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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 49, No. 1 January 1993

WHO IS GUILTY OF FRAUD?

The end of the Cold War has enabled the federal government to transfer more than 200 FBI agents from defense-related activities to the investigation of health-care fraud. In their search for perpetrators of the fraud that allegedly consumes 10% of the health care dollar, the FBI will have many allies and tools.

Anyone who suspects that a physician, hospital, or other health-care provider is performing unnecessary or inappropriate services is invited to call the fraud hotline (800-368-5779) established by the Office of the Inspector General of HHS. The number is advertised in magazines for senior citizens and other popular publications. An increasing number of complaints come from patients, but anyone can become an informer, especially competitors and employees (even those who were never considered ``disgruntled'').

Information may also be gained from the investigation of other providers or by other agencies. Cooperating agencies include HHS, the FBI, the US Attorney General, the IRS, the State Attorney General, the US Postal Service, and undercover agents from commercial insurance companies.

``After an offender has been identified, investigators and prosecutors want to be sure of a conviction. Having multiple agencies involved, with multiple charges, ensures protection of the public's investment in the investigation and prosecution,'' according to the Practice Management Institute, a San Antonio- based consulting firm.

Another source of tips is the statistical analysis of claims. Carriers have a large and sophisticated computer data base for all providers, and claims for various levels of service are expected to follow a normal probability distribution function. However, there need not be a ``pattern of fraud.'' A single unusual claim can trigger an investigation. In addition, random audits are performed.

Providers who make false claims are not the only persons who may be guilty of fraud. Persons who have knowledge of a false representation can also be charged. (Although an employee could be imprisoned, it is of course the physician who will have to refund any ``excess'' payments, whether or not he had knowledge of a misrepresentation.) If an accused physician belongs to a group practice, other members of the group will also be under suspicion, and the corporate umbrella may result in joint liability for offenses committed by any member.

Patients can also be guilty if they overutilize medical services. In fact, investigators have threatened patients who were reluctant to testify against their physician.

``If your doctor isn't guilty of fraud, then you are,'' some terrified inner-city residents were told. (They had possibly consulted their internist too often about their chest pain.)

The maximum penalties for any act of misrepresentation by a provider (which might be a miscoding) were increased by the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977 to a $25,000 fine or five years imprisonment or both. The maximum penalty for an act of misrepresentation or concealment by another person (such as a beneficiary) is $10,000 or one year in prison or both.

In 1980, Congress narrowed the scope of the law by only forbidding acts that are knowing and willful. However, the critical act is ``intent to engage in conduct,'' not ``intent to commit an illegal act,'' according to the Practice Management Institute.

Enforcement actions have been stepped up. The Arkansas Attorney Generals' office has threatened maximum criminal penalties in Medicaid cases. An FBI official was ``dis- appointed'' that only one physician was arrested in raids last summer (see AAPS News, Aug 1992), but more were an- ticipated. It was hoped that the pharmacists who were arrested would provide evidence against other suspects, including physicians.

Electronic surveillance is playing a central role in the investigations. ``We're working this like we do organized crime,'' one investigator said.

Electronic surveillance includes wiretapping and also interception of conversations on cordless telephones, which have no well-established legal protections.

Another tool that is ``vital to the law enforcement com- munity,'' according to Rep. Jim Kolbe (R-AZ), is asset seizure and forfeiture (see AAPS News, June 1992). Mr. Kolbe may reintroduce legislation to expand use of this weapon developed for the war on drugs, despite unexpectedly intense opposition from physicians. In a December 2 meeting in Tucson, Kolbe staffers said they felt physicians should prefer investigations by the FBI to those of the Inspector General of HHS. They felt that some threshold might be established to trigger deployment of the forfeiture weapon, say suspected fraud of $10,000.

Strategic elements of the drug war include ``sweeping'' and ``destabilization.'' (``Sweeping'' means to strip an accused person of his assets, including those that might be used to pay legal fees, and ``destabilization'' means to take a person's home.) These precede the trial or even the arraignment. The methods have been used against suspected drug dealers and recently against a man accused (probably wrongly) of harboring White Supremacist sentiments, who had allegedly cut down trees (probably by mistake) on the National Forest side of his property line. These weapons were not deployed against suspected Communist spies, but that war was a ``cold'' one.

