Volume 50, No. 9 September 1994

Judge Orders Trial; White House Offers Settlement

On July 25, 1994, oral arguments were heard in the case of AAPS v. Clinton before Judge Royce Lamberth in the US District Court for the District of Columbia.

As Congressional leaders are engaged in a frantic effort to pass a ``health-care reform'' bill-almost any bill-before the August recess, the White House is making desperate attempts to keep the genesis of ``reform'' hidden from the American public. AAPS contends that the secret meetings of the President's Task Force on Health Care Reform violated the Federal Advisory Committee Act (FACA).

``The purpose of the FACA is to prevent the corruption of representative government-to prevent the establishment of government of the people, by special interest groups, for special interests,'' stated AAPS President Charles McDowell, Jr., MD.

There are two exceptions to the public disclosure requirements of the FACA. One applies to committees composed wholly of federal employees. AAPS presented massive evidence that the Interdepartmental Working Group (IWG) chaired by Ira Magaziner, along with its various components, was stacked with private interests. AAPS Counsel Kent Masterson Brown argued that the government had conceded the issue.

``They have a curious way of stating it,'' observed Judge Lamberth. US attorneys never submitted a revision to Magaziner's 1993 sworn affidavit, which declared all Task Force participants to be federal employees. Instead, they simply failed to contest the point, citing a ``change in litigation strategy.''

The White House is now resting its entire case on the allegation that the IWG was a disorganized, chaotic, irrespon- sible, nonaccountable, ``anonymous, amorphous horde'' that did not advise the President (although it did spend some $20 million of the taxpayers' money). For the FACA to apply, the ``whole must be greater than the sum of its parts.''

Brown argued that the IWG was in fact a tightly structured group, following the same model as the interagency task forces developed by the Robert Wood Johnson Foundation and used in state reform programs. The ``tollgate'' concept is used by corporations in complex projects that need to be accomplished at a rapid pace. The May 7 tollgate, for example, was the final review of legislation ready for submission, and the working group draft was incorporated in the Health Security Act of 1993.

US Attorney Mark Stern complained that AAPS had ``impugned the good faith of Ira Magaziner'' in its statement that ``false swearing is the ultimate contempt of court.'' Such an accusation against a public servant is a ``very, very, very serious matter,'' Stern said, that caused government attorneys to ``lose our equipoise.''

Magaziner ``spoke nothing but the truth,'' Stern said. There were simply ``nuances'' and changes in the IWG that occurred after he made his declaration.

``Not only was there no abuse of good faith, but looked at closely, there was no problem of any kind,'' Stern said. He described truth as being a ``moving picture.''

The Judge noted that Magaziner had never filed an amended declaration to correspond with the alleged changes in the IWG structure. ``Were the amendments all oral or in someone's mind?''

``Yes,'' Stern agreed. Magaziner was ``too busy to write another plan.''

Judge Lamberth denied motions for summary judgment because of material disputes about facts. He ordered a non-jury trial, tentatively scheduled for the week of September 12 in order that witnesses could be fully examined and cross-examined. He reserved ruling on contempt and on attorney's fees. A week was set aside for the trial.

After the hearing, Congressman Istook (R-OK), who had been present for the argument, brought his concerns about the Health Care Task Force to the floor of the House in a special order (Congressional Record 7/27/94, pp H6342-H6347). He highlighted the question that Stern asked: ``Why do they still insist on wanting to know?''

``They want to know because it is the law, Mr. Speaker, because we have the right to know...what interests were involved in putting together this plan,'' stated Istook.

``[Mr. Lightfoot (R-IA)] and I have asked today for an investigation....When highly placed officials come before a congressional committee and tell us something that is not true, we have an oversight obligation on behalf of the American people who elected us.'' Istook referred to testimony by Patsy Thomasson, Special Assistant to the President, that the Working Group was made up entirely of federal employees.

