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

Volume 65, No. 2 February 2009


In his alleged pay-to-play scheme to sell Barack Obama's Senate seat, Illinois Governor Rod Blagojevich did only one thing wrong, said Meredith McGehee of the Campaign Finance Center: "he was stupid enough to say it out loud."

The scheme itself is not much different from the usual American political enterprise only more blatant and caught on tape by the FBI, writes Allan C. Brownfield (Conservative Curmudgeon 1/9/09). The power to make or destroy an enterprise or even an industry is worth a lot of money.

Sen. Charles Schumer (D-NY), for example, is said to have precipitated the run on IndyBank. Yet he used his position on the Banking and Finance Committee to weaken oversight of persons writing the checks to fund his political ambitions, and saved the financial industry billions (ibid.).

Conflicts of interest are rife, especially in the revolving door between Goldman Sachs and the U.S. Treasury Dept. Secretary Henry Paulson had to divest himself of $500 million in Goldman Sachs stock to assume his position, but was exempted from some $200 million in capital gains taxes by a special rule (www.marketwatch.com 6/30/06).

The secrecy that surrounded the Clinton Task Force on HealthCare Reform, challenged by AAPS in AAPS v. Clinton,

was minor league compared with that surrounding the massive Treasury rescue/bailout, the Troubled Assets Relief Program (TARP). The Federal Reserve has refused to answer a Freedom of Information Act (FOIA) request by Bloomberg News to disclose the recipients of $2 trillion in emergency loans and the assets the central bank is accepting as collateral, citing potential harm to the bank's customers. Bloomberg filed suit Nov 7.

Yet the Fed is proposed as a model for controlling American medicine by HHS Secretary-designate Tom Daschle, who cites Alan Greenspan's 1996 speech on the need for transparency in his book Critical: "It cannot be acceptable in a democratic society that a group of unelected individuals are vested with important responsibilities, without being open to full public scrutiny and accountability."

Payers and Players; Tax Sink to Tax Source

"Health care" constitutes some 16% of the GDP, and 85% of the amount flows through a third-party payer largely through "proprietary" channels, so that who pays how much for what may be very difficult to discern. The average family is spending 20% of its consumption on health-related expenses, hidden in taxes, lower wages, and cost-shifted health insurance premiums, notes John Goodman (NCPA Health Alert 10/3/08). Health spending also absorbs more than one-third of state and federal tax revenues (JAMA 2008;300:1929-1931).

At the same time that we purportedly are not spending enough for uninsured persons, chronic care, and preventive care, overall spending is helping to bankrupt the economy.

Would-be reformers clearly intend to decrease expenditures in the long run, while offering undisclosed deals to potential opponents. Ultimately, private insurance could be destroyed but in the short term, preferred companies could gain 47 million new enrollees. As promised "savings" will be delayed if they occur at all new funds are needed. While rejected if it means self- payment of medical bills, "individual responsibility" is the new watchword for mandatory insurance.

Forcing individuals to "contribute" to the third- party system by purchasing a product they would otherwise reject amounts to a new, privatized form of taxation a highly progressive tax, in the AMA's version. High earners would have to pay two to three times as much for the same government-dictated insurance plan as low earners in addition to taxes they would pay to subsidize low earners' purchases.

A Health Dictatorship?

The U.S. Federal Reserve System has "skillfully managed monetary policy for decades, while earning a reputation for political independence," Daschle writes. It enables politicians to "tacitly support the Fed's wrenching policies without having to embrace them publicly" the perfect means for distributing pain, while making it pointless to write to Congress.

With fewer tools at their disposal 40 years ago, "individual doctors didn't need much outside guidance to help them select the best course of treatment for their patients." But with our "national bias in form of innovation," new treatments continue to proliferate, so it will be "increasingly difficult for politicians to make the right healthcare choices [emphasis added]."

