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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
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Volume 46, No. 10 October 1990


The National Practitioner Data Bank, established by the Health Care Quality Improvement Act of 1986, is scheduled to begin operation on September 1, 1990. The Data Bank is supposed to protect the public from incompetent medical practitioners.

Information that must be reported to the Data Bank includes: medical malpractice payments; any disciplinary actions taken by a Board of Medical Examiners relating to a physician's professional competence or professional conduct; professional review actions that result in suspension, limitation, or reduction of clinical privileges in a hospital or other health care entity for a period exceeding 30 days; and adverse membership actions by professional societies that engage in peer review activities.

Any physician who makes a payment to a patient as a result of a claim or a judgment is obligated to report to both the Data Bank and the state medical board. Failure to do so is subject to a civil monetary penalty of up to $10,000 for each such payment. The stipulation that a settlement is ``confidential'' does not obviate the reporting requirement.

Instructions by the Department of Health and Human Services (HHS) require that reports of adverse actions against privileges be made in 600 characters or less. (Nine lines of this newsletter contain approximately 600 characters-spaces count.) Still, the report should be fair, complete, and comprehensive, lest a career be ruined on the basis of misinterpretation.

Physicians are supposed to receive a copy of everything that goes into their files. They have 60 days from the date the Data Bank processed the report to dispute the accuracy of the information. The physician must first ``attempt to discuss the situation with the reporting entity to resolve the dispute.'' If the reporting entity does not correct or void the disputed report, the Secretary of HHS will, upon request, review written information submitted by both the physician and the reporting entity and will conclude whether or not the information is accurate. The Secretary will not determine the merits of the claim or the appropriateness of the professional review action.

Health-care facilities will be required to query the Data Bank every two years for all staff members with clinical privileges, including nonphysicians such as podiatrists, clinical psychologists, dentists, and physicians assistants. (At present, they are only required to report actions taken against physicians and dentists.) Failure to query is subject to a $10,000 fine per instance, whether or not any information was present in the individual's file.

The Data Bank is to be run by an outside contractor, UNISYS Corporation, which won a $15.9 million, five-year contract. Initially, the AMA and the Federation of State Medical Boards submitted a bid for the contract, as ``an opportunity to prove to an increasingly wary public that physicians are interested in policing themselves.'' The AMA's ``master file'' could have been easily expanded to fill the data-bank function as first conceived. However, when the concept expanded into a ``bureaucratic nightmare,'' the AMA withdrew its bid.

The UNISYS computers are supposed to be ``tightly secured,'' and there is a $10,000 for each violation of confidentiality. The bank is not supposed to be a ``fishing ground'' for attorneys, although information is available to attorneys filing malpractice suits against hospitals that have failed to request information.

Because all settlements must be reported, it is expected that more physicians will demand expensive trials. The AMA is working to establish a ``threshold'' for reporting, say $30,000.

``Consumer advocates'' are not pleased about the Data Bank, saying that it is ``critically flawed.'' It is ``incomplete'' because it will not apply retroactively, and it is confidential and closed to the public. Ralph Nader's Public Citizen Health Research Group wants more consumer oversight over physicians, stating that the number of serious disciplinary actions taken by medical licensure boards is ``shockingly low.'' (Between 1984 and 1987, the number of serious sanctions -license revocation, suspension, and probation-rose 98% nationally and 265% in Colorado. Public Citizen applauded the increase in Colorado, but said ``more could be done.'' Dr. Ronald M. Davis, MD, of Seabrook, TX, cites John Wayne's words to the miscreant in Rio Bravo: ``We'll remember you said that.'' Dr. Davis notes that if Public Citizen prevails, and the number of disciplinary actions increases every year, and the number of applicants to medical school and family practice residencies continues to decrease, the doctor ``glut'' will be history by the year 2000.)

The Cost of Regulation

From the National Center for Policy Analysis:

The direct cost of complying with regulations totals $725 per person per year.

