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

Volume 47, No. 7 July 1991


In a widely publicized experiment, Oregon proposes to expand Medicaid eligibility to an additional 116,000 persons. To lessen the tax increase needed pay for this largesse, the state proposes to eliminate ``low priority'' services previously available to the poorest of the poor.

In March, 1991, the Oregon Basic Health Services Program released a prioritized list of 700-plus health services.

``This document is the cornerstone in a process which will expand access to health care for all our citizens who are uninsured,'' said its chief author, John Kitzhaber, MD, president of the Oregon State Senate. He praised commissioners for ``completing a daunting task no one else in the country was willing to confront.''

After 20,000 hours of volunteer time, 1,000 telephone surveys, and 60 public hearings, the list is ready. All the legislature has to do is draw a line. (Lawmakers are not allowed to tamper with the order.) To fund all the services would add about $40 million to the Medicaid budget in the first year. Drawing the line after #310 would result in a $700,000 cost increase.

The first draft of the list was so obviously flawed that ``opponents of the plan seized on this as an opportunity to criticize and ridicule the entire process on the basis of what resulted from the first test of the methodology'' (Arch Intern Med 151:912-916, 1991). The data have been ``cleaned.'' It might now be fair to look at the order of the services.

At the top of the list are life-threatening medical condi- tions, for which treatments of variable efficacy are available. At the end are conditions for which treatment is unnecessary (superficial wounds) or futile (anencephaly) or excessively expensive (organ transplants). In the middle are treatments that are effective but do not return a patient to ``full health.'' A sampling of conditions above and below #310 are as follows:

142. Withdrawal from alcohol and other drugs

143. Preventive services, children

161. Sterilization (vasectomy)

162. Sterilization (tubal ligation)

163. Birth control (contraception management)

166. Preventive dental services (cleaning and fluoride)

167. Preventive services for adults; proved effectiveness

168. Cancer of cervix (treatable)

Around 200. Many congenital cardiac lesions

322. Unwanted pregnancy (abortion)

Around 325. Hyphema, glaucoma, vitreous hemorrhage, enophthalmitis, other ophthalmologic conditions

434. Cerebral palsy (surgical treatments)

525. Retinal tear (laser prophylaxis)

526. Spontaneous and missed abortion

552. Congenital dislocation of hip (repair/reconstruction)

693. Metastatic cancer with less than 10% 5-yr survival after treatment

Applying this list to individual real patients immediately raises questions. Shall a patient with a imminent cord com- pression due to advanced metastatic cancer be denied surgery or radiation so that thousands can get contraceptives courtesy of Medicaid (instead of having to buy them at a drug store)? Shall a few patients be denied surgery that might save useful vision, so that thousands can have their teeth cleaned at public expense? Is it better to spend $100,000 on one child with leukemia, or on screening 1,000 women for breast cancer (with a 50% expectation of saving one life in that way)?

The problem with the initial Oregon list was that it violated the Rule of Rescue, which cannot be expunged from human nature even by the most ``evangelical utilitarian.'' This human trait must be taken into account if the plan is to be acceptable to society, although ``there is an emotional component to the Rule of Rescue that can interfere with the development and implementation of fair allocation systems'' (JAMA 265:2218-2225, 1991). (Note that tenderheartedness is a fatal flaw in a Communist, according to the Chinese.)

The Rule of Rescue focuses on the individual. The Oregon plan looks at the ``degree of benefit each service can be expected to have on the health of the entire population'' (Kitzhaber, Issues in Sci Technol, winter 1990-91, emphasis added). If there is an appearance of unfairness, it results from rationing services for the poor only. Kitzhaber believes that the rationing should be applied to everyone, regardless of personal resources, but that the goal will have to be reached in several steps. In the meantime, the proposed system would have less inequity than the status quo, even if current Medicaid recipients are the ones to make the initial sacrifices.