Thomasson also stated that the reason for not immediately revealing the names of Task Force members was that ``they were working very hard on this problem and we did not want them to be harassed by lobbyists and special interest groups.''

Istook accused the White House of trying to conceal the special interests who wanted to profit from the cash flow of a trillion dollars by changing the system to their own benefit.

Rep. Tom DeLay (R-TX) also commented that Congress should be asking the same question as the plaintiffs in the lawsuit. ``Should not this House...be having hearings on this very issue or are they going to use the same excuse that they have always used in the Whitewater affair, that you have to let the legal system run to the end of the rope...before Congress ever exercises its responsibility and authority?''

In meetings with Judge Lamberth after the hearing, Department of Justice attorneys asked for a settlement conference, which is now in progress.

AAPS Testifies on ``Gephardt-Clinton''

On August 2, the Republican members of the Joint Economic Committee held the first and possibly the only public hearing on the House Majority Leader's bill, dubbed ``Gephardt-Clinton.'' Medicine was represented by AAPS Executive Director, Jane M. Orient, MD. Also testifying were two small business owners and a cancer patient.

``This is an interesting challenge,'' Dr. Orient stated, ``to testify about a bill that I have not been able to read.''

Congressman Christopher Cox (R-CA), who chaired the hearing, immediately placed a telephone call to Gephardt's office, asking if he could have a copy of the bill.

``No,'' was the reply. The bill is ``not available.''

Secrecy has now expanded from the genesis of legislation to the legislation itself. Actually, the content of the bill is a moving picture that will be determined by what is required (along with threats and promises) to get 218 votes. According to news clippings, it will establish a Medicare Part C, which would make the majority of Americans dependent on government insurance.

Precedent for the secret procedure was established in Washington State, which enacted ``Clinton Heavy'' three hours after the legislators received the final draft. The bill came by FAX from the headquarters of the President's Task Force on Health Care Reform in the Old Executive Office Building in Washington, D.C. (Apparently, the Task Force advised the state legislature in Washington State, even if it did not advise the President.) Behind closed doors, with the press and above all radio commentators excluded, legislators' arms were twisted until they voted to pass the bill (see AAPS News April, 1994).

With implementation scheduled for July, 1995, citizens of Washington still do not know exactly what the bill means. For example, staff in the state house do not even know for certain whether the bill has outlawed private medicine. (It might just have made it economically impossible.) If the Gephardt bill includes the Clinton provision placing a one-year statute of limitations on constitutional challenges, citizens will be shut out of court before they can even determine what the law requires.

``Congress should pay close attention to the reception received by the Health Security Express buses (a.k.a. the Phony Express),'' Dr. Orient told the committee. ``Even in the Democratic stronghold of Seattle, thousands of citizens turned out in opposition to the Clinton campaign, despite short notice and minimal organizational effort.''

(A number of physicians from Washington State AAPS protested at the event, along with throngs of citizens organized by a fledgling group called the Coalition for Health Care Choice, Quality, and Privacy.)

``In Boise, the bus failed to show up for the media event, disappointing its own supporters rather than allowing the cameras to see the opposition. Across the country, the intended media blitz turned into a game of hide and seek,'' Dr. Orient stated. Schedules were frequently changed on short notice.

``Congressmen who vote for ill-advised `reform' may have no place to hide in November.''

Dr. Orient outlined the causes for the medical cost spiral and called for true reform, starting with the tax code that causes the perverse incentives inherent in the employment-linked, low-deductible prepaid consumption that is erroneously called ``insurance.''

Is It D-Day?

The usual legislative insert is suspended for the month because the shelf life of information from Capitol Hill is about three hours.

The key strategy is that of Senate Majority Leader George Mitchell: ``Pass anything, and we'll fix it in conference,'' according to the analysis of the American Legislative Exchange Council at its annual meeting August 4-6 in Tampa, Florida.

There is no reasonable ``compromise'' because there is no reasoned debate and no good faith.