Thirty percent of the decline in US productivity during the 1970s can be attributed to OSHA and EPA regulations.

FDA requirements have reduced the number of new drugs by 40% and have doubled the cost of developing new drugs.

Car fuel-economy standards will cause from 2,200 to 3,900 additional fatalities over the next decade.

Real spending on federal regulation rose 21% between 1981 and 1990.

From Capitol Hill

Medicare Claims Filing. HR 4772, Rep. Kolter's bill to repeal the requirement that physicians file all Medicare claims, is gradually accumulating cosponsors, and Sen. Shelby of Alabama has stated he will introduce a companion bill in the Senate. If you don't know your Representative's telephone number, you can call the Capitol switchboard at 202-224-3121.

Medicare beneficiaries are being encouraged by Medicare carriers to inform on physicians who refuse to file claims. Such beneficiaries can obtain a copy of HCFA form 1490S and receive assistance from their Social Security office in filling it out. The clerk is instructed to ``advise the beneficiary to...attach a signed statement outlining the failed attempts to get the physician or carrier to submit a Medicare claim on their behalf.'' Information sent to beneficiaries emphasizes that physicians cannot charge extra for doing the paperwork and are to be fined $2,000 per violation if they ``willfully and repeated- ly'' do not submit Part B claims.

Physicians are advised to place a stamp on receipts for Medicare payments cautioning patients not to file for their benefits themselves, lest they cause trouble for their physician.

Carriers are being told to use 10 patient-submitted claims per month as a threshold for taking action against the doctor. A HCFA official warned that the agency ``could change that tomorrow and never tell them [the doctors] about it.'' He said that ``physicians have no out whatsoever'' for avoiding the require- ment (Part B News 7/30/90).

Physicians have a year to file the claims. Some may choose to delay filing in the hope that the requirement will be repealed and that the law will be retroactive. Claims do not need to be filed for noncovered services. For some physicians, the requirement is the final straw causing them to withdraw altogether from the Medicare program (vide infra).

It is claimed that 90% of claims were filed by physicians before the requirement was enacted, but Congress has no idea how many physicians were not filing.

Some Congressmen have indicated in their refusal to cosponsor HR 4772 that they consider involuntary servitude by physicians a small price to pay for assuring that elderly persons collect all the government benefits to which they are entitled.

A National Drug Formulary? Budget Director Richard Darman has proposed the creation of a national prescription drug formulary by 1992. HHS would establish a Pharmacy and Therapeutics Committee to write the formulary. The cheapest drug in each therapeutic class would be the ``preferred drug'' for Medicaid. Pharmacists would be required to substitute the ``preferred drug'' in all cases, except when the physician spells out in writing that a brand-name drug is ``medically necessary.'' Pharmacists, but not physicians, would be granted immunity from liability for harm resulting from the substitution of any therapeutic alternative approved by HHS (NAPS Legislative Alert, 8/8/90).

Sullivan Denounces National Health Insurance. Louis Sullivan, MD, Secretary of HHS, has stated that national health insurance isn't needed and wouldn't be tolerated in the US. He pointed to serious problems with the Canadian health care system, including long waits and de facto rationing.

Rep. Fortney (``Pete'') Stark, author of a bill that would create a $100-plus billion national health care system, has

called Sullivan a ``disgrace to his profession and race'' for failing to do more to promote health care for the poor.

Seven Conditions Chosen for Treatment Guidelines. HHS has picked seven medical conditions for which it will develop treatment guidelines: bedsores, chronic pain, depression in outpatients, urinary incontinence, cataracts, sickle cell disease, and benign enlargement of the prostate. Panels of 10 to 15 experts will refine the approaches, which will include methods of prediction, prevention, diagnosis, and treatment. Three sets of guidelines should be ready by January, 1991.