The AMA has generally viewed the Oregon proposal with favor. The emphasis on ``aggregate health status,'' with reference to the values of those who pay the premiums (JAMA 265:2232-2238, 1991), is in accord with the AMA Principles of Medical Ethics (1980 revision), whatever violence it does to the Oath of Hip- pocrates: ``a physician shall recognize a responsibility to participate in activities contributing to an improved com- munity.'' Should the Oregon plan be enacted into law, the ``physician shall respect the law and also recognize a respon- sibility to seek changes in those requirements which are contrary to the best interests of the patient.''

In a step that could mitigate some of the effects of rationing, Oregon is considering legislation that would allow physicians to give lethal injections to certain patients, whether competent or incompetent, upon request (AM News 4/1/91).

Another View of ``Community Health''

``We may say that the doctor standing at the ramp [at Auschwitz] represented a kind of omega point, a gatekeeper....''

A mathematics textbook asked students to calculate how many government loans to newly married couples could be granted for the amount of money it cost the state to care for the ``crippled, the criminal, and the insane.''

``One views one's group as an `organism' whose `life' one must preserve...in ways that transcend individual fate.''

Definitions: das Recht auf den Tod (the right to die); Sterbehilfe (death assistance); Ballastexistenzen (human ballast; empty shells of human beings; people who are, in effect, already dead).

``Ordinary medical behavior is predicated upon maintaining life-and refraining from actual or potential killing or maiming one's patient in the name of enhancing the life of one's own group or people. Paradoxically, that medical vision of social cure contributed directly to using medicine to kill or injure....In experiments in sterilization, of course, the ideological source and goals are clear.''

``The healing achieved by killing could also become part of the immortalizing vision, and of the holiest human right and obligation....''

Robert Jay Lifton, MD, The Nazi Doctors


A New Oath for the Healer

``...I shall always...remember that it is wrong to terminate [human] life in certain circumstances, permissible in some, and an act of supreme love in others....I shall understand that preserving health is as important as treating disease....

``I shall have as a major focus in my life the promoting of a better world in which to live...To become the Healer I wish to be, I must expand my thinking and practice...to one of a preventive approach to the problems of mankind, including the social ills of malnutrition and poverty.''

Louis Weinstein, MD, JAMA 265:2484, 1991


The German Model

While the media are extolling Canada, the Physicians Payment Review Commission is looking east, to the system founded by the Iron Chancellor Bismarck. Features the Congress will probably like best: an emphasis on obligations rather than rights; mandated insurance, with all employers compelled to contribute (a payroll tax); a national relative value scale; and expenditure caps. The medical marketplace is heavily regulated so that ``society as a whole'' decides how much should be spent for goods called ``health services.'' Organized medicine likes it: physicians are required to belong to the German Chamber of Physicians, which negotiates with insurers. Patients like the absence of copayments and the coverage of a yearly Kur at a health spa.

The German system represents a ``judicious set of trade-offs between fairness, economy, and professional freedom'' (Uwe Reinhardt, PhD, Internist, May, 1991). And ``[t]here seems to be a resonance between the values in the health care system...of Germany and traditional American values'' (Bradford Kirkman-Liff, JAMA 265:2496-2502).

Some drawbacks are noted by a physician who voted with

his feet. A huge administrative bureaucracy forces everyone to live by ``the same iron-clad set of rules and regulations that have evolved and expanded over the course of a century.'' Physi- cians' independence is an illusion. Physicians must routinely see 70 or more patients per day, and may be penalized retroactively for exceeding their quota of prescriptions or services by having to pay for them out of their own pockets (Helmut Haar, MD, Internist, May, 1991).


More States Add ``Provider'' Tax

Kentucky and Arkansas have imposed excise taxes on the Medicaid revenue generated by hospitals, nursing homes, and physicians. The money is put back into the Medicaid program and matched three to one with federal dollars.

``We didn't have much choice,'' said Preston Nunnelly, MD, President of the Kentucky Medical Association. The other alternatives-a cut in services, decreased reimbursement rates, or a general tax increase-seemed even less attractive (AM News 5/13/91).


