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

Volume 46, No. 12 December 1990


In a direct response to the Association's victory in the US Court of Appeals for the Sixth Circuit in AAPS v. Bowen (see AAPS News Sept 1990), Congress passed a ``clarification'' of the assignment rule for laboratory tests, as part of the enor- mous Deficit Reduction Act (DEFRA) of 1990. Still worse, Congress added an ``effective dates'' provision to make its amendments retroactive to 1985 and 1987, raising the threat of sanctions against physicians who have billed for clinical diagnostic laboratory services on a nonassigned basis.

Almost immediately after the Sixth Circuit Court denied the government's petition for a rehearing en banc, the following appeared in the Congressional Record (Oct 26, 1990, pp. 12630-3):

Clarification of Assignment Rule for Laboratory Tests-In general, clinical laboratory tests are only reimbursed on an assigned basis. Since 1988, physicians have been prohibited from billing patients for such tests on an unassigned basis. A recent decision in the U.S. 6th Circuit Court of Appeals indicated that there may be some ambiguity as to whether the assignment requirement applies to such tests performed in all physician offices [emphasis added].

In DEFRA of 1990, Congress amended Title 42 of the United States Code §13951(h)(5)(C) to require that ``payment for a clinical diagnostic test, including a test performed in a physician's office...may only be made on an assignment-related basis.'' Congress further amended 13951(h)(5)(D), which enables the US Department of HHS to impose sanctions against a person who ``knowingly and willfully and on a repeated basis bills for a clinical diagnostic test on other than an assigned basis.''

The ``effective dates'' provision reads:

This amendment made by paragraph (1)(A) shall take effect as if included in the enactment of the Consolidated Omnibus Budget Reconciliation Act of 1985, and the amendment made by paragraph (1)(B) shall take effect as if included in the enactment of the Omnibus Budget Reconciliation Act of 1987.

As with many recent momentous changes in Medicare, the use of the budget reconciliation process effectively circumvents debate. No Congressman has even read DEFRA in its entirety. It is generally impossible to assign responsibility for the insertion of various amendments into this legislation. In this instance, Congress has simply rubber-stamped the interpretation that someone in the HHS bureaucracy wished to assign to the previous statute.

AAPS and its Legal Service believe that the statute, as now amended, is still unclear as to its requirements. Even assuming that the statute is clear, the effective dates make the new enactment potentially an ex post facto law and a bill of attainder, which are unequivocally and specifically forbidden by Article I, section 9 of the US Constitution. (An ex post facto law is one that has a retroactive effect. A bill of attainder is a legislative act that declares a person guilty of a crime, without trial, and subjects him to a loss of civil rights.)

Congress is apparently trying to punish persons for doing things that were wholly lawful when done. As AAPS argued in its brief asking the Court to deny the petition for rehearing, courts are required to assume that the purpose of legislation is expressed by the ordinary meaning of the words used, not by the tortuous interpretation of an administrative agency, especially when that interpretation effectively repeals one part of a statute.

``Congressional silence, no matter how `clanging,' cannot override the words of the statute,'' argued AAPS Counsel Kent Masterson Brown.

The Court of Appeals agreed with AAPS in its reading of the plain language of the law. In the ``effective dates'' provision, Congress is trying to nullify not only common sense but the decision of the Court. Although Congress has the power to change the statute to require billing on the basis of an assignment in the future, it cannot abrogate the law of a case without infringing upon the separation of powers established by the US Constitution.

AAPS, along with Nino Camardese, MD, Souheil Al-Jadda, MD, and Harold Schultz, DO-the original plaintiffs-are now preparing another civil action to be filed in the US District Court for the Northern District of Ohio, Western Division (Toledo), which will challenge the constitutionality of the new effective dates. The new case is being brought in an effort to protect those physicians who, prior to the new DEFRA amendments, billed for clinical diagnostic laboratory fees on a nonassigned basis in reliance on the Medicare Act as it was then worded.

Physicians are strongly advised from henceforth to bill for all clinical diagnostic laboratory tests on an assigned basis only, in compliance with DEFRA of 1990.

These events, in revealing the nature of the legislative and executive branches of the US government, should serve as an object lesson for physicians who advocate a ``partnership'' with government or seek a ``seat at the negotiating table.''

Retroactive ``clarifications'' of laws that are overturned by a court, resulting in punishment of citizens who are so bold as to challenge the decrees of an arrogant bureaucracy, have implications reaching far beyond the specific issue of billing for a laboratory test.

Another Farewell to Medicare

The requirement for physicians to file all Medicare claims was the final straw for Lawrence L. Freeman, MD, of Chamblee, GA, after 25 years of practice. Last July, he sent a letter to all his Medicare patients, explaining that he could not afford to hire the additional person who would be required to cope with the additional paperwork burden.