The only answer is to stand firm on stopping the Phony Express. Who will do it?

The message from ALEC is: ``It all depends on YOU. There is nobody else there.''

At Omaha Beach in Normandy, the fascists had the impregnable fortifications, the seasoned troops, the high ground, the big guns, the ammunition, the brilliant generals, the communications, and overwhelming numerical superiority. Even the weather was on their side.

What won the battle at Omaha Beach was desperate human endeavor by men: ``individual men-a succession of individual men, on their own, or leading small groups of ten or twenty, not under orders or according to some master plan, but out of a sense of desperation, or responsibility to their comrades, or honor, or pride, or all of them mixed together'' (Yale Kramer, ``Day at the Beach,'' The American Spectator, August, 1994).

Kramer asks, ``At the next Battle of Omaha, where will we find the Sgt. Streczyks and Lt. Spauldings to lead us off the beach?''

Americans at Omaha didn't know they would be facing Rommel's 352nd Infantry Division. Some Americans today think there is no serious threat, so there is no need to stand up. Others think the situation is hopeless.

American liberty was won by individuals. It will be preserved through the efforts of individuals, if at all.

Are we on the beach? If so, what will you do?

Do We Have Your FAX Number?

The AAPS FAX network is up and running. If you sent us your number and you have not yet received at least one FAX (three were sent as of Aug. 8), something is wrong. It may be that your FAX machine doesn't automatically answer the phone; in that case, your number has been deleted. Please give us a call if you want to be included and have the needed equipment.

To Expedite Your Calls to Congress...

Eagle Forum has set up a toll-free line (800)876-2299 to give the name and telephone number of your Congressman and Senators or to connect you connected to their offices.

Senators who most need your input are: Heflin and Shelby (AL); Lieberman (CT); Nunn (GA); Breaux and Johnston (LA); Durenberger (MN); Danforth (MO); Exon and Kerrey (NE); Bryan (NV); Chafee (RI); and Jeffords (VT). They have no strong commitment in either direction.

Rep. Jim McDermott on strategy and his colleagues: ``You can't move a herd with mixed messages.''

Legal Briefs

Don't Rely on Your Attorney for Full Disclosure: A physician who pleaded guilty to one count of Medicare fraud received a three-year suspended sentence, then found himself excluded from Medicare. He appealed on the basis that his lawyer had not informed him of the possibility of exclusion. The ALJ ruled that the attorney's failings were irrelevant. Court decisions say a defendant in a criminal case does not have to be informed of all the consequences of a guilty plea.

HCFA Says Retainers Are Illegal: Contracts under which a patient agrees to pay a annual ``retainer'' to cover Medicare deductibles and copayments, as well as to receive preventive services not covered under Medicare, are opposed by HCFA. If the patient uses more services than the premium covers, it might be construed as a kickback; if he uses less service, the physician could be in violation of assignment requirements. Dr. Russ Salton of Primary Physician Care of North Carolina views the agreement as a substitute for a more expensive Medigap supplement (BNA's Health Law Reporter 6/23/94).

Beware of New HCFA Survey Form. Physicians may soon be nudged into signing a form stating that they understand Stark II and promising not to make any prohibited referrals. The form asks for disclosure of any physicians having a financial relationship with a provider. Failure to sign the form could mean having claims rejected. Signing the form could lead to criminal penalties under the false statements or false claims act, if the OIG later finds any problems with your practice.

Regulations under Stark II have not yet even been released. A leaked draft ``survey'' form contains only a cursory review of the extremely complex law that physicians will have to claim to understand (Medicare Compliance Alert 7/18/94).

New Civil Penalties: A final rule published July 15 (59 FR 36072) grants the OIG of HHS the authority to levy increased penalties on prepaid plans contracting with Medicare and Medicaid beneficiaries: e.g. $25,000 for each instance of failing to provide ``medically necessary services''; $100,000 for actions that might discourage enrollment of high- risk individuals or for furnishing false information (BNA's Health Care Policy Report 7/25/94). For further information, contact Zeno W. St. Cyr, (202)619-3270 or Marty Abeln of HCFA's Office of Managed Care (202)205-9582.