(Asset forfeiture is targeted against the alleged proceeds of an alleged crime. The suspect, even if not formally charged with a crime, must prove that the property was innocent in order to recover it. The forfeiture is not intended as punishment- fines are limited to $25,000 per count-but as an ``incentive'' to local law enforcers to cooperate with the FBI.)

Open hostilities have broken out against physicians on every front: Medicare, Medicaid, and commercial insurance. Antifraud investigators attend seminars on maintaining relationships with law enforcers and prosecutors, utilizing physician reviewers, and reporting to supervisors on ``recoveries.'' Physicians attend seminars on ``E & M'' codes and the importance of ``settling'' (surrendering) at the lowest possible level.


OPM Addiction

In a Nov. 19 article in the Wall Street Journal, AAPS member James Weaver, MD, writes of ``The Best Care Other People's Money Can Buy.''

To one of his patients, a good man and a decent citizen, $75 was a ``lot of money''-too much for him to pay for a set of dentures that fit. (Dentures are not covered by insurance.)

But to the $275,000 bill for repairing his ruptured abdominal aortic aneurysm-paid by Medicare-the man gave no thought whatsoever. In fact, he requested home visits from a nurse and a physical therapist (also paid for with OPM).

``I'm certain he felt entitled to them, though he didn't need them,'' Dr. Weaver wrote. ``But if I had said `no,' I would have looked like a heartless, uncaring doctor. The system works that way, you know. I'm certain it would improve if I had the right to summon the Ultimate Cost Container and say, `I'll send them all out, but it will cost you $45 per visit.' ''

Dr. Weaver concluded that costs will never be contained until people have to pay an equitable amount for their own care.

When asked about the ultimate method of fraud control- outlawing the assignment of benefits and bringing the patient (instead of the FBI) into the financial equation-members of Rep. Kolbe's staff smiled and said that Washington wasn't interested.

Society is eager to make war on drugs. But kicking the habit is unthinkable.

Dr. James B. Weaver spoke at the 49th annual meeting on the subject ``Physicians and Third Parties'' (video- tape available). He also authored the Resolution deploring intrusive government regulation and involuntary servitude for physicians.

 

Message from the President

Bureaucracy is a pernicious disease that is rampant in America today. The disease has a special predilection for the medical minority upon which its vectors feed with relish. The vectors spread the disease through an addictive and destructive drug-power. Imbued with a lording-it-over-others mentality and a holier-than-thou attitude, they formulate the means of destruction through administrative law (which is a contradiction in terms and most often a violation of constitutional law).

Bureaucracy has been the destruction of 19 of the last 21 major civilizations, according to historian Arnold Toynbee. The devastations of the disease caused the death of the U.S.S.R. on December 25, 1991-after the disease had liquidated nearly 160 million lives and inflicted regression, stagnation, and poverty on much of the world's population. In the meantime, in the U.S.A., bureaucracy continues to inflict chaos, poverty, and semi-paralysis. It has all but paralyzed the ethical practice of medicine, which can be the keystone of freedom-or the keystone of socialism.

Bureaucracy is to freedom as cancer is to the living or- ganism. But the disease can be checked and even cured. The handbook for treatment is the Declaration of Independence and the US Constitution. The modus operandi is to empower the individual and to restrain the powers of the state. Who will be the ones to sequester the plague of bureaucracy? If we do not do it-together with our best allies, our patients-then who will?

The time for action is now. Let us declare October 26-the date of the decision in Stewart v. Sullivan to be Patient Freedom Day-and act accordingly.
Nino Camardese, MD, Norwalk, OH

 

Dissent in National Socialist Germany

In three instances, even the brutal totalitarianism of Hitler's National Socialism was brought to a halt.

According to a dispatch from the American Legation in Bern, April 1, 1943, ``Action against Jewish wives and husbands on the part of the Gestapo...had to be discontinued some time ago because of the protest which such action aroused.''

In March, 1943, hundreds of Aryan women gathered on the RosenstraŠe in Berlin, where their Jewish husbands were imprisoned to await deportation. Though scattered repeatedly by threats of gunfire, the women returned again and again, demanding the release of their husbands. Goebbels let them go.

Efforts to remove Christian symbols from schools aroused widespread public outrage. Children went to school wearing crucifixes around their necks. Mothers threatened to remove their children from school and to resign from the party and women's organizations until the crosses were replaced. Wives wrote to their husbands at the front about their struggles and used the dismayed responses as ammunition. The Nazi anti- crucifix decrees were secretly rescinded.

