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Volume 48, No. 9 September 1992


About 60 elderly patients faced possible eviction from their home as government inspectors threatened to terminate Medicaid funding to Gaymont Nursing Center in Norwalk, Ohio. Conditions in the nursing home posed a ``serious and immediate danger to residents,'' according to Randy Hertzer, a spokesman for the Ohio Department of Health. Local newspapers announced the state's charges in large, front-page headlines.

In a 1990 survey, Gaymont was listed as one of two Ohio nursing homes having no deficiencies. This time, however, the procedure was different, possibly because of complaints by two disgruntled former employees.

Six surveyors, twice the usual number, dispersed throughout the facility. They demanded records; insisted on interviewing residents without staff being present; interrupted personnel in the middle of procedures such as bedbaths in order to carry out their directives; and questioned the judgment of the patients' physicians. The inspectors went so far as to intimidate the staff into acting contrary to physicians' orders. In one instance, a surveyor demanded the removal of a patient's restraints; shortly thereafter, the patient fell. (The surveyor later denied giving the order.)

The routine in the nursing home was disrupted for six weeks by what the staff called the ``team from Hell.'' Nurses were in tears. Residents appeared in the administrator's office, trembling.

Gaymont administrator William Dotson said that many of the alleged infractions were ``found'' through the use of ``Gestapo'' techniques.

``My employees were lied about, coerced, intimidated, totally demoralized, and put into a state of shock,'' he stated. In a letter to Dotson, one nurse wrote that she felt she had been ``mentally raped'' by the surveyors.

The surveyors took at face value whatever they were told by residents in response to leading questions, regardless of the patient's mental status. ``They twisted and turned statements made by residents, employees, and family members to suit their need for something to report,'' stated a nurse.

Remarkably, the residents' ``immediate jeopardy'' no longer existed as soon as Dotson filed a large volume of paperwork with the state.

Dotson stated that the problems resulted from regulations that were frequently changed without notice. He periodically buys a book that lists the changes, but many are still unclear. The home was unable to comply with one regulation requiring a lock on an exit because such locks were forbidden by the fire code.

Most of the regulations concern paperwork. As one nurse explained, ``the pressures being put on us, the tons of extra paperwork-because according to the state, if we aren't charting it, we aren't doing it-has become a mental nightmare.''

Dotson said that he stands by his employees, who take pride in offering excellent, loving care to the residents. He extends an open invitation to all who would like to visit. He hoped that about 20 citizens might come to a public meeting to show their support; 130 appeared.

AAPS President-Elect Nino Camardese, MD, described the inspection as an example of tyranny-arbitrary, unrestrained government. He believes that Gaymont provides exceptionally fine care to his patients as well as to his own mother-in-law.

Many supportive letters from family members and Gaymont staff appeared in the local newspaper. One Norwalk citizen called the Gaymont incident a ``grand example of big government running amok.''

``It is unfortunate that a bunch of power-mad, two-bit bureaucrats can wield the power of life or death over a business....Whatever happened to the principle that the accused is innocent until proved guilty? I'll tell you. When dealing with any government bureaucracy, you are guilty until you are able to prove yourself innocent, and by then, the damage is already done.''

Another citizen, who frequently visits Gaymont, was ``outraged that our tax dollars are being spent to fund these power-hungry people who seem more interested in bullying quality nursing homes than in finding and correcting real abuses.''

A physician wrote that there was indeed a real threat existing at Gaymont. The danger is that ``the state is allowed to have the power to disrupt people's lives like this, creating havoc for all involved....More and more people work for financially troubled government and must justify their `gravy' jobs....They'll probably be raiding my office next because I wrote this letter.''

Dotson felt that speaking out is risky. The general public has been taught that those who protest about regulation must be proponents of bad care. Still, he plans to file a complaint with the state about the methods used by the surveyors.

``If I have the ability to keep any other facility from going through this, I will do it....This isn't America.''


I hope we shall never be so totally lost to all sense of the duties imposed upon us by the law of social union as, upon any pretext of public service, to confiscate the goods of a single unoffending citizen. Who but a tyrant...could think of seizing on the property of men unaccused, unheard, untried...

