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

Volume 65, No. 6 June 2009


In 1993, at a meeting of the Arizona Medical Association, we were told that the reform train was leaving the station, so we had better get on board. Now, we're hearing the same refrain with an added quotation from Dwight Eisenhower, in the Maricopa County Medical Society (MCMS) journal Round-up, that we shouldn't lie down on the track of history to wait for the train of the future to run over us.

In 1993, a fan of Westerns observed that there were a lot of ways to stop a train. The best way is to use the brakes. The congressional brakes, however, have been disconnected. Major changes may be rammed through in a budget reconciliation bill.

Doctors need to get off the train now. Before it picks up more speed. Obama, incidentally, aspires to be the president who brings us high-speed rail transportation.

The Destination

Obama's eight "guiding principles," for which the AMA announced strong support in an Apr 13 letter, amount to the following, writes David McKalip, M.D., of St. Petersburg, FL: 1) Pay for performance or P4P ("value-based purchasing"); 2) rationing ("efficiency"); 3) cookbook medicine ("quality"); 4) wealth transfer through tax law changes; 5) increased public financing; 6) third-party empowerment; 7) committee medicine ("comparative effectiveness"); and 8) health information technology to monitor doctors and keep them in line.

The proposed reform will fail, McKalip writes, "but only after destroying a profession, killing patients, and further bankrupting our country. We shall see if enough real doctors remain to raise our profession from the ashes."

Even those who believe these reforms are very desirable state that they are ineffective as cost-control measures. "Savings would depend on the political willingness to reduce payments to medical providers" (Ann Intern Med 2009;150:485-495).

The May 11 "major announcement" by the Administration and "health care industry leaders," who promise to take steps that "could save the country $2 trillion over the next 10 years," depends on precisely such measures. They are outlined in a letter from AMA, AHA, PhRMA, AHIP, AdvaMed, and SEIU, posted at www.HealthReform.gov. The potential "savings" a reduction of the growth rate of spending by 1.5% annually accrues partly to the private sector, and is a minuscule fraction of the $86 trillion in Medicare's unfunded liabilities. Moreover, the Congressional Budget Office and CMS assume a significant downward bending of the historical growth curve in making their forecasts (www.john-goodman-blog.com 5/11/09).

It appears likely that private insurers are trying to stave off the inclusion of a "public option" a middle-class entitlement that they see as the beginning of the end of private insurance (Wall St J 4/13/09). Indeed, Rep. Jan Schakowsky (D-IL) said it was simply the opening salvo against the private sector.

Printing Capital

The latest projection for the budget deficit is $1.84 trillion, or 12.9% of GDP. The increase of $89 billion since February reflects corporate bailouts, higher safety-net spending, and weaker tax receipts (Reuters 5/11/09). Private sector payroll fell by 611,000 in April, approaching an annual loss of 6 million jobs, a rate unprecedented since the data has been tracked, starting in 1939 (www.ritholtz.com/blog). Some "green shoots" may be sprouting, but they will not flower in the barren economic landscape, regardless of how much they are fertilized with trillions of sweat equity dollars from current and future generations, writes Gerald Celente (Rense.com 5/7/09).

Bernanke's "quantitative easing" hasn't worked. It would be ludicrous to expect a limp $300 billion to hold back an avalanche of trillions in new government obligations. Note that foreigners now hold 50% of U.S. Treasuries, increased from 20% in 1994 (http://immobilienblasen .blogspot.com 5/1/09).

The U.S. has borrowed nearly all the money that foreigners are willing to lend, and taxation is well past the peak of the Laffer curve. The needed trillions can only be obtained by inflating the money supply on a previously unimagined scale. Capital cannot be printed but wealth can be gradually confiscated through taxation by claiming that its price rise is a "capital gain." The government is buying up the private property of Americans with their own money, writes Arthur Robinson seizing their freedom along with their remaining capital (Access to Energy, August 2008).

Escaping the Dependency Trap

The government can throw counterfeit dollars into the system, but requires cooperation if any medical care is to be provided. That is why the AMA is invited to the White House. Physicians who accept public money become wards of the government and will have to comply with increasingly severe constraints on their ability to serve patients. Nominally private insurers allowed to remain will also enforce rationing.

