Volume 53, No. 5 May 1997

VILLAGE CARE

When Senator Nancy Kassebaum teamed up with Senator Ted Kennedy to offer a purportedly ``clean,'' simple, incremental, bipartisan reform bill, it sailed through Congress virtually without opposition-even though eventually loaded with unprecedented expansions of federal power. All health insurance plans are now within the jurisdiction of federal law enforcement agencies. Even worse, the so-called ``administrative simplification'' provisions set up the infrastructure for placing all medical records within the federal domain.

The bipartisan approach is on a roll. This session, the odd couple is Senator Orrin Hatch and, of course, Ted Kennedy. The goal is expressly the same as with the ``portability'' bill: to keep the bill ``clean'' and get it passed (BNA's HCPR 3/17/97). The result may also be comparable.

Kennedy claims that his bill is ``capped'' and is not really an entitlement. It is limited to the ``gap kids'': about ``4 million to 5 million'' children of the working poor who are ineligible for Medicaid. Unlike the ``distinctly Republican approach'' being offered by Sen. Arlen Specter, it has no 5-year expiration date. (Compare this with the severe constraints Kennedy placed on Medical Savings Accounts, which have a numerical cap of 750,000, albeit a potentially leaky one, and a cut-off year.)

Kennedy is also a cosponsor of a ``competing'' bill, entitled the ``Children's Health Coverage Act'' (S.13), introduced by Sen. Daschle on 1/21/97). Key details from that bill are likely to be part of whatever comes to the forefront. Most importantly, beneficiaries would not be able to choose just any insurance plan. The best type (a low-cost, catastrophic plan combined with a Medical Savings Account) is automatically ruled out. Subsidized health plans must meet ``general coverage guidelines that are established by the Secretary [of HHS] and designed to ensure that the plan provides comprehensive coverage, including preventive, basic, and catastrophic benefits that meet the health care needs of children.''

And what does this mean? The documents of the Clinton Task Force on Health Care Reform make this plain.

Under S.13, the Secretary would be granted authority over States that is potentially very expansive: each ``State will establish ... requirements and procedures necessary to carry out this title within the State'' and ``the State shall comply with any other requirements established by the Secretary.'' Other bills may make State participation voluntary or offer more flexibility-at least initially.

Being unspecified, the Secretary's requirements might include intrusive psychological monitoring; extensive computerized data collection; and provision of ``comprehensive'' sex education, contraceptives, and abortions, without parental knowledge or consent. Such ``benefits'' are already being administered in school-based clinics (of which there were 913 in 1996, a 50% increase in one year), the preferred delivery model of members of the Clinton Task Force on Health Care Reform, who discussed ``Kids First'' as the backup option for incremental enactment in case the Health Security Act of 1993 did not pass as a single bill (see AAPS News 1/96 and 1/97).

A standard benefits package was certainly one of the goals of Clintonite reform. For example, in Task Force documents box number 3288 is a paper entitled ``New System Coverage -- Option 2: Kids-First Coverage,'' which states: ``On July 1994, all children 0-18 years of age will be covered by a standardized benefit package as defined by the Benefits Workgroup. Employees currently covering children will be required to bring plans up to the standard benefit package.'' (Alan Weil, whose documents are in this box, has been appointed to Clinton's ``new'' Advisory Commission on Consumer Protection and Quality in the Health Care Industry, along with a number of other prominent Working Group members.)

Also likely to be mandated by the Secretary are outcomes research and practice guidelines-see ``Reforming Health Care: A Sourcebook for Journalists - Incremental Reforms,'' also from Box 3288. Sources include U.S. Quality Algorithms, a subsidiary for outcomes research and practice guideline development of U.S. HealthCare, a large HMO system.

Another goal to watch for is an expansion of ``administrative simplification.'' From box 3810, we have a memorandum to Risa Lavizzo-Mourey of the University of Pennsylvania, also a member of Clinton's ``new'' commission, which states: ``Require, by July 1, 1994, all providers, plans and public programs to use the claim forms, enrollment data sets and utilization review standards set forth by the Secretary....Plans that continue to use other forms, instructions, or UR procedures that are not consistent with those promulgated by the Secretary shall be subject to civil monetary penalties.... Authorize the Secretary of HHS to, after December 1, 1995, mandate the automation of transactions for which she has promulgated standards.''