Hence the need for an expert entity, impervious to the "human shield" strategy employed by doctors, hospitals, and drug companies. Something like the British National Institute for Clinical Excellence (NICE) and the U.S. Securities and Exchange Commission (SEC). It would "even out [level down] the delivery and efficiency of care," figure out what works, improve quality, and control costs. Like the Fed, it will be accountable to Con- gress which could dismantle it at any time.

Can the Bubble Be Re-inflated?

A world economy based on borrowing sums that cannot realistically be repaid is unraveling. Public insurance plans are a major component of the unfunded liabilities. The most viable sectors may be plundered to divert resources to the politically powerful players desperate to restart the game. It may not succeed. A financial collapse is already well along.

Saving the seed corn, and preserving the custom and culture of the medical profession, must be our first priority. The destruction of private medicine turning doctors into automata, and patients into expendable components of "population health" is the main goal of a Health Care Fed.

The Five Stages of Collapse

From observing the collapse of the Soviet Union, Dmitry Orlov outlines the stages: (1) financial collapse; (2) commercial collapse; (3) political collapse; (4) social collapse; (5) cultural collapse (Energy Bulletin 11/01/08).

Orlov notes that "a shrinking economy cannot sustain an ever-expanding level of debt." The loss of the ability to finance oil imports will be a tipping point. He believes that the U.S. has not yet experienced any of the major, earth-shattering realizations "the ones that look preposterous immediately before and completely obvious immediately after they occur."

Social collapse is guaranteed to happen, he writes, whenever society is utterly dependent on finance, commerce, or government. The responses needed to stave off the unthinkable include: (1) learning to live without much money; (2) providing for basic needs; (3) local self- government; (4) cohesive community with mutual responsibility; and (5) classical human virtues.

As Ludwig von Mises noted, "there is no means of avoiding the final collapse of a boom brought about by credit expansion." The choices are sooner, from voluntary abandonment of further credit expansion, or later, as a final catastrophic destruction of the currency.



  • Interest: $1 billion/day; U.S. govt borrowing to pay it.

  • Unofficial national debt ("financing gap"): > $50 trillion.

  • U.S. foreign debt, Dec 2007: $13.427 trillion

  • U.S. GDP: about $17 trillion.

  • Foreign debt/GDP > 60%: risk of major monetary crisis.

  • Percentage of adult men with jobs: lowest since 1948.


Players: the Partners Effect

In May 2000, the CEOs of Partners Health Care and Blue Cross/Blue Shield of Massachusetts shook hands on a deal that BC/BS would give a huge insurance payment increase to Partners, and Partners would not allow other insurers to pay less. This "market covenant" was not put in writing lest it raise concerns about anticompetitive behavior between the state's biggest hospital company and biggest insurer. It marked the beginning of a rapid escalation in Massachusetts insurance prices. Partners now dominates what was once one of the most competitive markets in the world, with networks big enough to overwhelm competitors and intimidate insurers.

"I'm not being cute here," said Partners board chairman Jack Connors. "I don't ever remember anyone suggesting that if we merged, healthcare would become cheaper."

The best kept secret in Massachusetts medicine is that elite hospitals are paid much more for care that is often no better than average (Boston Globe 11/16/08, 12/28/08).

"It's 'proprietary' information," explains Russell Faria, D.O. "We cheat and we don't want anyone to know."


"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow banks to control the issue of their currency,...the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." -- Thomas Jefferson Debate over Recharter of the Bank Bill (1809)


Free-market Medical Care

It was a pleasure to present "How to Finance Free-market Medical Care" at your annual meeting in Phoenix last September (click here to watch video). I often get requests for "noncovered care," or requests from my HRA clients for medical care for which they intend to pay cash. They want a doctor not burdened by financial and time constraints imposed by third-party payer contracts. For these clients, I market their cases to a list of doctors much as I would market a client to a list of insurers, with the client making the choice. AAPS members interested in an occasional cash referral can contact me: Ralph Weber, CLU, (888) 720-8889, or by email at [email protected].