The fight against euthanasia was spearheaded by religious leaders, such as Catholic bishop Clemens August von Galen, who preached three blistering sermons against the lawless power of the Gestapo. He warned that no one was safe from arbitrary arrest and punishment. Goebbels did not execute the bishop, fearing the effect on public morale. (What would soldiers think if a bishop was hanged for warning that if wounded, they too might be targets of the state that killed all who were deemed useless?)

The gassing of the insane and the deformed ended because of the public protest, although euthanasia itself continued in a way that was difficult to blame on the regime. Trusted doctors and nurses hastened death by deliberately treating patients with starvation diets and overdoses of medication.

According to Nathan Stoltzfus, who described these events in the September, 1992, issue of The Atlantic Monthly, the fundamental qualities essential to success of these protests were: (1) They were undertaken collectively by an integral part of society; (2) they were nonviolent, thus failing to legitimate the crushing violence of the regime; (3) they were overt. The state controlled the media, but could not control all forms of public communication-such as public noncooperation, open protest, rumors, and public preaching.

The movement is outside the system because that's the way to win. If you work within the established system,...most often you will lose. The system is put together by the powers that be so they will win.
William Greider, Who Will Tell the People


AAPS and Medicare: The Battle Joined

For many years, AAPS has resisted the expansion of government control over the practice of medicine. Recently, that resistance has emphasized battle in the federal court system over actions by the bureaucracy that exceed its statutory and constitutional authority. The latest case, Stewart v. Sullivan, handed the federal government one of its most embarrassing defeats. Although the US District Court for the District of New Jersey granted the government's motion to dismiss the case, the Court's reasoning left the Health Care Financing Administration in a position that is shameful.

From the vantage point of the ``eye of the storm'' during recent AAPS litigation, I have observed the behavior of the federal government and its agents. One theme is consistent: the federal government operates the Medicare program by employing deceit, and even though it knows its position to be based on utter falsehood, it backs the position up with threats and intimidation. When confronted in a court of law, the federal government disavows knowledge of what it has done or denigrates its own authority in order to avoid outright defeat. Such tactics serve the interest of power while trampling on the very essence of government under the Constitution and completely undermining the public trust.

To review the case of AAPS v. Bowen (see AAPS News, Dec. 1990), the Medicare Act (as amended in 1989) explicitly allowed for the billing of clinical laboratory services to Medicare beneficiaries on a nonassigned basis. When the Court of Appeals so ruled, the HCFA sought and obtained an amendment to the Medicare Act, which was slipped into the budget reconciliation act and passed without debate. The amendment did not stop with forcing physicians to bill on an assigned basis for laboratory services but threatened to sanction physicians who had billed on a nonassigned basis during the seven years preceding the enactment of the amendment! AAPS returned to court in AAPS v. Bowen II, asserting that the retroactive enforcement provision was an ex post facto law and an affront to Article III of the Constitution, which defines the powers of the federal courts. The government then asserted that the amendment's enforcement provision was ``unenforceable.'' The US District Court in Toledo, Ohio, agreed. Why then, one might ask, did the HCFA seek the retroactive enforcement provision in the first place?

No case brought this shameless behavior of the federal government to light better than Stewart v. Sullivan. When Lois Copeland, MD, and her patients sought to contract privately, they were frightened by repeated bulletins from Medicare carriers asserting that such action was sanctionable. Yet nothing in the Medicare Act prohibited such activity; in fact, it was protected under Section 1395b of Title 42.

When Dr. Copeland and her patients filed suit, the government, in open court, disavowed any knowledge of the origin of the bulletins! Are we to believe that the carriers' bulletins were sent without the knowledge of the HCFA? Or, are we to believe that the carriers are not agents of the HCFA? In a master stroke of genius, the New Jersey federal court ruled that neither the Medicare Act nor the regulations of the Secretary of HHS even address the issue of private contracting on a case-by- case basis, and since the government disavowed knowledge of the origin of bulletins which stated such contracting was unlawful- and the letters of officials of the agency illustrated complete confusion within the agency on the subject-there exists no ``clearly articulated policy'' of the government prohibiting private contracting.

