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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 63, No. 4 April 2007


The flagship of American military hospitals, Walter Reed, has made national news and congressional hearings because of squalid conditions in housing for wounded soldiers.

"We needed to do a better job," admitted Army surgeon general Lt. Gen. Kevin Kiley, M.D. He said all the problems had been fixed: "They weren't serious, and there weren't a lot of them." Detracting from his credibility, men wearing Tyvek hazmat suits and gas masks walked through the lobby while the camera crew awaited a tour. A few minutes later, Kiley said that the building needed to be closed for a complete renovation (Washington Post 2/23/07).

Rodent droppings, leaky plumbing, and mold are just the most visible symptoms of systematic rot in military and Veterans Affairs facilities. Vermin infestations don't develop overnight; complaints about bureaucratic indifference have moldered for years and go far beyond decrepit buildings.

Patients may wander about lost; soldiers go months without pay; medical appointments are cancelled; disability records go missing in the "stovepiped, paper-choked process." Complaints, even from congressmen, are rebuffed or ignored.

There's a pervasive culture of denial. "[N]othing can be allowed to shake the confidence in that system, to include the superb performance of Walter Reed in ensuring that our soldiers are cared for," Kiley told Congress.

After the Walter Reed story broke, wounded soldiers were subjected to early-morning room inspections and forbidden to speak to reporters (Washington Post 3/1/07).

VA professionals who complain about problems that could cause imminent harm or death to patients risk career-ruining retaliation, despite a law that is supposed to protect whistle- blowers (AAPS News, December 2006).

Now that the barrier has been breached, reports of neglect and substandard care are pouring in from military bases and VA hospitals nationwide. One veteran suffered third-degree burns on his leg when a nurse left him unattended in a shower, unable to move away from scalding water. Now hospital staff quarrel over who has to give him a bath (Wash Post 3/5/07).

The U.S. government's premier medical facility has a "tortuous system that has so far proved stubbornly incapable of reaching the standard of care this nation is honor-bound to provide returning warriors," Rep. Thomas Davis (R-VA) told the House Committee on Oversight and Government Reform, Subcommittee on National Security and Foreign Affairs, in a hearing on March 5, 2007. It also failed to anticipate the types of injuries that would be sustained in Afghanistan and Iraq.

Perhaps Americans will begin to doubt the ability of the same government to assure quality and plan the allocation of medical resources to meet the present and future needs of all.

The VA is said to be a model of modern information technology. But many soldiers say they get the wrong medical records; one guardsman had the gynecologic report of a female soldier sent to him. The Department of Defense cut off VA physicians' access to DOD medical records because the two bureaucracies had not finalized data-use agreements. Citing concerns about potential HIPAA violations, DOD lawyers cut off VA polytrauma center physicians' access to records.

What is to be done?

Instead of interrogating military brass and civilian officials in an ornate hearing room, writes Craig Cantoni, politicians who want to learn the cause of the problems should hold closed-door meetings with physicians, nurses, pharmacists, lab technicians, janitors, and others who interface directly with patients. They'd find that "initiative, judgment, common sense, flexibility, and morale are being squashed by a massive pyramid of central control,... mind-numbing bureaucracy, and an information system that doesn't provide needed information."

Advocates of nationalized medicine want the government to construct the "most massive pyramid ever" and put it on top of 300 million Americans and their physicians, Cantoni notes.

"This country has finally reached a tipping point that no national politician can afford to ignore any longer," opines the San Francisco Chronicle. A majority of Americans now believe that the federal government should guarantee universal insurance, according to a NY Times/CBS News poll.

However, even left-leaning San Francisco is taking note of the Walter Reed scandal. "Americans and Californians are right to push for more answers than just a government-run health-care system" (SF Chron 3/11/07).

Americans might be willing to pay as much as $500 per year more in taxes to "guarantee health insurance for all," as the poll showed. But socialized medicine for the elderly and the poor is already bankrupting America. On March 4, Comptroller General David Walker told 60 Minutes that "the survival of the republic is at stake" because of entitlement programs.

As some conditions at Walter Reed resemble those in the old Soviet Union (convergence?), it is worth reviewing books such as Inside Russian Medicine by William Knaus, 1981. Soviet doctors could not make decisions independently; case managers at Walter Reed cancel studies that doctors ordered. VA, like Soviet medicine, is "free" but limited in amount and constrained by the "plan." One Soviet engineer explained that the cost of his "free" medical care was the difference between his $300/month salary and the $3,000 he could have earned in the United States. How much are hidden taxes in America?

Walter Reed is a perfect example of Gammon's Law of Bureaucratic Displacement, writes Alieta Eck, M.D., of Piscataway, NJ. As rigid rules exclude human initiative, productive activity is progressively displaced by nonproductive or counterproductive activity. We must get the government out of medicine. Perhaps Walter Reed can tip us back to sanity.


