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

Volume 65, No. 7 July 2009


Once America's pride, General Motors is now Government Motors. It is being dismantled by 31-year-old deputy car czar Brian Deese, who had never been inside an automobile assembly plant. Deese reportedly left law school to work on Hillary Clinton's presidential campaign, then switched to the Obama campaign when Clinton faltered.

By 2018, energy-starved Americans could be driving ultra- light GM vehicles resembling a cross between a motorcycle and a breadbox, writes Arthur Robinson (Access to Energy 10/08).

The resulting higher auto fatality rate might help relieve the stress on another GM Government Medicine, as American medicine is disassembled by health czars. GM will replace the patient-physician relationship with a new system in which "healthcare providers" simply enter data electronically and prescribe formulary drugs, guided by embedded decision aids.

The problem with medicine, concludes Atul Gawande, is that "no one is in charge" of "managing the full complexity of medical care" (New Yorker 6/1/09). McAllen, TX, for example, spends much more on medical care because of the "accumulation of individual decisions doctors make." Doctors should be in structured practices like the Mayo Clinic, he thinks.

If the goal is to drive doctors out of independent practice, the steamroller that accomplishes it might to force them to use - complex, costly electronic records (NY Times 5/28/09).

In McAllen, a severe physician shortage drives more care into the ER or hospital, notes Donna Kinney, C.P.A., of the Texas Med Assn an effect Gawande overlooked (CPR 6/4/09).

Centrally Planned Models

While bemoaning the rate of uninsurance and high costs in the U.S., "change" advocates neglect to mention that out-of- pocket spending in the U.S. (13%) is lower than in any of the 20 OECD countries except France (7%), Luxembourg, and the Netherlands. OOP spending is 15% in Canada; the OECD average is 20%. Reformers do not like decreasing demand through deductibles and other OOP costs; they prefer to increase revenues by forcing many individuals to pay, through premiums, for more services than they are expected to use.

The number one foreign model, according to the vaunted World Health Organization (WHO) rankings that placed the U.S. 37th, is France, with per capita spending of $2,885 vs. $5,783 in the U.S. The situation there has deteriorated since 2000, when WHO stopped doing the ratings because of the complexity of the task. A 2004 WHO bulletin reported that problems became increasingly apparent when 15,000 Frenchmen died in a heat wave, dwarfing the number in neighboring countries. The French refuse to pay costs for illegal aliens. Copayments have been increased to 30%-40% to try to control costs. About 85% of Frenchmen purchase private supplemental insurance (Dattilo and Racer, Your Health Matters).

The most mature system of "social solidarity" in Germany is beset with runaway costs. Massive government regulation is attempting to increase quality (ibid.).

Japan spends about as much as France, yet enjoys the world's longest life expectancy and a very low infant mortality of 3.3 per 1,000 live births. Though Japan has had a form of national health insurance since 1927, it is seldom cited as an example by reformers. Copayments are as high as 30%; prenatal care, childbirth, and postpartum care are not covered; and potential exposure for costs is up to 50% of income (ibid.).

Single-payer advocates don't like to talk about Canada, although it is the only country outside of North Korea that does not allow a parallel private system. Despite substantial increases in spending, wait times are 45% longer than in 1997. In the red by $1.5 billion, Alberta Health Services is placing tight restrictions on hiring of nurses, and cancelling 15% of elective procedures. Cataract surgery is available only patients who are nearly blind (Calgary Herald 5/09).

Reform in Massachusetts is moving in the Canadian direction. Even though Massachusetts has more physicians per capita than any other state, Boston has the longest waiting times for a physician appointment: 49.6 days average wait time for 5 specialties in Boston, compared to an average of 20.5 days and a low of 11.2 days for Atlanta (Merritt Hawkins, 2009).

Single-payer GM would by no means eliminate managed care. Power players in Washington are ready to set the rules and hand over the spending keys to large insurers.

