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

Volume 63, No. 2 February 2007


With the party of Hillary Clinton in the ascendancy, the drive to complete the government takeover of American medicine is gaining momentum. The movement, of course, did not begin in 1993, nor did it end with the defeat of the Clinton Health Security Act. The back-up strategy of piecemeal implementation continued in the Republican Congress and in various state legislatures. We're far down the field.

Senator Ron Wyden (D-OR) already has a 166-page bill, the Healthy Americans Act, to reach the goal of universality.

It might take a Democrat in the White House to finish the job; the bill is viewed as the opening of the 2008 presidential campaign. Ron Pollack of Families USA calls it "a first step; a work in progress."

Many lessons were learned from the failure of the Health Security Act. For one thing, the complexity and devilish details in the 1,364-page Clinton plan have been left out delegated to the IRS (the collector of premiums) and the new state Health Help Agencies (HHAs). And Health Savings Accounts are (still) in the provision that bought business and "conservative" support for HIPAA and the Medicare drug benefit.

Taking a cue from Clinton act opponents, Wyden said his plan would "guarantee health coverage for every American that is at least as good as members of Congress receive and can never be taken away." The minimum premium is for a plan at least as comprehensive as the Blue Cross/Blue Shield standard option plan in the Federal Employee Health Benefits Program (FEHBP). This has a $15 office-visit copayment and a $250 yearly deductible for hospital in-patient services.

The FEHBP has been touted for years by the Heritage Foundation, and by all 2004 Democratic presidential candidates.

People would have the option of paying more for "more lavish" benefits. But Wyden emphasizes that workers would not have the option of buying a "bare bones" package and pocketing the savings.

Under this act, everybody would have to have a HAPI (Healthy America Private Insurance) plan, unless on Medicare or certain other plans. Persons at the poverty level would be fully subsidized. Persons up to 400% of poverty 300% is the median income level would receive subsidies on a sliding scale.

By definition, HAPI plans would be affordable. And debts created by failing to pay premiums would not be dischargeable through bankruptcy.

While no one, because of community rating, would be permitted to benefit from low-risk status, premium discounts might be offered for "meaningful" or "successful" participation in an approved wellness program. There might also be discounts for "certain healthy behaviors, such as weight management, exercise, nutrition counseling, refraining from tobacco use, designating a health home, and other behaviors determined appropriate by the Secretary."

HAPI plans would be required to offer "preventive" and chronic care disease management programs, without any "personal responsibility contributions" (direct payment).

The plan is supposed to save $1.48 trillion from 2007 2012, according to the Lewin Group, because of assumed administrative savings, increased price competition for insurance, and a reduction in the rate of spending growth. This is to occur despite an expected increase in demand for services by previously uninsured persons, and despite requirements for mental health parity and guaranteed issue. It assumes people would move to HMOs and save 12% in doing so.

Employer-provided insurance would be eliminated the best feature of the plan and the reason it is gaining business support. Current employer spending for health benefits would be "cashed out" as wages which the employee would have to spend on premiums. All employers would then have to make an "employer responsibility contribution," varying by revenue and number of employees the equivalent of a payroll tax.

All employers would have to administer employee selection of a plan, along with the withholding of the lowest cost premium as well as additional premiums for richer plans.

There would be "choice." The HHAs would have to offer at least two HAPI plans, and no more than 10, lest consumers be confused. All would have the same "core benefits." Supple-mental abortion coverage would have to be made available, unless the insurer was owned by a religious organization. HHAs shall ensure that individuals are well informed about their right to refuse treatment, especially at the end of life.

Within two years after enactment, hospitals would be required to demonstrate improved quality control. Insurers would have to use a uniform set of clinical performance standards and make information available to consumers on their success in prevention and disease management.

The Lewin Group claims that the plan would cover more than 99% of "Americans." But it won't cover illegal aliens, and 43.6% of 46 million uninsured "Americans" are noncitizens.

