a courageous stand for freedom. These people don't believe in taking any government money for any reason. They refuse Social Security, they refuse Medicare, they pay all of their own medical expenses, they refuse refund money sent them by the IRS, etc. What they have done to help others without taking any money or assistance from the government is remarkable.

Interestingly, while passing through Cassadaga, New York, yesterday (which is where the Lapps live), I got pulled over by the State police. I was second in line of about four other cars. A trooper driving in the opposite direction seemed to recognize either us or our car. After passing us, he made an abrupt U-turn in the middle of the street and came after us. He said he ``thought our inspection sticker might have expired.'' (The sticker is 2 x 2 inches and has a small hole punched through the date of expiration.) I had not violated any traffic law and was not accused of anything. I thought it might be some new law giving the government power to do various things if they think you're about to commit a crime. The trooper wanted to know where I had been, where I was going, and why was I out riding in the car with my wife, my dog, and my cat. (We had just taken our pets to the vet and were driving home.) Maybe they thought I was going to visit the Lapps. Funny how it happened near Cassadaga....
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Industrial Commission Encourages Lies. Patients have an incentive to file their medical claims with Worker's Compen- sation. If the Industrial Commission approves the claim as being work-related, the patient gets reimbursed for the copayment, deductible, and any out-of-pocket expenses. The Commission will often approve cases that can't objectively be proven to be work- related, such as backaches and carpal tunnel syndrome. I don't care to work with the Industrial Commission, ... a program that ignores free-market forces and produces care of lesser quality than I am willing to provide. The Industrial Commission of Utah fixes prices and tries to force physicians to participate....
Christopher J. Reynolds, M.D., American Fork, UT


In response to questions raised by Dr. Reynolds, Alan Hennebold, General Counsel, Industrial Commission of Utah, telephone (801)530-6937, writes that: A physician's duty to abide by workers' compensation rules and fee schedules arises from the nature of the injury. It is a matter of statutory law, rather than contract. Even if a physician explicitly states that he does not wish to see industrial patients and patients sign an acknowledgment to that effect, the physician is still bound by Commission rules if it is later determined that the injury was industrial. The physician may have to reimburse amounts paid under the assumption that the case was nonindustrial.

Question: ``Is there any way a physician in Utah can close his practice entirely to industrially injured patients?'' Answer: ``In absolute terms, probably not.''


Inconsistencies by Medical Board. In July, 1996, Dr. Eric Braverman's license was suspended by the Board of Medical Examiners. The DA accused him publicly of ``gross malpractice,'' techniques that ``bordered on quackery,'' and lack of good moral character. Any single charge, if proved, would be enough to bar him from practice. But ten months and hundreds of thousands of dollars later, the Board backed off on all except the usual fallback, face-saving, round-up-the-usual- suspects position of ``shoddy recordkeeping.''

``We called his practices into question, and all our questions were answered. He was able to adequately prove to us that there were legitimate medical reasons for the things he did,'' stated Rita Malley, spokeswoman for the Attorney General's office (Burlington-Metro Times 5/22/97).

Dr. Braverman said he thought he was targeted because of ``alternative'' methods. He filed a $3 million lawsuit against the BME, now settled. He owes the state $20,000 for their investigation of his practice.

What is going on here? Is the BME defaulting on its obligation to rid us of a rogue doctor? Or is it a mendacious, meretricious, and nasty gang that persecutes doctors in the guise of offering consumer protection? Or a bunch of feckless bumblers unable to distinguish medical fact from fiction?

The major structural problem in this system is the inclusion of the BME in the Dept. of Consumer Affairs, headed by the Attorney General. Every case becomes a legal problem before it is has been adequately investigated.

I feel competent to comment on this case because I too have locked horns with BME. I ``voluntarily'' surrendered my license to avoid draconian penalties. My hearing was an inquisition run by a podiatrist. I could not prepare; I had no idea what questions would be asked. I harmed no one, helped a lot of people, and broke no laws. Any reasonable society would want to make use of 50 years' experience in medicine in one capacity or another, not simply jettison the entire package.
Charles Harris, M.D., Island Heights, NJ

AAPS Calendar

July 30. Medicare Patient Freedom Day
Sept. 17-20, 54th annual meeting, Chicago, IL.
Oct. 8-10, 1998, 55th annual meeting, Raleigh, NC.

Senators Enact Private Contracting in Medicare

During the Senate floor debate on the Budget, Senator Jon Kyl (R-AZ) offered his Senior Citizens Medicare Freedom to Contract Act as an amendment to the Senate version of the budget reconciliation bill, the Balanced Budget Act of 1997 (S. 947). On a procedural motion, Kyl ran into opposition from Senator Frank Lautenberg of New Jersey, a liberal Democrat, who objected that the private contracting measure was too controversial. But Kyl won the procedural fight on the Senate floor handsomely 64 to 35. The substantive amendment establishing private contracting then passed on a voice vote. The amendment simply reads: ``Nothing shall prohibit a physician or other provider who does not provide items or services under the Medicare program from entering into a private contract with a Medicare beneficiary for health services for which no claim for payment is submitted.''