CLIA Update

John Dingell (D-MI), Chairman of the Energy and Commerce Committee, recently grilled William Roper, MD, Director of the CDC, on his position regarding waivered tests. Initially, the CDC had stated that there should be no waivered tests, however simple, because there are no error-free tests. Apparently, this position had to be modified in order to mute opposition to the regulations.

Dingell also questioned HCFA's plan to bill physicians $261 for ``provisional certificates,'' which are not authorized by the legislation. He said that it would entitle holders to pay $261 for the privilege of hanging up a worthless piece of paper that said nothing about the holder's competence. HCFA Administrator Gail Wilensky defended the plan to mail bills to 640,000 physicians, starting in July. It has nothing to do with com- petence; the purpose is to find out where the labs are and what kind of tests they are doing. The information received will be entered into a computer database.

Labs that fail to apply for certification could be fined and/or excluded from Medicare and Medicaid participation. Those labs would eventually be caught if they applied for Medicare or Medicaid reimbursement (AM News 5/20/91).

CLIA requires that HCFA conduct five studies to determine the impact of laboratory errors and the cost of regulation. The results of the first will not be available for two to five years. The Health Industry Manufacturers Association estimates that the regulations will add $4 billion annually to the nation's medical bills.

Veterans Administration laboratories will be exempt from CLIA requirements under a bill approved by a House panel (HR 2280). Panel chairman Sonny Montgomery (D-MS) said that HCFA has no business overseeing VA lab quality; the VA is a Cabinet-level department, and HHS is a ``bureaucratic vacuum.'' At the same time, the VA, despite quality oversight by 46 different organizations, has recently been under fire for ``botched surgeries, bad transfusions, missed diagnoses, failure to render proper care'', etc. (Medicine & Health 6/3/91).

A copy of AAPS comments regarding HCFA's proposed ``intermediate sanctions'' is available for $2.00.

US Supreme Court Rules that Physician's Federal Antitrust Case May Proceed

On May 28, 1991, the US Supreme Court ruled that a physician whose medical staff privileges were terminated stated a claim for violation of the federal antitrust laws. The case (Summit Health, Ltd. v. Pinhas, 59 USLW 4493) resolves a conflict among the lower federal courts over the extent to which the Sherman Antitrust Act may be applied to hospital peer review activities.

The five-to-four decision is the second Supreme Court case in the past decade to concern the application of federal antitrust law to hospital peer review. The first such decision was Patrick v. Burget, a 1986 case in which AAPS participated as amicus curiae in support of the plaintiff physician.

The majority opinion in Pinhas was authored by Justice John Paul Stevens, joined by Chief Justice William Rehnquist, Byron White, Thurgood Marshall, and Harry Blackmun. Justice Antonin Scalia filed a dissenting opinion in which Sandra Day O'Connor, Anthony Kennedy, and David Souter joined.

The Pinhas case arose in 1986, when Simon J. Pinhas, MD, an ophthalmologic surgeon, requested the Midway Hospital Medical Center in Los Angeles to eliminate its requirement for an assistant surgeon in the performance of eye surgery. Dr. Pinhas explained that because Medicare reimbursement was no longer available for the assistant's fee, the requirement would cost him $60,000 per year in payments to competing surgeons for assistance that he did not need. Although Dr. Pinhas wished to maintain the preponderance of his practice at Midway, he nevertheless advised the hospital that he would leave if the assistant surgeon requirement were not eliminated.

In response, Midway, its parent corporation, and certain members of the medical staff offered Dr. Pinhas a ``sham'' contract that provided for payments of $36,000 per year (an amount later increased to $60,000 per year) for services that he would not be asked to perform. When Dr. Pinhas refused to sign or return the ``sham'' contract, certain members of the medical staff and the hospital initiated peer review proceedings against him and summarily suspended, and later terminated, his medical staff privileges. The peer review proceedings were conducted in an unfair manner by biased decisionmakers and ultimately resulted in an order upholding one of seven charges against Dr. Pinhas and imposing severe restrictions on his practice.

