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

Volume 64, No. 3 March 2008


Listen to the rhetoric on "health care reform," with its "progressive" tilt. How often do reformers use words such as "excellence," "breakthrough," "optimal," or "innovative"? And how often do they refer to the need to eliminate "disparities," offer universal "basic" coverage, and put the brakes on life-saving or enhancing technology, and the fetters on capitalism?

Some still call for the cliched "level playing field" the situation under a nomocracy or disinterested government, which applies the rule of law without regard to outcome. But a complex regulatory regime is inevitably rigged in favor of preferred players. One may complain about a particular outcome, but today, writes Joseph Sobran, most politicians and voters are unthinking teleocrats, who want government directed toward achieving a desired outcome (FGF 1/24/08).

Reformers' goals include "standardization of treatment" one reason to promote electronic records (JAMA 2008;299: 507-509). They'd like to reduce physicians' performance to one summary score (N Engl J Med 2007;357:2649-2652), and to eliminate "wide variations in practice patterns" with both over- and undertreatment (N Engl J Med 2008;358:549- 551).

Redistribution v. Creation

Reformers want to shift funds from subspecialists to generalists, from profit centers such as cardiac catheterization labs to loss centers such as emergency rooms, and of course from the rich to the poor. Cost shifting to patients is considered objectionable (ibid.), while government routinely shifts costs onto the private sector. According to the Minnesota Hospital Association, underfunding from government programs such as Medicare and Medicaid exceeded $1.3 billion in 2006.

The "sliding scale" helps to cancel the effect of income differentials, by forcing the "haves" to pay more. For example, participant fees in the Healthy San Francisco (HSF) program range from $0 to $675 per quarter. Those whose income is 500% of the federal poverty level pay $450; those who earn $1 more than that pay $675 a tax of $900/y on that $1. The HSF provides "universal access" to services offered within the enrollee's "medical home" (N Engl J Med 2008:258:327-329).

Self-insured people with a high income also have to pay more in absolute terms before they get a tax deduction for medical expenses. The threshold of 7.5% of adjusted gross income is up from 5.5% in 1983 and 3% before 1983.

It is apparently assumed that wealth and medical services are natural resources that renew themselves automatically, at least within certain limits. Reformers overlook the need for work and the role of "disparities" in providing an incentive to work. As Sean Parnell of Heartland Institute points out, few people in the upper income brackets work less than 50 hr/wk. Welfare pays the equivalent of an $8/hr job, up to as much as $36,400 pre-tax wage equivalent in Hawaii, according to a 1995 report by the Cato Institute. For legal residents, the work/ welfare disparity may be negative or insufficiently positive.

In physics, disparities as in pressure or temperature are necessary for work to occur. The state of complete equality is known as the heat death of the universe.

In place of natural incentives, reformers would substitute other driving forces (rewards and punishments), such as the "levers" in use by the British National Health Service (JAMA 2007;298:1445-1447). Tellingly, the strategy for gaining support, as outlined in a 1993 memo from Hillary Clinton to Jay Rockeller, emphasized selling the concepts, not the mechanics.

Would proposed universal systems actually bring about the desired equality? National health insurance in Canada and Britain may have caused more inequality than otherwise would have existed. Among the nonelderly white population, low-income Canadians are 22% more likely to be in poor health than their American counterparts (John Goodman, NCPA Health Alert 11/26/07).


Reformers are puzzled that the U.S. system has not collapsed, despite the "incontestable consensus" that it ought to. The "nonsystem" with its stubborn localism, voluntarism, privatism, and federalism has an "eerie stability." Reformers need to work around "formidable medical-cultural continuities" to bring about "real change" (N Engl J Med 358;325-327).

One barrier is fiscal. California's anticipated $14 billion budget deficit may have killed Gov. Schwarzenegger's proposed $14 billion Massachusetts-style plan. Frustrated state reformers look to Washington, D.C., which does not suffer from the states' constitutional handicaps: the requirement to balance their budgets, and their inability to print money.