Because the amendment would allow for seniors to pay for medical services directly, if they wished, Kyl argued that his amendment would likely be scored by the Congressional Budget Office (CBO) as a savings to the taxpayer.

Kyl made the salient point that Congress never intended to outlaw private contracting in Medicare. But the Medicare Technical Corrections Act of 1995 contained subtle language which enabled the Health Care Financing Administration (HCFA) to expand existing restrictions on private payments in the Medicare program to all ``enrolled individuals,'' whether or not claims were filed with Medicare.

Kyl noted, in the course of the Senate discussion, that HCFA's enforcement has been hazy, but that the bureaucrats at HCFA have been very clear-on the record-that they are adamantly opposed to Americans spending their own money on medical care once they reach the age of 65. Kyl recounted the evidence for his Senate colleagues. Bruce Vladeck, Administrator of HCFA, has stated that, in his view, the current law requires that physicians submit claims on behalf of Medicare beneficiaries: ``Violations of these requirements are subject to sanctions such as civil monetary penalties and exclusion from Medicare.'' Likewise, Tom Ault, HCFA's Director of Policy Development, has stated that for doctors to engage in private contracting with senior adults is ``illegal.'' Ditto Kathleen Buto, HCFA's Director of the Bureau of Policy: ``A physician can choose not to treat Medicare beneficiaries. However, once a physician renders services to a Medicare beneficiary, he or she is subject to Medicare's requirements and regulations, regardless of the physicians' participation as a Medicare provider. A physician's failure to comply with the claim filing requirement violates Medicare law and subjects him or her to possible monetary penalties.''

Put plainly, these statements of the HCFA bureaucracy mean that American citizens lose personal freedom once they turn 65. Most Americans would be shocked to learn this. For example, the Wirthlin Organization, a prestigious polling firm, reported in November 1996 that 60% of Americans believe that they should be able to add their own money to government payments in order to get ``unrationed'' health care services.

``Surely,'' noted Senator Kyl, ``a law that made it illegal to supplement with private funds the amount received from Social Security would be met with disbelief and derision.'' HCFA's interpretation of Medicare law is, and has been, an arrogant exercise of bureaucratic power.

As of this writing, the matter will be settled in the House and Senate conference on the Reconciliation bill because the House of Representatives does not have a similar provision.

The Executive Office of the President, Office of Management and Budget, is strongly opposed to the proposal, calling it a ``threat to beneficiary protections.'' They are concerned that ``private agreements could become licenses for physicians to coerce beneficiaries, exposing beneficiaries to unlimited liability and making meaningless the Medicare coverage they have paid for.''

To allow voluntary arrangements as an escape from coercive ones is thus ``coercive'' (consult your Newspeak Dictionary).

The Means-Testing Fight in Medicare

The Senate also is proposing to means-test Medicare premiums, as well as to raise the age of eligibility for Medicare beneficiaries. Many members of Congress have come to believe that the current payment system is fundamentally unfair. It is unfair to force young working families, who are raising children, paying for education, paying mortgages, and struggling to pay their own medical bills, to subsidize retirees with six-figure incomes.

Increasing the Medicare premium for wealthy retirees will only partly rectify an imbalance in the payment structure. Too many Americans do not understand that for every $1 that the elderly contribute for Medicare, the taxpayers now kick in $5. The increase would affect only 5% of the Medicare population of 33 million elderly, those couples making $75,000 per year or more income. It is a modest corrective.

Nonetheless, the central ``liberal'' principle of health policy is that everyone, regardless of how well off he is, is entitled to have somebody else to pay his medical bills. Sen. Kennedy and liberals in Congress even a oppose a simple $5 copayment for Medicare home health care services, the fastest growing component of the Medicare system. The unspoken assumption is that working families should simply pay the whole cost.

A Case Study of a Last-Minute Change

The Senate's decision to raise Medicare premiums for the ``wealthy,'' as a fallback position, came after a high-profile fight over an earlier version that called for raising the deductibles for the same class of retirees. Conservative health policy analysts have generally favored increasing the Medicare deductibles, even more so than the Medicare premiums. The reason: High-income people have much greater disposable income, and can easily afford a normal deductible. It also has the virtue of creating an incentive-which does not now exist-for using health services more wisely than they do today. Everybody knows that the Medicare deductibles-now at $100 annually-have been held artificially low for political reasons. The Senate originally proposed simply to raise these deductibles by $8 a week-for wealthy seniors only-to a level that would mirror the levels that you find in private sector.

For low-income seniors, Medicaid would still cover out-of- pocket costs, including Medicare deductibles and co-insurance.

The Senate handling of the Medicare deductible issue, its retreat from raising the deductibles and then promoting a premium increase for the same class of wealthy seniors, is a case study in the politics of Medicare in 1997. Faced with a whiff of political grapeshot from liberals in Congress (who also oppose allowing choices that might benefit the ``healthy and wealthy''), the Senate beat a quick retreat. Hand it to Senator Kennedy; he really knows how to make Republicans dance.