Edmund Burke, Reflections on the Revolution in France

CLIA Impact Weighed by President's Council on Competitiveness

On July 30, practicing physicians representing a number of organizations met with the staff of the President's Council on Competitiveness, which is headed by Vice President Quayle, in Washington, DC. The consensus was that the Clinical Laboratory Improvement Act of 1988 will be a disaster for patient care. All participants were in favor of further delays in implementation, pending study of the impact, although AAPS made the only unequivocal plea for repeal of the Act.

Several physicians made the point that preventing physicians from performing certain tests was like taking away their stethoscope. Many tests are personally performed by physicians as an integral part of their specialty. Some tests, such as vaginal wet mounts, simply cannot be referred elsewhere because they must be done before the specimen dries. Others, such as examination of spinal fluid, admit of no delay because of their clinical implications. It would be ``immoral'' not to do such tests, stated Dr. Robert Brodell of the American Academy of Pediatrics.

``We will go ahead and do these tests,'' stated Dr. Richard Jones, President of the American College of Obstetrics and Gynecology.

Dr. Gerald Keller, Vice President of the American Academy of Family Practice, said many physicians would either do without confirmatory tests or would say ``take me to jail or take me to court and we'll fight it out.''

A hematologist stated that he would still look at his patient's blood films. A nephrologist stated that he would continue to look at urine specimens. ``I have yet to see a laboratory report a red blood cell cast,'' he said.

Several physicians raised objections to the make-up of the Clinical Laboratory Improvement Advisory Committee recently appointed by HHS Secretary Louis Sullivan. Only one practicing physician was appointed and ``one name after another...has a conflict of interest,'' observed Dr. Jones. (Most appointees were from pathology laboratories.

One major impact of CLIA will be to force physicians into large groups, and to make it impossible for a physician to open a solo practice in a rural area. Many dialysis centers that are already struggling financially will be put out of business.

``I've heard from many doctors in rural areas that may do as many as 50 different tests in their offices,'' said Dr. Keller. ``This means they will have to send in 750 analyses per year to maintain the lab. The cost and extra work is prohibitive.''

Dr. Don Printz of Georgia brought a graphic demonstration of the absurdity of the proficiency testing requirements: a positive and a negative dermatophyte culture. ``HHS wants me to prove to them, three times a year, that I can tell the difference between red and orange.'' (Dr. Printz was recently elected to the AAPS Board of Directors and also serves as Secretary-Treasurer of the American Society of Dermatology.)

Besides the cost in dollars, CLIA will have a cost in lives, stated Dr. Jane Orient, AAPS Executive Director. To continue to perform screening laboratory tests, the Pima County Public Health Department will have to divert $35,000 from other uses. Candidates for funding cuts were the colposcopy clinic where indigent women can obtain treatment for their abnormal Pap smears or the salary of a public health nurse needed to help prevent the spread of measles or drug-resistant tuberculosis.

Dr. Donald Lewers, who represented the AMA, stated that five studies requested by the law have not been done, and that implementation should be delayed until they are complete.

Sandra Mahkorn, MD, Associate Director of the President's Council on Competitiveness, distributed a draft of a physician questionnaire to determine the impact of CLIA on clinical practice.

After the meeting, AAPS prepared the enclosed questionnaire. If you are in active practice, please fill it out and return it as soon as possible. Replies received by August 31 will be tabulated and the results forwarded to the Council on Com- petitiveness.


Ohio Freedom in Medicine Seminar Planned

The Ohio State Medical Association, the Ohio Academy of Family Physicians, the Ohio Osteopathic Association, the American Medical Association, and AAPS will jointly offer a one-day seminar at the Holiday Inn, 270 North, in Columbus, Ohio, on Saturday, October 24.

Speakers include J. Patrick Rooney of Golden Rule Insurance Co.; Robert Moffit of the Heritage Foundation; Edward Annis, MD, Past AMA President; Lois Copeland, MD, and Trudy Drucker, plaintiffs in Stewart v. Sullivan; Kent Masterson Brown, and three leading medical students. A fee of $45 will be charged for physicians not belonging to a sponsoring organization. Registration is limited to 500. For more information, write Mr. Herb Gillen, Executive Director, OSMA, 1500 Lake Shore Drive, Columbus, OH 43204.


Annual Meeting Deadlines

Registrations must be sent to AAPS by September 1 to obtain a $50 discount on the seminar fee.

Resolutions must be received by R.S. Jaggard, MD, of 10 E. Charles St., Oelwein, IA 50662, by September 15, 1992.

