Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 46, No. 9 September 1990
AAPS WINS IN CHALLENGE
On July 23, 1990, AAPS and three of its members, Drs. Nino
Camardese, Harold Schultz, and Souheil Al-Jadda prevailed against
the Secretary of Health and Human Services (HHS) in the US Court
of Appeals for the Sixth Circuit. The Court ruled that the HHS
ban on direct (unassigned) billing for clinical laboratory tests
performed in physicians' offices was based on an erroneous
interpretation of the Consolidated Omnibus Budget Reconciliation
Act of 1985.
The three physicians had been threatened with sanctions by
Nationwide Mutual Insurance Co., the Medicare carrier, for
refusing to take assignment on all laboratory charges. AAPS
filed suit in the federal district court in Toledo in 1988 (see
AAPS News, Nov 1988, Jan 1989). The district court
dismissed the suit, and AAPS appealed (AAPS News July
In a published opinion titled AAPS, et al. v. Bowen, written
by Judge Danny Boggs, the Sixth Circuit Court unanimously
reversed and remanded the lower court's decision.
It is the opinion of the court that the
statute applies only to tests performed in a
laboratory and that, absent a showing that
Appellants' offices constitute laboratories,
Appellants may continue to bill their
Medicare patients directly for clinical
diagnostic laboratory tests performed in
The Medicare statute provides that some persons or entities
may bill beneficiaries by means of an itemized bill; formerly,
this was taken to include physicians. HHS contended that now
only rural health clinics are in that category. However, rural
health clinics are by definition clinics that are required to
accept assignment on all patients. To the Court's question,
``Who can be billed by a rural health clinic?'' US attorneys were
only able to respond, ``Nonpatients.''
The Court reasoned as follows:
Sound statutory construction dictates that
subsection (B) should refer to something, and
not be a nullity. Therefore, the sensible
meaning to attach to subsections (A), (B),
and (C) of §1395l(h)(5) is the follow-
ing: (1) Someone can bill Medicare patients
for clinical diagnostic tests by means of an
itemized bill. (2) that someone is a non-
laboratory; and (3) the category of non-
laboratories (as that term is understood in
the statute) is not an empty set, and it
includes some physicians' offices.
The Court also noted that the attempt to force all physi-
cians to accept assignment for lab services was in conflict with
Medicare's statutory provision for nonparticipation.
The case represents the only judicial pronouncement ever
handed down on the issue by a US court. Its effect will be felt
across the nation as it will undoubtedly cause the Secretary of
HHS and his fiscal intermediaries to adjust the way in which they
process clinical laboratory claims across the nation. Certainly
this case, having been published, can be used by every
``nonparticipating'' physician in the US, so long as the
physician is not, in fact, a ``laboratory,'' to protect himself
from government demands to submit laboratory bills only on an
AAPS was represented by Kent Masterson Brown. Litigation
was partially supported by the American Health Legal Foundation
(whose treasury now stands close to $0). Those wishing to help
replenish the war chest may send a tax-deductible contribution to
AHLF at 1601 N. Tucson Blvd. Suite 9, Tucson, AZ 85716.
AAPS Confronts Public Citizen
On July 2, AAPS Director Sidney Steinberg, MD, a vascular
and general surgeon in Shelbyville, KY, appeared on CNN Crossfire
with Sidney Wolfe, MD, Director of Public Citizen, a self-styled
consumer advocacy group.
Public Citizen recently published a book warning patients
about 6,892 ``questionable doctors.'' Private citizens can
obtain a copy for $40; for doctors and lawyers, the price is
Dr. Steinberg noted that physicians may be listed in the
book for a variety of reasons, which might be completely
unrelated to patient care. Doctors who have committed a major
felony are on the same list as those whose licenses were
suspended during rehabilitation and those who were late in making
a loan payment or filing CME credits. The chiropractor who
appeared on the program was listed because the Virginia medical
board objected to one of his advertisements. Physicians on the
list may never have been accorded the rights of self defense that
common criminals routinely receive.