In fact, as Star Parker pointed out, the government doesn't really have any money. Not even the federal government. Now, there is the terrifying prospect that Americans as a whole don't have any money either: see Figure 2, p 4 of the enclosed September 2007 issue of Access to Energy. This shows the world currency price of American dollars divided by the price of gold the ratio has dropped 87% since 2001.



Pay for performance, a "fundamental change...that could transform how healthcare is delivered more than the current prospective payment system and managed care plans," could become in its next generation pay for outcome (HealthLeaders Media 1/21/08). And what is likely to be the desired outcome for retiring baby boomers?

One definition of "to level" is "to equalize in height, rank, quality, etc." Another, "to knock to the ground, demolish, " could be the effect of "healthcare reform" on America.

Financial Indicators

  • U.S. Treasury bills and bonds could be downgraded from AAA to junk status, warned Moody's. Using the ordinary accounting standards required of private business, the U.S. government is bankrupt. The annual deficit is $4 trillion, not $200 billion as reported, if future obligations are included. There is no possibility that the current debt of $60 trillion, which includes current and future obligations such as Medicare, Social Security, and pensions, will be paid. "So our elected officials see no reason to avoid increasing the debt," writes Arthur Robinson (Access to Energy, August 2007). "Failing to pay $60 trillion or $100 trillion what's the difference?"

  • U.S. non-borrowed banking reserves went from $37 billion to $199 million in the past month, according to the Federal Reserve Board website. Banks are having to borrow from the Fed. "Simply put, the U.S. banking system has no reserves," writes Paul Lamont (www.financialsense.com 1/30/08).

  • The U.S. personal savings rate has been negative since the second quarter of 2005. It was -1.1% in 2006, compared to 2.2% in 1999-2004, 4.6% in 1993-1998, and 8.6% in 1950-1992. The decrease could stem in part from the surge in energy prices, which is also beginning to impact food prices, especially as food is being burned as fuel (ethanol). Concerns are overstated, said the Federal Reserve Bank of New York in May 2007 (www.newyorkfed.org).

  • The Gold Anti-Trust Action Committee (GATA) charges that the U.S. government is engaging in international swaps and other market manipulations to suppress the price of gold, writes Jerome Corsi (WND 1/25/08). Corsi also reports allegations that the Fed is using repurchase agreements to depress the stock market, in an effort to cushion the pernicious effects of its money printing (WND 2/5/08).


The Final Outcome?

While politicians and candidates promise universal care, they don't reveal the truth about how it will happen, states Ron Panzer of the Hospice Patients Alliance. "Dark Hospice is the 'final solution' to the Social Security mess looming with the baby boomers," he writes. Mandatory enrollment means "limited treatment options and yes, mandatory death when it serves the purpose of those in power." While some hospices are faithful to their original humanitarian mission, others are carrying out what Panzer calls the "royal 'bait and switch' con of the century." He believes thousands are being killed by treatment denial; placement of non-terminal patients in hospice and labeling them "terminal"; intentional use of nonsanitary procedures and failure to treat the resulting infections; deliberate dehydration; and intentional overdosages of opioids, sedatives, and paralytic agents. While an "angel of death" is occasionally prosecuted, law enforcement agencies routinely disregard reports by relatives who think a loved one was killed (www.hospicepatients.org) .


"Socialized medicine is 'good' because of 'universal coverage.' Overlooked are the 15,000 deaths in France during the August 2003 heat wave. Health workers...were away at the seashore.... The poor and elderly had 'universal coverage' with six feet of dirt."

David Stolinsky, M.D. Stolinsky.com


Colorado Proposes More Cost Shifting

Colorado's Blue Ribbon Commission on Health Care Reform cites the unfairness of cost shifting to pay for uncompensated care as a rationale to force people to buy insurance. The result of its proposals: more cost shifting, write Linda Gorman and R. Allan Jensen in a minority report. Taxpayers who have health insurance would be forced to subsidize families of four making up to $82,600/y, many of whom pay for their own care now. More would also be forced onto Medicaid, which generates far more cost shifting than the uninsured do. The report, available at www.i2i.org, is probably applicable in your state also.