Hotel reservations must be made by September 21. Call the Airport Radisson, Seattle, at 206-244-6000 or 800-333-3333.


Market Solutions

The answer to the crisis in medical care is simple: Put the patient back in charge.

Terree Wasley shows how we got in our current situation and points the way to a consumer-choice solution.

AAPS members who attended the 1990 annual meeting in Scottsdale may remember Ms. Wasley. Those who responded to her survey may find their comments in print.

What Has the Government Done to Our Health Care? by Terree Wasley is available from the Cato Institute, 224 Second St. SE, Washington, DC 20003 ($19.95 cloth or $10.95 paper).


50% May Be Guilty of Fraud

Medicare carriers state that up to 50% of all claims for ``E&M'' (evaluation and management services) have inadequate documentation. More than half should be assigned a lower code, according to Blue Cross/Blue Shield of Rhode Island, based on the information in the chart (Part B News, July 20, 1992). While ``education'' is HCFA's current agenda, upcoding could be defined as fraud and asset forfeiture could be invoked.

AAPS Files Response to Government Motion to Dismiss in New Jersey Litigation

On July 14, 1992, AAPS filed a brief in response to the government's motion to dismiss the case of Stewart v. Sullivan and asked for a summary judgment declaring that nonparticipating physicians and their patients have a right to contract privately for medical services without filing a claim for Medicare benefits or disenrolling from Part B. The plaintiff physician, Lois J. Copeland, MD, of Hillsdale, NJ, is a member of the AAPS Board of Directors. The other plaintiffs are all patients over the age of 65 who wish to contract privately with Dr. Copeland, their personal physician.

The government has argued that in order to be heard in Court, Dr. Copeland must first violate Medicare's policy, then exhaust all administrative appeals. AAPS maintains that such a legal proposition would effectively preclude any physician from challenging any Medicare policy because of the risk of professional ruin, and thus prevent any court from addressing the important legal issues in this case. AAPS relies heavily upon the opinion in its previous case that challenged the 1984 Medicare fee freeze, Whitney v. Heckler, 780 F.2d 963 (11th Cir. 1986), which held that physicians are not required to choose between complying with what they claim to be an illegal policy and risking sanctions by violating the policy in order to obtain judicial review.

In arguing that patients do not have the right to contract privately for medical services on a case by case basis, the government relies exclusively upon 42 U.S.C. §1395w-4, which was enacted as part of the Omnibus Budget Reconciliation Act of 1989. The plaintiffs' brief notes that such argument ignores other salient provisions of the Medicare Act, e.g. §1395k, which states: ``the benefits provided to an individual by the insurance program established by this part...shall consist of entitlement to have payment made to him or on his behalf....'' An entitlement is not a requirement to apply for benefits every time a patient receives a medical service. The government's construction also conflicts with U.S.C. §1395 a and b, which guarantee freedom of choice of physician and the freedom to purchase or otherwise secure protection against the cost of any medical services.

The government argues that its interpretation of the statute is entitled to the deference due an administrative agency. AAPS responds that deference is not warranted because the construction placed on the Act by the Department of Justice flatly contradicts an earlier position taken by the Secretary of Health and Human Services. AAPS cites a letter from Gail Wilensky, former HCFA Administrator, to the effect that the law does not require submission of a Medicare claim ``in the rare event ... that a patient, for his or her own reasons, and entirely independently, chooses not to use Part B coverage.''

AAPS also maintains that HCFA's ``policy'' (requiring Part B beneficiaries to disenroll from the program in order to contract privately) is a violation of the Administrative Procedures Act because it ignored the ``notice-and comment'' procedures required for rulemaking pursuant to a substantive change in the law.

Finally, plaintiffs contend that their construction of the Medicare Act must be accepted by the Court in order to avoid serious constitutional questions. The government's policy is an unconstitutional invasion of patients' privacy in sensitive medical information. Furthermore, the Secretary's construction of the statute would involve an unconstitutional delegation of legislative power, in violation of Article I, Section 1 of the US Constitution. The section (§1395w-4) that gives the Secretary the authority to set the fees of physicians under the Resource- Based Relative Value Scale totally precludes administrative or judicial review. Essentially, there is no check on the Secretary's exercise of delegated powers to set prices unless physicians can opt out on a case-by-case basis by contracting privately with their patients.