The IRS would get an additional 25% or $2.2 billion to administer and audit the premium and subsidy components. The Lewin Group writes that no verification of coverage, penalties, or fines would be needed since people could not avoid paying the premium by failing to enroll in a plan.

But according to Wyden's summary, "Every time an indi-vidual interacts with state, local, and federal government registering their car, enrolling their children in school, applying for a driver's license or paying their taxes they can be required to verify their enrollment in a private insurance plan."

The Wyden plan is not socialized medicine all the HAPI plans are private. It is fascism, writes Greg Scandlen.

The plan would not simply be a government takeover of medicine, but government intrusion into every area of life.

States Drive Toward "Universal" Coverage

California. Gov. Schwarzenegger, as part of a sweeping plan to mandate universal coverage, would charge physicians a 2%, and hospitals a 4% "dividend" [Newspeak for "tax"] on revenue. This would offset the theoretical $10 billion increase in revenue from more insurance and higher Medi-Cal payments. The plan would cover all children, including illegal aliens. It has an individual mandate and a "play or pay" mandate on businesses with 10 or more workers.

Illinois. A state task force proposes a plan with an estimated cost of $5 billion, in a state already $5 billion in debt. It includes individual and employer mandates and subsidies to persons up to 400% of poverty ($80,000/yr in family income).

Maine. The Dirigo Health Reform Act that went into effect Jan 1, 2005, was meant to contain costs and cover 31,000 of the state's uninsured in its first year and all 130,000 by 2009. Only 12,153 were enrolled by October 2006. A Blue Ribbon Com-mission is exploring new taxes, an employer mandate, and a individual mandate for those above a certain income level.

New Jersey. A plan being drafted for introduction this spring would force residents to get health insurance and prove they had it on their state tax forms. New Jersey's 1.4 million uninsured persons include 300,000 eligible for Medicaid or FamilyCare, but not enrolled; 614,000 who earn too much to qualify for those programs; and 400,000 illegal aliens.

New Mexico. Gaining support after several failed attempts is a bill that would junk the private insurance industry, put everyone into one pool, and have a government- appointed commission run the system. About 21% of New Mexicans, some 411,000, lack insurance; the contribution of illegals, who are flooding the state, is not considered. Eligibility for the plan requires "physical presence" in the state for one year and intention to remain there. Providers may not discriminate on the basis of "payment status." All payment for all covered services shall be through the plan.

New York. The state health care commission's objective of universal coverage has been endorsed by the state medical association (MSSNY), although MSSNY opposes the idea of taxing physician revenues to support the bad debt and charity fund, which benefits only hospitals. A special commission that meets in secret is forcing hospitals to close or competing hospitals to merge, wielding the state health commissioner's power to revoke operating certificates. "This is straight out of Atlas Shrugged where the government took over the operation of the railroads" (Buffalo News 11/29/06).

Oregon. After two decades of effort in moving toward universal coverage, the plan of Sen. Wyden's state is unraveling. Entire benefit categories have been cut, enrollment is down 75%, and the plan is closed to new enrollees (Health Affairs online, Dec 19, 2006).

West Virginia. In a preview of what awaits people dependent on government for medical care, Medicaid recipients who don't sign or abide by a health pledge are denied "enhanced benefits" and are limited to four prescriptions per month. The pledge includes attending programs as directed.


Replacing Disgruntled Physicians

If the demolition of American medicine drives many physicians out of practice, and discourages talented young people from applying to medical school, they can easily be replaced. Under the J-1 visa program, hospitals can bring in foreign physicians at less than half the cost of an American-born physician. The program also allows foreign students to obtain medical degrees in the U.S. Unlike with an F visa, spouses can work in a limited capacity, and dependents are also granted visa status (www.usvisanews.com/j1info.shtml).