``Plus, if we inadvertently failed to file a claim, the threat of a $2,000 fine is something I will not accept,'' he said.

As of September 1, all Dr. Freeman's Medicare patients, except those who do not have Part B coverage, needed to find another physician.

I count among Medicare beneficiaries many of my favorite and long term patients...and I take this action with tremendous reluctance....I am sending a copy of this letter to each member of the Georgia Congressional Delegation and to AARP. The AARP lobbyists have been the main group putting pressure on Congress to pass this and the other anti-physician legislation, and I also believe it ultimately to be detrimental to my patients (their members).

In an article about Dr. Freeman in the Atlanta Journal and Constitution, Richard Warren, associate regional administrator for the HCFA, said that ``the machine is working well.''


Unbundling the Bundle

I took [the] admonition seriously to heart, so no more ``unbundling.'' The insurance form simply stated ``Treatment of fracture of ulna and radius, $300.'' Back comes the form with a cover letter from the insurance company: ``Please itemize charges.'' Translated into my vocabulary that means don't bundle, unbundle. So itemize I did. [The total came to $447.] I bundled because it is naughty to unbundle. The insurance company says-you must not bundle. So in the interest of doing the right thing per insurance company's instruction and so that my patient would not be refused coverage, I unbundled. [They paid 80% of $447.] Now the moral of the story is:-YOU TELL ME, I DON'T KNOW.

Rudi Kirschner, MD, Maricopa County Round-Up


A Medical Student's Perspective

I have spoken to a lot of my classmates and asked them their opinions about the socialization of medicine. I found that I could place them into four groups.

The first group really didn't know anything about current trends in medicine. They were oblivious to the whole situation.

The second group admitted they didn't know very much about the situation but said they would ``go along with whatever the system says.'' You might call these the true pacifists.

The third group, a large percentage, told me they wouldn't mind the socialized system. ``Well, you know, everybody's going to get equal health care, and I'm only going to have to work 40 hours a week and get paid whether I see my patients or not.''

The last group is mainly made up of students who have a parent or relative in medicine and know what is going on. They want to try to stop it.

As Vice President of the student section of the Ohio State

Medical Association, I've had a lot of physicians tell me how angry they are with young physicians because they don't want to do anything. But from what I've seen, you really can't be upset at these young physicians because they are only reflecting the view that they've been taught in medical school or what they've seen in the hospitals. In the third and fourth years, we're indoctrinated into a rationed-care type of system. We're not being presented with the other side of the story. Physicians aren't telling us. Maybe they don't have the time. And maybe they forget how influential they are and how much impact just one person can have if he stands up.

We ask you to stop and think about the education of future physicians, the ones that will possibly be treating you. We're asking you to share the wisdom of your experience with us and to give us the opportunity to enjoy the medicine that you have relished for so long.

Richard Villareal, Medical College of Ohio
AAPS seminar, Toledo, April 20, 1990


Letter from the President

It is an honor to serve as your president this year.

Since one of our highest priorities should be membership growth, a clear understanding of what AAPS stands for is a must. Therefore, I urge you to use our Code of Medical Ethics, our Code of Medical Practice, and statement of Patient Freedoms to help clarify our position to prospective members. (If you don't have a copy, watch for a new printing in the next issue of AAPS News.)

Telephone, write, or speak face to face with someone today about membership in AAPS! Even those who are not in private practice now might like to keep this option open, for some have actually begun their private practice after retirement from academia or military service. So speak to someone today about AAPS.

The attacks on private practice mount daily, primarily from federal ``agencies,'' but also from state, county, and city bureaucrats. Their techniques are not new. The enclosed pamphlet (The Gelded by Otto Scott) chronicles the plight of American business managers. If you mentally substitute ``physician'' each time ``manager'' is used, you will see the similarities to past events in medicine and understand probable future ``agency'' tactics.

Perhaps by the time you read this, the election will have rectified Congress somewhat. But many of our battles will be in the courts. The American Health Legal Foundation has supported litigation by patients and physicians as well as by AAPS to resist compulsory political medicine. Individuals, corporations, associations, and foundations may make tax-deductible charitable gifts to AHLF, so ask someone to contribute today. Anyone can contribute and everyone will benefit.

Claud A. Boyd, Jr., MD, President AAPS, Augusta, GA


New Members

AAPS welcomes Drs. Dona Alvarez of Oakland, MD; Kenneth D. Hansen of McLean, VA; John Margaris of Great Falls, MT; John Stiller of Plant City, FL; Pitt Vesom of Atchison, KS; and Ben Wofford of Catawba, NC.