Patient Safety: a Phony Crisis

The media and its politicians never tire of quoting the Institute of Medicine's estimate of 98,000 annual deaths from medical errors, though the flawed methodology has been debunked (AAPS News 1/00, 4/00, 3/04, 4/06, 9/06). For all the panic, there have been only three patient safety studies, done in 1974, 1984, and 1992, notes John Dale Dunn, M.D., J.D., in Heartland Perspectives 2006 (cited in Dr. Del Meyer's Medical Tuesday, January 2009). All showed about a 1% rate of some kind of negligent error, and a less than 0.25% rate of negligent injury or death. The 1992 rate was half that of the 1984 rate; a reduction by 50% was the Institute of Medicine's stated goal. As A.E. Miller, M.D., of Idaho pointed out, the reviewers did not and could not estimate the potential life-days lost as a result of the error; some patients were terminally ill.


Phony International Comparisons

It is not at all obvious that the U.S. has worse health outcomes or even higher per-capita expenses than nations with socialized medicine, writes Linda Gorman. On measures such as sickness and disability prevented by rapid access to care, cardiac and cancer survival, hospital adverse events, and blood pressure control, the U.S. is better (AAPS News 12/06; www.westandfirm.org/docs/Gorman-01.pdf).

Other nations rampantly suppress medical professionals' income, and cost calculations vary by currency conversions and measures of health spending. It is unlikely that the Japanese or Scandinavian system would perform well with a heterogeneous population as in the U.S. Illegal aliens, who make up some 5% of the U.S. population, would not receive standard care in Canada, notes Gerald Yorioka, M.D., of Washington State.

"We must not compare our apples with billiard balls," writes Dr. Yorioka.


AAPS Calendar

Jan 30, 2009. Arizona chapter, Prescott, AZ.

Feb 6-7, 2009. Workshop, board meeting, Dallas, TX.

Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.

Balance Billing under Attack

Overturning a lower court decision, the California Supreme Court ruled that hospitals and doctors may not bill patients for emergency care not fully paid by their health plans. It found that any billing disputes over emergency care must be resolved solely between providers and health plans.

Since 2006, 1.75 million Californians who received emergency treatment were billed about $528 million for charges beyond their copays, deductibles, and reimbursed amounts. The average bill was for $300 (Sacramento Bee 12/14/08).

Connecticut, Pennsylvania, and Alabama have also banned balance billing, according to the California Department of Managed Health Care (Wall St J 1/8/09).

In New York, the billion-dollar profit generating HMO industry is attempting to set default rates for reimbursing noncontracted providers. MSSNY and other organizations testified that this would devastate the state's emergency care safety net. They note that the market power of the five plans with 75% of the managed- care market makes it impossible to negotiate needed changes. HMO net income per subscriber is twice as high in New York as in New Jersey, and three times as high as in Connecticut. Employer premiums have doubled over the past decade, while coverage has been cut (Med Soc Bull Counties of Erie and Chautauqua, winter 2008).


NY Recovers $551 Million from Medicaid Fraud

The NY Medicaid Fraud Control Unit reported bringing in $551 million in FY 2008 from criminal, civil, and administrative recoveries for fraud, waste, and abuse. This was twice the amount required by a 2006 agreement, and nearly twice the total recovered in all other states combined. It included mistaken payment to managed-care plans for deceased or imprisoned persons (BNA's HCFR 12/17/08).


AMA Concludes: Peer Review Abuse Rare-

Responding to AAPS allegations that sham peer review is "epidemic in this country," the AMA House of Delegates passed a 2007 resolution directing the Board of Trustees to investigate. In B of T report 24-A-08, Edward L. Langston, M.D., Chair, writes: "Since the passage of HCQIA in 1986, the AMA is aware of only exceptional, isolated instances of peer review determinations that have resulted from improper motivations, rather than a good faith desire to improve patient care." As "proved cases," Langston lists Patri ck v. Burget, two cases identified by a Colorado legislative committee, Rosenblit v. Superior Court, Clark v. Columbia/HCA Information Services, and the Poliner case, noted to be under appeal. (This is the only reference to Poliner on the AMA website.)