Wolfe alleged that medical licensure boards are not doing
their job; otherwise more physicians would be delicensed.
Steinberg responded that the most important quality control
occurs at the medical staff level. Public Citizen has no proof
that more doctors deserve to be sanctioned by medical boards.
In reply to Wolfe's skepticism about peer review, Steinberg
said, ``We take credentialing very seriously. So seriously, Dr.
Wolfe, that if you applied for privileges on our staff, with your
qualifications, you might not get them.''
From Capitol Hill
Defendant Wanted. The Inspector General's office is
looking for a medical necessity case to test the IG's authority
to assess a $2,000 fine per violation (e.g. for wrongly signing a
``medical necessity'' form). The US attorney in Tampa, FL, has
formed a task force to investigate ``medically unnecessary''
services. One possible clue is a dramatic change in the number
of services billed from one year to the next.
Note that the IG does not need to prove that the doctor
intentionally tried to defraud Medicare (Part B News 7/16/90).
The Lock-In Arrangement. The Texas Department of
Health Services has identified patient SE, a mentally retarded
epileptic, as a ``Lock-in recipient'' for the offense of using
Medicaid services ``much more than is usually necessary for a
given medical condition'' or otherwise habitually misusing
Medicaid services. SE saw her physician 14 times in 12 months,
costing Medicaid $148. As ``an educational and control measure
for the Medicaid recipient's overutilization,'' Medicaid would
henceforth refuse to pay for services rendered to this patient,
except by a designated primary provider.
The physician who was requested to serve as ``Lock-in
provider'' requested that he be allowed to continue as the
patient's physician, treating her without charge, and that the
patient be spared the confusion of receiving the Lock-in forms.
Dumping Free Speech. Physicians are advised to mind
their tongue if accused of violating federal ``anti-dumping''
legislation. The $20,000 fine levied against Michael L. Burditt,
an obstetrician who transferred an emergency patient, might have
been more like $3,000, had Dr. Burditt not said that ``the
hospital and the federal government were not going to tell him
who he has to take as a patient,'' according to attorney Mark
Rubin (Medical World News 7/90). An utterance that is explicitly
forbidden by the regulations is any query about method of payment
before a medical screening examination is performed.
The maximum fine for noncompliance with federal rules on
patient transfers, in effect since July 1, is $50,000. The rules
are expected to lead to finger-pointing by doctors, as
specialists who fail to respond promptly to consultation requests
by emergency physicians are also subject to fines and exclusion
``Anti-Hassle'' Legislation. HR 4475, introduced by
Rep. J. Roy Rowland, MD (D, GA) and S 2591, introduced by Sen.
Max Baucus (D-MT), have collected a large number of cosponsors.
These would repeal legislation that prohibits a physician from
billing for the services of a covering physician and rules that
deny physicians information used as the basis for claims denials
or that require physicians to pay for information needed to
comply with Medicare mandates. (Carriers may charge physicians
from $45 to $750 for information about MAAC charge limits and
HCFA is resistant to the idea of releasing secret carrier
screening parameters, fearing that physicians may use the
information to ``abuse the system.'' HCFA chief Gail Wilensky is
open to the idea of shining a light on the ``invisible barbed
wire,'' at least on a trial basis. Meanwhile, HCFA cautions
physicians to beware of the ``unauthorized'' parameter lists
being marketed by entrepreneurs.
Laboratory Regulations. HCFA-proposed rules im-
plementing the Clinical Laboratory Improvement Act (CLIA) have
been published and submitted for public comment (see p. 3). Some
Labs filing for a certificate of waiver must submit a
description of the examinations and procedures to be performed,
the methodologies used, and the qualifications of personnel.
Unannounced inspections may be made. Labs must notify HHS before
performing any test not in the waiver category. Notice is also
required for a change in location, methodology, name, or
ownership. Failure to comply with regulatory requirements could
result in revocation of the certificate and suspension or denial
of payments under Medicare.
Level I and II labs must provide the Secretary with adequate
assurances that they will comply with later provisions of the
regulations related to administration, proficiency testing,
quality control, personnel, inspection, and computer systems.