The government is expected to file a reply brief in the coming weeks. Oral arguments will be held in the US District Court in Newark, NJ, on September 14, 1992.

Briefs amicus curiae on the side of AAPS have been filed by the American Medical Association and the Medical Society of New Jersey; the Washington Legal Foundation; and the Florida Medical Association.


Florida Physicians Petition US Supreme Court

Does the Florida Birth-Related Neurological Injury Compensation Act (NICA), which imposes a ``status tax'' of $250 on all Florida-licensed physicians, violate the Equal Protection Clause of the Fourteenth Amendment to the US Constitution?

This is the question presented to the US Supreme Court in a petition submitted by the Florida Medical Association and AAPS. The petitioners request a review of the federal issue involved in the challenge to NICA, which was denied in a four-to-three decision by the Supreme Court of Florida (see AAPS News, April, 1992).

Citing the dissenting opinion in the case of Coy v. NICA, petitioners note that allowance of such discriminatory taxation endorses the view that ``society can shift its more onerous tax burdens exclusively onto those minorities or groups that lack a sufficient voice in the state capitol.''


WV Balance Billing Ban Upheld

After 16 months, Judge Zaikab finally ruled that West Virginia's ban on balance billing for patients covered under state-supported insurance plans is not unconstitutional. In his view, the ban does not constitute a tax and is ``rationally related'' to the state's ``compelling'' interest in saving money.

The decision stated that ``any provider could avoid the ban...by simply refusing to accept patients covered by the state's plan.'' However, ``there is no evidence in the record of this case that health care providers have ceased to treat state health care beneficiaries to the extent of placing their health and well-being in jeopardy.'' Further, there is ``no fundamental right under either federal or state constitution that the state supply any person with the physician of his or her choice.''

According to AAPS member Jerome Arnett, MD, the long-awaited decision clears the way for plaintiffs, L.I.F.E. for West Virginians Foundation, to seek review in the state supreme court. (Dr. Arnett discussed the case at the 1991 annual meeting. Also see AAPS News, June, 1991.)

New Members

AAPS welcomes Drs. David Beck of Westport, CT; Ronald E. Cordell of Charleston, WV; Richard DeJournett of Honolulu, HI; Allan G. Hanretta of Santa Barbara, CA; Richard S. Kerr of Morgantown, WV; Lawrence A. Lefkowitz of Norwalk, CT; Mel Margaris of Great Falls, MT; Jim Mendenhall of Great Falls, MT; Frank R. Recker of Cincinnati, OH; David M. Rowland of Decatur, GA; Dale M. Schaefer of Great Falls, MT; Frederick M. Steinberg of Jonesboro, GA; Richard N. Taylor, Jr. of Lewistown, MT; Randall K. Tozer of Scottsdale, AZ; and Stanley Weinstein of Lakewood, NJ.

Cate Brown and Ann Murray of Ohio are new student members.


Letters to the Editor

Government, to the applause of third-party payers, is hell- bent on reducing us from a profession to a government-controlled trade, and we physicians are busy greasing the skids for our own descent....

Although we constantly complain about Medicare's poor fees and general level of harassment, we continue to sign on as ``participating physicians'' in embarrassingly large numbers (in my state of Alabama, 75%!) How can we expect anyone to take our complaints seriously when we voluntarily sign up every year...? And we shouldn't be surprised that third party ``private'' payers, seeing how much backbone we lack, are increasingly deciding to join in the feeding frenzy of our once mighty profession....The easiest first step upward toward regained professionalism is to stop signing those Medicare participation contracts....
John H. Lary, Jr., MD, Huntsville, AL


Physicians are neglecting their home territory-the office girl or office nurse. At the first opportunity they should be taught the correct answers, and when an opening appears they should step in and tell everyone about the faults of any type of government medicine. Most of them unfortunately don't seem to do this simple but effective thing.
E.A. Rittenhouse, MD, McKeesport, PA


I recently attended my undergraduate college reunion with my lawyer, Kathleen Carlsson. Three clases each presented a panel of speakers about various aspects of the ``crisis'' in medical care. These leaders of medicine agreed, not surprisingly, on the issues: access, cost containment and quality. There was much bashing of rapacious malpractice attorneys....

Outcomes research was the answer to everything....