Dr. Steinberg Wins Jurisdictional Battle

On November 2, 1990, arguments were heard in the case of Steinberg v. Sullivan, the challenge to the legality of the methodology by which the Secretary of HHS calculated the fee screens in Kentucky for Medicare services, effective April 1, 1990 (see AAPS News May and Nov, 1990). The Secretary, effectively acknowledging that the April fee screens had been calculated incorrectly, imposed new screens which were to be effective September 30, 1990. Dr. Steinberg regarded the Secretary's notice and new screens as an admission of his case as plead.

In the meantime, the Secretary filed a motion to dismiss Dr. Steinberg's case on the ground that the Court did not have jurisdiction to hear the complaint.

Judge William O. Bertelsman of the US District Court for the Eastern District of Kentucky overruled the Secretary's motion on November 2, 1990, finding that Dr. Steinberg's challenge to the methodology was a justiciable cause. He has granted Dr. Steinberg 90 days to take the depositions of officials in the US Department of HHS and the HCFA to determine whether the April 1, 1990, and subsequent fee screens were developed by the Secretary (or HCFA), whether the Secretary (or HCFA) instructed the intermediary to utilize the fee screens, and, if so, whether the methodology used violated the Omnibus Budget Reconciliation Act of 1989.

[Dr. Steinberg discussed this case at the banquet at the 47th AAPS annual meeting. An audiotape, which includes the address by Representative Jon Kyl (R-AZ) is available for $5.]


West Virginians Challenge Omnibus Health Care Cost Containment Act

L.I.F.E. for West Virginians (Legislation Investigation Fund Effort), an organization of patients and physicians, has filed a class action complaint in the Kanawha County Circuit Court, asking that the Omnibus Budget Health Care Cost Containment Act of April, 1989, be declared unconstitutional.

At the time the Act was passed, the state of West Virginia owed over $50 million to health care providers, despite the enactment of the largest tax increase in the state's history. The plaintiffs allege that the Act shifts to health care professionals an ever-increasing portion of the state's self- chosen financial obligations to provide health care to state employees and the indigent, a violation of the guarantee of ``equal and uniform'' taxation.

The ``equal and uniform'' taxation clause is a unique feature of the West Virginia Constitution, enacted at the time that the state separated from Virginia because of unequal taxes. To date, there is virtually no judicial interpretation of its practical meaning.

The linchpin of the case, according to Henry Mark Holzer, Professor of Constitutional Law at the Brooklyn Law School, will be to establish that the fee caps and ``take-one-take all'' provisions of the Act are the equivalent of taxes.

The Act establishes fee caps and prohibits balance billing

for all state beneficiaries, regardless of the patient's financial situation. In the ``take-one-take-all'' provision, the Act mandates that any physician who treats any state beneficiary (such as a state employee or a workman's compensation patient) must accept Medicaid beneficiaries until the number of the latter equals 15% of his active patients.

Although jail sentences were eventually removed from the Act, the penalties remain quite severe, and due process protections are minimal. If after an administrative hearing, the Secretary of the Department of Health and Human Resources determines that any health care provider is in violation of the Act or any rule promulgated under the Act, she may assess a civil penalty of not less than $1,000 or more than $25,000 and remove the provider from any list. The Secretary shall exercise her discretion in setting the monetary amount, considering such factors as the degree of ``willfulness'' displayed by the violation.

The patient plaintiffs allege that the Act deprives them of the right to freely choose their physicians and to freely make agreements with their physician about the nature and cost of treatment. Several were forced to accept inferior care because their physicians of many years had been forced out of the program by unreasonable ceilings on their fees.

Plaintiffs also argue that in allowing ``standardless determinations by departments of the state,'' the Act delegates legislative power in an unprecedented and unconstitutional manner.

Jerome C. Arnett, Jr, MD, founder of L.I.F.E. for West Virginians, states that more than 100 physicians are leaving the state each year. Not a single family practice resident trained in the state will agree to stay. The exodus will cause an irreversible deterioration in the quality of care available to West Virginians, he believes.


Joint Underwriting Plan Under Attack in Massachusetts

With their fees limited by mandatory assignment under both Medicare and private insurance plans, Massachusetts physicians are also saddled with retroactive malpractice payments. In 1988, the Joint Underwriting Association requested the authority to recoup the $140 million deficit that it had incurred due to inadequate premium rates charged since its establishment in 1975. The Supreme Judicial Court of Massachusetts has opined that all physicians, regardless of whether or not they were insured by the JUA, are liable for deficit recoupment. Failure to pay means revocation of insurance and automatic loss of licensure, since malpractice insurance is mandatory in Massachusetts. About $10 million is believed to be uncollectible from doctors who fled the state; this cost will be distributed among those who remain.