"This is the definition of fascism," writes David McKalip, M.D. "The state decides what corporations will do, and the corporations do their bidding while making a profit.... [And] the very corporations making the profit also control the government." The organizational mainstay is "integrated delivery systems" such as Geisinger Health System, with "new, population-based payment models" and without anti-kickback rules or the proscription of gainsharing (Fisher ES, et al. N Engl J Med 2009;360:2495-2497).

Free-Market Models

Meanwhile, 6 years of real-world testing have shown that taking money from third-party payers and putting it in the hands of patient actually lowers costs. Consumer-driven health (CDH) plans cost 25% to 40% less than HMOs or PPOs, writes Greg Scandlen. The CDC found that 20% of the under-65 population has some form of CDH.

If free-market methods are rejected, medical facilities, like car manufacturing, may leave the U.S. In 2007, more than 750,000 Americans were treated off-shore (Reuters 7/30/08).

Free Americans rejected the Yugo. But GM could keep them from ever having cars that also fly and block stunning breakthroughs in medicine.

Has China Already Dumped the Dollar?

As the Fed prints more money and uses it to buy U.S. government bonds, a process compared to a snake swallowing its tail, the Chinese have made derogatory statements about the dollar. Why would they do this, and risk provoking a panic that would jeopardize the value of their $1.3 trillion stash, asks Richard Maybury (Early Warning Report, June-July 2009).

In the 1990s, the Chinese were working very hard to produce valuable goods, and sell them to a counterfeiter, he writes. Perhaps, realizing that they'd been had, they created a lot of front companies to buy assets in foreign lands, and paid for them in long-term dollar contracts.

Maybury has heard many reports of Chinese signs on big buildings in out-of-the-way places. Do they say, "A Bush-Whack- the-Federal-Reserve Project by the Chinese Dragon"?


A Czar Epidemic

The U.S. now has about 20 "czars," exceeding the number of Romanov Czars (18) over the 300-year history of Imperial Russia. Senator Byrd writes: "The rapid and easy accumulation of power by White House staff can threaten the Constitutional system of checks and balances."


Medical Bankruptcies Hyped

A new study by well-known single-payer advocates blames medical factors for 62% of U.S. bankruptcies, up from 54% in 2001 (Himmelstein D, et al., Am J Med, in press). Coauthor Steffie Woolhandler claims that most people in the study would have been saved from bankruptcy by single-payer GM, although only 29% of debtors blamed medical bills for their bankruptcy (Hogberg D, IBD 6/5/09). The mean net worth for "medically bankrupt" households was -$44,622, and average out-of-pocket medical expenses for such households was $17,943.

The actual number of medical bankruptcies fell by 220,000 between 2001 and 2007 a fact ignored or deliberately obscured by the authors (Megan McArdle, theatlantic.com 6/4/09).

Particularly troubling, writes McArdle, is that coauthor Elizabeth Warren is in charge of the congressional oversight panel for the TARP bailout fund.


Medicare Is Draining General Fund

According to the 2009 annual report of the Medicare board of trustees, Part A is expected to pay out more this year in hospital benefits than it receives in payroll taxes and other dedicated revenues, and thus will be redeeming trust fund "assets" (IOUs for funds already spent on other government projects). For the third successive year, a "Medicare funding warning" is being triggered, as general revenues will soon account for more than 45% of all Medicare outlays.

As Mark Pauly notes, "there is no evidence that Medicare has been successful at controlling spending growth." Victor Fuchs points out that "Medicare, despite its assured market and huge buying power, is headed for insolvency; thus, it is a poor model for a new program that would be dependent on voluntary enrollment in a competitive marketplace" (N Engl J Med 2009;360:2271-2275).

"The only thing that can control health care costs is rationing," writes Lawton Burns of the Wharton Center. [At least as long as we rely on third-party payment.]


