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A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 59, No. 10 October 2003


For more than five decades, the American Left has been pushing for socialized medicine. The vanguard of the latest campaign, led by prestigious academic physicians, published a manifesto in the Journal of the American Medical Association, despite the AMA's official opposition to "single payer" (The Physicians' Working Group for Single-Payer National Health Insurance. JAMA 2003;290:798-805).

"For the sake of the uninsured, the era of trying small steps and using the wrong approaches hopefully is over; it is time to take a great leap forward," write Andrew Bindman and David Haggstrom of San Francisco General Hospital in an accompanying editorial (JAMA 2003;290:816-818).

It isn't enough to dismiss the Proposal as unworkable, writes Rashi Fein of Harvard Medical School in a second editorial (JAMA 2003;290:818-820). Those who can't supply a bridge over the great chasm of the uninsured will just have to take the plunge rather than standing still.

Is the terminology accidental or are these authors admirers of Mao Zedong, who launched the Great Leap Forward of 1958 to 1960? This campaign forced the collectivization of Chinese agriculture and attempted crash industrialization, with the infamous backyard pig-iron furnaces. Unable to meet absurdly high quotas for the 1959 harvest, officials falsified reports and confiscated every ounce of grain they could find. Attempting to cover up the resulting famine, one county issued regulations that prohibited "crying and wailing" or mourning garments. Truthtellers were enemies of the Party. The death toll, variously estimated as 10 or 30 million, qualifies Mao as the most lethal tyrant in world history.

The proposed American Great Leap is, proponents insist, not socialized medicine. The government would not hold title to the means of production; it would merely "regulate" and pay all the bills, delegating the work to "private" entities. HMOs and capitation would still exist, even predominate but all would be "nonprofits," and all their revenue would come through government. Presumably, there would still be carriers or fiscal intermediaries, as Medicare is the model.

The proposal isn't even a very big leap. It is rather the culmination of incremental steps in the direction of corporate socialism, using "public-private partnerships." The radical step is the severance of the frayed lifeline to constitutional protections of basic rights to life, liberty, and property.

The gravest threat to America, many have said, is not socialism or communism, but national socialism or fascism (e.g. Peikoff L, The Ominous Parallels, 1982). The Proposal certainly fits the definition of economic fascism, complete with attacks on "profiteers," as explained by Thomas DiLorenzo in 1994 ( www.aapsonline.org/brochures/fascism.htm).

Fascism is more efficient than socialism and is credited with rescuing Germany from post World War I economic havoc. Perhaps it is possible to have economic gains without the virulent anti-Semitism and militarism of Hitler's Germany. But the ethical parallels are chilling: emphasis on the good of Society over that of the individual; public health especially anti-smoking fanaticism; increasingly intense surveillance; and the concept of lebensunwertes Leben cloaked under "quality of life."

The Proposal criticizes "market-based" reforms, which have indeed provided government favors to managed-care arrangements that profit from denying care. Outrage over resulting abuses is used by Physicians for a National Health Program (PNHP) et al. to promote the one uniform Final, "once enrolled, always enrolled" Solution.

Most of these "reforms," however, are directed at increasing third-party dependence and interfere further with a free market. The whole point of the market which is not lost on PNHP is that anybody with money can buy care. One does not need good political connections, a politically correct condition, or the right skin color. Giving money to help the poor is relatively easy; both private groups and government know how to do that. The ability to use money to obtain care is precisely what single-payer advocates propose to eliminate.

Having even one other payer, they say, would subvert quality improvement efforts, which purportedly depend on having a single database, as well as undermine cost containment. On this point, PNHP differs with the AMA, which also has the goal of "universal coverage and access."

Total penetrance is demanded by socialism or fascism, a logical consequence of the basic assumptions. In a free- enterprise economy, property is possessed and used by right; in a national socialist system, by government permission.