All personnel must be licensed. In Level II labs, technical
personnel would be required to have a bachelor's degree in
medical technology or meet one of several other training options,
and the director would have to be a physician certified in
``relevant fields'' (such as pathology) or hold a PhD in a
chemical, physical, or biological science. Labs must comply with
federal, state, and local fire safety laws and laws related to
the storage, handling, and disposal of chemical, biological, and
radioactive materials. Very detailed requirements must be met
for documenting the handling of specimens submitted for
proficiency testing, and for documenting quality controls
(including temperature and humidity monitoring, procedure
manuals, labeling of testing supplies, etc.)
For further details, contact Rhonda Whalen, 301-966-6801.
Medicare Claims Filing. HR 4772, Rep. Joe Kolter's
bill repealing the requirement that physicians file all Medicare
claims is slowing gathering cosponsorships and has been endorsed
in a July 13 report of the Republican Study Committee. HCFA is
proceeding with plans to implement the requirement on schedule
(September 1). Representatives of the carriers say that
beneficiaries are ``thrilled'' to be relieved of the paperwork
burden. When asked what will happen to physicians and suppliers
who do not comply, the answer is ``education.'' (Fines of $2,000
per violation are no doubt very educational.) The next agency
step is likely to be outlawing the popular and time-saving
``superbills'' used by many offices.
Relative Value Scale. On July 13, 1990, the Republican
Study Committee issued a report that is a frontal attack on the
relative value scale, quoting Robert Moffit, PhD, executive
director of the National Alliance of Physicians and Surgeons:
``this very uncertainty [about the effects on patient access to
services] calls for a halt to implementation until HCFA can
provide the Congress and the public with a clearer idea of the
consequences of the new system.'' The report calls for free
enterprise solutions, instead of centralized planning.
Data Bank to Open October 1. HHS will soon be
distributing information on how to use the national malpractice
data bank to 16,000 doctors, hospitals, medical societies,
dentists, and state boards of medical examiners. The Public
Citizen Health Research Group wants the bank be accessible to the
public, a move that would require Congressional approval.
Let's Not Forget the Whitney Case
In our euphoria over receiving the decision of the US Court
of Appeals for the Sixth Circuit in the case of AAPS, et al. v.
Bowen (see p. 1), we cannot lose sight of a key step we have
taken along the way.
One of the primary issues raised in the early proceedings in
the lab-fee case was whether AAPS and the three plaintiff
physicians had ``standing'' to question the validity of the
demands of the Secretary of HHS and whether their case was
``ripe'' for judicial review. The government contended that
because there was an administrative appeal mechanism for
physicians to defend themselves against sanction recommendations,
and the plaintiffs had not been sanctioned and had not taken
advantage of same, they could not proceed to a US court for
Indeed, US District Courts are creatures of Congress. They
are accorded very limited jurisdiction. True, where one has an
administrative remedy, the federal common law mandates that that
remedy be exhausted before one may have access to a federal
One case resolved the issue of standing in AAPS v. Bowen-a
case also brought by AAPS. Although at the time it seemed as
though the victory on the issue of standing in the case of
Whitney v. Heckler, 780 F.2d 963 (11th Cir., 1986) was little
consolation for the Court upholding the constitutionality of the
fee freeze for ``nonparticipating'' physicians under the Deficit
Reduction Act of 1984 (DEFRA), the decision was of enormous
In the Whitney case, the plaintiffs challenged the
constitutionality of the Medicare amendments to DEFRA. The
nonparticipating physician plaintiffs were threatened with
sanctions if they did not freeze their fees according to the
maximum allowable actual charge (MAAC) set by Medicare. The
government, in a Motion to Dismiss, claimed that the physicians
had no standing to litigate the validity of DEFRA because they
had not been sanctioned, and, if they were sanctioned, they had
an administrative appeal mechanism available to them prior to any
judicial review. The case, according to the government, was not
ripe for judicial review.
