HMO Sues to Suppress Publication of ``D'' Financial Rating

Health Net of California has filed a lawsuit against Weiss Research, accusing them of ``fraud and malice'' for warning readers about their weak financial condition. Weiss reports that they have far more debt and far less capital than any other company their size. ``This HMO is so highly leveraged that a 3.7 percent increase in claims as a percent of premiums could wipe them out'' (Martin Weiss' Safe Money Report, 11/7/94).

An $89 million judgment was recently handed down against Health Net for refusing a bone marrow transplant to a young mother of three.

Weiss intends to continue publishing its ratings. Their readers need the information, in their view, because if an HMO or insurer is short of capital, it may be more likely to cut back on the services that it provides.

Physician-Assisted Suicide Initiative Challenged

In the November election, Oregon voters narrowly passed an initiative to legally authorize physician-assisted suicide-the first such measure ever passed in the entire world. A lawsuit filed Nov. 23 in federal district court seeks to block its implementation (Lee v. Harcleroad, DC Ore, No. 94-6467- TC). An injunction has been handed down, pending a decision on the merits.

The plaintiffs allege that Measure 16 violates the Civil Rights Act, the Religious Freedom Restoration Act of 1983, the Americans with Disabilities Act, and the First and Fourteenth Amendments to the U.S. Constitution. Financial assistance has been offered by the Oregon Right to Life and the National Right to Life (BNA's Health Care Policy Report 12/5/94).

The only method sanctioned by Measure 16 is death by prescription of a legal drug. An unintended consequence is that terminally ill patients may have more difficulty obtaining pain relief, due to new bureaucratic procedures designed to serve as ``safeguards.'' Physicians may decide to write prescriptions for potentially lethal drugs only in the burdensome manner dictated by Measure 16, in order to avail themselves of immunity provisions if patients die in a manner that could be attributed to the drugs rather than their disease. There is also an interesting irony: physicians may prescribe drugs intended to cause death, but are still forbidden to prescribe less dangerous drugs that might prevent suicide, such as heroin, marijuana, and LSD (NEngl J Med 1994;331:1240- 3).

Members' Page

A Non-Nonparticipating Physician. HR 5252 is interesting if you quote it correctly. The law applies to ``nonparticipating physicians.'' What is a ``nonparticipating physician''? Dr. Copeland and I are not nonparticipating physicians when we contract with patients completely outside the Medicare system....We are nonexistent as far as HR 5252 is concerned unless there are other clauses in the law that include us.

What is a physician who has been expelled from the system, nonparticipating or nonexistent? But clearly this is a problem for further study by AAPS and counsel.
John H. DeTar, M.D., Reno, NV

Season's Greetings from Medicare. [Letter to Mr. Preston Lowen, HCFA Representative in Syracuse, NY]

Please extend my sincere thanks to HCFA and to Upstate Medicare for the Announcement of Changes to the Limiting Charges. It's been almost 24 hours since I last received any harassment or threats from HCFA/Medicare, and I was beginning to feel a bit forgotten.

I was especially elated to read that the ``sanctions'' referred to in your ``greetings'' have now been codified into law under section 1842(j)(2) of the Act....Civil monetary penalties up to $2000 for each instance certainly cause me to want to see as many Medicare patients as I can so that I can experience the thrill of taking the risk of bankruptcy for typographical errors. I must confess though that the possible ``exclusion from the Medicare program for up to 5 years'' is becoming more and more appealing. I really enjoy providing medical care at the rate of 50 cents on the dollar, but if there was some way that we could achieve ``exclusion from the Medicare program'' without incurring the $2000 fine, I'm thinking that I might actually be able to make a living.

At the risk of being ``politically incorrect'' and inquiring about individual rights,...did you forget to inform physicians that patients and physicians are free to contract privately if no Medicare benefits are claimed? [Stewart v. Sullivan]
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Laboratory Tests Rationed. [Letter to David Chellappa, Community Mutual Insurance Company (CMIC)]

I have received the new CMIC laboratory policy,...[which] states that a stat turn-around time of four hours will be allowed. This is unacceptable. It is hard to understand how an insurance company can tell a physician that he cannot send a patient to the hospital for a laboratory test. I practice in a rural area and due to CLIA, I can no longer afford to do laboratory testing in my office. If I have a patient with an urgent problem and need a blood test, I send the patient to our nearby hospital. To say that I have to send the blood test to an outside reference laboratory and wait four hours for the result is asking me to commit medical malpractice....The policy also states that physicians will be monitored for possible expulsion. So you are asking me to commit malpractice and if I refuse to do so you are threatening to drop me as a ``provider.'' If this is not changed, I refuse to participate.
Joseph M. Kuhn, D.O., Payne, OH