Outcomes research is to be welcomed because it provides hard data which we can use to improve our practices; much of what we do is probably nonsense. But these speakers welcomed it not...because it will improve our best judgment and aid us in reaching it, but precisely for the opposite reason, to relieve us of the ethical and legal responsibility of doing so. Outcomes research [the speakers thought] will dictate what third parties will cover, and so will keep costs down,...and will protect us from second-guessing by peer reviewers and the plaintiff's bar. The speakers implied that critical thought, at least by individual practitioners, did not extend to outcomes research, which will have to be swallowed whole.

What I witnessed was nothing less than general agreement to abandon intellectual and professional responsibility. And this explains why no organization but AAPS supported my litigation and a major one was almost hostile to it: they were working very hard for the opposite end, namely, the deprofessionalization of American medicine. Compromise and appeasement is their order of the day.

How should a knowledgeable physician act if he is the first to believe that standard practice is incorrect and would harm his patient?...I put the dissenting physician question directly to some half-dozen movers and shakers in the medical and legal professions. No answer has been offered.
Robert Carlen, MD, Sayville, NY


Nominating Committee Report

The Nominating Committee offers the following slate of officers for the election at the Seattle meeting:

President: Nino Camardese, MD, of Norwalk, OH

President-Elect: Charles McDowell, Jr., MD, Alpharetta, GA

Secretary: Donald Quinlan, MD, of Northbrook, IL

Treasurer: R. Lowell Campbell, MD, of Corsicana, TX

Directors: Claud A. Boyd, Jr., MD, of Augusta, GA; Curtis W. Caine, MD, of Jackson, MS; Lois Copeland, MD, of Hillsdale, NJ; Victor F. Duvall, MD, of Clarkson, KY; and Michael Schlitt, MD, of Seattle, WA.


AAPS Calendar

October 14, 1992. Board of Directors meeting, Seattle, WA.

October 15-17, 1992. Annual meeting, Seattle, WA.

October 24, 1992. Freedom in Medicine seminar, Columbus, OH. (To register, call Herb Gillen at the Ohio State Medical Assoc., 614-486-3130.)

October 6-9, 1993. 50th Annual Meeting, Menger Hotel, San Antonio, TX.

Legislative Alert

AAPS Report from Washington

Medical Issues and the Presidential Contest. The silly season has arrived in Washington. It will soon descend on every village and town in America. While policy-making is winding down, politics is heating up.

With a buoyant Democratic Convention send-off to Governor Bill Clinton and Senator Al Gore, Republican strategists are scrambling to find a campaign theme to rescue President Bush and his Administration. Because Ross Perot, the Texas billiomnaire, has dropped out, some Republican strategists think the chances for Bush and Quayle have improved. The reason: with Perot out of the race, they think they can hold onto the South. Others are not so sure, pointing out that the Perot Phenomena represents a passionate and deep-seated disgust with Washington and the current crop of politicians, including Bush. And Bush is down 25 points in the polls; pretty deep. Clinton and Gore are both making overtures to the Perot dissidents as the true champions of change. It may work. While a well-run, nationally televised political convention gives the challenger a sizable bounce in the polls, and Clinton's bounce has been a solid one, Bush partisans and Congressional Republicans, in particular, are deeply worried. Folks on Capitol Hill smell the odor of defeat; it is the unmis- takable scent of chaos and confusion. Veteran White House watchers have smelled it before-in 1980, the last year of the Carter Presidency.

With consumer confidence falling and unemployment hitting 7.8%, amidst a Carteresque national ``malaise'' spiced with anger among the electorate, Bush handlers are desperately trying to figure out a battle plan.

The good news for President Bush is that several options are available. The bad news for Bush is that they are as dangerous to Bush as his Democratic opponents.

One strategy says, in effect, yes, we have problems, but we really will, scout's honor, do a much better job next time if you give just us a second chance (we'll cut spending, reduce regulation, get Americans back to work, etc.) Besides, it can get worse. Much worse. Pursuing this line will require Bush and company to attack Clinton and Gore vigorously, making the Democratic ticket the issue, marginalizing as much as possible public discussion of the four years of Bush's stewardship of domestic policy. The likely line of the White House counterattack is easy to discern. Clinton and Gore say they are ``moderates,'' but...we all know better...The L-word will be employed.