Denial of permission to purchase life-saving treatment might not survive constitutional challenge in the U.S. ("Zelman Memorandum" in Clinton Health Care Task Force documents at www.aapsonline.org and AAPS News May 1998). Article 5 of the Quebec Health Insurance Act, which prohibits private payment for "covered" services, does violate the constitution, ruled the Quebec Superior Court, but is acceptable because it is "consistent with the fundamental principles of justice." Dr. Jacques Chaoulli, who brought the case in 1996 at great personal risk, has appealed to the Supreme Court of Canada. If he loses, he will have to pay the other side's costs. The case should be heard in March, 2004 (JAMC 2003;169:2).

The 9 to 13% of nonelderly Americans who are chronically uninsured are not a chasm, but a wedge to ram through a totalitarian system that imposes a duty to pay for the collective "health" and denies the right to buy care.

What Americans need is a rope to climb up the slippery slope a true free-market sector of critical mass not a heedless leap over a precipice into an abyss from which societies like formerly Maoist China are painfully trying to emerge.

See: Why the United States Should Reject Socialized Medicine (a.k.a. “Single Payer”) and Restore Private Medicine (Word Format) - 10/2003

Socialized Medicine Fault Lines

The Effect of the NHS on British Physicians. In his farewell address, Dr. Ian Bogle, outgoing British Medical Association Chairman of Council, castigated the NHS for: "morale- sapping erosion of doctors' clinical autonomy brought about by micro-management from Whitehall"; the "stifling of innovation by excessive, intrusive audits and the imposition of Department of Health diktats"; and the "shackling of doctors by prescribing guidelines, referral guidelines and protocols."

Dr. Bogle observed that the system was driven by "spreadsheets and tick boxes," rather than patient needs. The setting of targets for treatment of one group automatically disadvantages others whose clinical needs may be greater. To meet the targets, managers resort to trickery and ruses, such as counting trolleys and examination couches as beds.

"Politically motivated national performance targets that come with ... punishments for those who fail to achieve them make honest people dishonest."

The entire speech is available at www.bma.org/ap.nsf/Content/ARM03chcouncil.

How Long Is a Wait? The Western Canada Waiting List Project (WCWL) has no way to actually decrease waiting times, but is striving for better management of the waiting list. Tools will include an on-line registry, a standard definition of waiting time (when does it officially start?), and an objective priority scoring system ( www.wcwl.org ).

Some Animals More Equal Than Others. While threatening to penalize Alberta by withdrawing public funds if "private" clinics there dared to bill privately, Canadian Prime Minister Jean Chr‚tien flies his family to U.S. clinics on Canadian air force jets. When he missed the funeral of King Hussein of Jordan, he told Parliament he had been on a ski vacation in British Columbia, though air force logs showed he had been flown to Minnesota (Levant E, Calgary Herald 1/15/02).

Stealth Costs. The purported $200 billion administrative saving with a single payer (N Engl J Med 2003;349:768-775) is slashed by $50 billion if a different method of calculation is used (N Engl J Med 2003;349:801-803). Additional hidden costs include: tax collection ($1 billion); the deadweight loss of taxes value destroyed in the rest of the economy ($20 billion); health risks as well as economic cost of waiting; and partial conscription of physicians through wage- fixing (Lemieux P, Nat Post 8/28/03).

More Rationing Proposed in Germany. If Germany continues its current level of unlimited health care, about 30% of income will be spent on health insurance by 2020. The head of the youth organization of the Christian Democratic party has proposed that hip replacements and dentures should be denied to patients over the age of 85 (BMJ 2003;327:414).

"Rational Rationing" in Oregon. Combing through the Oregon Health Plan's list of priorities, Linda Gorman observed that vasectomy for surgical sterilization, #93, is ahead of repairing a cleft palate with airway obstruction, repairing a liver rupture, or treating skin cancer. Treatment of elective mutism, #433, in which a child will speak perfectly well in some situations but fail to speak in others, ranks ahead of gall bladder cancer, tick-borne diseases, joint dislocations, or immune system disorders.