According to Independent Task Force Report No. 53 of the Council on Foreign Relations (Building a North American Community), governments of the U.S., Canada, and Mexico "should devote more resources to leading and creating incentives that would encourage the professional associations of each of the three countries to develop shared standards that would facilitate short-term professional labor mobility within North America." "Harmonization," as in the EU?


Will Insurance Cut ER Use?

Heavy emergency room use is responsible for a large share of medical costs. Some argue that ER overuse results from lack of first-dollar coverage of primary care. Medicaid patients, however, already have such coverage but still use ERs because they can show up any time, notes Linda Gorman. The most common reasons for ER visits in order of frequency, according to the RAND Health Insurance Experiment, were: abrasions/ contusions; fracture/dislocation; sprains; URI; asthma; otitis media; gastroenteritis; abdominal pain; back/neck pain; influenza/viral syndrome; chest pain/heart problem (Newhouse JP, Free for All?). Which visits would "preventive" care prevent?


Employers, Workers Saving with HSAs

According to a recent RAND study, employers report saving 10% with consumer-directed plans. The savings on premiums may be considerably more, notes Russ Faria, D.O., of Newport, OR, if costs include contributions to workers' Health Savings Accounts. Such savings are huge, he notes, and would be trumpeted as a great triumph if they occurred with a socialist scheme. Workers have also cut their spending by 5 12%. Some complain that only the healthy benefit from an HSA. But now that one can have a $1,100 deductible and still sock away $2,850, who doesn't benefit? Sick people like to save money too, Gorman notes. See News of the Day 1/1/07.


AAPS Calendar

Feb 9, 2007. Thrive, Not Just Survive V, Dallas, TX.
Feb 10, 2007. Winter Board meeting, Dallas, TX.
Oct 10-13, 2007. 64th annual meeting, Cherry Hill, NJ.

Sham Peer Review Updates

Misuse of NPDB. Over objections of respondents, AAPS filed an amicus brief in the U.S. Supreme Court in the case of Arthur J. Misischia, D.M.D., v. St. John's Mercy Health Systems. After Dr. Misischia spoke out against perceived unnecessary surgery and fraudulent billing, he was subjected to a sham peer review, and his hospital privileges were suspended. Although he prevailed in state court in 1994, the hospital persisted with a defamatory entry in the National Practitioner Data Bank (NPDB) until 2003. In 2001, the hospital demanded that he not testify in a malpractice proceeding as a condition of removing the defamatory entry. At issue now is a federal appeals court ruling that would bar access to court if a plaintiff failed to anticipate future wrongful acts and include them in a prior action. The brief, posted at www.aapsonline.org, was funded by the American Health Legal Foundation (AHLF).

Medical Staff Bylaws. AAPS filed an amicus brief in the appeal of Lawnwood Medical Center v. Randall Seeger, M.D., in the First District Court of Appeal, State of Florida (Case No. 1D06-2016, L.T. Case No. 2003 CA 2865). The case arose from efforts by Columbia/HCA to maximize its profits from the acquired hospital by means of exclusive contracts. The Medical Executive Committee objected and prevailed over the hospital when it resorted to sham peer review of two pathologists it wanted to replace, Drs. Leonard Walker and John Minarcik. After multiple losses in court, the hospital lobbied for and obtained the St. Lucie County Hospital Governance Law, which was ruled unconstitutional by the lower court.

Exclusive contracts are anti-competitive and are disfavored by the courts although no longer deemed a "per se" violation of antitrust law. There was no rational economic justification for the Governance Law, AAPS argued.

"If this Court were to allow the legislature to rewrite contractual obligations, the economic harm would be severe.... [N]umerous transactions in the medical field and beyond would be subject to a new risk of shifting property rights at the whim of the legislature." (See www.aapsonline.org for the full brief.)

This brief was also funded by AHLF.