A Democratic Congress did not pass this mandate in 1993, but a Republican Congress may, in 1996, delegate to Donna Shalala the authority to implement it if she wishes, at least for a group of entitled subjects. Such entitlements have a history of continuous expansion, whatever the stated legislative intent.

The direct tax funding of this legislation will probably be dwarfed by the indirect costs, such as premium increases cost- shifted to the ineligible (even below 300% or 185% or 100% of the poverty level). The greatest economic benefit may accrue to members of a burgeoning bureaucracy for determining eligibility and certifying health plans.

The worst result of all will be subjecting our poorer children to VillageCare, with further undermining of the private options that parents would probably choose were it not for the burdens imposed by the federal tax code.


The Players

The cast of players has hardly changed since the Clinton Health Care Task Force. A seminar on the same old ``bold new initiatives'' for insuring kids, referred to in a March 14, 1997, press release by the Alliance for Health Reform, is funded by the Robert Wood Johnson Foundation. The Chairman of this Alliance is Senator Jay Rockefeller, and the Vice Chairman is Senator Bill Frist. Directors include AFL-CIO President John Sweeney and Children's Defense Fund President Marian Wright Edelman.

In remarks before the American Public Health Association (11/19/96), Sweeny agreed that ``it takes a village to raise a child.'' He identified as ``shared enemies'' the ``new brand of politicians who believe that free markets are fair.''

Constraints on freedom are explicitly part of the agenda. Alliance for Health Reform materials, from Task Force documents box number 3288, state: ``One alternative is to use the results of outcomes research as the basis for mandatory, rather than voluntary, guidelines-...as a way of strengthening or broadening current utilization control programs.''

This agenda is cloaked in good deeds. RWJF plans to spend millions to start programs to expand insurance coverage for children not eligible for Medicaid in 11 states. Additionally, it funds All Kids Count, a national program ``for the development of immunization monitoring and follow-up systems.'' Implementing this seemingly innocuous program requires linking a multitude of diverse computer systems. The state of Georgia is scheduled to be completely linked by the year 2000 (All Kids Count, vol. 3, no. 2, Summer, 1996). Once developed, such infrastructure has other applications.

In the lawsuit against the illegal secret operations of the Task Force (AAPS v. Clinton), AAPS discovered that RWJF fellows served in Democratic offices on Capitol Hill as well as on the Task Force. Now Senator James Jeffords (R-VT), who assumed chairmanship of the Senate Labor and Human Resources Committee upon the retirement of Nancy Kassebaum, has hired two staffers from RWJF to work on ``kiddie care'' (Washington Times 2/26/97). Jeffords was the only Republican who supported the Clinton Plan in 1993.

Since it is unlawful for charitable foundations to engage in lobbying, ``specific organizations (such as Families USA, Robert Wood Johnson Foundation) are developing grass-roots and media campaigns for reform that can be conducted without losing their non-profit status'' (memo to Hillary Clinton and Carol Rasco from Atul Gawande et al., 1/21/92, Task Force diskette number 156).

Opinions on Quality and Managed Care

White House Press Briefing 3/26/97

Mike McCurry: ``What's wrong with health care? Nothing''....``Chris Jennings..., deputy assistant to the President, health care expert extraordinaire'' [formerly liaison to the First Lady for the Health Care Task Force]... ``is graciously here to brief you before he briefs the President for the upcoming event'' [the announcement of members on the Advisory Commission on Consumer Rights and Quality in the Health Care Industry].

Chris Jennings: ``The agenda is to focus on how does one define quality....[T]hen once you define quality, how do you enforce quality....We want [the commission] to come to us with explicit recommendations....''

The President: ``In this time of transition, many Americans worry that lower costs mean lower quality and less attention to their rights. On balance, however, managed health care plans...give patients good care and greater choice at lower cost....Managed care managed well can be the best deal for our families....I am proud that the Medicare and Medicaid programs have taken the lead in responding to the quality concerns of both patients and health care providers....''