As with the billing for clinical diagnostic laboratory services, the government did not speak truthfully or in good faith to the physician community about the legality of private contracting. It went so far as to use threats and intimidation to back up a ``policy'' it knew to be contrary to law. When it was caught, it disavowed knowledge of the origin of the threatening ``policy'' statements.

Future comments of the Medicare carriers and the HCFA on this issue will be carefully assessed by the Legal Service. Members are asked to send copies of any pertinent communications to AAPS headquarters (FAX number 602-290-9674) and the LLCS (FAX 606-252-6791).

The battle has truly been joined in earnest.

 

Carrier Statements: Before and After

Exhibit B in plaintiff's complaint in Stewart v. Sullivan, published by Aetna of Georgia prior to the filing of the lawsuit, was headlined ``Providers must bill Medicare services.'' The article stated that:

Providers cannot bypass the law by having patients sign a disclaimer stating that services provided to them should not be billed to Medicare. The following are the only ways a physician can dissociate himself or herself from the Medicare program: Discontinue providing covered Medicare services, or surrender his or her license....

The same carrier, in September, 1992 (the case was heard in late September), had a front-page article headlined ``Physician's Withdrawal/Non-Enrollment in Medicare.'' The article stated that ``there is no provision in the Medicare law for a physician to voluntarily withdraw his services from Medicare coverage.'' What it didn't state is that there is also no provision forbidding such action. (Several physicians have formally resigned and had their UPIN deactivated by carriers.)

Aetna continues: ``A physician does not commit an offense by merely obtaining an agreement from the patient not to use his Medicare coverage.'' The caveat by Aetna is that ``Medicare is not bound by this agreement.'' [Why should it be? The government is explicitly not a party to the agreement.] Aetna warned that the physician might be sanctioned if the patient renounced the agreement.

It will be interesting to see what Aetna will say now that a decision has been rendered.

 

Appeal Filed in WV Balance Billing Case

On Nov. 20, 1992, LIFE for West Virginians Foundation, representing patients and physicians including AAPS member Jerome Arnett, MD, filed an appeal in the WV Supreme Court of Appeals. Their case challenges the ban on balance billing of beneficiaries covered under state insurance programs (see AAPS News, March 1991 and September 1992).

Plaintiffs' attorney Henry Mark Holzer cites the Florida Supreme Court decision in Coy v. NICA to show that the ban (like the assessment on all Florida-licensed physicians to support a no-fault insurance scheme for birth defects) is a tax because it is ``an enforced pecuniary burden laid on individuals'' to support the government. (In West Virginia, the tax is imposed de facto by declaring the labor of physicians to be worth less than its fair market value.) In a 4-3 decision against the AAPS physicians who brought the Florida case, the court held that the tax did not violate the Equal Protection Clause of the Florida constitution, since it had a ``rational relation'' to a public purpose. However, the West Virginia constitution has a more stringent clause demanding Equal and Uniform taxation of all forms of property of equal market value.


 

