AAPS News – Oct 2003

Volume 59, No. 10 October 2003

A “GREAT LEAP FORWARD”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Socialized Medicine Fault Lines

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

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

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

The entire speech is available at

www.bma.org/ap.nsf/Content/ARM03chcouncil.

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

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

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

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

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

HIPAA Updates

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

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

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

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

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

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

The Federal Register notice clarifies that paper facsimiles
and voice transmissions are not considered electronic trans-

missions for the purpose of making one a covered entity because
“the information being exchanged did not exist in electronic
format before the transmission.”

AAPS Calendar

Sept. 17. Board of Directors mtg, Point Clear, Alabama.

Sept. 17-20. 60th annual mtg, Point Clear, Alabama.

Oct. 13-16, 2004. 61st annual mtg, Portland, Oregon.

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Stealth Legislation on Fast Track

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

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

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

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

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

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

How Many Employees?

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

Misinformation on Medical Staff Bylaws

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

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

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

Fines Not Excessive

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

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

Congress Not Responsible?

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

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

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

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

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

Fraud Enforcement on a Roll

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

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

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

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

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Correspondence

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

Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

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

Russell W. Faria, D.O., Newport, OR

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

Jim Frogue, Washington, D.C.

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

Phil Alper, M.D., Burlingame, CA

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

Stephen Katz, M.D., Fairfield, CT

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

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

Greg Scandlen, Frederick, MD

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

Edward Harshman, M.D., Dade City, FL

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

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

Joseph Lee Pugh, Diamondhead, MS

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

Linda Gorman, Englewood, CO

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

Craig Cantoni, Scottsdale, AZ

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