HIT Gets Huge Boost, Value Unproved

Without any demonstration of either safety or efficacy, or any public debate, health information technology (HIT) got a huge bailout of tens of billions of dollars in the "stimulus" bill. The data miners are exultant: "Finally, we're going to have access to millions and millions of patient records online," said Blackford Middleton of the Harvard Center for Information Technology Leadership (O'Harrow R, Wash Post 5/16/09).

An industry-funded study quoted by Obama asserted that a complete embrace of HIT would save nearly $80 billion annually. The Congressional Budget Office (CBO) estimated perhaps $17 billion in savings over a decade (ibid.)

Support for the Obama health reform agenda, including HIT, is to be linked to "every favor to a constituency," e.g. automakers, said Zeke Emanuel (McCaughey B, "Downgrading American Medical Care," American Spectator 6/8/09).

HIT can't fix either high costs or medical errors. "Technology can accelerate the bad systems and you can make the same mistakes 100 times faster," explains Richard Neill of the University of Pennsylvania.

It can also introduce new errors. A prospective study of a CPOE system in a tertiary care center concluded that "despite standardization of data entry, inconsistent communication in CPOE poses a significant risk to safety" (Singh H, et al. Arch Intern Med 2009;169:982-989).

The most likely outcome of the HIT stimulus, writes Greg Scandlen, is that it will all be wasted on systems that don't work like federal attempts to upgrade technology at the IRS, FBI, and air-traffic control, which are relatively simple challenges (Heartland Research and Commentary 2/20/09).

Dept. of Defense officials told Congress that the military's AHLTA electronic health records are a "disaster." AHLTA is unreliable, time-wasting, and so frustrating that it has caused some medical professionals to leave the military (hcrenewal.blogspot.com).

Clinicians should be aware that early adopters that have had to switch EHRs had no option but to keep the old EHR in the back room and print relevant information as needed. "Divorce is easy compared with converting...to another EHR" (Modern Healthcare 6/2/09).

When a massive power surge crashed computers at Methodist and Indiana University Hospitals, the hospitals went back to paper, and diverted new patients (wthr.com 6/2/09).


Resolutions Deadline

To be considered at the annual meeting, resolutions must be received in writing at AAPS by July 30.


AAPS Calendar

Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.
Sep 15-18, 2010. 67th annual meeting, Salt Lake City, UT.

Medicare Limits ABNs

The Advance Beneficiary Notice (ABN) is intended to allow a Medicare beneficiary to pay out of pocket for services that Medicare denies. According to an Apr 14 letter from the National Correct Coding Initiative, the ABN can be applied only if the initial determination on a claim results in a denial based on lack of medical necessity. The beneficiary cannot be billed if an appeal of a Medically Unlikely Edit (MUE) results in a denial of some units of service (UOS) as medically unnecessary. This limits the ability of patients to obtain services that Medicare may decline to pay for.


Expect More Investigations

If audited by one entity, a practice is likely to face demands from others, because Medicare, Medicaid, and private insurers will be sharing information with each other. In addition, providers and business associates may be required to report on each other.

A provision in the Fraud Enforcement & Recovery Act of 2009 (FERA), aimed at preventing banking and securities fraud, would expand the application of "reverse false claims," or failure to refund an overpayment. It would allow the Attorney General to delegate authority to issue Civil Investigative Demands (CIDs) (MCA 5/18/09).


Opt-out Update

See MLN Matters number MM6081, "Private Contracting/Opting Out of Medicare," for new information on the consequences of failure to maintain opt-out. Among other things, if the physician fails to demonstrate a good-faith effort to comply within 45 days of receiving a notice of failure to maintain opt out, he "may not attempt to once more meet the criteria for properly opting out until the 2-year opt-out period expires" (www.cms.hhs.gov). It also notes that: "For a physician/practitioner who has never enrolled in the Medicare program and wishes to opt out of Medicare, the physician/ practitioner must provide the carrier or A/B MAC with a National Provider Identifier (NPI)." A nonenrolled physician might want to opt out in order to get claims denials, so that patients might receive reimbursement from an insurer that pays claims that Medicare denies, or to protect against patients who attempt to file their own claims. We are not aware of any law that forbids Medicare beneficiaries to purchase services from a nonenrolled physician.