New Members

AAPS welcomes Drs.David Auerbach of Long Branch, NJ; Melinda Kay Bailey of Mount Pleasant, SC; J. Austin Ball of Charleston, SC; John Barberii of Tucson, AZ; Gilbert Baum of Port Chester, NY; Mark Berman of Hackensack, NJ; Sheldon Birnhak of Union, NJ; Theodore Bohlman of Boise, ID; Scott P. Bowers of Wilson, NC; John F. Brunner of Toledo, OH; Kenneth Buchi of Salt Lake City, UT; Peter A. Butrey of Lorain, OH; Mark Carter of Hobart, IN; Kaye Check of Ankeny, IA; Frank H. Christensen of Chapel Hill, NC; Michael Clancy of Port Angeles, WA; Rick Damron of Tal- lahassee, FL; Theresa Eubanks of Troutdale, OR; Edward Feller of Miami, FL; Louis Fishman of Beverly Hills, CA; E.C. Gaulden of Fullerton, CA; Michael L. Gernant of Champaign, IL; Robert Gnade of Radner, OH; Jeffrey Gold of Salt Lake City, UT; Ross Hauser of Oak Park, IL; Donald Hegge of Port Angeles, WA; Katherine S. Henry of Richardson, TX; Steve Hillman of Sequim, WA; C.V.O. Hughes, III of Levelland, TX; Mitchell L. Jablons of Watchung, NJ; Jafar J. Jafar of New York, NY; Wendy Jamison of Metairie, LA; Gerard G. Jebaily of Florence, SC; Frank Joseph of Roswell, GA; Dewey H. Lane of Pascagoula, MS; Steven Lansman of Englewood, NJ; James S. Lapcevic of Boston, PA; Sidney H. Levine of San Diego, CA; Fred Levit of Chicago, IL; Kenneth Licker of DeSoto, TX; Loretta Loeb of Portland, OR; Lawrence J. Luppi of Laguna Miguel, CA; Alfred P. Luppi, II of Bonita, CA; Joseph Massaro of Sparks, NV; Theodore Mazer of San Diego, CA; Gerald J. McMahon of Flagstaff, AZ; James McMillan of San Francisco, CA; Howard G. McQuarrie of Salt Lake City, UT; Howard Miller of Coudersport, PA; Thomas F. Neal of Lubbock, TX; Patrick M. Nolan of Anchorage, AK; Carol Osborn of Salt Lake City, UT; Frank Picone of Red Bank, NJ; James Reidy of Mishawaka, IN; Bert Rogers of Enid, OK; Roberta G. Rubin of Glen Ridge, NJ; Michael A. Samach of Morristown, NJ; Charles B. Scheutz of Edmonds, WA; Philip Schmidt of Colorado Springs, CO; Matthew Sirrot of Walnut Creek, CA; Roger Stark of Bellevue, WA; Mark Szentes of Boise, ID; Clifford Toliver of East Orange, NJ; David Udehn of Moline, IL; Mark Valentine of Everett, WA; Thomas Vasileff of Anchorage, AK; John J. Verndon, Jr. of Tinton Falls, NJ; Charles Waldrop of Lan- caster, TX; Roy M Waller, III of Lexington, KY; Michael G. White of Germantown, WI; William G. White of Franklin Park, IL; Paul Worrell of Anchorage, AK; Ivan Zamora of Renton, WA; and Eugene P. Zanolli of Payson, UT; also Tallman Ob-Gyn, P.C. of Suffern, NY, and Dermatology Associates of Beverly Hills, CA. Mrs. Virginia Nisbet of League City, TX, is a new student member.

 

On Democracy

Enclosed with this issue of AAPS News is AAPS pamphlet #1022, ``On Freedom and Other Things with Apology to Plato,'' which rightly champions the market. But in it, democ- racy is also spoken of approvingly. Note that Socrates' closing remarks clearly demonstrate that democracy is inherently the self-destructive mob rule of avaricious men. Knowing this, the founders of these States in Union brilliantly established the converse, a representative Constitutional Republic of law. At the time, Benjamin Franklin, in the light of history, foresaw the future and warned against allowing the transformation of the original Republic into the present oppressive democracy.

Curtis Caine, MD, Jackson, MS

 

A Letter from Britain

Having heard of the difficulties of an AAPS member, Nathaniel Lehrman, MD, a British physician responded:

We have been having something like this with our administrators here in the NHS. Recently, senior doctors have been accused of being ``whistle blowers,'' i.e...[of] drawing public attention to defects in their services which in their opinion threaten the well-being and safety of their patients. These doctors have been suspended on full pay, and then dismissed in due course on the grounds that they have become redundant, or that they have been at odds with their colleagues. Now that we have Hospital Trusts under the NHS, there is the concept of corporate loyalty, such that any public criticism of the Trust's organisation is judged to be disloyal and followed by instant dismissal, sometimes without any right of appeal. In one particular case, I understand that the doctor was dismissed the day before he reached pensionable status. So, dirty tricks are alive and well over here also!...The whole of the NHS is now based on...[the idea] that the money is supposed to follow the patient, but in reality, the patient has to follow the money....

 

John Goodman to Speak in Dallas

Market-based, consumer-choice solutions to the medical insurance crisis will be the focus of a dinner program presented by AAPS at the Dallas-Fort Worth Airport Marriott on Saturday, February 6, 1993, from 5:00 until 9:30 p.m. John Goodman, PhD, of the National Center Policy Analysis will speak. NCPA proposals, which are endorsed by AAPS, are gaining ground. The Medical Cost Containment Act of 1992, which included medical IRAs, gained 84 cosponsors in the last session of Congress.

