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

Volume 63, No. 5 May 2007


Trying to address coverage and cost problems simultaneously is like "driving a stick shift car working accelerator and clutch together, to avoid either stalling or racing the engine while going nowhere," write Alan Sager and Deborah Socolar, directors of the Health Reform Program at Boston University School of Public Health (see p 4).

As long as the drive shaft is disconnected from the engine, progress is of course impossible. This is exactly what govern- ment-subsidized third-party payment has done for the past 65 years. But allowing normal function of price signals and profit incentives which modulate and drive the economy is generally anathema to reformers. Instead, the idea is to manage the driver and interpose ever more gears and regulators.

"[B]usinesses, governments, and individuals all should contribute to managing and financing a new American health care system" is one of the four principles announced by the Better Health Care Together campaign (www.walmartfacts.com/articles/4800.aspx). And the first principle, according to Wal-Mart, other businesses, unions, and nonprofit organizations, is that "every person in America must have quality, affordable health insurance coverage" [emphasis added].

Wal-Mart uses computers to manage its inventory. So why is the "health care delivery process" so far behind? The same loaf of bread gets scanned the same way in grocery stores nationwide. So why can't we get "A" doctors and "C" doctors to prescribe the same way, ask executives of McKesson, America's largest health- care-services company, with revenues of $88 billion in 2006 (Fortune 2/19/07).

First, a common language is essential. "[P]hysicians, in common with all health care workers, are likely to be compelled to use SNOMED CT" despite the paucity of formal assessment of its suitability. One problem: The automatic rules used for building hierarchies can lead to nonsense relationships (Mayo Clin Proc 2006;81:729-731).

Then, consensus on "best practices" is needed. "Unanimous" consensus was achieved on a colon cancer screening protocol that would, in the private judgment of the participants, reduce mortality by between 0% and 100%, with responses randomly distributed (BMJ 1991;303:798-799).

Better coordination is necessary: in the U.S. "we have 200 groups working on the same 15 problems." More importantly, to achieve Professor Eddy's "fantasy of a health room equivalent to the control room at an airport" (ibid.), a "regime of truth" is imperative: "evidence-based" medicine (EBM).

Control of EBM is in the hands of institutional medicine, "whose authority is rarely challenged or tested probably because it alone controls the terms by which any challenge or test would proceed" (Int J Evid Based Healthc 2006;4:180-186).

As the randomized controlled trial is the gold standard, 98% of the literature is deemed scientifically imperfect. An "unvarying, uniform language an ossifying discourse" is increasingly being mandated, thwarting both creativity and pluralism in the name of efficacy.

Newspeak may be efficient, write Holmes et al. (ibid.), but it radically restricts the ways in which humans are able to think making them the "servo-mechanism of their own technology." The process "operates hand-in-hand with powerful political or `power' structures" and "gears and sustains scientific assertions in the same direction: that of the dominant ideology." This comes to exclude alternate forms of knowledge and acts as a "fascist structure."

This "panoptic kind of `expert seeing'...determines in advance what will appear," and "negates the personal and interpersonal meaning of the world."

There's a hidden political agenda, and "medicine...assumes an increasingly important place in the...machinery of power."

Enforcement of the new norms requires massive data collection. CMS, which annually disseminates more data than any other public or private entity, has announced a new data warehousing initiative to centralize information on Medicare and Medicaid beneficiaries (Health Care News Feb 2007).

The first step in getting physicians to buy in is financial incentives: "pay for performance." In 2005, 42% of P4P programs incorporated specific information technology (IT) requirements (JAMA 2007;297:740-744). This will help build the control infrastructure. Group incentives will create peer pressure for conformity. And the next step is already in place.

"Health care fraud enforcement" (p 3) has been a priority for both public and private payers over the last 10 years, spurred by the HIPAA provisions that were implemented earliest: doubling to $160 million the mandatory funding to the HHS Office of Inspector General (OIG). Health care entities have been forced to develop compliance programs to ensure that they are "aligned with government expectations."

Former IG Richard Kusserow noted that electronic claims data is one of the OIG's most important oversight tools.

And for getting people's attention, and producing behavioral change, nothing works better than criminal convictions. "Quality" is increasingly being "encouraged" by federal prosecutors through the False Claims Act, ever broadening its scope through "implied certification," extreme theories of causation, and the like (BNA's HCFP 3/14/07).

Staunching the financial hemorrhage from entitlement programs, by controlling doctors, is after all a national security issue, as shown by Comptroller General David Walker's Jan 23 testimony to the House Committee on Budget. Merely wiping out waste, fraud, and abuse will not be enough (see pp 2,4).

Professionals can't be "managed." To remain a profession, medicine needs a clutch, a disconnect from the government managers which requires renouncing the government money.