As carriers may delay answering requests, or even provide contradictory information, start early and send all correspon- dence certified/return receipt requested.


No Medicare Part A, No Social Security

The government filed a motion to dismiss in Hall v. Leavitt (AAPS News, December 2008). In a May hearing, the government argued that plaintiffs lacked standing and had not exhausted all administrative remedies. Plaintiffs argue that no administrative remedy exists. They cannot sign the Social Security application without accepting Medicare Part A, and without signing the application, they cannot raise an issue with the agency. The government admitted that their only recourse would be to sign the forms and later petition to be allowed out of Medicare Part A.

Lyme Guidelines May Violate Antitrust

In the first-ever antitrust investigation of medical guidelines, the Connecticut Attorney General found numerous defects in the process used by the Infectious Diseases Society of America (IDSA) to develop Lyme disease guidelines. Although the level of disability of patients with Lyme disease is equal to that of patients with congestive heart failure, most Lyme patients are excluded by the guidelines and denied treatment.

The AG found that IDSA limited the guidelines panel to researchers known to have a bias against the diagnosis and treatment of Lyme, selectively ignored evidence of persistent infection or improvement with antibiotic treatment, and has commercial conflicts of interest.

IDSA uses its monopoly power to enforce its guidelines by providing insurers with second opinions while instigating and testifying at unprofessional-conduct actions against doctors who did not comply. Two broad ethical themes in the investigation were the "growing problem of conflicts of interest among guidelines developers" and "the increasing centralisation of medical decisions by insurance companies, which use treatment guidelines as a means of controlling the practices of individual doctors and denying treatment to patients" (Johnson L, Stricker LB. J Med Ethics 2009;35:283-288).


On-call Payments Probably OK

In an advisory opinion, the HHS Office of Inspector General (OIG) gave conditional approval to a hospital's proposal to provide some payment to physicians for treating uninsured emergency patients. The hospital must take care that the payment "is not determined in any manner that takes into account the volume or value of referrals or other business generated between the parties." While there are "minimal enforcement risks," hospital attorneys might want to review compensation arrangements in light of the opinion (No. 09-05), especially if they pay physicians just for being available (BNA's HCFR 6/3/09).


Geisinger P4P Model

Geisinger Health Plan, a nonprofit HMO employing some 800 physicians at about 50 practice sites, including 20 hospitals, has developed a trademarked ProvenCare pay-for-performance model. Patients pay a fixed price for a package of care. Compliance with all 40 best-practice steps increased from 59% to 100%, facilitated by the electronic health record system that got Geisinger voted the "Most Wired" 6 years in a row. The key is to "make the right thing to do the easiest thing to do" [and conversely make it hard to deviate]. The fact that all physicians are employed makes complying with federal fraud and abuse laws easier, said legal counsel.

Incentives to physicians are subject to federal civil monetary penalties law that prohibits inducements to restrict care to Medicare or Medicaid beneficiaries. Seth Frazier, Geisinger's vice president for transformation, stated that in the system "there is no financial incentive for physicians to limit their patients' care" (BNA's HCFR 6/3/09).

* * *

Advocates of free enterprise must...declare that it is a moral issue to confiscate more income from the minority simply because the government can.... It is unfair for the government to be predatory even if the prey are wealthy. Arthur C. Brooks


Planning and Prevention. In Texas, physician-owned hospitals infuse $2.3 billion/yr into the state's economy, and pay close to $86 million in taxes. Unlike 36 other states, Texas does not have a "certificate of need" policy (Dallas Morning News 1/14/09). The CON prevents innovation and competition. Central planners consider competition a bad thing, even though it lowers prices. They firmly believe in price controls, even though rationing and shortages are the reliable result.