Following Dr. Goodman's presentation, AAPS director Lois Copeland, MD, and Legal Counsel Kent Masterson Brown will give an update on the outcome of Stewart v. Sullivan. The cost of the meeting, including dinner, is $35. To register, call AAPS at 1- 800-635-1196.

 

AAPS Calendar

Feb. 6. Board of Directors meeting and dinner program, Dallas-Ft. Worth Airport Marriott.

Oct. 5-9. 50th annual meeting, San Antonio, TX.


Legislative Alert

The New Congress

The new Congress is best described by the cynical aphorism: the more things change the more they remain the same. A total of 93% of all incumbents running for re-election to Congress were re-elected. While term limits won in virtually every state and while a record number of incumbents retired from office voluntarily, the voters generally returned ``their guy'' back to office. Whatever happened in 1992, it was not a vote for ``change''-at least on the Congressional level. Voters do not seem either able or willing to connect real, live personalities with their much publicized wrath over the way in which Washington does business. The American people have given Congress, as an institution, its lowest ratings in years: 18% approval. And yet the voters do not throw the objects of their disaffection out of office.

Washington pundits make much of the fact that in Congress we have a lot of new faces. But the changeover is not as impressive as suggested. Even though there are 110 new Members of the House, that is less than the 150 that some Capitol Hill observers were predicting as little as a week or so before the general election. The Perot factor, the wild card of the 1992 Presidential election, was supposed to bring a large number of angry and disaffected voters to the polls on a widely expected ``search and destroy'' mission against long time incumbents. It just didn't happen.

The ideological balance of power in the House of Representa- tives is likely to remain the same. Republicans gained only eight seats, less than expected in a pivotal election where incumbents, mostly Democrats, were supposed to be in serious trouble. Conservatives in both parties have a slight edge. So look for the bloc Conservative Democrats in the House, led by Congressman Charles Stenholm of Texas, to exercise a more pronounced role as the critical power brokers in the new Congress.

Almost 90% of the freshman class have experience in prior elective office. This may mean that they will be less deferential to Congressional leadership than the old time regulars. More- over, while there will be pressure among the newly elected Democrats to follow the new Presidential Administration and break the ``Washington gridlock,'' these new Members invariably ran ahead of President-elect Clinton in their districts. Thus they are, in fact, politically independent. No coat-tails here. House Speaker Thomas Foley (D-WA) seems to understand this and has been traveling around to visit the new Democratic Members of the House, doubtless trying to make sure that they are ``properly introduced'' to the ways and means of power in Washington. This type of action by the Speaker of the House is unprecedented; it suggests a deep down nervousness on the part of Foley and Company.

Clinton needs a comfortable majority in the Senate. He does not have it. Georgians may once again have voted for ``grid- lock'' in electing the Republican insurgent Coverdell to replace Democratic incumbent Wyche Fowler. Coverdell's election means that the Senate Republican minority can easily sustain a filibuster on crucial issues.

Senate ideological divisions have deepened. The Senate liberal wing has clearly been strengthened by the election of four, unabashedly liberal feminists: Dianne Feinstein and Barbara Boxer of California, Carol Mosely-Braun of Illinois and Patty Murray of Washington State. All four are committed to a strong liberal agenda, and are expected to deliver on that agenda. The five new Republican freshmen (Coverdell of Georgia, Dirk Kempthorne of Idaho, Lauch Faircloth of North Carolina, Bob Bennett of Utah and Judd Gregg of New Hampshire) are all solidly conservative and form an ideologically cohesive band. With Coverdell beating Wyche Fowler in the Georgia Senate run-off, the Republican Senate base will have survived the 1992 Democratic onslaught intact, and Senate Minority Leader Robert Dole of Kansas will have a well-disciplined force to be reckoned with over the next two years.

The outlook for President-Elect Clinton is not necessarily gridlock, especially in the early months of his administration. Senate Majority Leader George Mitchell can himself assure a long and prosperous ``honeymoon'' between Congress and the White House if he sets his mind to it. Helping Mitchell will be Senator David Pryor of Arkansas, a personal friend and an informal point man for the new President on Capitol Hill. And Senate Republicans will want to show good faith with the new President and enjoy the honeymoon, too.