``Incentives'' to Increase Assignment Rates. The New York legislature has passed a bill holding MD balance billing to 115% of the Medicare ``reasonable'' charge. If the total number of claims taken on assignment does not increase by 5% or more by 1993, the balance billing limit would be decreased to 105%; otherwise, it will only be diminished to 110% of the Medicare ``reasonable'' charge.

Insurance carriers also have an incentive to increase the ``participation'' rate by whatever means their ingenuity can suggest. Nationwide Mutual Insurance Company, the Medicare carrier for Ohio, received a payment of $230,300 because of an 8% increase in participation rate based on covered charges between April, 1988, and January, 1989. (Information was obtained by AAPS Director Nino Camardese, MD, under a Freedom of Information Act request.)


The End of a Medical Era

As of Sept. 1, 1990, I will no longer see Medicare patients in my practice....Congress has decreed that doctors will be required to prepare and submit all Medicare Part B claims for all Medicare patients. The ethics which I have abided by for all these years set out my medical responsibilities to my patients, not the Government, Congress, or insurance companies, and the patients were responsible to me. I have been, by the Government's definition, a nonparticipating physician- meaning to me that I have a physician's relationship only with my patient. I am not a physician who takes care of a patient and is then subservient to the Government for payment, and is controlled by the Government as to the patient's treatment.

Now I find by our congressmen's directive that even though I have cared for, billed to, and collected from that Medicare patient, I must now fill out and submit this demanded paperwork (for which they forbid any charge for the additional paperwork and time) for each Medicare service,...and they will reprimand and fine me if I do not carry out this mandate. Congress has also ``in its wisdom'' set it up so the doctor can take one year to submit this form...; meanwhile, the patient would have to wait for his reimbursement.

It has come to pass that we as doctors are now spending more time responding to Congress' rules...than we are spending with patients....

So a medical era comes to an end in this area. My grandfather practiced medicine in Minburn, IA, 20 miles from here, from 1870 until 1918; my father practiced in Jamaica from 1902 until 1952; and I, in Jamaica from 1946 until now.

Thanks to you US Senators and Representatives for the new medical era in the community.

William A. Seidler, Jr., MD
Panora, IA

Health Law Commentary

by Kent Masterson Brown AAPS Legal Counsel

AAPS Physician Wins Major Civil Rights Victory in US Court of Appeals

The stunning victory won by AAPS member Curtis Caine, Jr., MD, in the US Court of Appeals for the Fifth Circuit (New Orleans, LA), will affect the conduct of medical staff credentialing and disciplinary procedures in public hospitals for years to come.

Dr. Caine, a board-certified anesthesiologist, was a member of the medical staff of Hinds General Hospital, a publicly owned institution in Jackson, MS. In 1987 and 1988, a large partnership of anesthesiologists sought an exclusive contract to provide anesthesia at the hospital. Dr. Caine and a number of private practicing anesthesiologists objected strenuously. Dr. Caine then ran against the principal partner in the large anesthesia group for the chairmanship of the department, losing by one vote.

Within weeks after the election, the department chairman preferred charges against Dr. Caine, with the result that Dr. Caine was summarily suspended from the medical staff. Ultimately, his privileges were revoked.

Dr. Caine filed a lawsuit in the US District Court for the Southern District of Mississippi under the Civil Rights Act of 1871 (the anti-Ku Klux Klan Act), 42 U.S.C. 1983, alleging a deprivation of his property without due process of law, in violation of the Civil Rights Act and the Fourteenth Amendment to the Constitution of the United States. The District Court dismissed the case, asserting that Dr. Caine did not state a cause of action under the federal Civil Rights Act because the State of Mississippi had enacted a statute that allowed an aggrieved physician to proceed to state chancery court after his or her privileges were revoked, to determine whether the hospital had violated its medical staff bylaws. In the chancery court, Dr. Caine-even if he was successful-would not have been able to ask for any damages; would not have been given a jury trial; and would not even have been given an opportunity to introduce evidence. Yet, the US District Court asserted that such represented, for purposes of the Parratt/Hudson Doctrine (twin cases handed down by the US Supreme Court in 1981 and 1984, respectively), an adequate post-deprivation remedy so as to deny Dr. Caine access to a remedy created by Congress.