In a two-page footnote, the US Court of Appeals for the
Eleventh Circuit (Atlanta, GA) rejected the government's
...deferring resolution of the constitutionality
of §2306 will force Appellants (Plaintiff
physicians) to choose between complying with the
temporary fee freeze and risking sanctions by raising
their rates. It is well established that an issue is
ripe for judicial review when the challenging party is
placed in the dilemma of incurring the disadvantages of
complying or risking penalties for noncompliance.
Hence, we conclude that the ripeness standard has been
met in the instant case.
The Whitney case, in other words, opened the doors of the
federal courts to such actions.
The US District Court for the Northern District of Ohio at
Toledo, rejecting the government's argument that the AAPS v.
Bowen case should be dismissed for lack of standing and
ripeness' cited Whitney v. Heckler in support of this opinion.
When I argued the case before the US Court of Appeals for
the Sixth Circuit, I began with a recitation of the standing of
the physicians and the ripeness of the issues. The Chief Judge
interrupted me, asserting, ``Mr. Brown, this court has no problem
with whether there is standing or ripeness here.'' How far the
law has come, I thought.
Let us not forget that in a past case, AAPS made law that
enabled it to file the lab-fee case. The law is constantly
evolving; and AAPS has been a key player in its development. We
owe a great debt to Drs. Douglass Whitney, W. Daniel Jordan, Fred
Shessel, and all the Atlanta physicians who made the Whitney v.
Heckler case possible. That case is truly bearing fruit.
AAPS Physician Wins Civil Rights Victory
Curtis Caine, Jr., MD, won a major victory in the US Court
of Appeals for the Fifth Circuit. Dr. Caine's suit was filed
under the Civil Rights Act of 1871, the anti-Ku Klux Klan Act,
alleging deprivation of property without due process of law.
Details to follow in the October issue of AAPS News.
Comments on Lab Regulations Due August 20
The address for public comments on lab regulations is:
HCFA, Dept HHS, Attn: HSQ-176-P, PO Box 26676, Baltimore, MD
21207, with copies to your Congressmen and the Office of
Information and Regulatory Affairs, OMB, Room 3002, New Executive
Office Bldg, Washington, DC 20503, Attn: Allison Herron.
Points that the American Society of Internal Medicine (ASIM)
asks you not to make: urging HCFA not to issue regulations at
all, requesting an exemption for physicians' office labs, and
lengthening the list of waivered tests. After all, ASIM was one
of the first medical organizations to agree that greater
accountability was needed for all laboratory work. They simply
failed to foresee that the end result might be the forced closure
of many labs and denial of patient access to convenient, cost-
effective testing. So, you should definitely not suggest that
the same government that spent more than a gigabuck to put a
nearsighted telescope into orbit is possibly incapable of
assuring quality microscope work across the land.
One suggested letter from a ``concerned citizen of Canadian,
TX'' was sent to us by Dr. Tadeuz Darocha. It states that the
closure of their hospital and physicians' office labs would
result principally from the unreasonable and unnecessary
personnel rules. There are no ``technical supervisors'' or
``general supervisors'' available at any price.
AAPS has recommended the development of a cost-and-quality
impact statement, including: (1) the number of physicians who
stop doing lab work and the effect on their patients (timeliness
of diagnosis, travel time, and amount of the laboratory bill);
(2) the cost of the regulatory process itself, both to the
government and the medical practitioner, including estimates of
resources diverted from direct patient care into meeting
regulatory requirements; and (3) outcome analysis- does any
measurable increase in quality result? We believe that Congress
should require such information about ``what works'' to guide in
The agenda at the annual meeting will include discussion of
a declaration of patients' freedoms, many of which are overlooked
in the ``Patient Bill of Rights'' recently approved by the AMA
House of Delegates. Instead of freedom, the AMA announced a
``basic right to have available adequate health care,''
overriding the objection that this statement ``paves the way to
socialized medicine'' and implies a governmental obligation to
President-Elect Claud Boyd proposes for the assembly's
consideration a statement that patients have the freedom:
- To seek consultation with the physician of their choice;
- To contract with their physicians on mutually agreeable
- To purchase the care of their choice;
- To refuse medical treatment even if it is recommended by
- To be informed about their medical condition, the risks
and benefits of treatment, and possible alternatives;
- To be treated confidentially, with access to their records
limited to those involved in their care or designated by the
patient, except as necessary to protect other persons from
- To refuse government interference in their medical care,
and to be confident that their actions in seeking or declining
medical care will not result in government-imposed sanctions on
patient or physician or any other party; and
- To seek redress through the courts, including a jury
trial, in the event of injuries resulting from gross negligence.