The major problem for President-Elect Clinton is that, as a plurality President, he will have to ``create''-literally-a popular legislative mandate within the first few months of his Presidency. Clinton's strategic role model is Ronald Reagan, who won a series of stunning legislative victories in the first six months of his Administration. But in 1981 Reagan had a clear electoral mandate. Without amassing a popular majority at the polls, Clinton simply cannot lay claim to a mandate, making the political maneuvering with Congress a tricky business. If Clinton is not bold enough, he is in danger of losing political momentum and thus his agenda. If he is too bold, without sufficient support for the initial push, he squanders even more precious political capital and shortens the honeymoon with the Hill.

Democratic control of Congress should guarantee early success for the new President. But those big Congressional majorities are not easily tamed. And for all the new faces in the House and the Senate, the Congressional leadership is the same: In the House, Rostenkowski runs Ways and Means; Stark runs the Health Subcommittee of Ways and Means; Dingell and Waxman will be at the helm of their respective Energy and Commerce panels. In the Senate, Kennedy of Massachusetts will run Labor and Human Resources. For health care policy, the same leaders will be in charge. But these powerful committee chairmen in the House and Senate, who have been blocked, thwarted and frustrated for 12 years by Republican White House rule and veto threats, naturally yearn to exercise a little muscle of their own.

Already, there are discernible tensions between the incoming White House team and the Kings of Capitol Hill. Clinton, for example, echoing Presidents Reagan and Bush, wants a line item veto as a weapon to combat deficit or pork barrel spending. But Senate Majority Leader George Mitchell of Maine is flatly opposed. Clinton also wants to cut Congressional staff by 20%, as a first major step in Congressional reform. But House Speaker Tom Foley of Washington is also signalling opposition. Clinton's proposal to open up military service to homosexuals is drawing sharp opposition from Senator Sam Nunn of Georgia, Chairman of the Senate Armed Services Committee. Getting sidetracked by hot- button social issues, like ending restrictions on homosexuals in the military, for example, is hardly a prescription for early political success.

The New Regime

Every four years, the American people do not simply elect a President. They also elect-indirectly-about 3000 people, the President's appointments, who will serve as the chief managers and policymakers of the Executive Branch of the Federal Government.

With White House Policy Advisor Gail Wilensky, HHS Secretary Louis Sullivan, Undersecretary Kevin Moley, OMB Associate Director Tom Scully, and OMB Director Richard Darman gone, who will replace them? The most likely pool of the new Administration's talent is, of course, the President-Elect's own transition team headed by Vernon Jordan. With a few notable exceptions, members of the Clinton transition team, now preparing policy and management proposals for the new Administration, are genuine liberals, many of them from the congressional staffs of liberal Democrats.

On health care policy, the Clinton transition effort is being headed by Judith Feder, PhD. A Harvard political scientist, Feder served as an advisor to the Clinton campaign and previously was chief of the Center for Health Policy at George- town University. More importantly, Dr. Feder was former Staff Director of the Pepper Commission, the bipartisan Congressional task force headed by Senator Jay Rockefeller of West Virginia, one of the leading Senate advocates of the ``play-or-pay'' approach to health care reform and a strong proponent of the RB- RVS Medicare rules. As a health care policy analyst Feder has been highly visible in defending the play-or-pay option in health care forums around the nation. (The Clinton team has moved discernably away from that option in favor of something resembling ``managed competition.'' Feder told the Washington Post and others that she is not issuing any policy pronounce- ments, but simply preparing the options to assure ``universal'' access and cost control.

While a top position in the transition team does not guarantee a top government job, Feder is likely to be offered a high-level position in the Clinton Administration. Because of the high priority Clinton has given health care reform, it is likely that the nerve center of health-care policy will be centered in the White House rather than HHS or OMB. It is unlikely, in other words, that Clinton will have the equivalent of a Richard Darman, the current OMB Director, meddling in the details of his health policy.

Even if the White House becomes the brain of health care policy, HHS will be the enforcer. Liberals can barely contain themselves at the prospect of Marion Wright Edelman, current chief of the Children's Defense Fund, as the a contender to replace Louis Sullivan as Secretary of the Department of Health and Human Services (HHS). Another contender is Jocelyn Elder, Clinton's health department chief from Little Rock, Arkansas. With a budget over $525 billion, HHS is the center of most of the day-to-day policymaking in health care and a repository of a vast regulatory authority.

