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
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
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
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
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
"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
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
Frank Timmins, Dallas, TX