New York has gone beyond CON to outright dictation of corporate hospital structures by the central planners. The Berger Commission dictates which hospitals will merge, and which will close. Millard Fillmore, the main hospital for independent physicians in the Buffalo area, is slated to close. Central planners hate anything that is independent. Meanwhile, the State has punished hospitals that have surpluses for being well-managed by forcing them to merge with debt-ridden, poorly managed hospitals. Central planners will ensure that the punishment and pain are "equally distributed."
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Stifling Competition. Regulation restricts market entry. Consider the absurd restriction on physician-owned hospitals that gives general hospitals so much power. If that regulation had been in effect 20 years ago, we wouldn't have ambulatory surgery centers. Obviously, state regulation of insurers reduces the contestability of state individual and group markets. Contestability, not just the number of insurers, determines the extent of competition. The threat of entry keeps prices down even if there is only one producer in a particular market.
Linda Gorman, Ph.D., Independence Institute, Golden, CO


Retired at 54. I am proud that in more than 26 years I have never been sued or sanctioned by medical boards, Medicare or Medicaid, the Drug Enforcement Administration, or other agency. I am determined to keep it that way by side-stepping the national witch-hunt to scapegoat physicians in order to avoid acknowledging the tremendous damage caused by decades of government meddling. I have closed the primary care clinic I ran for 24 years in rural N.C. If the nation ever makes it safe to practice medicine again, I intend to return to practice.
David J. Pasek, M.D., Charlotte, NC


Tactics. How many times do we have to see this: Put a system in place to correct a supposed problem (Solzhenitsyn's straw men), assure everybody that the bad possibilities won't happen, and then change the rules to enable them to happen. I've seen politicians do this for at least 40 years.
Robert Hamilton, M.D., Godfrey, IL


The Real Agenda. Bill Roper, M.D., former CMS and CDC head, says: "The public will most assuredly have to make sacrifices in their own healthcare services to make meaningful reforms work." Covering nearly 50 million uninsured people "means taking something that is currently spent on you and me and spending it on another person without health insurance." Evidence-based medicine will tell us what works in what setting, and that means we will say "no" to requests for knee surgery or other procedures. "Really controlling costs," writes Stuart Altman of Brandeis, "requires just stopping spending."
Greg Scandlen, Heartland Institute


Blaming the Uninsured. A hospital price scale may now be as follows: Chargemaster price, $10,000; Medicare price, $1,000; Medicaid price, $800; Insurance price, $1,150. Hospitals may claim that in the 2% to 5% of procedures where they charged the uninsured the chargemaster price and were not paid, they lost $10,000. Instead, they should take a reasonable price, say $1,100, and say that they lose 10% per Medicare procedure, 30% for Medicaid, and make a 5% profit with insurance. Then we could prescribe solutions based on facts, not fiction.
Ralph Weber, C.L.U., Paso Robles, CA


Defeatism. A great Bradley University basketball coach told his players that "if you think you can or if you think you can't, you are absolutely right!" A defeatist attitude assures that we will get government medicine. I am sick of seeing our profession go to politicians to beg. We want a seat at the table even though we can see we are the main course. Other options are available, including legal action and passive resistance. Let us have no self-fulfilling prophecies.
Chester Danehower, M.D., Peoria, IL


Nothing New. The formalization of the concepts in "reform" legislation began some years ago with Gov. Richard Lamm of Colorado, who publicly stated that old people in this country must develop the mindset of people in Europe: to accept the infirmities of old age, die, and get out of the way.
Louis Keeler, M.D., Cherry Hill, NJ


Safety Net. In our free clinic, we are seeing more and more kids on SCHIP and more adults on Medicaid. Doctors cannot afford to see patients at Medicaid rates, so in government charity only the bureaucrats thrive. The Medicaid office actually has the chutzpah to refer patients to our free clinic!
Alieta Eck, M.D., Somerset, NJ


The Solution. Disentangle the government from private medicine. Keep the government tier separate.
Dave Racer, M.Litt., St. Paul, MN