The scope of health policy will be defined by the transition group. Working with Feder on the transition team is Atul Gawande, Clinton's health care advisor during the campaign. Unlike Feder, Gawande's pedigree, however, is hardly liberal. He is a former staffer of Congressman Jim Cooper, the Tennessee Democrat who authored the Conservative Democratic Forum's ``managed competition'' option. The CDF plan is Backed by the ``Jackson Hole Group'' and inspired by the theoretical work of Alain Enthoven, the Stanford University economist who is considered the intellectual godfather of ``managed competition.'' Whatever the final shape of the Clinton health care proposal, it is clear that the efforts of Cooper and his conservative Democratic allies in the House have made a strong impression on Clinton who, along with Vice President-Elect Al Gore, has repeatedly used the rhetoric of ``managed competition,'' especially in the final weeks of the Presidential campaign.

While Feder and Gawande are the main players, others likely to have influence or positions in the new Democratic Ad- ministration include: Bruce Fried, who is likely to push for comprehensive reform with tough controls on the prices of prescription drugs; Ken Thorpe of the University of North Carolina Department of Health Policy and Administration, who is a strong advocate of government ``global budgets''; Robert Berenson from the American College of Physicians; and John McGrath, formerly of Jimmy Carter's transition team, who is an opponent of a single-payer, Canadian-style approach, who believes that the health care problems are best resolved in and though the private sector.

While Clinton's immediate health care policy group is generally characterized by support for a heavy regulatory approach, there are exceptions, providing political junkies with a lot of betting opportunities at Clinton's casino. Most impor- tantly, the man who heads the overall domestic policy effort for the transition team is Al From, the former chief of the Democratic Leadership Council (DLC). Because the DLC was a deliberate creation of Clinton and other Democrats who wanted to shed the Mondale-Dukakis ``liberal'' image of party, the role of Al From and other DLC activists is critical.

From, a self-described ``moderate,'' carefully charted a course away from the old ``tax-and-spend'' image of liberal Democrats, and the success or failure of his efforts will be readily apparent, if not in the transition reports to Clinton, then in the first few months of a Clinton Presidency. On health care in particular, From is regarded as friendly to free markets and unfriendly to government control and regulation. Another key figure is Ira Magaziner, a key Clinton economic advisor, who is reportedly friendly to the ``managed competition'' approach.

A lot hangs in the balance. Right now the Clinton Plan is composed of three intellectually incompatible elements: (a) a flat mandate on employers to provide health insurance, coupled with new tax subsidies to employers; (b) a Canadian-style global budget and a set of government price controls on doctors and hospitals; and (c) a set of government-sponsored organizations to determine qualified plans for competition in a new market, a market characterized by ``managed competition.'' Capitol Hill observers don't think that the package as broadly outlined can fly; that the market-oriented reforms and price controls, for example, go ill together. Robert Reischauer, head of the Congressional Budget Office, has already dubbed ``managed competition'' an oxymoron, like ``socialist profits.'' And conservatives see more management than competition in the scheme, and wonder whether Clinton and Company are just draping moderate rhetoric over liberal policies. The answer will be clearer during the next two months.

Perhaps the most important external factor determining the future character of the Clinton Administration is the role of the Progressive Policy Institute, the new Washington think tank spawned by the Democratic Leadership Council. As a center of intellectual influence, PPI, friendly to free markets, may surpass the Brookings Institution or the Urban Institute as an idea factory for Democratic Administrations.

The Progressive Policy Institute is in the process of developing a comprehensive policy plan for the Clinton Administration entitled ``Mandate for Change'' to be released in mid-December, containing a detailed outline for foreign and domestic policy, including health care reform. Strategically, the ``Mandate For Change'' is explicitly modelled on the conservative Heritage Foundation's 1980 tome ``Mandate for Leadership,'' which outlined in minute detail tax, budget, management and regulatory reform proposals for the incoming Reagan team in 1981. Capitol Hill observers wonder whether the PPI will play the same decisive role for a Clinton Administration as the conservative Heritage Foundation played in shaping the policies and programs of the first four years of the Reagan Administration. Moderate and conservative Democrats, wary of the enormous political power of liberal special-interest groups, hope that PPI's role looms large. Rep. Charles Stenholm, for instance, Texas Democrat and the leader of the Conservative Democratic Forum (CDF) in the House of Representatives, has publicly exhorted Clinton to remember who he is and to dance with the ones who ``brung ya'' to Washington, especially on issues like the budget, the line item veto, and health care reform on the ``managed competition'' model.