Medicaid payment covers only the marginal cost, which applies to the last unit of production, Gorman explains. It doesn't work to apply this to 30 50% of production because somebody has to pay the overhead. In Massachusetts, all funds that went to hospitals for disproportionate share payments for uncompensated care went to pay for Medicaid losses.

For-profit hospitals may do less cost shifting, Gorman writes. Instead, based on limited data mostly from California, they apparently reduce service intensity. There is some evidence that this does affect morbidity and mortality.

The proposed Colorado "basic health plan" would load up on cheap primary care, but includes only $25,000 for hospital care and a $50,000 lifetime maximum. Making this plan mandatory "is a tacit admission that consumers would not buy it by choice," writes Steve Hyde in Rocky Mountain News (Consumer Power Report 1/25/08).

It is a fallacy to assume that increasing the size of the insurance pool necessarily decreases costs, Gorman notes. Expanding insurance can increase costs by bringing higher risks into the pool. The increase in utilization alone, from insuring the uninsured, would raise costs 3 5%, according to estimates by Mark Litow. That doesn't include bureaucratic costs. "Under programs like Medicaid that are designed to look like insurance," Gorman writes, "overhead has got to be larger because so much paper flies around and so many consultants are hired to do this and that."



The promised savings from reduced uncompensated care in Massachusetts haven't materialized (ibid.). The state is negotiating with the federal government to cover half of the higher-than-expected costs. In opposing the Schwarzenegger plan, which was modeled on the Romney plan, California unions argued that workers would be forced to divert funds from more pressing needs for coverage whose price and quality they could not control. That's exactly what is happening in Massachusetts, writes Shikha Dalmia (Wall St J 1/31/08). The uninsured who don't qualify for government help might well find it cheaper to pay the penalty up to half the price of a standard policy: that is, pay to remain uninsured. "This is legalized extortion: TonySopranoCare."

AAPS Files Amicus in D.C. Gun Ban Case

In an amicus brief opposing those filed by the American Public Health Association (APHA) and the American Academy of Pediatrics (AAP) in District of Columbia et al. v. Dick Anthony Heller, AAPS points out the bias and fraud in reports frequently cited to support gun control.

"The attempt to shroud political gun control arguments in the white coat of physicians and public health officials is utterly baseless, and constitutional law should not be influenced by it," writes Andrew Schlafly in the AAPS brief.

APHA and AAP consider only the harms inflicted by firearms, while neglecting the undeniable benefits of self-defense and deterrence against crime, terrorism, and tyranny.

"The same logic underlying their briefs' approach to gun control could be used to insist on a ban on automobiles and swimming pools...." It could also be applied to vaccines, leading to "the false conclusion that all vaccination programs are harmful because all vaccines have some side effects."

Guns are primarily defensive weapons, and "the gun is the best protector for the weak and vulnerable in society because it removes any advantage held by a stronger aggressor," AAPS argues. "Guns are not pathogens, and the loss of lives from guns is not a public health phenomenon.... Vaccines could be taken as a public health analogy for guns."

The AAPS brief is posted at www.aapsonline.org.


FSMB Wants Unfettered Record Access

Despite a number of losses in court, the Maryland State Board of Physicians continues to appeal its case against psychiatrist Harold Eist, M.D., who delayed releasing patient records, citing a belief that patient consent was required. Although he eventually released the records and was exonerated of charges that he had violated the Medical Practice Act by providing substandard care, the Board has relentlessly pursued the charge of failure to cooperate with its investigation. In an amicus brief supporting the State, the Federation of State Medical Boards (FSMB) argues: "If upheld...this case would set precedent for health care providers and patients to object to disclosure of PHI [protected health information] to not just the regulatory boards, but to all governmental agencies." HIPAA, notes FSMB, specifically states that agencies engaged in health oversight activities do not need patient permission or even notification to obtain PHI when authorized by law.