Langston details the difficulties of proving a case and the legal disincentives against bringing it. While these might explain the paucity of cases, it is "more likely...[that] peer review abuse is a rarity." A claim of inappropriate peer review may be difficult to prove, but not impossible. "If abusive peer review were indeed 'epidemic,' there would probably be a more substantial track record of definitive and proven malfeasance. The absence of such a record suggests that the claims of widespread or frequent 'sham peer review' are speculative."

Policy H-375.983 provides "guidance to medical staffs" on procedural safeguards; amendments creating "further complex-ity could obscure its value as an understandable guideline."


Poliner of Grave Importance

In the Petitioners' Reply Brief in Poliner v. Texas Health System supporting a Supreme Court review of the Fifth Circuit decision, Dr. Poliner's attorneys note that "If Poliner stands, abuse of peer review for malicious purposes will remain unchecked...." Powerful groups such as hospital associations and systems, insurance companies, and large hospitals joined in an amicus opposing Poliner before the Fifth Circuit.

The Fifth Circuit's decision means that there is apparently no evidence that could be used to rebut a presumption of "reasonable belief." Hospitals can, with impunity, recite "facts" that are simply not true or are misleading, and the jury's fact- finding role is usurped in cases in which immunity is not determined as a matter of law.

See www.aapsonline.org for Petitioners' brief and the AAPS amicus, and the winter 2008 issue of J Am Phys Surg.


CMS on Doctors Without NPIs

From an email from Lorraine T. Doo of CMS to an AAPS member: "[M]y colleagues...directed me to a form that patients use to bill medicare for reimbursement directly, which does not require a provider's NPI. Are you already familiar with this form... [www.cms.hhs.gov/cmsforms/downloads/cms1490s-english.pdf], and are your patient's [sic] trying to use this form for Medicare reimbursement unsuccessfully? Do you know if any of the other insurance carriers have similar forms? It would seem likely that they do, and perhaps the patients can be encouraged to call their health plans or insurance carriers to request access to such a form either on line or [by] mail.

"With respect to labs, pharmacies and clearinghouses navigating with alternative provider numbers when dealing with non covered entities, these entities should already have those systems in place. CMS has provided ample education on this subject, and those organizations can access the CMS website for specific instructions; certainly from a Medicare perspective. Each health plan would have similar guidance. If there are specific entities with whom you are having difficulties, please use our system to file a complaint so that we can work with those organizations directly. https://htct.hhs.gov/aset/. We'll be happy to contact any one who continues to have difficulty accommodating either NPIs, or providers who do not have NPIs."

AAPS members are invited to share communications with CMS or insurers (write [email protected]).


Kalafut Resigns as Head of Texas Medical Board

Citing a desire to "rededicate my energy and focus on my family, my practice, and my community," Roberta Kalafut, D.O., stepped down as president of the TMB, a position she had held for 3 years. Her term was not due to expire until 2013. She has been appointed by Gov. Rick Perry to serve on a district review committee, in which capacity she will attend disciplinary hearings and help determine their outcome.

Kalafut is the third key board official to resign since AAPS began calling attention to conflicts of interest, abusive secret proceedings, and draconian enforcement measures. Previously leaving the TMB were Keith Miller, M.D., former head of the TMB Disciplinary Process Review Committee, and Donald Patrick, M.D., J.D., former executive director. Director of Enforcement Mari Robinson, J.D., is interim executive director.