Medicare in Australia
At the May meeting of IATROS in London, Dr. Sheila W. Hyland
of Private Doctors of Australia presented an update on national
health insurance down under:
The new Labor government has disallowed private insurance
for the gap between Medicare rebate and a more realistic private
medical fee, lowered payment to doctors for inpatient hospital
consultation from 85% to 75% of an abnormally low government
schedule fee, and prevented private payment for prostheses
urgently required for operations such as hip replacements.
Although Medicare was introduced in 1984 as a just and
equitable system for everyone, it has not been fair or just for
the aged or disabled, whom it was supposedly designed to assist.
The public hospital waiting lists have swelled to 60-70,000
patients, with everyone, rich, poor, and aged in the queue.
Administrative personnel have increased in one rural district
referral hospital from six to 60 in 25 years, while the number of
beds has declined.
Nor is the scheme fair for physicians. An anesthetist
attending a Medicare patient at night is paid less than a
television technician. The minimum cost of engaging a technician
for a 10-minute job to replace short connecting cables from phone
to wall with long ones is $53, worth more than four pensioner
consultations under the Medicare system.
General practitioners were nationalized by legislation
passed in October, 1989. In collusion with the government, the
Royal Australian College of General Practitioners (RACGP) became
the ``Lords'' of general practice. There are two classes of GPs
(one receiving a higher fee), based on eligibility for Vocational
Registration. Ineligible groups include women who marry and
New legislation to cut dispensing fees endangers the
livelihood of small rural pharmacists. Furthermore, the Health
Insurance Commission proposes to introduce a ``black box'' into
every pharmacy and require the pharmacist to check eligibility
before dispensing, endangering confidentiality and causing
inevitable delays and confusion. . . .
FOR INFORMATION ON IATROS TAPES, CALL 1-800-635-1196.
AAPS welcomes Drs. Lewis G. Allen of Ash Flat, AR; H.C.
Ambacher of Erie, PA; T.D. Blanton of Jackson, MS; Paul T.
Elliott of Richardson, TX; Tom Farmer of Rock Hill, SC; W.I. Fox
of Abilene, TX; Brian W. Goltry of Boise, ID; Bernhardt Heersink
of Newburyport, MA; Donathan M. Ivey of Crossville, TN; Waite S.
Kirkconnell of Tampa, FL; Guy E. Knolle, Jr. of Houston, TX;
Gregory P. Lewis of Seattle, WA; James W. Montague of
Williamsport, PA; Ricardo G. Mora of Norfolk, VA; E. Addis Munyan
of Independence, MO; D.G. Nielsen of Seattle, WA; M.V. Rock of
Mesa, AZ; F. Fuller Royal of Las Vegas, NV; Manorama Sharma of
Fountain Valley, CA; David R. Reich of Auburn, NY; Jean Sauer of
Bloomington, MN; Lynn T. Simon of Louisville, KY; Keith Stampher
of Colorado Springs, CO; J.V. Wright of Kent, WA; and Daniel V.
Young of Washington, DC.
Sept 12, 1990. Board of Directors meeting, Scottsdale, AZ.
Prelude to annual meeting: Bureaucrat of the Year Awards
Ceremony, Cattleman's Cookout.
Sept 13-15, 1990. 47th Annual Meeting: The Control of
Medicine in the 1990s. Camelview Resort, Scottsdale.
Oct 17-19, 1991. Annual meeting, Lexington, KY.