Blue Cross ``Deselects'' 4,000 Physicians

The Medical Society of the District of Columbia told a House panel that a Blue Cross/Blue Shield managed care plan keeps the poorest and sickest patients from receiving care by excluding physicians who treat them from the network. A computer program designed to select ``high-caliber, cost-effective'' physicians excluded almost 4,000 previously in the insurers' indemnity program and/or Capital Care provider group, reducing the number of available physicians by about 50% (BNA's HCPR 7/25/94).

AMA Joins with AARP, AFL-CIO

The AMA is sponsoring full-page newspaper ads calling for ``comprehensive health benefits for every American by building on our current employment based system.''

``For workers and their families, coverage can be achieved through shared employer/individual responsibility, with a required level of employer contributions.''

Though many AMA members have strongly opposed employer mandates, the association leaders support AFL-CIO President Lane Kirkland, who stated that any reform without employer mandates ``would betray the hopes of working Americans and their families.''

Congressman Jim Kolbe (R-AZ) told AAPS President Charles McDowell and Executive Director Jane Orient, in a meeting in his office, that the AMA is now supporting ``single-payer.'' (We do not know what message the AMA meant to transmit; only the message that the Congressman received.)

Politics of Meaning

Community rating: (1) a ``hidden tax on the young'' (Rep. Tim Penny, D-MN, and Rep. Harris Falwell (R-IL), who noted it would mean a ``staggering intergenerational wealth transfer'' of roughly $1 billion); (2) the ``right thing to do'' (Rep. Pete Stark, D-CA, who calls intergenerational transfers a ``well- established principle'' in American society).

Comprehensive health care: the end of freedom of religion. (``The idea that certain health care benefits should not be covered if some people find them politically, morally, or religiously unacceptable, defeats the whole idea of comprehensive health care,'' stated Rep. Peter DeFazio, D-OR.)

D-Day: ``This is our own D-Day....Soon it will be time to choose where to place our support, and `to take the current' when it is right'' (James Todd, who also cautioned that support of any single plan would ``close the doors'' to Washington.)

Guaranteed Access: a government promise, cf. the promise in the Federal Advisory Committee Act of guaranteed public access to whatever documents the federal government sees fit to release.

Right-Wing Ideologue: anyone who opposes her plan (HRC in message carried on KVI Seattle).

Universal coverage: (1) universal payment; (2) insurance coverage of whatever percentage of Americans is required to prevent Bill Clinton from vetoing a bill.

5,000 Medical Devices Kept Off Market by FDA

FDA's Center for Devices and Radiological Health has an enormous backlog of applications awaiting review: about 5,000 as of June 30. The agency expects to receive 12,000 applications in 1994.

To help clear the backlog, the FDA has proposed a new tax in the form of ``user fees'' of up to $52,000. If the backlog is not cleared, American manufacturers threaten to move their businesses to Europe, ``where the regulatory process is more - timely and predictable,'' stated William George of Medtronic (BNA's HCPR 7/18/94).

For updates on the American Conservative Union Health Care Truth Tour call (800)228-7345. The bus tour begins August 22 in New Jersey and ends in Senator Dole's state on Aug. 27. For information on the petition drive called ``Halt the Health Care Hoax-Just Vote NO,'' call the Patriot Line (513)777-8120.

A managed care complaint hotline, 800-800-5154, has been set up by Physicians Who Care.