British Troops Complain of NHS Care

The care that British troops wounded in Afghanistan or Iraq receive in National Health Service hospitals is appalling, families say. A father had to change his 18-year-old son's colostomy bag because nurses said they didn't know how. Soldiers are deprived of pain medication for long periods when wards run out of supplies. Many wait 18 months or longer for critical mental health services, said a spokeswoman for the Royal British Legion (Washington Post 3/12/07).


Swiss Reject Single Payer

More than 71% of Swiss voters rejected a proposal to replace the 87 insurers that now write coverage by a single state-run entity. Proponents claimed the current system is too costly, and wanted a replacement that would base premiums on wealth and income. Medical insurance is mandatory in Switzerland (Business Insurance 3/12/07).


The Cost of "Free" Medicine in Canada

Based on average waiting times for treatment and the assumption that 9.8% of waiting patients suffer substantial disability, Globerman and Hoye calculated a private cost of $680 million per year in lost wages from queuing. This places no value on the efforts of family members caring for patients nor on time outside normal working hours, and it ignores increased mortality or adverse medical events owing to delays. "Since this lost time is `free' to the provincial health ministries...while the costs of providing additional treatments...are not, patients' time is used profligately, as most `free' goods are" (Fraser Forum December 2006/January 2007).

Also not counted in Canadian expenditures are amounts paid out of pocket by 39,282 Canadians who sought care outside the country in 2006. If private payment were allowed, these dollars would probably have supported Canadian medical facilities (Fraser Forum, February 2007).

Capped fees, increasing overhead, and heavier adminstrative burdens are driving family physicians from practice, leaving 40% of Albertans without a physician (National Post 3/3/07). Medical schools cut enrollment in the 1990s to prevent a physician surplus. Now it is difficult to increase class size adequately because of lack of physicians available to teach (Financial Post 11/15/06).


Massachusetts Watch

About 200,000 people will have to buy more expensive policies because their prescription drug benefit isn't rich enough to satisfy the Connector. One couple complains of being taxed $700/mon to upgrade a catastrophic plan for which the premium was $300/mon. The Connector Board can't say no to special interest pleaders such as providers of in vitro fertilization, substance abuse treatment, or mental health services. It also wants to require first-dollar coverage of three physician office visits, so HSAs would not be allowed.

The Connector, writes Linda Gorman, is to set rates, manage subsidies, and keep people from buying nonapproved insurance a super FEHBP that can do income transfers. Time will tell whether the subsidies cost more than the uncompensated care they were supposed to replace. The plan could easily end up as a single payer, no more legislative effort needed.


Arvind Goyal, M.D., Runs for AMA Vice Speaker

The AAPS Board of Directors voted to endorse long-time AAPS member Arvind Goyal, M.D., of Chicago, for the position of AMA Vice Speaker.

"The AMA could be a powerful voice in opposing intrusions by government and other third-party payers into the physician- patient relationship," writes AAPS President Tamzin Rosenwasser, M.D.


Ron Paul, M.D., Enters Presidential Race

On March 12, AAPS life member Rep. Ron Paul, M.D., (R-TX) announced his candidacy for President of the United States. He said he is running "to restore the Republican Party," which has become "the party of big government," and to return to a noninterventionist foreign policy.

Paul said: "A lot of people want to hear my message, and I'm willing to deliver it."

To contact the campaign, call (703) 650-9559 or visit www.ronpaul2008.com.


Wait List Rescue Project

Film producer Scott McConnell needs additional American doctors and at least one hospital to volunteer to help Canadian patients stuck on waiting lists, at an affordable cost. He is also looking for doctors to interview for a film intended to respond to Michael Moore's forthcoming movie Sicko, which will promote socialized medicine. Have you treated Canadians who couldn't find timely care at home? Contact: [email protected].


Catastrophic Insurance

For years, AAPS has sought an association plan of true medical insurance. Deductibles of $10,000 or higher have been virtually impossible to find. The $20,000-deductible plan offered through the AMA insurance agency now requires new subscribers to have an underlying "basic" plan. LehrmanGroup (see enclosure) has put together a hybrid product with some features of a "mini-med" and access to "network re-pricing" if care is obtained from a member of the MultiPlan network (see www.multiplan.com). An HSA- qualifying option is also available. Open enrollment extends from April 1 June 30, 2007. AAPS members who are fully employed, under the age of 70, and not on Medicare are eligible. Call: (800) 600- 9663.


AAPS Calendar

Jun 8-9. Thrive, Not Just Survive VI, and Board of Directors meeting, Milwaukee, WI.
Oct 10-13. 64th annual meeting, Cherry Hill, NJ.