While he was appealing the suspension, Dr. Pinhas filed suit against the hospital, its parent company, its medical staff, the hospital's chief of staff, four competing ophthalmologists, hospital officers and employees, and the hospital's attorneys, alleging violations of the Sherman Antitrust Act, among other things. The Sherman Act prohibits contracts, combinations, or conspiracies in restraint of trade that affect interstate commerce.

The US District Court dismissed the suit, including the antitrust claims, on the ground that the defendants were immune from antitrust liability because of the ``state action

doctrine,'' which shields anticompetitive conduct if it is based on a clearly articulated policy of the state government and if the state actively supervises the anticompetitive action. The US Court of Appeals for the Ninth Circuit reversed the District Court and reinstated Dr. Pinhas's antitrust claims, relying on the Supreme Court's decision in Patrick v. Burget. The Court ruled that the defendants' conduct was not immunized by the state action doctrine and that Dr. Pinhas's complaint stated an adequate connection between the anticompetitive activity (peer review) and interstate commerce (59 USLW 3416, BNA, 12/11/90). At the urging of the defendants, the US Supreme Court agreed to hear the case limited to the question of what connection between the alleged restraint of trade and interstate commerce must be shown in order for a federal court to have the power to hear the case.

In affirming the decision of the Ninth Circuit, the US Supreme Court wrote:

[Ophthalmologic] services are regularly performed for out-of-state patients and generate revenues from out- of-state sources....Petitioners contend that the boycott of a single surgeon [does not affect interstate commerce]...because the complaint does not deny the existence of an adequate supply of other surgeons....There are two flaws in the petitioner's argument. First, because the essence of any violation of 1 is the illegal agreement itself, rather than the overt act performed in furtherance of it,...proper analysis focuses ... upon the potential harm that would ensue if the conspiracy were successful.... If the conspiracy alleged in the complaint is successful, ``as a matter of practical economics'' there will be a reduction in the provision of ophthalmological services in the Los Angeles market.

The Court noted that the alleged restraint of trade was accomplished by an alleged misuse of a congressionally regulated peer review process that constitutes the gateway to market access. The gateway was closed to the respondent because petitioners insisted upon adhering to an unnecessarily costly procedure.

In an important footnote, the Court showed the limited nature of the immunity conferred by the Health Care Quality Improvement Act of 1986, 42 USC §11111 et seq.

The statute provides for immunity from antitrust...if the peer review process proceeds in accordance with §11112. Respondent alleges that the process did not conform with the requirements...such as adequate notice, representation by an attorney, access to a transcript of the proceedings, and the right to cross- examine witnesses. According to the House sponsor of the bill, ``[t]he immunity provisions [were] restricted so as not to protect illegitimate actions taken under the guise of furthering the quality of health care. Actions...that are really taken for anticompetitive purposes will not be protected by this bill.

The Pinhas decision will undoubtedly have a significant effect on the conduct of peer review bodies by affirming that a physician may proceed to federal court to seek relief for anticompetitive abuse of the peer review process.