All that is needed, states FSMB, is for a complaint to name a licensee and contain an allegation that, if true, would violate the Medical Practice Act. It need not be credible.


Tip of the Month: In a breach-of-contract case brought by an orthopedic surgeon (Scott v. Beth Israel Medical Center), a New York court ruled that e-mail communication between a physician and his attorney may be discoverable in litigation, even when marked "privileged and confidential" ( N.Y.S.2d , 2007 WL 3053351). The communications occurred over the hospital's server, and because they violated written policy prohibiting personal use of hospital computers, the physician and the attorney were deemed to have waived the attorney-client privilege. Moral: be sure to learn and abide by the rules if using the hospital or clinic's computer for communications (Kern Augustine Conroy & Schoppman, StatLaw Update 2007 Medical Society Bulletin Counties of Erie and Chautauqua, winter 2007, www.eriemds.org.)


Provider Identity Theft

If someone gets hold of a physician's number and bills Medicare with it, the physician "could be at risk for submitting false claims," stated an attorney with Fox Rothschild in Pittsburgh. If you suspect fraudulent use of your number, call your carrier and request a list of your current practice locations and of your utilization for a specific time period. Also keep a record of referred services or items of equipment so you can identify legitimate claims. If your provider number is inactive for four quarters, CMS will deactivate it (MCA 1/28/08).


Operation Whack a Mole

Under an agreement with the federal government, New York State must recover a minimum of $644 million from the Medicaid program. The government is using data mining to identify "aberrances," and providers are advised to use similar methods of analysis internally (BNA's HCFR 1/30/08).

Every dollar invested in data-mining software is estimated to return $13 (Neurology Today, October 2007). The government has also hired mercenaries known as "Program Safeguard Contractors." States that have their own false claims acts meeting certain standards get a share of the proceeds.

Neurologists who offer in-office procedures are especially likely to be whacked, writes New York neurologist Lawrence Huntoon, M.D., Ph.D. "What better way for the government to 'save money'?" he asks. Failure to collect a copayment or to document a single element in Medicare E&M guidelines could lead to prosecution; the conviction rate is about 80%. Outliers who use higher level codes will be treated as outlaws.

"The name of the operation lets physicians know where they stand," observes Dr. Huntoon. "It's like comments a few years ago that pain management physicians would be treated like the Taliban."


Keeping Attorneys Out of Your Life

Plaintiffs frequently allege that physicians did not return calls. Calls from a land line leave no record thus, you might want to return calls from your cell phone. To document what was said, you could use a call-in transcription service or a separate voicemail on your office telephone for transcription of after- hours messages (Medical Justice News Bulletin 1/8/08).


Are Risk Retention Groups a Way Out?

To keep New York physicians from bolting to avoid 15 20% liability insurance premium increases in each of the next 5 years, legislation is expected to mandate that physicians be covered by a company licensed to operate in New York. According to correspondence from its CEO, NY physicians are "free to obtain comprehensive medical malpractice coverage from J.M. Woodworth RRG [Risk Retention Group], Inc. at competitive rates without fear of increases imposed by state regulation or legislative acts to protect traditional carriers."

RRGs are governed by federal statute, which requires regulation by the state of domicile Nevada, in the case of R.G. Woodworth. There are 147 RRGs providing malpractice coverage in the U.S., and 34 are registered in New York.

"A possible challenge based on the Supremacy Clause in the U.S. Constitution might be forthcoming," suggests Dr. Huntoon, if NY tries to override the federal law.