NPI Update

AAPS members at the Ear and Balance Institute of Baton Rouge send the following letter to entities requesting an NPI:

"We are not HIPAA-covered entities, as defined at 45 C.F.R. 160.103.

"We take absolutely no third-party insurance payments, do not transmit health transactions electronically, and are not required to obtain an NPI.

"We have included the appropriate pages from the Federal Register and circled the section addressing this topic, and we have included a link to this document on the CMS website.

"Please update your records to reflect this information."

The CMS link: www.cms.hhs.gov/NatonalProvidentStand/Downloads/NPIfinalrule.pdf.

The letter with circled section from the Federal Register is posted at www.aapsonline.org: "Health care providers that are not covered entities that do not wish to apply for NPIs will necessitate the need for healthcare clearinghouses to accommodate health care provider identifiers in addition to the NPI."


Justice Dept. Targeting "Improper" Prescriptions

Although physicians may legally prescribe drugs and devices for unapproved or "off label" uses, they may not necessarily bill Medicare for them.

"One of our biggest prosecutions areas right now is off- label" prescriptions, said Assistant U.S. Attorney Robert Nicholson, because "most of the time Medicare and private payers don't cover [those uses]."

A "pattern" of claims or denials for unapproved uses could trigger accusations of filing medically unnecessary or false claims, or even of drug diversion. And "devices are next."

Physicians are advised to justify off-label uses by citing reputable medical research in the patient's record supporting the item's use in the patient's condition (MCA 3/5/07).


Billing Companies Increase Physicians' Risk

Using a billing company could actually increase your compliance duties and increase risk of a government investig- ation, as the Inspector General wants to be sure third-party billers aren't driving up charges to increase the value of their contracts. Percentage-based compensation or use of the same company for management or auditing services, creating a perceived conflict of interest, are especially risky (ibid.).


Ohio Pain Doctor's Conviction Reversed

In a unanimous opinion, judges in the Court of Appeals of Clark County, Ohio, reversed the conviction of William Nucklos, M.D., and remanded the case for further proceedings.

"The prosecution and the trial court wrongly shifted the burden of proof to the defense," writes defense attorney John P. Flannery II. Also, "the prosecution threw in all sorts of evidence that was prejudicial that had nothing whatsoever to do with the case at hand, in order to smear Dr. Nucklos's character more like you'd expect in a political campaign, rather than a criminal prosecution."

The jury was not allowed to know that one of the prosecution witnesses had also been deceived by one of the three patients included in the charges.

See www.aapsonline.org for appeals brief and opinion.


Doctors Decline to Return, Cite Distrust

Three physicians who resigned from the medical staff at the Beeville hospital because of concerns about sham per review were asked by the Bee County (TX) Ad Hoc Hospital Committee what it would take to get them to return. They said they wouldn't work there as long as it was managed by Christus Spohn, saying they no longer trusted the company with their careers and livelihood.

Dr. Rodney Schorlemmer detailed problems, for example: The hospital altered the minutes of medical staff meetings without doctors' knowledge or permission; refused to change a guidebook that promised patients they would have no pain during their stay; and attempted to discipline a physician and terminated a staff member without going through the prescribed procedure.

Colleagues said that Christus Spohn attempted to discipline Dr. Michael Belew for throwing guidebooks in the trash and pouring orange juice over them to prevent use. He said it was unwise and even dangerous to overmedicate patients for post- operative pain.

Dr. Belew and others had complained repeatedly that Christus Spohn charged patients much higher prices for tests than other facilities did, sometimes twice as high.

Dr. Schorlemmer deplored the decline in staff morale at Beeville owing to administrative policy. "I will not compromise my...ethics, or my duty to my patients to play games with any organization," he said (Bee Picayune 2/24/07).


Tip of the Month: Be sure to mark your calendar well in advance of the two-year anniversary of your Medicare opt-out. If you miss the date, you may receive a demand from your carrier to fill out CMS form 855I, CMS form 588, a copy of your NPI notification letter, and another Opt-Out Affidavit in order to opt out again!


OIG Reviews Uncompensated Care Pool

In a November 2005 report to the House and Senate Committees on Ways and Means, the Office of Inspector General of the Commonwealth of Massachusetts detailed findings of interest to any states contemplating insurance reform. The uncompensated pool evolved from a private, small-scale, hospital-sponsored cost- sharing pool into a huge public/private, legislatively mandated program. The Massachusetts program had a $800 million budget in FY 2005. Problems include a "largely non-transparent accounting system" and an "arcane, controversial and ever-changing method of assessment and cost redistribution." The IG found, inter alia, that:

1. The Division of Health Care Finance and Policy failed to follow legislative mandates and take steps to improve oversight.