Medicare Peer Review Organization. Herb Rigberg, M.D., Vice President of Health Systems Advisory Group, writing in Arizona Capitol Times (3/14/97) in opposition to state mandates on HMOs: ``it is imperative that [legislators] have all of the information possible about the significant strides Medicare [HMOs] have made in Arizona and how well the health care programs that practice coordinated care already are doing to serve their clients....''

Arizona Physicians. About 300 physicians responded to an AAPS survey of all office-based physicians in the State. Of these, only 5% stated that the overall quality of medical care in Arizona is improving; 24% said it is staying the same, and 64% that it is deteriorating. The majority (52%) felt that the sickness care received by managed care patients was worse than with fee-for- service. Moreover, 54% said they were ``rarely'' or ``never'' able to provide better preventive care under managed care, and only 15% were ``always'' or ``usually'' able to provide better prevention. Only 31% were insured under any of the managed-care plans with which they themselves had a contract. Most (82%) disagreed with the statement that ``managed care has increased the efficiency of my office,'' and 60% disagreed with the statement that ``managed care decreases the unit cost of providing services and not just expenditures for medical care.'' About 36% of the specialists said they ``often'' saw patients whose care had been unreasonably delayed, and 49% ``sometimes'' saw such patients. [A copy of the survey and all results are available at http://www.primenet.com/~snavely.]

Medical Savings Accounts Save 12%

In Ohio, an analysis of 27 firms using MSAs showed that overall employer medical insurance costs fell 11.6% on the average, while the employee share of medical costs was reduced $317 for single employees and $1,355 for families. Savings are achieved by voluntary patient choice rather than coercive rationing by managers. Savings have been as high as 40%.

Facts and figures, along with practical advice on setting up such accounts, are presented by Michael Bond, Ph.D., in a Buckeye Institute Policy Report, 131 N. Ludlow St., Suite 317, Dayton, OH 45402, (937)224-8352.

AAPS Calendar


Dr. Rutgard Wins on Key Points

In a March 6 decision in the case of US v. Jeffrey Jay Rutgard (95-50309), the Ninth Circuit Court of Appeals unanimously adopted reasoning outlined by AAPS in its amicus brief, stating that fraud in specific cases does not prove that a doctor's whole practice is a fraud. The Court reversed certain counts of conviction, set aside the order of forfeiture, vacated the sentence, and remanded the case for resentencing.

The Court had serious misgivings about the lower court's limitation on the number of defense witnesses and the refusal to hear any patient testimony at the forfeiture hearing, but held these errors to be ``harmless'' in view of the Court's ruling against the government on certain issues.

Most importantly for future defendants, the Court ruled that while a global finding of ``permeated with fraud'' is sufficient to sustain probable cause for a search warrant, it is too loose and indefinite to sustain a criminal conviction.

There were portions of Dr. Rutgard's practice (self-paying patients, glaucoma patients, and patients with retinal problems) for which no fraud was charged. ``It was the burden undertaken by the government...to show that 100% of Rutgard's practice was fraudulent.'' And though patient satisfaction was not an issue, ``it is improbable that all of Rutgard's satisfied cataract patients were persons who did not need cataract surgery.'' After all, almost one in every four Medicare beneficiaries does need cataract surgery. Actually proved instances of unnecessary surgery constituted a tiny fraction of a practice that did thousands of cases.

The district court had ordered restitution of all of Rutgard's billings to both government and private insurers for the entire period of the indictment. As to fraud prior to Nov. 29, 1990, the sentence violates the rule laid down by the Supreme Court under the Victim and Witness Protection Act, U.S.C. @ 3663, that ``restitution may only be ordered for `the loss caused by the specific conduct that is the basis of the offense of conviction'.'' After a 1990 amendment, restitution may be ordered for losses caused by a defendant's scheme even beyond the counts of conviction, but ``this substantive change in the criminal law cannot be applied retroactively without violation of the ex post facto clause of the U.S. Constitution.''