Dr. Caine appealed the decision to the US Court of Appeals for the Fifth Circuit. The case was argued by AAPS Counsel Kent Masterson Brown on January 8, 1990.

On June 27, 1990, the Fifth Circuit handed down its opinion, reversing the US District Court and remanded the case back to that Court, holding that, even if the State of Mississippi had provided a statutory means allowing a physician to proceed to a chancery court upon dismissal from a medical staff, the Court doubted that such a remedy was ``adequate.''

More importantly, the Court of Appeals stated that the Parratt/Hudson cases (which created immunity for the State from civil rights liability for ``random and unauthorized'' acts of state agents) cannot be used to deny a physician a remedy guaranteed by the Civil Rights Act of 1871 in a US court where the government-as in a publicly owned hospital-had ample opportunity to provide the physician with due process of law before and after his suspension from the medical staff. Medical staff privileges, stated the Court, ``embody such a valuable property interest that notice and hearing should be held prior to termination or withdrawal.'' Also, Dr. Caine alleged that the members of the medical staff and hospital officials were biased and predisposed to his elimination for reasons other than the quality of care he had rendered to his patients and that he was systematically denied his rights to due process. In cases in which the State, by statute, requires medical staff bylaws to govern medical staff dismissals, none of the acts performed by those sitting on medical staff and hospital committees determining medical staff privileges can be deemed ``random and unauthorized'' as a matter of law.

Since handing down the decision, the Court has agreed to rehear the case en banc. The American Health Legal Foundation has voted to support Dr. Caine's case.


Are There Limits to the State's Power to Tax?

In ruling against AAPS physicians in their challenge to the constitutionality of the Florida Birth-Related Neurological Injury Compensation Plan, the Circuit Court of the Second Judicial Circuit in and for Leon County, FL, cited Eastern Airlines, Inc. v. Department of Revenue:

When the state Legislature...undertakes to exert the taxing power, every presumption in favor of the validity of its action is indulged....The burden is on the one attacking the legislative enactment to negate every conceivable basis which might support it....

The Court further stated that ``a tax may even be so high as to restrict or even possibly destroy particular occupations without violating the due process or equal protection clauses.''

In State ex rel. Bonsteel v. Allen, the court held: While it is within the power of the courts to declare Laws levying license taxes void because of the unreasonable and arbitrary exercise of the state's power either in the classification or in fixing the amount of the license, such power will not be exercised unless the amount of the license tax is so great...as to...tend to prevent a great number, if not all persons, from pursuing otherwise lawful occupations which do not impair public safety, public health, or destroy property.

Furthermore, the end apparently justifies the means. ``As long as a classificatory scheme chosen by the Legislature rationally advances a legitimate governmental objective, the courts will disregard the method used in achieving the objective.''

AAPS Counsel Kent Masterson Brown has filed a brief appealing the decision in Coy et al. v. Florida Birth-Related Injury Compensation Plan in the Supreme Court of Florida, arguing that the Court has never squarely addressed the constitutionality of a statutory scheme such as this one, which requires over 40,000 Florida-licensed physicians to underwrite the malpractice premiums of the select group of 535 physicians who are eligible and choose to participate in the plan.

``The Act at issue here...takes property from one private party and transfers it to the exclusive benefit of another private party without legitimate reason or justification.''

Soviets Lead in ``Right to Health''

As noted by the US founders of the USSR-USA Health Policy Exchange Initiative, ``the Soviet Union was the first country in the world to guarantee free medical care as a constitutional right to all its citizens'' (JAMA 1990;264:1097-1098). Lenin signed the decree establishing the right to free medical care in 1917. The present Soviet constitution, adopted in 1977, contains the right to ``health,'' not just medical care (The Free Market, August, 1990). To provide for this right, the Soviet Union has more physicians per capita than any other nation in the world, and twice as many hospital beds as the US.