2. Inadequate Medicaid payments created "public payer" revenue shortfalls at acute care hospitals.

3. Under any of the reform plans under consideration, some Massachusetts residents will remain uninsured.

4. Hospital charges were not clearly related to costs.

5. Emergency bad debt payments were being used to cover hospital losses for non-emergency services.

The IG noted that "hospitals can manipulate their prices and ignore economic theory that keeps prices in line with market demand because the Division of Health Care Finance and Policy doesn't act like a typical consumer." Read the report at: www.mass.gov/ig/publ/poolrpt.pdf.


Insurers Hate Self-Payment. As Health Savings Accounts (HSAs) become increasingly popular, insurers are scrambling to maintain control. Most HSA products are linked to networks (PPOs). The Blues are developing their own bank to enable them to monitor all transactions. Univera Healthcare told participating physicians that "it is imperative that you submit a claim...for all services delivered. Please do not bill the member or collect any payment at the time of the visit. Claim information is necessary for us to determine when the member has met his or her deductible." Univera also tells enrolled patients that they should never pay any physician "upfront" at the time of the visit for any service.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


We Told You So. In my 40 years in private practice, I witnessed the devolution of medicine, owing to third-party medicine in which the patient/doctor private relationship is negated. Nowadays, thousands of five-digit numbers are used in billing, not the patient, but a remote third party.

How prophetic some of us were back in 1963 in declaring that a system of socialized medicine for some Americans (Medicare) would be enormously expensive, be abused by both doctors and patients, and would lead to a deterioration in the quality of personal medical care! Gone are the days of house calls, professional courtesy, "be my guest" care of the indigent and the aged, fraternal societies, and Voltaire's exclamation, "Medicine, that most estimable of professions!"

Marx said, "Socialize medicine first. Then, all other activities of a nation will follow as night follows day." Bastiat said, "See if the law benefits one citizen at the expense of another by doing what he, himself, cannot do without committing a crime. Then, if found, abolish such a law without delay, because it will breed a system!" How right they were!
Stu Pritchard, M.D., Philipsburg, MT


Pre-conceived Answers. The "health care" debate is less concerned with solving problems than with dictating an ideologically correct solution. I've spent 3 months repeating that the language in a request for proposal should require, as a baseline estimate for discussing the imperative to cover everyone, a determination of how many people lack care. There is a blank refusal to consider that insurance may be an unnecessary solution to a problem that is already being solved in a variety of other ways. From this I conclude that the focus on the uninsured has nothing to do with the welfare of people who lack medical care and everything to do with erasing the role of the private sector in medicine.
Linda Gorman, Independence Institute, Golden, CO


The Real Question. I applaud Michael Tanner for writing (Des Moines Register 3/5/07) that "individual insurance mandates, such as the Massachusetts plan, cross an important line: accepting the principle that it is the government's responsibility to assure that every American has health insurance." Indeed, as he writes, these mandates are a "significant infringement on individual liberty," and raise "serious practical questions." But isn't the real issue whether the government has the Constitutional authority to mandate insurance or to provide it? Has this authority ever been challenged in court?
Joseph Lee Pugh, Diamondhead, MS


The 100% "Co-pay." Michigan Blue Cross/Blue Shield defined an office visit as a "covered service" subject to a 100% co-pay, or no co-pay but a $5,000 deductible. This meant that plan participants had to pay the full fee out of pocket but the charge was limited by the plan. Physicians sued and lost. The obvious solution is to resign from the contracts, as I did 10 years ago. The Blue Cross rate here is 80% of Medicare; the out- of-network rate of 70% of the billed charge is twice as much. Most physicians who resigned lost one-third of their Blue Cross patients and increased revenue by one-third.
Thomas LaGrelius, M.D., Torrance, CA


An 87% Discount. I have a statement from CareFirst BCBS that shows charges of $4,113.60 and $3,000 for ambulatory surgery that were "re-priced" to $532.80 and $378.80!
Greg Scandlen, Consumers for Health Care Choices


Reversing a One-Way Course? I have been in the health insurance business since 1971, and HSAs are the first step I have seen in the direction of enhancing the patient/physician relationship and bringing market forces to bear. Every other change has meant more managed care and third-party involvement. The prospect for change is causing great consternation.
Frank Timmins, Dallas, TX


No Compromise. Although one might accept compromise on the tax treatment of health insurance, along the lines of the Bush proposal, and some other details, a compromise on an individual mandate guarantees more government involvement, not less. Someone has to define "health insurance." You can bet it will be a government commission dominated by do-gooders, like the Massachusetts Connector, where member John Gruber says, "it's a hard issue. There's a trade-off between making sure we have real coverage and minimizing disruption to the market." I want to decide for myself what "real coverage" is. I don't want advocacy groups lobbying to get their malady included, or big insurance to get small insurers excluded....
David Hogberg, National Center for Public Policy Research