Pirates, Congressmen, and Medicare. Reading through an article entitled "Boomtowns have pirates to thank," it occurred to me that there's little difference between Somali pirates and congressmen. Both take things that don't belong to them. Pirates take hostages and collect ransoms. Congress holds taxpayers hostage and collects taxes. Both live in high style on other people's money. "The pirates [congressmen] depend on us [to vote], and we benefit from them." "There are more shops, and business is booming because of the piracy." [There are more motorized scooter dealers, and business is booming because of Medicare.] "In Haradhere, residents came out in droves to celebrate as the looming oil ship came into focus." [Seniors celebrate the expansion of Medicare.] "I can buy a packet of cigarettes for about $1, but I will charge the pirate $1.30." [HMOs charge the government 12%-15% more to care for Medicare hostages.] "[R]egional officials say they have no power to stop piracy....[which] is generally considered a sure bet to a better life." [Many in the U.S. think that government subsidies are a sure bet to a better life.]

Meanwhile insurance premiums for ships are going up, and some ships are looking for alternate routes so as to avoid the pirates. And some physicians are looking for alternate practice models so as to avoid Medicare.

What will happen when there are no more ships to loot? Or when people are taxed into poverty, and there is no incentive to work?
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Computers Can Be Dangerous. While doing my part to keep my medical costs down (exercising), I watched the old movie The Net with Sandra Bullock and Dennis Miller. It concerns a corrupt billionaire who is trying to take over the country by selling a security system to fend off cyberterrorists, while creating the attacks so he can sell his system.

Dennis Miller's character is killed when the bad guys hack into the hospital's system and change his diagnosis from penicillin allergy to diabetes. Then the nurse kills him by following a computer-generated order for insulin.

Even now, nurses are so overburdened with computer charting that they can easily not know their patients. Computers are fantastic tools, but we need to control them, not they us.
Mark J. Kellen, M.D., AAPS President, Rockford, IL


Public Misconceptions. Many people don't know they can file their own insurance claims or pay cash and get medical care. They've been convinced that no insurance = no care!
Linda Gorman, Ph.D., Independence Institute, Golden, CO 

Letter to a Colleague. Why do physicians continue to fall for government/insurer schemes such as "pay for reporting"? Quality can't be measured by bean counting, and if it could people would just game the system. What will it take to show them that these meddlers are a mix of academics, who want to impose their ideology; politicians with a passion to rule others; and financial types who want a scheme to maximize profits? We do not need these people, none of whom share our knowledge, motivation, or ethics, to tell is how to "improve" what we are doing. They have done nothing except cook up ways to waste our time and interfere with our work. They need to leave us alone, instead of manipulating us to serve their ends. Why do you help them and cooperate with them?
R. Wayne Porter, M.D., Terrell, TX


How Much Do Patients Want EHRs? Patients say they want their doctor to use an electronic health record and e-prescribing, but they don't want to pay for it, and neither does anybody else. How about $10 extra per visit for a year to pay the initial cost, and $5 forever to pay for maintenance and upgrades? Nobody is asking the question because we already know the answer to it.
Everest A. "Tad" Whited, M.D., Pflugerville, TX


Zero Care. According to the Physicians' Foundation survey, 49% of U.S. physicians plan to reduce or quit their practice within 3 years. "Insuring" all Americans means nothing if there are no physicians. The government and insurers have regulated medicine to the point that there is no care. There are reimbursable events, but no relationship. Doctors are done.
Marcy Zwelling-Aamot, M.D., Los Gatos, CA


End the Zero-sum Game. Balance billing is the way to allow both primary physicians and specialists to get paid adequately. Otherwise, where will primary physicians send patients when they need specialist care? To the medical homeless shelter?
David McKalip, M.D., St. Petersburg, FL


Medically Homeless. In one country I recently visited, you don't have "a doctor." You just go to a clinic, where your record is retrieved from a computer and you are seen by someone, doctor or nurse. Come early because there are no appointments, and the doors are locked after the day's quota of patients has arrived. The average wait for surgery is 3 months. Because of a shortage of radiologists trained to read them, the Ministry of Health may stop routine mammograms!

"Universal health care" sounds comforting and supporting, but results have been consistent around the world: bureaucracy, high costs, high taxes, and rationing of services.
Richard C. Boronow, M.D., Jackson, MS