An Unsustainable Course

The nation's financial condition is "worse than is widely understood," writes David Walker. "Continuing on our current fiscal path would gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately even our domestic tranquility and our national security" (GAO-07-389T).

Walker estimates the government's total reported liabilities at $50 trillion, or four times the GDP, up from $20 trillion or two times GDP in 2000. The single largest contributor was the Medicare drug benefit passed in 2003.

Change is imperative: "A government that in our children's lifetime does nothing more than pay interest on its debt and mail checks to retirees and some of their health providers is unacceptable."

The average household burden of federal liabilities is 9.5 times median household income.

If no action is taken now, balancing the budget in 2040 could require cutting spending by 60%, or doubling federal taxes. Growth, ending earmarks, stopping the war, and letting tax cuts expire will not be enough.


Incentives for Behavioral Change

Under pay for performance (P4P), financial incentives might be as little as $2 per patient, but must be carefully calibrated to cover the cost of data gathering and diverting efforts from other activities. The British have put up to 30% of a family physician's income at stake.

Evidence linking such programs to quality improvements is "thin" (Epstein AM, N Engl J Med 356:515-516). They could well result in physicians' adopting insurers' policies of "cherry picking and lemon dropping." Some patients have expensive illnesses. And nearly three-fourths of patients admit to some form of noncompliant behavior. The economic impact of patient noncompliance has been estimated at nearly $100 billion/year (NCPA press release 12/15/06). If physicians were held responsible for this, the only rational economic course would be to screen prospective patients (Med Econ 3/2/07).

Already, "incentives" are becoming punishments. If UnitedHealth patients use out-of-network labs, the Plan could fine the physician $50, and if such patient behavior persists, doctors could face a "change of eligibility" in United's P4P and quality-rating programs (amednews.com 3/5/07).

Empire Blue Cross/Blue Shield issued a contract amendment that would have made the referring physician financially responsible if he referred a patient out of network, unless the patient executed a signed agreement to pay the out-of-network fees. The company retracted the amendment because of complaints by the state medical society to the attorney general and state insurance and health departments.


Pay for Population Health

Only 20 studies have evaluated P4P, with mixed results, but it's already time to move forward to the next, still more complex level: improving the average health of the U.S. population while reducing disparities and controlling costs. Can the next generation afford for us to treat today's injuries before working to prevent injuries? We need a "more balanced health investment portfolio," diversified into socioeconomics and behavior as well as health care, writes David Kindig of the University of Wisconsin (JAMA 2006;296:2611-2613).


The Wal-Mart Effect

Labor unions and others desiring a government takeover of medicine have been targeting Wal-Mart as the potential ally that would clinch their final victory. The largest employer in the history of the world, Wal-Mart has an enormous influence on business practices. It has a startlingly thin profit margin of 4 cents per sales dollar or about $6,000 profit per employee, in contrast to Exxon-Mobile's $300,000. And the cost of employee benefits is outpacing its profits.

Wal-Mart is accused of foisting its responsibilities onto Medicaid, although actually its workers and their dependents are less likely to be on Medicaid than are their counterparts elsewhere in the retail sector. Wal-Mart's medical insurance benefits are more accessible than those of many of its competitors. "Fair share" bills aimed at Wal-Mart, like the one recently overturned in Maryland (AAPS News of the Day 7/25/06) are a tactical maneuver to leverage industry support for nationalized health insurance.

"There is every technical reason why Wal-Mart should support universal health care and shift the burden onto the only entity in the country bigger than itself: the federal government," writes Atlantic senior editor Joshua Green.

None of the proposed approaches would be "the dreaded `socialized' medicine," Green states "they would be organized by government but operate through private doctors and health plans." [See dictionary definition of "fascism."]

"Employers would still contribute something toward health care, but their contribution would go through the government, and in exchange they would at last receive a measure of cost predictability" (Atlantic Monthly, June 2006).


Unintended Consequences of Measuring "Quality"

The medical director of one of California's largest managed- care organizations said: "Everybody's doing what they're required to do in responding to the quality measurements.... Every ounce of energy is being diverted to responding to these; not one ounce is going into any other aspect of quality." Time being a limited resource, "[w]hen physicians are preoccupied, for example, with recording yet again that they have counseled a patient to stop smoking, they may not take the time to investigate a subtle sign of a serious medical condition,...or summarize a complex chart in order to make a helpful referral to a specialist." Quality measurement may "reduce the degree to which physicians act professionally" [i.e. putting patients first] (N Engl J Med 1999;341:1147-1150).


AAPS Calendar

Apr 19, 26. Arizona chapter meetings.

Jun 8-9. Thrive, Not Just Survive VI, and Board of Directors meeting, Milwaukee, WI.

Oct 10-13. 64th annual meeting, Cherry Hill, NJ.