The government has petitioned for rehearing and has been granted an extension for filing a brief. AAPS intends to oppose this petition.

Dr. Rutgard has already been incarcerated for about two years.

Disincentives to Care Must Be Disclosed

The US Circuit Court of Appeals for the Eighth Circuit has held that under the Employee Retirement Income Security Act (ERISA), fiduciaries are obligated to disclose financial incentives that discourage referrals to outside specialists, reversing a - ruling by the US District Court for the District of Minnesota (Shea v. Eisenstein, CA 8, No. 95-4029MN, 2/26/97).

A primary physician for Medica told a 40-year-old patient that a cardiology consult was unnecessary to evaluate chest pain and dyspnea. A few months later, the patient died of heart failure. Dianne Shea, his widow, alleged that had her husband known that his HMO doctor could earn a bonus by providing a minimum level of care, he would have ignored the doctor's advice and sought consultation at his own expense (BNA's Health Care Policy Report 3/3/97).

Threats to Justice in Michigan

Gubernatorial candidate Charles G. Artinian, M.D., a former member of the Michigan State Board of Medicine, writes of serious threats to the rights of regulated professionals:

``It is fairly well documented that career prosecutors become increasingly autocratic and punitive with increasing years of service.'' Dr. Artinian believes an increase in medical society scrutiny of attorney general actions should be considered and that in certain instances, the Michigan State Medical Society should openly support physicians.

Some examples that illustrate his concerns:

  1. Release of information about ongoing investigations, in ``tabloid fashion,'' early in the process prior to any sanction.
  2. Forced relocation of a surgeon after 7 years of ``investiga- tions'' in which the most egregious of the counts was related to the type of suture material used.
  3. Suspension of a general practitioner because of staff errors in just two Medicaid claims.
  4. An inordinate number of cases prosecuted against minorities and foreign medical graduates.

``I have specifically observed assistant attorneys general in court proceedings willfully and knowingly state untruths to an administrative law judge,'' he wrote.>

A Freedom of Information Act request filed by a Lansing dermatologist revealed that more than 25% of physicians in Ingham County have files attached to their licenses, many of which are clandestine and closed. A secret file against this doctor, which included his wife's medical records, was initiated without complaint or allegation. Neither the subject nor the duly appointed members of the Board of Medicine can see many of these files, though they are kept indefinitely. Blue Cross Blue Shield investigators were recently granted immunity for information passed on to the Board of Regulation.

Immunity for Slander Upheld

On April Fool's Day, 1997, the US District Court for the Eastern District of Texas, Texarkana Division, granted the defendant's motion to dismiss in the case of Joseph J. Greenspan v. HealthSouth Rehabilitation Hospital of Texarkana (5:96cv320). Dr. Greenspan alleged that HealthSouth had fired him because of his refusal to commit fraud and then filed a libelous complaint with the National Practitioner Data Bank (see AAPS News Mar '97). Federal Judge David Folsom, under the doctrine of res judicata, upheld the state court's finding that the defendant was immune from liability under the Health Care Quality Improvement Act of 1986. See U.S.C. 11101-11152.

Grounds for Penalties Under False Claims Act

The American Hospital Association (AHA) contends that the use of the False Claims Act in cases in which there is no injury to the public fisc is ``abusive and beyond the scope of the Act,'' in an amicus brief filed in the U.S. Circuit Court of Appeals for the 5th Circuit (U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp. CA5, NO 96-40868). Such a use of the Act by qui tam relators is not meant to remedy federal losses, but to ``bully the hospitals...into inflated settlements,'' argued AHA. The government argues that although harm must be proved to recover damages, penalties of up to $10,000 per claim could be collected in the absence of any economic loss to the government (BNA's Medicare Report 3/28/97).