[The Ohio Osteopathic Association and the Ohio State Medical Association also protested these policies. As a result, CMIC approved a list of stat tests that can be ordered at most hospitals, along with a list of office tests (though Dr. Kuhn calls the reimbursement ``a joke''). Dr. Kuhn believes physicians scored a victory, though he looks for restrictions on the number of tests that can be ordered.]

More on Fee-Splitting. The letter by Dr. Carl Webber in the December issue (``Is Managed Care Illegal?'') is right on target. It usually is illegal for more reasons than Dr. Webber cites and it is certainly unethical, because it is ``fee splitting.''

Most physicians aren't aware that there was a huge scandal in Europe and North America in the early part of this century over the issue of fee splitting. This is a practice in which a general physician refers a patient to a specialist and in return receives a kickback of part of the specialist's fee.

In place of specialist, put ``all physicians'' and in place of general physician, put ``referring managed- care organization.'' The corruption is identical. If you receive a patient because you have discounted (kicked back) part of your fee to the referring agency, you are engaged in fee splitting, pure and simple. If you refer a patient to another physician within the cartel because you are required to do so under the terms of your contract, you are again engaged in fee splitting, because the underlying assumption is that your referral pattern will result in a financial gain to yourself....If all physicians upheld the law and their oath not to engage in fee splitting, managed care would disappear overnight. Why don't we do it? Could we at least form an organization of physicians sworn to uphold the law by not engaging in managed-care fee splitting? Could the FTC prosecute us for upholding the law?

Once again, the fault is ``not in the stars but in ourselves.'' Without our own moral and ethical failure, we would not be in the managed-care mess.
George F. Wittkopp, M.D., Beaverton, OR

AAPS Calendar

Jan. 21. Board of Directors meeting, Dallas

May 6. Regional meeting, Boise, ID

Legislative Alert

Awestruck, Dazed. Shocked. Stunned. The casualty lists: Foley of Washington State, Rosty of Chicago, Jack Brooks of Texas, Sasser of Tennessee.

Congressman Newt Gingrich of Georgia is to be Speaker of the House. Congressman Dick Armey of Texas is to be House Majority Leader. Capitol Hill watchers expect Congressman Tom DeLay of Texas to capture the job of Majority Whip. This amounts to a Reaganite control of the House of Representatives. There are more Reaganites in Congress now than when Ronald Reagan himself was President of the United States, struggling against often hostile majorities in Congress.

DeLay will move Heaven and Hell to make sure that the new Congressional majority delivers on the Republican ``Contract with America''-a package of promises ranging from a balanced budget amendment, term limits and middle-class tax cuts-as its first order of business; no surprise there. He is also calling for a united front, borrowing a leaf from liberal political organizations.

Although Congressional Republicans campaigned on the ``Contract,'' most Americans are not deeply familiar with it. Remarkably, the Washington press corps has focused on it, strengthening the new Congressional agenda for January, no doubt inadvertently.

One fly in the political ointment has been the voluntary school prayer initiative. Some are saying the issue is likely to push the new Congress off course, like Clinton's ``gays in the Marine Corps'' problem in the beginning of his term. One difference is that between 75 and 80 percent of the electorate, according to the polls, supports the concept of voluntary prayer in schools. The same can't be said about gays in the military.

As for the new Democratic minority, the liberals have consolidated their power, beating back conservative and moderate challengers. Dick Gephardt, author of the House version of the Clinton Plan, defeated the moderate Charlie Rose of North Carolina for the post of Minority Leader, and David Bonior of Michigan prevailed over conservative Charles Stenholm of Texas to become House Minority Whip. The shift to the left will leave the conservative Democrats with even less influence than they previously enjoyed. Then, there is always the possibility that conservative or moderate House Democrats might join Alabama Senator Richard Shelby and switch to the Republican side of the aisle. Shelby told the national press corps that there is no room anymore in the Democratic Congressional ranks for a conservative. With Tom Daschle of South Dakota replacing George Mitchell as the leader of the Senate Democrats, Shelby's assessment is directly reinforced. Up to 10 to 12 Southern House Democrats could bolt in the next few weeks. Watch Congressman Billy Tauzin, Louisiana Democrat and a solid conservative.