Health Care Fraud Enforcement

When the Bureau of National Affairs launched the biweekly publication Health Care Fraud Report 10 years ago, HHS OIG Chief Counsel Mac Thornton doubted there would be enough activity to support a stand-alone publication.

In 1996, AAPS pointed out to congressmen that a large portion of the Clinton Health Security Act had been imported into an initially thin bill meant to allow workers to continue their employer-owned insurance during the transition between jobs: the Health Insurance Portability and Accountability Act or HIPAA. We were told that we were the first to point this out. Among the troublesome aspects were the criminalization provisions that reporters found too draconian to believe.

The bill passed with the endorsement of the AMA.

"The AMA does officially support junkyard dogs, but as long as they are FBI agents," AMA General Counsel Kirk Johnson told the Senate Judiciary Committee (AAPS News, June 1996).

HIPAA established the Health Care Fraud and Abuse Account (HCFAC), and with this steady funding source, civil actions and prosecutions have burgeoned. There was a temporary slowing just after the terrorist attacks of Sept 11, 2001, as resources were diverted to fight terrorism.

HIPAA has enabled a huge advance in cooperation of various government agencies, and in private-public information sharing fraud being an "all-payer problem."

Since the first year of HCFAC, health care fraud convictions have increased by 50%, from 363 to a record 547 in 2006. About $11.5 billion has been "recovered."

While $2 billion per year is a small fraction of the $425 billion Medicare expects to spend this year serving 44 million beneficiaries, the impact of fines and prison sentences as long as 30 years or life exert substantial leverage.

The False Claims Act (FCA) has emerged not only as the government's "most reliable extractor of financial spoils; it has also become a weapon for inducing behavioral change in ways arguably far beyond its original intent. The FCA and its ramifications now dominate our practices," states Washington, D.C., attorney John T. Brennan, Jr.

Law enforcement is intruding into "policy fraud issues" where practices are not obviously wrong. One trend is for the government to allege that an arrangement is a "scheme to defraud" Medicare although it cannot point to a specific regulation that was violated.

Despite all the enforcement activity, health care fraud is said to be an "ever increasing problem."

Large, faceless companies may pay millions of dollars in defense costs and settlements, but the company survives and no one gets hurt personally. Despite far less significant transgres- sions, the solo practitioner, unable to afford a fair fight, "runs the very real risk of having his world turned upside down," Brennan said (BNA's HCFR 3/14/07, special anniversary issue).


"Surge" Operation in Florida

The U.S. attorney's office in south Florida is mounting a new operation to look at real-time billing for activity spikes that could enable them to catch fraudsters in the act.

A data mining program called Medi-Medi, which combines Medicare and Medicaid claims to comb for patterns, is running in "key states" and expected to go national soon (Medicare Compliance Alert 3/19/07).


Refund Overpayments Promptly

A cardiology practice in Tennessee paid $2.9 million in civil fraud claims and restitution because of overpayments dating back to 1995. Attorneys advise not letting even the smallest overpayments fall through the cracks. It may be better to send refunds to the carrier which has discretion to report to OIG. There is also the option to send it to the OIG. If one follows the very expensive self-disclosure protocol, instead of letting the OIG investigate as it chooses at its own expense, there is a possibility of leniency (MCA 3/19/07).


Quality Data Boosts Fraud Fighting

James Sheehan, associate U.S. attorney for eastern Pennsylvania, says his office will focus on assuring that providers give high-quality care as they adjust to the "Medicare revolution" which is changing the federal payment system from one based on procedures performed to one based on outcomes. Information on lapses in quality will come from mining data from a range of regulatory and oversight entities as well as qui-tam relators, media, and other. Discrepancies in data from different sources may serve as "red flags."

"I expect an increase in the number of mixed cases in which whistleblowers allege both quality lapses and false claims in one action," Sheehan said.

Compliance programs in the quality area are becoming essential (BNA's HCFR 2/14/07).


Constraining Physicians' Prescribing Discretion

Legislation proposed by Senators Edward Kennedy (D-MA) and Michael Enzi (R-WY) would extend the FDA's ability to restrict which physicians can prescribe certain newly approved drugs. Risk-management plans ("RiskMAPs") already guide the use of about 30 drugs through "voluntary" agreements with manufacturers. Not trusting generalist physicians, the FDA, for example, tries to keep the new diabetes drug Symlin out of their hands by restricting promotion to doctors who specialize in diabetes and employ certified diabetes educators.

Meanwhile, the Dept. of Justice is criminalizing drug company's exchange of truthful, non-misleading information about new "off label" uses of drugs with physicians (Scott Gottlieb, Wall St J 3/6/07).