Members' Page

The Huntoon Participating Bureaucrat Program. From a letter to Ms. Kathleen Caroompas, Resource Representative, Professional Relations Dept.: Thank you for your most recent letter regarding your request that we provide you with the name and address of one of the many patients who have filed complaints against Upstate Medicare and your medical director Dr. Michael Cox. Since you are a non-participating member of our HCFA/Medicare Participating Bureaucrat Program, and have not supplied us with our required form for us to release this information to you, we are not able to honor your request. You need not worry though; we are perfectly happy to tell these patients the TRUTH about how Upstate Medicare really operates. It is, therefore, totally unnecessary for you to write to any of these patients that file complaints against you...,[as] for mishandling our Medicare claims or illegally interfering with the practice of medicine....
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
[Copies of the enrollment package available from AAPS.]

Defining the Practice of Medicine. I have asked one of my state legislators to introduce the following Law: ``Be it enacted that the determination of medical necessity or appropriateness of proposed care, so as to affect the diagnosis or treatment of a patient, constitutes the practice of medicine. The Commissioner of the Dept. of Public Health shall establish such regulations as may be necessary for enforcement of this act.''

It seems that this simple act would forever relieve the legislature from the burden of legislating lengths of stays for individual conditions (childbirth, mastectomies, etc.).
Stephen R. Katz, M.D., Fairfield, CT

Plunder. The 38 caliber and gruff voice commanded: ``Leave your money.'' I complied. The teller, shaking, complied also. He put the cash in the thief's bag. This happened at the Bank of American in San Juan Capistrano several years ago. Months later, the Laguna police caught the thief throwing freshly stolen money from his car. His plea: Not Guilty. He claimed ``redistribution of wealth.'' The jury called it plunder.

America does not condone the above, but does approve another less obvious kind of plundering to redistribute wealth. Government plunders the doctor [and the taxpayers] and redistributes wealth to bureaucrats, insurance companies, and patients [in that order].
Anthony Orlandella, M.D., Dana Point, CA

Decision Reversed. Although I do not belong to any HMOs, my management of a patient was recently challenged by an HMO reviewer. I had scheduled an exploratory laparotomy for a 40-year-old woman, who already had had radical hysterectomy and now had evidence of tumors in her transposed ovaries. The physician reviewer said the patient was only eligible for out-patient surgery with discharge 2 hours post-operatively. When I expressed the opinion that he had to be joking, he replied with an interminable lecture that proved to be an excerpt from the codebook that was his bible. I told him I was so interested in what he was saying that I was recording it and planned to send the tape to a major New York newspaper. Within 5 minutes, I was contacted by one of the reviewer's supervisors, who told me that the patient had been cleared for hospital admission and any therapy that I deemed necessary (excerpted from The Female Patient 7/96).
Hugh R.K. Barber, M.D., New York, NY

Texas Precedent. On Jan. 7. 1997, US District Judge David Hittner ruled in favor of a Houston orthopedist in a lawsuit (4:96- cv-01564) against the major HMO insurance companies based on the Lanham Act and the Texas Deceptive Trade Practice Code, Article 21.21, section 16(a). The suit claimed that the defendant made fraudulent misrepresentations, engaged in tortious interference with plaintiff's patient/physician relationships, and constructed elaborate procedures that prevented primary care gatekeepers from referring patients to specialists able to provide needed care. A copy of the Orders of Judgment are available on request from Citizens for Responsible Managed Care, 5300 N. Braeswood Suite 227, Houston, TX 77231-1900, tel. (713)688-6343.
Arnold J. Wolf, Executive Director

Staff Privileges, 1990s Style. At a Dept. of Internal Medicine staff meeting at our hospital, with 9 attendees from a department with 175 active staff members, we were informed that the hospital was receiving too many applications for staff membership. Applications would be considered only after a pre-application demonstrating affirmative answers to all of these questions: (1) Is the service or specialty needed...? (2) Will members of the present staff have enough time to oversee the work of the new staff member? (3) Does a current staff member currently perform the same procedures so that proper peer review can be done? The Chairman noted that last year ``we had someone who wanted to do neuro- ophthalmology or something like that, but since no one knew how to evaluate the work of that doctor, we turned down his application.''

In one meeting, we saw all the features of bureaucracy: limiting competition, stifling innovation, preserving fiefdoms, and determining what the people ``need.''

The other members did not consider my comments to this effect to be relevant, and the policy stands.
Don W. Printz, M.D., Lilburn, GA