One remarkable argument advanced by Congressional liberals and the AARP lobbyists is that raising the deductible would be tantamount to an administrative nightmare. Please note: A standard defense of the status quo in Washington is that, well you might have a good idea-it might be just, it might be fair, but it would inconvenience government bureaucrats. So, tell your story walking.

Over the past 40 years, the Congress and succeeding Presidential Administrations have created 77 means-tested federal programs in the welfare system (food stamps, general assistance housing assistance, Medicaid) requiring bureaucrats to make determinations based on income, costing taxpayers about $325 billion per year. Fixing eligibility was never an administrative problem, as long as taxpayers were shelling out billions of bucks. Now the Senate drafts a proposal that is designed to save taxpayers money, and it is an ``administrative problem.'' It would inconvenience the bureaucrats at HHS and among the Medicare contractors. Nobody seems to have had the gumption to say to HCFA bureaucrats or their Medicare contractors: Tough. Go to work and get the job done, or find another job.

Moreover, nobody in Congress-at least no one with a high enough profile to challenge the Clinton Administration head on- seems to care about the administrative nightmare that Medicare itself has become. It is absurd to say that one particular change in Medicare policy constitutes an insufferable administrative hassle, when the entire system itself generates administrative hassles before breakfast. In Medicare, liberals in Congress and their friends in the special interest groups that make a living out of expanding government programs have created a system governed by 22,000 pages of rules, regulations and guidelines. Doctors and hospitals are swimming-no, drowning-in a rising sea of Medicare paperwork and being forced to comply with often stupid bureaucratic rules. It is a tremendous waste of time, energy, effort, and resources that should otherwise be going to patient care.

In any case, the matter of the Medicare premium increase for the wealthiest of the Medicare population will also have to be settled in the House/Senate conference. The House of Representatives does not have a similar provision.

Older Eligibility

Even though it will not be fully phased in for 30 years, the Senate adopted yet another major reform in the Medicare program that is designed to maintain its fiscal solvency and ease the burden on a future generation of taxpayers. Raising the age of eligibility, on the face of it, is only common sense. The Social Security Retirement Age is being gradually raised over the next 30 years, and the Senate proposal simply brings Medicare into line with what is already established policy for Social Security. Conservatives and moderates in the Senate are making the argument that Americans are living longer, and they are healthier and wealthier than ever before. The current age of eligibility-65-was set back in 1935, during the Roosevelt Administration, when life expectancy was 62 years of age. Life expectancy is now 76 years of age, and in the next century it will be even higher. Supporters of the amendment argue that 30 years from now people will be working at least two more years than they do today and will not think that this is somehow abnormal. In the meantime, of course, Congress could do a world of good by helping expand the access to insurance and solid medical care by changing the federal tax treatment of health insurance, making it an objective of government policy to promote personal savings and investment and medical savings accounts, as well as portable and affordable insurance.

Once again, the House of Representatives does not have a similar provision, so the question of age-eligibility for Medicare will have to be ironed out in conference.

Establishing a Basis for Structural Medicare Reform?

The nits and picks, price adjustments and means-testing, while hot politically, do not alter the fundamental dynamics of the Medicare program. Members of Congress from both sides of the aisle are rapidly coming to recognize that fact. The stakes get higher with each passing year. Medicare's hospitalization trust fund is 45 months from bankruptcy under the current scenarios. The Balanced Budget Act of 1997, the major bill now being debated by Congress, will alter that a bit. But it will still be a stop gap measure. If we don't control costs in Medicare today, we will end up paying huge payroll taxes or severely cutting back on benefits tomorrow.

There are two structural items, set up as demonstration projects, before the Congress in the current Reconciliation bill.

First, Medical Savings Accounts are introduced as a way for seniors to bypass the traditional Medicare system and all of its bureaucracy and pay for services directly. The House bill provides, as noted last month, a demonstration project allowing 500,000 such accounts to be opened. In the Senate bill, the demonstration project is limited to 100,000. The OMB wants an even lower limit.

Second is the Senate Finance Committee proposal, sponsored by Senator John Breaux (D-LA) and Senator Connie Mack (R-FL) to set up a demonstration project for 13 regions of the country, where Medicare beneficiaries will be able to have access to the same kind of system of consumer choice and competition among private insurance companies that is now only available to federal and congressional employees and retirees. Senator Breaux, who also backed Senator Kyl's amendment to allow private contracting, has emerged as a sharp critic of the paperwork and bureaucracy that is plaguing the existing Medicare program.

Seniors participating in both of these demonstration programs would have better benefits-including access to prescription drug and catastrophic coverage-at competitive prices and with less bureaucracy.

These issues will also be decided in conference; the House version lacks the consumer-choice demonstration project modeled after the popular Federal Employee Health Benefits Program.

The White House is opposed to allowing seniors to choose private fee-for-service plans, calling them ``bad policy, particularly given the fact that these plans will be subject to no balance billing or quality protections.'' OMB fears that too many rural providers might choose to leave traditional Medicare and form private plans. (Can they explain why?)

While doctors and patients have long grown accustomed to a Congress that talks a lot about change, disappointment has been the normal outcome. But this time, Congress could be on to something big.