New JCAHO Standard on "Hospital Disruptive Behavior." To enhance top-down control over physicians in hospitals, the hospital bar has been advocating its purposely vague and subjective definition of the "disruptive physician." The proposed JCAHO LD.3.15 Standard would codify this view nationwide, putting physicians who have their privileges wrongfully terminated at an even greater disadvantage if they seek redress in court. Among the elements in the JCAHO-approved Code of Conduct is "behavior" interpreted solely by accusers, as exhibited in facial and other nonverbal expressions, that might been perceived as "threatening" or harmful to "staff morale." This dangerous standard, writes AAPS Sham Peer Review Committee chairman Lawrence Huntoon, M.D., Ph.D., "will strongly discourage physician whistleblowers from advocating for quality care and patient safety in hospitals."

AAPS comments are posted on the web site.


"The great enemy of clear language is insincerity. When there is a gap between one's real and one's declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish squirting out ink."
George Orwell, Politics and the English Language


Tip of the Month: The receipt of electronic funds alone does not make you a covered entity under HIPAA. We heard of an insurance company demanding that out-of-network providers accept automatic deposits. When our member refused, the insurance company took his account number from reimbursement checks he had cashed, and directly deposited future reimbursements into his account without his consent! Apparently banks do not prevent unauthorized direct deposits. Fortunately, this bizarre conduct by the insurance company does not trigger application of HIPAA to the physician.


Must a Mens Rea Be Proved to Convict a Doctor?

Ordinarily, specific intent to commit a crime a mens rea or guilty mind is required for criminal conviction. Yet the U.S. Court of Appeals for the Fourth Circuit upheld the conviction of Ronald McIver, D.O., for unlawful distribution of a controlled substance, resulting in death, and conspiracy to unlawfully distribute controlled substances, in a case that hinged solely on alleged deviation from "professional norms" (No. 05-4884). The patient who died had committed suicide to avoid becoming a burden to his family. The prosecution presented no evidence that Dr. McIver had any knowledge that some of his patients were selling the drugs he prescribed.

In a petition for rehearing en banc, attorney John P. Flannery, II, writes: "The government gives no notice of what is precisely prohibited until after a physician has been indicted and sometimes only at trial. In this manner, defendants are denied constitutional notice of the malum and discover their crimes ex post facto."

Dr. McIver had called the county sheriff to inquire whether certain patients were known drug seekers. He never got an answer. What the government often does after such inquiries is begin an investigation of the physician. It may "turn" the patient and have him testify against the doctor.

In the county jail after being sentenced to 30 years, Dr. McIver nearly died of a heart attack.

A decision on the petition is pending. See the website for the Opinion and petition.


Patient and Doctor Sue Over Secret Contracts

California allergist Dorothy Calabrese, M.D., an AAPS member, and Medicare patient Paul Messer sued National Heritage Insurance Company (NHIC), a Medicare contractor, for abusing the medical-necessity requirement to ration care. NHIC physicians admitted that they never read any of the scientific citations provided to them and did not consult any of the beneficiaries' experts before denying payment for successful ongoing medical care that had been paid for by the previous carrier. In a 2005 local coverage determination (LCD) appeal, an administrative law judge had ruled the services to be medically necessary. NHIC Medical Director Bruce Quinn refused to release the NHIC contract or names of its experts, and said that there were no records.


False Claims Act Defendant Pays

In any successful FCA action, including a settlement, the FCA, unlike many statutes, requires the defendant to pay all of the plaintiff's costs, which typically exceed $1 million. FCA litigation has grown exponentially; mediation is strongly advised (BNA's HCFR 10/25/06).


More Pay Cuts Coming. In a front page story, Robert Pear writes that in dealing with the "runaway cost of the Medicare program, Congress has decided to use a carrot instead of a stick to change doctors' behavior" (NY Times 12/12/06). It is offering "a small bonus with big strings attached." Doctors will have to report "how often they provide quality care, as defined by the government." Medicare officials say they will use the statistics to "reward doctors who follow clinical guidelines and perhaps penalize those who flout such standards without justification." Rep. Pete Stark (D-CA), incoming Chairman of the House Ways and Means Subcommittee on Health, says that "most doctors will have to accept lower fees if Medicare is to pay bonuses to the best performers."