In May, 1989, Liability Investigation Fund Effort, Inc. (L.I.F.E.-the organization serving as a model for L.I.F.E. of West Virginia) filed suit. The Superior Court dismissed the suit on jurisdictional grounds. An appeal to the Supreme Judicial Court should be heard in January, 1991, according to Leonard J. Morse, MD, Chairman.

The lawsuit alleges, among 23 counts, that the act establishing the JUA violates the Separation of Powers doctrine delegating the power to tax. Further, the recoupment provision constitutes retroactive rate making, a violation of Amendments 5, 9, and 14 of the US Constitution.

From Capitol Hill

Medicare Program Integrity. Medicare carriers are distributing pamphlets describing the ``Program Integrity function,'' which is designed to detect potential fraud and abuse. The most common forms of fraud include billing noncovered services (such as routine examinations unrelated to specific illnesses or diagnoses) as covered services, and claims involving ``collusion between a provider and a beneficiary.'' Penalties for fraud include a fine of not more than $25,000, imprisonment for not more than five years, or both.

Abuse includes billing Medicare at a higher fee than non- Medicare patients; fragmenting (unbundling) services on separate claim forms for higher reimbursement; and routine waiver of deductible and/or coinsurance. Persons convicted will be subject to a fine of not more than $2,000 per item claimed, imprisonment for not more than six months, or both.

Although waiver of deductibles and coinsurance would not be a violation of the law in the event that the payment constitutes a financial hardship to the beneficiary, routine waivers will result in retroactive reductions in customary charges; recovery of overpayments on previous claims; suspension of providers from participation in Medicare; and treatment of all future routine waivers as criminal.

The Inspector General has established a toll-free nationwide hotline for reports of suspected fraud, abuse, or mismanagement.

Allocations to Medicare contractors to catch Medicare cheats dropped from $358 million in 1989 to $332 million this year. The Administration has recommended an increase to $335 million for next year.

Methods of investigation and standards of evidence are not described.

Volume Performance Standards. The first six months of FY90 have shown a 12.4% increase in spending for physician services compared with the same period in FY89. Although the increase doesn't differ much from previous years, it exceeds the 9.1% volume target, jeopardizing the 1992 update for physicians' fees.

Profit Opportunities. A growing service industry is helping to keep doctors in practice by relieving them of the claims filing hassles-showing how Congress can help stimulate the economy. Franchised clinics similar to H&R block may soon dot the land. One company charges doctors between $750 and $1,200 per month, depending on the number of claims and the number of added services such as coding. Physicians who want to do their own can lease a computer system that does forms

for only $700.23 per month. A school that trains entrepreneurs to do forms (only $1,750 for a three-day session) projects $500,000 in 1990 revenues. On the down side, clinics that specialize in filing claims for beneficiaries (for 10% of the take) may be hurt by increased deductibles and requirements for physicians to file forms.

Beware of 90060. Physicians who code everything as an ``intermediate visit'' to simplify their billing procedures may be in for serious complications such as repayment demands and penalties, even if they often treat older, sicker patients who require more time. Physicians are supposed to use a variety of codes. However, carriers are not supposed to advise physicians to bill a specific percentage of visits at a certain code because HCFA Administrator Gail Wilensky has instructed them to adjudicate visit claims on a case-by-case basis. Physicians should thus try to show empathy for the carriers, who are trying to comply with these instructions.

Access and Mandatory Assignment. In Massachusetts, physicians who see any Medicare patients must accept assignment on all or face loss of licensure. It is estimated that between 20 and 30% of all medical practices have closed out Medicare patients completely (Physicians Financial News 10/30/90). More than 10% of doctors in private practice are thought to have left the state since 1985, although figures are difficult to determine.

Payment Delay Mandated. After several months of allowing Medicare claims to be paid immediately after processing, Aetna of Georgia has again established a delay of 14 days before any payments can be made. Are aged claims better?


Lawrence Shinabery, MD, RIP

Dr. Lawrence Shinabery, President of AAPS in 1950-1951, died on September 16. He was in general practice for 43 years and was also founder of A-1 Production in Kendallville, IN. Dr. Shinabery was also active in the American Family Physicians Association, American Medical Association, Indiana State Medical Association, and Fort Wayne-Allen County Medical Society. He is survived by his wife Isabelle.


AAPS Calendar

Jan. 26, 1991. Board of Directors meeting, Embassy Suites Hotel, Atlanta, GA.

Oct. 17-19, 1991. Annual meeting, Griffin Gate Marriott, Lexington, KY.