Nevertheless, the ``quality and accessibility of that care are now in question,'' the health care system having been ``starved and progress in improving health status...slowed'' during the ``last 30 years of the arms race'' (JAMA, ibid.)

B. Iskakov of the Moscow Institute of National Economy described the situation as ``worse than critical.'' Less than half the Soviet people are considered to be in normal health, and 75% of Soviet children have been officially classified as unhealthy. Life expectancy is about 10 years shorter in the Soviet Union than in the US. Hepatitis is 30 times more prevalent than in the US. Still, hospital mortality stays within the planned rate; if the patient dies on the front steps, it doesn't count in the statistics (Free Market, ibid.)

The Soviets do excel in cost containment. The plan states that the average cost of medical treatment must not exceed 11 cents per day. Physicians' pay is about one-third that of bus drivers (not counting under-the-table payments), to enable physicians to pay back society for all the resources they used during their free schooling (Free Market, ibid.) Total health spending is estimated to be less than 3% of the GNP.

When asked how to apply market principles to the Soviet system, US representatives offered ``respectful cautions'':

Emphasizing the dangers inherent in a market system, we urged the Soviets not to retreat from the principles of universal coverage and access. Mal- distribution of resources, inability to control expenditures, overemphasis on technology and medical specialization at the expense of primary care, a strong bias toward curative medicine rather than preventive practice...were undesirable elements in the US experience we tried to describe to our Soviet colleagues (JAMA, ibid.)

These US experts suggested that the Canadian system would be preferable to US insurance as a model for the Soviets to emulate. They also urged an emphasis on the needs of defined populations, not just individuals.

Two Headlines

The Plain Dealer of Cleveland carried two contrasting front page stories on Mar 7, 1990: ``Soviets break with ideology, allow private business role'' and ``600 rally for Ohio universal health insurance.''

The Supreme Soviet passed a law that would allow some limited ownership rights, as long as no ``exploitation'' occurred.

At the Ohio rally, Gerald McEntee of the American Federation of State, County and Municipal Employees proclaimed that ``health care is not a private product to be sold for profit. It's a right.'' Citizens (mostly elderly) attending the event supported House Bill 425, which would abolish health insurance companies and institute Canadian-style medicine.


New Members

AAPS welcomes Drs. Robert Alexander, Jr., of Pineville, KY; Charles Astrin of Great Falls, MT; Mark Baldree of Phoenix, AZ; Donald Behr of Ennis, TX; John Bennett of Sequim, WA; Salvatore Durante of Brooklyn, NY; Emile El-Shammaa of Durham, NC; James Guenther of Lancaster, OH; Martin Guerrero of San Antonio, TX; John Hughes of Augusta, GA; David Humphrey of Seattle, WA; Craig Miller of San Mateo, CA; Robert Molinet of Ft. Lauderdale, FL; Robert Neville of Bowling Green, OH; Joseph Noreika of Medina, OH; Thomas Pidduck of Ontario, Canada; Robert Rosser of Birmingham, AL; Daniel F. Royal of Las Vegas, NV; Robert Schaefer of Nampa, ID; Thomas Simonsen of Ft. Wayne, IN; James Weaver of Durham, NC; and Robert Wood of Crossville, IN.


From the Virginia Birth-Related Neurological Injury Compensation Program

Having an enacted a law similar to the one being challenged by AAPS physicians in Florida (see p. 3), Virginia is serious about enforcement. One physician who hadn't paid up received a certified letter from the program, with carbon copy to the Assistant Attorney General:

If your $250 payment or claim of an appropriate exemption has not been received [in 30 days], the Bureau of Insurance of the State Corporation Commission will be notified of your failure to respond. The Commission is authorized by Section 38.2-218 of the Code of Virginia to impose a penalty up to $5,000 for a knowing or willful violation of any provision of Title 38.2.2