Another option is to acknowledge the ``gridlock'' in Wash- ington and train heavy political artillery on Congress. Racked with scandals and governed by an entrenched old-boy network, Congress's approval ratings are in the statistical basement. The Democratic Conventioneers in New York seemed to have locked their Congressional leadership in the closet, a point not lost on commentators for ABC, NBC and CBS. Blaming the Congress for the gridlock has precedents. President Harry Truman successfully did this in his tough fight for the White House in 1948. Rich Bond, Chairman of the Republican National Committee, argues that the President is being boxed in by the Congressional leadership, making him sign legislation for higher taxes, and bills with large doses of government regulation, like the Clean Air Act and the Americans with Disabilities Act.

On medical issues, Bush's Labor Secretary Lynn Martin has ridden point, along with Secretary Sullivan, against the ``Play or Pay'' approach endorsed by the Congressional leadership.

Governor Clinton routinely includes health care reform in his top list of priorities, presumably to be tackled jointly with Congress in the promised first 100 Days of a Clinton Ad- ministration. He has endorsed the ``play or pay'' proposal, although Rep. Barbara Kennelly (D-MA), a member of the House Ways and Means Committee, says that ``play or pay'' is dead, as far as she is concerned.

Senator Gore, on the other hand, during his first foray under the hot lights of the media as the Vice Presidential nominee, emphasized the need for national health care reform in language that, at least superficially, sounded like a single- payer national health insurance system.

Included in Gore's proposal was the idea that abortion coverage should be part of any national health insurance reform. This is the first time that any national political figure has deliberately linked health care reform with the enormously divisive abortion issue.

The political calculation is both obvious and dangerous. In the aftermath of the Supreme Court's recent decision in Planned Parenthood v. Casey (1992), which simultaneously reaffirmed Roe v. Wade (1973) and upheld Pennsylvania's restrictions on abortion, the Democratic team obviously feels that a strong liberal position favoring easy access to abortion will help them with the voters this year, including many members of the medical profession. Meanwhile, watch liberals in Congress try to turn up the heat. In the House, Congressional liberals are pushing the ``Freedom of Choice Act,'' which will restrict states' interference with abortion. While even strong supporters of the bill do not think they have the votes to make it law this year, the bill is likely to become a political vehicle for the 1992 race for the White House. Over in the Senate, Sen. Orrin Hatch (R-UT), ranking member of the Senate Committee on Labor and Human Resources, one of the Senate's key health policy committees, is expected to play a leading role in the Senate fight against the bill, which he characterizes as guaranteeing ``abortion on demand.'' According to Hatch, the bill goes much further than Roe v. Wade, and there is enough opposition to sustain a Presidential veto.

The House Democratic Agenda for ``Cost Containment.'' House Ways and Means Democrats have been circulating a draft bill that would impose the Medicare payment system, in essence a comprehensive ``global budget'' and price control regime, on private medicine. That bill now has a number: H.R. 5502.

The highlights of the bill were outlined in the August Legislative Alert. To recapituate, it includes: (1) a national health budget to control medical spending in both the public and the private sector; (2) promotion of HMOs, permitting them to negotiate independent rates directly with doctors and hospitals outside of the rules governing national payment rates; (3) a system of national payment rates for doctors and hospitals, based on the Medicare RVS and DRG methods; (4) a national anti-fraud and abuse program, replete with stiff penalties.

The political strength of the effort is yet unclear. Even though some House heavies are jumping behind it, the bill still only has seven cosponsors-all Democrats. House Democratic leaders are sure that they do not yet have the 218 votes necessary for passage in the House of Representatives. But they are working on it. Backed by Fortney ``Pete'' Stark (D-CA) and Richard Gephardt (D-MO), the bill is designed to appeal to Members of Congress who want ``cost containment.'' Gephardt has been working intensively to round up support among House Democrats. Other House heavyweights are backing the bill, including Henry Waxman (D-CA), Chairman of the House Subcommittee on Health and the Environment, and John Dingell (D-MI), the powerful Chairman of the House Committee on Energy and Commerce. Waxman and Dingell had earlier proposed a national health insurance bill, financed by a combination of value added and payroll taxes and estimated to cost $400 billion. According to a June 30th letter circulated on the Hill by Congressmen Sander Levin (D-MI) and Ben Cardin (D- MD), ``The cost containment in H.R. 5502 uses the methods that have proven successful in the Medicare program to reign (sic.) in runaway costs. These measures have been implemented over the last ten years, have received bipartisan support, and were instituted because the market-place for health care was not working.''