Members' Page

Corrupt Philosophy. Medicine is being assaulted today by the corrupt philosophy of collectivism, i.e., the individual and his needs are superseded by society's need and as such man has become programmed to sacrifice himself for the good of society....This philosophy [was] enacted when government created Medicare and Medicaid-two entitlement programs in which the ``providee'' obtains services using someone else's money....The physician, like all productive people, is feeling the financial drain...required to maintain this philosophy and at the same time he is being attacked...as greedy and dishonest. These arrogant bureaucrats provide no service (save for harassment) and produce no goods; yet they...are telling you how to practice medicine through the shifting arrays of the paper chase syndrome. Trying to approach [them] in a logical manner will only lead to frustration. They exist as a mercenary branch of the tyranny required to maintain these collectivist programs....What can be done to change our plight? We must reject collectivism for its corrupt nature....
James P. Fogarty, MD, Barron, WI

Attack from the Rear. ``Managed care'' is the politically correct term for controlled care. While we were warding off government at the front door, we have been run over by a managed-care train through the back door. Reform needs a level playing field so private fee-for-service can compete. Only fee-for-service puts quality first. No reform is progressive if it takes a step backwards in quality.
N. Scott Craven, MD, Lexington, NC

Human Costs. To date, the frenzy over the issue of ``cost'' has primarily centered on the monetary definition of ``cost,'' divert[ing] attention from the...political and human dimensions....Many regions, such as Boston, Dallas, and New York have flourished in part because of the presence of an active biotechnology industrial base....They will soon see their unemployment rates increase and their tax base shrink....The loss of researchers, scientists, technicians, engineers, physicians, and the potential contributions that they could have made in the future cannot be easily plugged into equations which depend purely on dollar amounts and current economic theories...We are already seeing large pharmaceutical companies diverting billions of dollars to expansion into the baby food distribution business and pharmaceutical purchasing plans rather than basic pharmaceutical research...In the frenzy to reduce immediate costs of medical care, we are clearly in a short-sighted way short- circuiting any future research which could have led to tomorrow's miracles and true cost savings.
Walter L. Nieves, MD, Suffern, NY

Insurers and Privacy. I have recently been requested by some patients to join the Super Blue network....They sent a list of names of [subscribers], requesting that they be able to come into my office and review those charts. I called them to ask if patients really want to buy a policy that requires such scrutiny,...and informed them that patients should give specific written consent before anyone reviews their medical records. For years, people have signed away that right by becoming clients of an insurance company. This is the first experience I have had wherein the insurance company is exercising that ability. I have refused the insurance company access to my records until I receive written permission from the patients. I have also suggested that patients lobby the insurance company to change their policy,...[which] I believe is a serious infringement on the physician-patient relationship....
R.E. Dwight, DO, Sandusky, OH

The Arizona Board of Medical Examiners is attempting to investigate the medical director of Blue Cross/Blue Shield of Arizona, who failed to approve a needed gall bladder surgery. The Board requested records on the past 20 cases in which Blue Cross denied a procedure in an attempt to determine whether there is a pattern of poor medical judgment by its medical director. The insurer refused to provide the records.

The Board issued a formal letter of concern about what it called an ``inappropriate medical decision which could have caused harm to a patient'' and has subpoenaed the additional records. Blue Cross intends not to comply with the subpoena and to challenge the Board's authority to discipline the physician, on the basis that his action was purely administrative and did not constitute the practice of medicine. The issue will go to Superior Court.
Arizona Republic, 7/2/94 and 7/16/94

New PRO Criteria. Why has there been no physician outcry about new criteria for admission of patients: e.g. a Hgb < 5 (rather than <7); a fever >104 (rather than >103)?
David Fulghum, MD, Bradenton, FL

AAPS Calendar

Sept. 24, the Pointe at Squaw Peak. First Annual Arizona State AAPS Convention: The Politics of Health Care Reform. Speakers include Merrill Matthews of NCPA, Prof. Richard Epstein of the University of Chicago School of Law, Michael Tanner of Cato, and the Honorable Jon Kyl. Call (602)996-4747 for information.

Oct. 12. Board of Directors meeting

Oct. 13-15. Ritz-Carlton Hotel, Atlanta: 51st annual meeting of AAPS. For information, call (800)635-1196.