HIPAA Updates

At an August 26 seminar, the Arizona Medical Association reviewed materials on the Privacy Rule that cost $50,000 in legal fees to develop. Patients' refusal to sign the Privacy Notification was called a "red flag," though ArMA stopped short of recommending that physicians decline to see them. From attendees' comments at the meeting, and from patients' telephone calls to AAPS headquarters, it is apparent that doctors are discriminating against non-signers even though signatures are not required by federal law and make no difference in handling of the patient record.

ArMA has no help to offer on the Transaction Code Sets, although all electronic claims submissions after October 15 must be compliant (AAPS News July 2003). Neither does anyone else, as far as we can tell. Medicare itself is struggling and has tested with fewer than 10% of entities submitting claims more than any other insurer (AM News 8/11/03).

While physicians are reassured that the HIPAA cops probably won't arrest or fine them if they are not compliant on Oct. 16, their claims will not be paid. Experts inside and outside government fear that many physicians will switch back to paper. An AMA survey showed that at least 13% planned to do so if they could not reach compliance (AM News 9/8/03).

The Dept. of HHS finds that although 83% of physicians file electronic claims with Medicare, more than 70% (about 400,000) are exempt from the Administrative Simplification Compliance Act (ASCA) requirement that they do so, because they have fewer than 10 full-time employee equivalents.

"Entities will not generally need to make a special request to determine whether an exception applies that would make them eligible for a mandatory waiver under 424.32(d)(3) or a discretionary waiver under 424.32(d)(4)." However, "the Secretary may audit entities that bill Medicare non- electronically. Entities determined to be in violation of the statute or this rule may be subject to claim denials, overpayment recoveries, and applicable interest on overpayments" (Federal Register 2003;68(158):48805-48813, 8/15/03, posted at www.aapsonline.org under "HIPAA Regulations").

CMS has specifically invited comments on the accuracy of their estimate of the cost of the information collection burden. They estimate less than $1,000, while 34% of physicians responding to an AMA survey estimated more than $10,000. Deadline for receipt is Oct. 14; call AAPS for details.

The Federal Register notice clarifies that paper facsimiles and voice transmissions are not considered electronic trans- missions for the purpose of making one a covered entity because "the information being exchanged did not exist in electronic format before the transmission."


AAPS Calendar

Sept. 17. Board of Directors mtg, Point Clear, Alabama.
Sept. 17-20. 60th annual mtg, Point Clear, Alabama.
Oct. 13-16, 2004. 61st annual mtg, Portland, Oregon.

Stealth Legislation on Fast Track

A bill without a number or named sponsor is nevertheless slated for rapid enactment after a hearing with only four witnesses permitted. The Data Base and Collections of Information Misappropriation Act would interfere with information exchange, creating monopolies to obstruct the use of data, and could severely hamper the growth of the internet.

The Act is a reincarnation of the Collections of Information Antipiracy Act (H.R. 354), which was defeated in the 106th Congress (AAPS News May 1999). It is an attempt to circumvent the 5th Circuit Court ruling in Veeck v SBCCI (AAPS News Jan 2003), which was a major setback to the AMA's CPT coding monopoly, among other special interests.

There has been no public debate, and few congressmen are even aware of the bill. AAPS has sent a letter of opposition and is gathering signatures from other organizations.

Federally created monopolies over databases are unneeded and undesirable, AAPS stated. "Private ownership of a database imposed by law distorts policy and inflates costs. The monopolist inevitably adds complexity to the database to maximize profits, rather than improving its accessibility and usability." The CPT codes are an excellent example.

Fair use of data bases would be determined through judicial fiat. "Very few users of data can afford taking a chance on how a court might rule, and the legal uncertainty would chill productive activity. The free market needs clear rules to thrive," AAPS writes. Data base users would have the burden of proof, and could harassed by subpoenas obtained from a clerk, with no judicial oversight, even if a lawsuit is never filed.

A draft of the bill, and the AAPS letter and cosigners are posted on www.aapsonline.org.


How Many Employees?