Aiming for the Middle. For a mere $299 you can purchase a book to see where your practice is on the E/M Bell Curve. The special software will let you know when you are straying into dangerous end-of-the-curve territory. It will lead to more middle-of-the-curve gaming. Physicians can make sure they are not submitting "too many" level 4 or 5 codes whether they are warranted or not. It is probably cheaper for the physician to downcode to stay in the middle of the curve rather than incurring the horrendous expense of having to defend against an accusation of Medicare fraud or a demand for refunds by insurers. The more physicians congregate toward the middle of the curve, the greater the risk of audit for physicians toward the end of the curve. Sick patients will need to be avoided because they cannot be served within the middle of the curve.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


The "Medical Home." This is an instructive concept illustrating the politics of the destruction of private medicine. The difference between "a medical home" and "my doctor" is very important. The medical home is a PR rebranding effort to turn a gatekeeper into something warm and fuzzy that envelopes one like the education blob. Running the term through PubMed yields 233 hits, and few empirical studies. The modern version goes back to a 1988 article in the Hawaii Medical Journal. Then there's "Integrated School Health Center: a New Medical Home." A 2007 abstract by WC Livingood in Fam Community Health finally tells the truth: "the concept has strong philosophical foundations, but the science...is not as well developed." "Logic models" and "mixed method design" provide "systematic and rigorous approaches to observation while retaining the complexity," which tends to be lost with randomized controlled trials that control and reduce the number of variables. I think this means there isn't any empirical support, so we'll rebrand the philosophy, call it logic, and try getting the public to pay for more pork.
Linda Gorman, Independence Institute, Golden, CO


Republican Socialism. Mandating individual insurance is the latest Republican fad, from Massachusetts to California, displaying woeful ignorance and hubris. They are saying, "I will tell you what to do, and you have a 'personal responsibility' to do it." In fact, those who refuse to purchase insurance are sending a valuable signal: the product is not worth purchasing. Only 12% of respondents to a J.D. Powers survey said they trust their "health plan" to deliver reliable information. Many plans are bloated with waste, delivering $0.45 in services per $1 premium. We need innovation, not mandates.
Greg Scandlen, Consumers for Health Care Choices


The Tax Burden Counts. Using the most conservative estimates for the cost of collecting taxes, Ben Zycher has shown that the excess burden of a universal Medicare program would be twice as high as the administrative costs of universal private coverage. John Goodman, Ph.D., NCPA Health Alert 11/26/07


Obstructing Quality. Increased trade in services combined with technology could do wonders for medicine. But this cannot be achieved through greater government control. When European kids wanted to send pictures with their cell phones, billions of euros were invested, and they got what they wanted. But when Europeans want more and better medical care, and are ready to pay more, the state prevents them from doing it.
Ernest J. White, WAR Report 9/14/07


Obligations. Contrary to common assertions, as in Wyden's Healthy Americans act and a Colorado reform proposal, health care is not a societal obligation. In America, the societal obligation is to limit government and defend the liberty to live unencumbered by a government that redistributes wealth to enable politicians to be re-elected.
David McKalip, M.D., St. Petersburg, FL


Mergers Circumvent Antitrust. I think that UnitedHealth Care buys up very small competitors because individually the acquisitions are too small to alarm the Dept. of Justice antitrust division. Attempts to acquire a large competitor would draw scrutiny; the large number of small acquisitions has the same anticompetitive result in the long run. Donna Kinney, Texas Medical Association


Practice Swapping. Vacationing Canadians told us that some surgeons get around provincial limitations on the number of procedures they may do in a calendar year by trading practices with a surgeon in another province in the middle of a year, fulfilling their quota twice each year. Waiting lists may be shorter than they otherwise might be as physicians figure out ingenious ways to get their work done.
Alieta Eck, M.D., Somerset, NJ


Financial Security. How many people know that the liabilities for Social Security and Medicare only extend contractually for the next two years? With pay-as-you-go financing, what else can you reasonably expect? The Social Security Act contains a clause that expressly reserves to Congress the right to alter, amend, or repeal any provision of the Act. People covered by it can rely on it with complete assurance that they will be compelled to contribute regularly to this fund.
Don Levit, CLU, ChFC, Sugar Land, TX