So, what is the deeper political meaning? One fact stands out brightly. The South has seceded a second time; this time from the Democrats. The Southerners-Gingrich, Armey, Lott, Gramm, Thurmond, et al.-have taken Capitol Hill, and liberal Yankees are in full, disorganized retreat.

Senator Robert Dole will become Majority Leader, replacing the retiring George Mitchell of Maine, the original cosponsor of the Clinton Health Plan and a sponsor of a similar version. Senator Trent Lott, the fiery conservative from Mississippi, and ally of Senator Phil Gramm of Texas, has edged out Senator Alan Simpson of Wyoming for the post of Senate Majority Whip. Lott, Gramm, and their Senatorial allies want to have the Senate make transition plans as quickly and as aggressively as their fellow revolutionaries in the House of Representatives.

Nancy Kassebaum of Kansas, a moderate Republican will head the Senate Committee on Labor and Human Resources, and Senator Robert Packwood of Oregon will head up the Senate Finance Committee. In the closing months of the health-care debate, Packwood started to show his conservative Senate colleagues that he had gotten religion on the matter of markets and tax code changes; he endorsed medical savings accounts.

Speaking of Rebels, Senator Strom Thurmond of South Carolina, as senior Senator, will assume the post of President Pro Tem of the Senate. At a recent meeting of the Senate Republicans, Thurmond let everybody know that, his age notwithstanding, he has been torched by the revolutionary fire. When the subject of terms limits came up, some moderate Republicans hesitated about embracing the idea. Thurmond told them that he had been in the Senate for 40 years, but if the American people want term limits, then he would be only too happy to go. And so should everybody else.

The power shift has enormous consequences for health policy. In the House, Dingell is now reduced to a ranking minority member on the Committee on Energy and Commerce, to be presided over by Congressman Tom Bliley, a staunch conservative and a Virginia Republican. As Bill Archer of Texas assumes the Chairmanship of Ways and Means, Congressman Pete Stark of California will likely be reduced to a noisy footnote to Committee deliberations.

Even more importantly, look for a conservative academic to take over the direction of the powerful Congressional Budget Office, now headed up by Robert Reischauer. Reischauer played an enormous role in the national health policy debate, dispensing bad news to just about everybody, including the Clintons, on the cost of their health-care proposals. Candidates for the job include Jim Miller of the Citizens for a Sound Economy, former Director of the Office of Management and Budget (OMB) under Ronald Reagan, and John Cogan of the Hoover Institution. Cogan served as a labor economist advising Republicans on the so-called Pepper Commission chaired by Senator Jay Rockefeller, where he counseled strongly against employer mandates.

The issue of CBO director is not merely a matter of personnel, but also of policy. Conservatives on Capitol Hill generally admire the way the Reischauer did his job, but they have always felt that the CBO method of scoring tax and budget changes was archaic; it was a static rather than a dynamic analysis. For example, CBO could always show ``savings'' from price controls, but could never even approximate the effect of market efficiencies. It modelled various Congressional proposals as if tax-and-budget changes had no effect on economic behavior.

Aftershocks

The journalists covering the election could not absorb it, and many still can't. Post-election surveys are showing bad news for the White House. Stan Greenberg, the President's pollster, says that the Clinton Health Plan was seen as a big government project that the voters didn't want; Chris Matthews of the San Francisco Chronicle, former Speaker Tip O'Neill's top staffer, said the same thing. The President's response: opponents ``mischaracterized'' his health plan as a big government program.

Surveys show that, with the exception of black voters, most Americans have shifted to the right. Talk radio programs are partially responsible for increases in voter turn-out. But there is a word of caution in the surveys. First, while this is an anti-liberal vote, an anti-Washington vote, it is not an anti- incumbent vote. Not one Republican incumbent lost re-election. But even so, it is not necessarily a pro-Republican vote; it is a replacement vote. The message: the other guys had forty years in power; now it's your turn. Do something.

This election also represents a radically different approach to the way Washington does business, including the way in which Washington has preempted state and local government authority.