A case filed under the Americans with Disabilities Act, which exempts employers with fewer than 15 employees from its burdensome recordkeeping requirements, has implications for other statutes, probably including ASCA. In Clackamas v. Wells, the U.S. Supreme Court ruled 7-2 that it would follow the common-law definition of the master-servant relationship. Thus, four doctor-shareholders in an Oregon medical clinic shouldn't count as employees (Wall St J 4/23/03).


Misinformation on Medical Staff Bylaws

The Tennessee Medical Association legal department warns that misinformation about HIPAA has been circulating at one or more Tennessee hospitals. HIPAA does not require bylaws changes to sanction physicians, as by suspending hospital privileges, for violating the HIPAA Privacy Rule.

"To place such a requirement in the bylaws would be tantamount to running roughshod over due process rights already in place in most medical staff bylaws."

Medical staffs might not even know what constitutes a HIPAA violation, especially if the hospital hasn't completed its training sessions (TMA Member News 2/14/03).


Fines Not Excessive

A $729,455 judgment against the owner of a physical therapy clinic did not violate the Eighth Amendment, ruled a federal appeals court (U.S. v. Mackby, 9th Cir., No. 02-16778, 8/12/03). Had the government sought damages for all 8,499 claims submitted under Mackby's father's PIN, instead of 1,459 claims totalling $58,151, fines could have reached $85 million. If criminally convicted, Mackby's maximum fine would have been $75,000, but he might have been imprisoned for 37-46 months and ordered to pay restitution for the full amount.

The severe penalties are warranted, the court found, because "Congress believed that making a false claim to the government is a serious offense," and heavy fines are necessary for deterrence (BNA's HCFR 8/20/03).


Congress Not Responsible?

"I am unable to intervene in matters that have been decided by the courts. An appeal through the court system may be the only way to question the justice of this situation," writes Sen. Lisa Murkowski concerning the sentencing of Jay Van Houten, D.O., of Alaska and his wife.

Appeal, however, is foreclosed because Dr. Van Houten accepted a plea bargain, as the vast majority of federal defendants do (AAPS News Sept. 2003). The judge felt that the terms agreed upon with the prosecutor were too lenient and decided that both the Van Houtens have to spend three months in prison. Mrs. Van Houten will be the first to be torn away from her children, ages 3 and 8.

During the sentencing hearing, the judge said: "If the patients were sentencing you, you would be in jail for life." The patients, however, were very supportive. The "victims" to whom restitution was paid were all insurance companies. The indictment claimed 83 counts of "fraud" in 16,000 patient encounters with 90,000 line items. Less than 0.1% of the items billed were in dispute.

The destruction of a medical career should indeed be a powerful deterrent to accepting payment from the federal government, or, post HIPAA, any other insurer.

For more information on the Van Houten case, see "prosecutions" on www.aapsonline.org.


Fraud Enforcement on a Roll

Thanks to settlement of some big-ticket cases, the Office of Inspector General (OIG) took $2.3 billion from providers in fraud cases in 11 months of fiscal year 2003, a 55% increase over 2002. Smaller settlements added up to $187 million.

"The $100,000 settlements might seem like small potatoes compared to the bigger, flashier settlements, but they do send a strong message to the smaller providers," stated OIG spokeswoman Judy Holtz (Medicare Compliance Alert 9/1/03).

A high priority is cases that involve potential patient harm, in which the government is likely to pursue both civil and criminal charges. Sentence enhancements for patient harm involve minimum jail time of two years. "That affects the willingness of potential convicts to cooperate," stated Associate U.S. Attorney Jim Sheehan. Unnecessary procedures involve potential patient harm (Medicare Compliance Alert 8/28/03).

Cases in the private payer arena have risen sharply in the past five years. Private payers work closely with state and federal prosecutors (Medicare Compliance Alert 7/28/03).