New Members

AAPS welcomes the Augusta Institute of Psychiatry and Behavior of Augusta, GA, and the following physicians: Drs. J. of Augusta, GA; J. Alexander Ayres of Decatur, GA; Emile J. Berlet of Westwood, NJ; Arthur Birnkrant of Freehold, NJ; Brian E. Briggs of Minot, ND; Ruth Burke of Willcox, AZ; Joseph A. DeMarco of Parasmus, NJ; John DeMays of Westwood, NJ; Alieta Eck of Piscataway, NJ; Ronald J. Fadel of Louisville, KY; James M. Fayle of Baytown, TX; James M. Fayle of Baytown, TX; Ronald E. Feldman of Escondido, CA; Albert L. Fisher of Oshkosh, WI; Albert L. Fisher of Oshkosh, WI; Marvin G. Frank of Union, NJ; John A. Friedline of Jenkins, KY; Inge Friedrich of Old Tappan, NY; Richard T. Furr of Ocean Springs, MS; Eugene Gorman of Westwood, NJ; Kwang Han of Westwood, NJ; Kyle R. Hegg of Huntington, WV; Francis H Hughes, Jr. of St. Mary, WV; Rick Jacobs of Phoenix, AZ; Charles G. Kalko of Edison, NJ; Chang Kang of Westwood, NJ; Grace L. Keenan of Sterling, VA; Roy E. Kerry of Greenville, PA; Henry H. Kwah of Bel Air, MD; Jon Kyl of Washington, DC; Steven Laskin of Westwood, NJ; Julia Levai of Tucson, AZ; Zinovy Lipsky of Westwood, NJ; Justo Lozada of Westwood, NJ; Robert M. Lumish of Pittsburgh, PA; Theodore F. Marshburn of Whittier, CA; Kevin L. McChord of Dayton, OH; David J. Merk of The Plains, OH; Danine A. Rydland of Martinsburg, WV; Ira Siegel of Westwood, NJ; Arnold Sobel of Westwood, NJ; J. Fritz Thompson of Rockledge, FL; C.P. Vasudevan of Bluefield, VA; William Ventura of Westwood, NJ; Clarita V. Vicher of McDowell, KY; Nicholas A. Videtti of West Orange, NJ; Deleno H. Webb, III of Huntington, WV; Joe E. Wilson of Augusta, GA; John N. Withers of Kahului, HI; and John Wrigley of Anchorage, AK.

We are especially pleased to welcome the following new student members: Jaime L. Davis of Rochester, MN and Caroline Kabel of Cherry Hill, NJ.


Negotiations by Organized Medicine

All over the world, the establishment medical organizations have proved to be the profession's worst enemy. This has been well documented in the British, Australian, Swiss, and other experiences. Our Ontario Medical Association has run true to form: it has just made a deal with the government to accept a) 2% increase in the government-mandated schedule of fees for the years 1989 and 1990...(there has been no increase since 1988), and 3.9% for 1991, (while the consumer price index has risen over 5% per year); b) a cap on any doctor's gross billings to the plan, with payments reduced by

one-third to two-thirds per service billed above this level; c) ``binding'' arbitration in future (an exercise in futility, since Canadian governments have ignored the recommendations of the arbitrator in the past, when it suited their purposes). Worst of all, the OMA has agreed that the profession will include patient utilization increases and consequent costs to the public treasury, in defining future fee schedule increases; and that the terms of reference of the arbitrator will include the govern- ment's perception of its ``ability to pay.'' You know what that means.

In return for this abject surrender, the OMA has received permission from the government to force all doctors in the province, whether they're members of the Ontario Medical Association or not, to pay the usual annual dues (something over $1000 per year)!....
William Goodman, MD, Toronto

The Canadian health care system creeps relentlessly toward its ultimate destination, the Soviet model, a centrally planned monster run by commissars issuing directives in a futile attempt to control the uncontrollable. The end result of the Soviet system, extensively documented, is chaos and corruption and collapse....

Rather than fight the bureaucratization of the medical system, [doctors] decided to join it...Members of the Ontario Medical Association (OMA), once thought to be on the side of the patient, voted to accept an agreement that makes the doctors comrades in arms in the great socialist enterprise of managing and controlling, right down to the simplest pin-prick, every aspect of the medical needs of 9 million people.

...The agreement [the result of grovelling capitulation by the OMA executive in the face of government threats] establishes a Joint Management Committee, composed of OMA and government officials. The JMC promises to become the commissariat of the Ontario health care system. Its agenda is already full, ranging over everything from ``drug utilization'' to ``technology assessment'' to ``hospital efficiency initiatives.''

The OMA has sold the souls of its doctors.

Terry Corcoran, Globe and Mail 5/38/91


A Reminder. . .

``To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.''

Thomas Jefferson


AAPS Calendar

Oct. 17-19, 1991. Annual meeting, Lexington, KY, Griffin Gate Marriott.