AAPS Sues FDA over OTC Plan B

While the FDA usually tries to expand its authority in the direction of increasing barriers to drug use, it has, without statutory authority, created an unprecedented bifurcated process for morning-after contraception (AAPS News of the Day 8/27/06). Persons over the age of 18 can obtain 0.75 mg levonorgestrel tablets over the counter, while a prescription is still required for younger persons. AAPS has filed suit, with Concerned Women for America, Family Research Council, and Safe Drugs for Women. The suit alleges that the rulemaking process was violated; that Plan B is mislabeled; and that unlawful political pressure was brought by Senators Clinton and Murray by placing a hold on Commissioner von Eschenbach's confirmation hearings. The brief notes that safety testing considered only acute effects, single dosages, and healthy women, and relied on historical controls rather than actively or randomly controlled trials.


Doctors Need to Ration Care. According to Alan Sager and Deborah Socolar of the Boston University School of Public Health, market incentives won't work to control costs because "doctors, not patients, make the great bulk of decisions that incur costs" (Buffalo News 3/18/07). Their answer: global budgets. "...[T]he only motive to withhold care from one patient would be to finance more valuable care for another patient." This is the most blatant admission of rationing that I have ever seen socialists make.

"Doctors could not make more money by scrimping on patient care," say Sager and Socolar. But they abhor the idea that working harder should lead to better pay: "[Doctors] usually make more money when they provide more care." Although "it's useful to reward doctors who are more competent, energetic and kind," they think that "only mild incentives are needed because most doctors already want to do a good job and work hard." That concept worked well in the former Soviet Union, where it was said that "they pretend to pay us, and we pretend to work."
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Sham Altruism. The government pretends that it is caring for the poor, but it so underpays doctors and hospitals that they must withdraw from the program or make it up elsewhere.
Alieta Eck, M.D., Somerset, NJ


"Good" Insurance. Some seem to think that Medicaid is such a good thing that we have to keep extending it until it covers the middle class. It is in fact far richer than any private package. You get transportation, long-term care, acute care, mental health care, drugs with an occasional copay of $3, home health care, and there is no limit on the days the state will pay for. So no physician wants to see you since the pay is so low? We've been barraged with the assertion that doctors, hospitals, and drug companies are vastly overpaid. It must be true.
Linda Gorman, Independence Institute, Golden, CO


Aspiring Single Payer? Blue Shield of California (which in that state is separate from Blue Cross) is positioning itself to be the single payer operator. It is run by a physician who is a fervent advocate of single payer, and it is tight with California politicians who want it.
Greg Scandlen, Consumers for Health Care Choices


Denial. David Walker of the U.S. Government Accountability Office told 60 Minutes that entitlements and healthcare are sinking the U.S. financial boat. The facts are known to everybody in Washington, D.C., but are ignored. Walker said he has given up on communicating with elected officials and is now taking the message to opinion leaders and the media.

National, single-payer medical insurance is not economically feasible. It would be irresponsible to back such a plan.
Danny M. O'Grady, CLU, Midland, TX


Skyrocketing Costs. The annual cost of the federal government alone averages $22,000 per household, not counting the $600,000 in unfunded liabilities for Social Security and Medicare. The typical couple will pay close to $200,000 in public education taxes over their lifetimes. And Americans are demanding that the government do something about the skyrocketing cost of medical care. Even though the government killed the medical market 65 years ago.

If American crybabies downsized their homes and car engines by one-fifth and reduced discretionary spending by one-fifth, and if taxes were reduced by one-fifth, Americans could easily pay their medical costs out of pocket and still have a higher standard of living than 98% of the world.
Craig Cantoni, Scottsdale, AZ


Regulatory Destruction. The Clinical Laboratory Improvement Act of 1986 (CLIA) prohibits physicians from doing lab tests unless they pay for expensive government inspections and testing. Physicians cannot use the microscope they have used since undergraduate days, or do a test patients can buy in the grocery store, without a government certificate. This shut down thousands of physicians' office labs. My oldest daughter's pediatrician used to do a quick CBC on kids with fever to determine whether antibiotics might help. Our current pediatrician never does this. Is that better medicine?
Donna Kinney, CPA, Texas Medical Association


A Doctor on Your Street. Barriers put up to keep doctors from living and working in a neighborhood took a major pillar out of the community. To achieve the ideal of 50 years ago would require immunity from property and commercial taxes, and allowing up to five people to work in a combination doctor's office and residence. The doctor's laboratory equipment should be monitored by the company providing it.
Leonard Friedman, M.D., J.D., Middleton, MA


Small Business. While smaller businesses are harder for the government to control in a sense, they are much easier to bully because most of them are so busy working that they have little time to pay attention to politicians who are trying to impose hardships. The government treats its life blood (small business) like an ignorant rider treats his horse: just keep riding it hard until it collapses and dies, as it does not complain.
Frank Timmins, Dallas, TX