Both Republicans and Democrats in Congress ought to be aware of another major fact: most voters now refuse to identify with either political party. According to Frank Luntz, the Republican pollster, few voters under the age of 48 identify with either political party and hardly any voters under the age of 32 do. This is a sour electorate looking for concrete results. Congress had better deliver.

The 1994 Election and Medicine

In California, Proposition 186, a proposal to establish single-payer, Canadian-style medicine on the state level, failed by a huge margin: 25 to 75 percent. This will temporarily take the wind out of the sails of the socialized medicine camp. But they'll be back in states more liberal than California. In Oregon, doctor-assisted suicide squeaked by 51 percent to 49 percent. Hippocrates, call your office.

At the Congressional level, the health-care issue played against the Administration. Nobody is reporting a win because of being a stalwart champion of the Clinton health plan. Hardly anyone benefited from taking a stand on medical issues-certainly not ``Managed Competition'' Jim Cooper of Tennessee, who left the House and lost his Senate race. The possible exception is Phil Gramm of Texas, who touts his role in helping to bring down the Clinton Plan in the Senate.

Hard survey data show that the American people want careful, constructive decisions made in Washington on the health-care issue, but that the states should take the lead in reforming the system. A November 8, 1994, survey of 1,200 voters conducted by the Kaiser Family Foundation and the Harvard University School of Public Health shows that among the most important issues in deciding a vote for a member of the House, health care registered 33 percent, while crime came in at 29 percent and taxes at a surprising 23 percent. As the top priorities for next year, 40 percent said health care, 31 percent said crime and 17 percent said taxes.

When asked who should take the lead in developing a health- care reform plan in 1995, 56 percent said Members of Congress, and 18 percent said President Clinton. Clinton has lost any popular claim to leadership on the issue. (And Hillary's negatives range between 38 and 40 percent.) When asked what kind of legislation Congress should enact, only 25 percent said a major reform bill, while 41 percent favored modest changes. Only 25 percent said that Congress should leave the system alone.

Changing of the Guard

The Heritage Foundation, Washington's largest conservative think tank, is holding seminars for new Members of Congress, rather than Harvard University's John F. Kennedy School of Government, which quit the field in the competition with Heritage. For Harvard University, which has been conducting its Congressional Freshman Orientation Program for 22 years, this is a shock, to put it mildly.

More shocking is the career change of men and women who have made up the muscle tissue of the Washington establishment for decades. No, not Members of Congress. Yes, Congressional staff. Thousands of senior Congressional staff, in various states of denial and disbelief, are getting ready to go out on the street. For a good many senior liberal Democratic staff, including a number who served on Hillary's Task Force, it's really over. All over. And they are not hiring over at AARP or Families USA either.

Consumer-Based Reform: On The Way

It will not happen until the fall of 1995, at the earliest, but the new Members of Congress are considering a series of options for market-based reform. Ideas in circulation focus on empowering individuals and families to make the key decisions and on changing the tax code. Here are some of the major principles under consideration:

1. Every American worker has the right to know exactly what his employer is spending on his behalf for medical insurance and precisely how that reduces his wages or other compensation.

2. All Americans have the right to own their health insurance policy and to choose the kind of health benefits, medical treatments, and procedures that they desire and are willing to pay for.

3. Every American should receive equitable tax relief for obtaining medical services, regardless of employment status. Mechanisms include tax-sheltered Medical Savings Accounts and allowing current Flexible Spending Accounts to roll over. The tax favoritism now accorded to employer-provided ``insurance'' (or prepayment) should be abolished.

4. Every physician has the right to exercise his best medical judgment in caring for patients, regardless of practice guidelines issued by government agencies.

5. Every doctor has the right to practice free of unnecessary and counterproductive red tape. Any reform should include comprehensive deregulation of private medical practice, including the abolition of OSHA rules applying to private medicine and specifically the repeal of CLIA regulations.

6. Americans should be protected against government- sponsored cost shifting into the private sector. Reform of the Medicare program should include the abolition of the DRG and RBRVS system of administrative pricing and the elimination of restrictions on balance billing.

7. Americans should have the right to take their private insurance into retirement, instead of being forced to enroll in the Medicare program. (Vouchers might be used to provide their equitable share of benefits for which they have prepaid.)

8. Americans should be progressively liberated from costly, nonproductive regulations at the state as well as the federal level. No change in the ERISA should be made that does not further state deregulation of the already overregulated health insurance market.