Opposition to the legislation among conservative Democrats and House Republicans is strong and growing. The Conservative Democratic Forum (CDF) has its own bill (see August Legislative Alert), and the House Republican leadership has also introduced an alternative of its own. Second thoughts are surfacing, even among liberal Democrats, about the wisdom of a raw price control strategy. In a thoughtful article in the Washington Post, Congressman Ron Wyden (D-OR) asks why Congress could not combine a market-oriented strategy with budget caps. Wyden's idea is to start with a competitive market and have a budget cap kick in-if and only if market forces fail to control costs. At the same time, Congressman Bill Gradison (R-OH), ranking Republican on the House Ways and Means Health Subcommittee, is cautioning his colleagues about the wisdom of national or global health care budgets, noting that such an approach assumes that government somehow knows the right level of spending or the right pricing for medical services. The problem: government doesn't. While Gephardt and company wanted to bring the bill to the floor for a vote before or after the national political conventions, chances of doing so are fading.

The House Republican Alternative. Ever since President Bush unveiled his ``Comprehensive Health Reform Program'' last February 6, Congressional Republicans have been trying to forge a health care reform alternative. The President's plan has been sent to Capitol Hill in bits and pieces, including proposals to extend the current 25% deductibility of health insurance premiums for the self-employed and raise it to 100%; small group health insurance market reform; reform of the claims processing system, designed to simplify information and billing; and medical liability reform.

Although it was supposed to be the centerpiece of the White House effort, the President's tax credit proposal has not arrived on Capitol Hill. The White House could be making a cold calculation here, simply by defusing the issue while coming up with an alternative. That serves a narrow political purpose. In the political debate, right now, there are two groups: those with a plan and those without a plan. Those without a plan are not political losers; they are not even political players. By chopping the President's plan up in bits and pieces, the Administration is both making concrete proposals and allowing Congressional allies to pick and choose from a health care reform menu various items compatible with their particular tastes.

In the meantime, Bob Michel (R-IL) and Newt Gingrich (R-GA) of the House Republican leadership have drafted a plan of their own: H.R.5325. The key elements include the following:

  • Medisave Accounts. The bill allows a business to con- tribute to a tax free Medisave account either some or all of the premium costs that an employer would otherwise incur for health care coverage. The employee may use the funds in the account to purchase medical or longterm care insurance or medical services. The employee would be able to roll over the account from year to year. The bill would impose a penalty for the withdrawl of funds for non-medical purposes.

  • Group Insurance Market Reform. The bill mandates that insurance companies make at least a basic insurance plan available to small businesses with preventive care benefits, as well as more conventional insurance plan. It eliminates state mandated benefits and pre-existing medical conditions as grounds for exclusions from coverage, guarantees renewability and assures continuity of coverage, establishes consumer protection standards and limits premium increases. The bill also promotes risk pooling, allowing small firms with up to 100 employees and the self-employed to form groups to purchase cheaper health care coverage. State laws restricting the development of managed care programs are preempted.

  • Medical Malpractice Reform. The proposal provides for a new process of dispute resolution outside of court before entering into litigation in the state court system; places a cap on non-economic damages; allows for ``structured payments of compensatory awards''; limits attorneys fees; reduces the time in the statute of limitations; and eliminates joint and several liability. Malpractice reforms are estimated to save $15 billion per year, partially as a result of reducing ``defensive medicine.''

  • Expanded Practice Guidelines. The bill increases the authorization of appropriations ($45 million over 3 years) for development and dissemination of medical practice guidelines. The bill would allow such practice guidelines to be used as a defense in malpractice cases.

  • Administrative Cost Savings. The bill authorizes the Secretary of HHS to develop standard insurance claims forms and a ``data set'' for electronic transmission of coverage and billing information. These standards would apply to doctors, hospitals and insurance companies. Medical information and claims on electronic billing cards would be identified by the patient's social security number. Sponsors estimate that these administrative changes would reduce costs by at least $25 billion annually.

The bill does not include the expensive tax credits that President Bush originally proposed last February to help the low- income uninsured purchase health care coverage.