HIPAA Dog Gone Crazy. Recently I went into a pharmacy to pick up a prescription for our dog Porsha. The pharmacy technician dutifully provided me with the HIPAA Privacy Notice. I informed her that (1) Porsha is unable to read. (2) As Porsha rarely if ever wears clothes in public, I doubt that she has any concerns about privacy although her medical records are kept more private than mine. (3) HIPAA doesn't apply to dogs. "We don't make the laws; we just have to follow them," was the response. I'm seriously considering having a rubber stamp made of Porsha's paw print so that the next time I am asked to sign a HIPAA document on her behalf, she will be able to provide her own true signature. Maybe that will give them paws for thought.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Why Not Evidence-Based Policy? It's strange that advocates for a single-payer system are so opposed to a voluntary, reversible trial of a private option like Medical Savings Accounts, citing grave risks, yet propose a complete overhaul of an entire nation that is irreversible. You'd think they were picking what color tie to wear today. I think the fear of MSAs is not that they won't work but that they will work.
Russell W. Faria, D.O., Newport, OR


Leftist Opposition. Those of us who believe in free markets oppose what the Left wants because we know it will fail. We have seen it fail. It can only fail. Leftists oppose a free market in medicine (and education too) because they know deep down that it will succeed. And when it does, there is no more need for central planning, government meddling, and thousands of bureaucrats making "health care" decisions based on narrow political interests. Opposing something because it will work better is flat-out evil.
Jim Frogue, Washington, D.C.


Displacing Blame. Insurance carriers imply that the doctor did something wrong, rather than saying, "Your policy doesn't cover this." With skillful choice of language, Medicare pretends that everything necessary is covered, forcing doctors to choose between conflict with patients and bending the rules.
Phil Alper, M.D., Burlingame, CA


"Medical Necessity." This concept was developed in the "insurance state" of Connecticut to direct attention away from the profit-enhancing motives of insurers. It worked so well that Medicare set up an entire fraud unit that is self-funded from the fortunes that can be made by accusing doctors of excessive care. The government even puts a toll-free number on the patients' bills, telling them they can earn a 10% bounty by turning in their doctors. Medical necessity was conceived as a club to beat physicians, using patients as the duped intermediary assailant.
Stephen Katz, M.D., Fairfield, CT


How Much Should We Spend on Medical Care? The way to determine the "right" amount to spend on medical care is to have it compete with all other needs and desires including the desire to leave our children an inheritance. Then we can make judgments depending on our own values and priorities.

Every penny spent on medical care comes from us. We pay the taxes and we earn our benefits as surely as we earn our wages. We, not some distant bureaucracy, should decide how that money is spent. Once we regain control of the dollars, the system will rearrange itself to suit us.
Greg Scandlen, Frederick, MD


Information, Please. Sun Yat-Sen Univ. in Taipeh, Taiwan, has a unit for extracorporeal counterpulsation, a treatment approved by Medicare only for patients too ill to undergo coronary artery bypass. Can anyone tell us how to reach them for price quotations? It is sad that I must refer patients out of the country because we give inferior, not just costly, care.
Edward Harshman, M.D., Dade City, FL


The Key to Sustainability... lies in reducing the amount of money that goes into the third-party payment system. Medical care costs a lot because third-party payment costs a lot.

Hogs get slaughtered. Pigs get fed. The third-party system is a hog. If we want patient empowerment, we need to put the hog on a financial diet. Slim the big fellas down and watch the transformation from fat, unresponsive mud wallowers into agile, competitive piglets.
Joseph Lee Pugh, Diamondhead, MS


Medicare Drug Benefits... would increase dependence on government, turn the pharmaceutical industry into a government supplicant, and further the project of nationalizing medicine. Republicans don't seem to know how to argue against increasing entitlements. Maybe the fun of being a public official is proportional to the amount of other people's money that you get to spend.
Linda Gorman, Englewood, CO


Could Americans Save for Retirement? See www.dinkytown.net to see how easy it would be. The savings from carrying a $2 bagged lunch instead of buying a $6.50 deli lunch every workday for 45 years, invested at 6%, would amount to a nestegg of $237,164 by age 65.
Craig Cantoni, Scottsdale, AZ