Another ingenious tactic to cut physicians' pay is to refuse to pay consultants if the referring physician's documentation is inadequate and to require the consultant to obtain that documentation from the referring physician's records, substantially increasing the transaction costs. Moreover, Medicare does not pay for a consultation, but only for an office visit, when patients self refer.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Mandatory Auto Insurance. In 2002, the State of Colorado reported that uninsured motorists made up 12.5% of the driving population, with the upper-bound estimate at 22%. The estimate is based on people involved in car crashes. In what academics call a private communication, a cop said that lots of uninsured motorists (many of whom are illegal) drive around with wads of cash and settle on the spot. The rate fell from the 16 18% rate in the 1990s when the state installed a data base that automatically checks with insurance companies when the car is registered. This can't account for the sign-up-now-but-cancel- later dodge or the don't-pay-at-all dodge.
Linda Gorman, Independence Institute, Golden, CO


Cheap, Private EMRs. I simply scan the paper chart on a high-speed auto-feed Copy Star GS-1820 scanner into a Compaq Presario computer and burn it to a mini-disk. It takes two minutes, and the disk with soft vinyl envelope costs 33 cents. For a few pennies, you can get a sticky label. It fits in a wide wallet. Any good computer person can set this up in an hour.
Thomas LaGrelius, M.D., Torrance, CA


The Huge Waste of Insurance. The increase in administrative cost in the past 20 years (since the beginning dissemination of managed care) is so large that it dwarfs every other source of cost increase in physician practice. Every claim for less than $100 which must be prepared, transmitted, adjudicated, and appealed is sheer waste. To get paid reliably, physicians must collect from the patient at the time of the visit, and any insurance plan that doesn't facilitate collection then is incompatible with consumer-driven medical care.
Donna Kinney, C.P.A., Texas Medical Assn.


What Insurance Destroys. The growing queue of those who seek to force others to carry a burden not their own encroaches more and more on our founding principle of individual liberty. There must be a paternalistic superiority complex in socialist- minded academics that is short-sighted, naive, and selfish. The more we are insured, communized, and protected, the fewer opportunities for compassion, love, and grace. We cannot mandate these things, and mandates destroy them. "Carry each other's burdens" is beautifully balanced by "for each should carry his own load.
Steven Bassett, Oak Park, IL


Insurance vs. the Community. With insurance, there's a company that wants to maximize profits and minimize losses, and subscribers who want to game the system and maximize their return on their premium dollar. Tensions worsen. But a community wants everyone to do well. A system of HSAs, with 90% of expenditures paid out of pocket, would keep people honest and frugal. Community charities also rally to help when unforeseen events occur, not just for the poor. Currently, people are paying so much for insurance that they have nothing left for charity or for medical care!
Alieta Eck, M.D., Somerset, NH


HSAs Much Better Now. A change in the tax law passed in December means that the maximum amount contributed to a Health Savings Account no longer needs to exactly match the deductible. My wife and I immediately changed our policy to find the amount in the range of deductibles where the "cost" of the deductible itself, assuming that it is "used up" yearly, plus the insurance premium leaves us the most "extra money" for the HSA. This tax change makes HSAs an even better free-market weapon to restore power to patients. Our insurance broker knew nothing of the change. He said he'd be making a lot of telephone calls after we told him of it.
Timothy C. Kriss, M.D., Versailles, KY p


Targets. In the drive to "universal health coverage," the first goal/target will be the most vulnerable: children. Because of the drain on the treasury, disaster awaits both the children and any and all adults on the government dole. It may be a war of two parasitic constituencies: "children's advocates" vs. the lobbies purportedly defending oldsters and the disabled.
Zvi Herschman, West Hempstead, NY