How can we thwart the takeover of medicine by the giants with the money and the power? "Here is how," writes AAPS President-elect George Watson, D.O. "Everybody opt out of Medicare, and cancel all insurance contracts, especially HMO contracts." Physicians are close to being indentured servants. "It's time for real change away from dependency."

Our new masters dream of controlling the entire world, writes Robinson. "Otherwise they will fail. If freedom survives in any major region, that region will grow, prosper, and overcome them just as the U.S. overcame its competitors in the 20th century." An enclave of freedom in medicine is also a threat: hence the demand for "everybody in, nobody out."

Take the train that's going to Galt's Gulch not the one headed over the cliff.

Run the Numbers

"I wonder what other business...has to spend 6-12% of its income to get paid?" writes Brian R. Riveland, M.D., president of Maricopa County Medical Society (Round-up, May 2009).

If overhead is 50%, then 12% of the gross is 24% of your net income. For many practices, overhead is much greater.

Instead of worrying about a 22% cut in Medicare reimbursement, Dr. Watson suggests asking what would happen if you lost 22% of your patients by opting out, but could greatly decrease overhead. Junk the CPT, ICD-9, and ICD-10. A reviewer can look at the plain English description of the procedure and decide that you used the wrong code.

"If they know that, then we don't need the codes in the first place," he writes.

Dr. Watson started over in October 2003 with no patients, no charts, and no insurance contracts. When he bought another practice in 2005, he expected that because of his policy of no insurance, he would lose the 25% of patients on Blue Cross/Blue Shield, and the 20% on Medicare. In fact, he lost very few, because he could charge a fair fee.

Many doctors have decided that they cannot afford more Medicare patients. The Medicare Payment Advisory Commission reported in 2008 that 28% of Medicare beneficiaries looking for a primary physician had trouble finding one, up from 24% in 2007. The Texas Medical Association found that only 38% of primary physicians in Texas accepted new Medicare patients. Only 50% of physicians accept Medicaid.

In New York, the annual drop-out rate from the state's largest HMO is 10% (Marc Siegel, Wall St J 4/17/09).


"Options" from Senate Finance Committee

The first of three policy option papers was released by Sen. Max Baucus (D-MT) and Sen. Charles Grassley (R-IA); the AMA invited comments by Federation members. One holdover from the Clinton Plan is no administrative or judicial review of critical items such as the method for calculating "value-based" payments and the selection of quality measures.

There are onerous maintenance of certification programs, including proficiency in "system-based practice," with re- enrollment required every 5 years. The level of screening depends on the Secretary's estimate of the risk of noncompliance; a surety bond of up to $500,000 may be required.

On p. 16 of the 52-page summary are comments on physician payments; most of the "updates" have minus signs.

An "independent expert committee," possibly formed by the HHS secretary, will work out the methodology for comparative effectiveness research no mention of the grand challenge of dealing with petabytes of poorly characterized data collected by thousands of persons of varying levels of training.

The plan is supposed to address "health disparities" not just differences in care. What about folks with bad genes?

Enforcement provisions include fines of up to $10,000 for each instance of "medically improper or unnecessary care" (as determined by the Secretary). Payments can be suspended during an investigation. The testimonial subpoena authority would be extended to program exclusion investigations. New civil monetary penalties are added for failure to submit data, and there are more reasons for reporting to the National Practitioner Data Bank. CMS will be able to withhold payments if a facility should fail to meet "health and safety standards." Will any small offices measure up?


Why Health Care Costs So Much

The patient's role in solving the high cost of medical care is the subject of the enclosed book, first in a series of six. You can order in bulk to distribute to patients and opinion leaders: go to www.alethospress.com/aaps.htm. AAPS receives a share of the purchase price. At www.freemarkethealthcare.com, authors Dattilo and Racer refute common socialist myths.


ICD-10: Another Unfunded Mandate

It's been postponed to 2013, but the ICD-10 coding system will require modification of virtually all health information programs, including electronic medical records. There are 10 times as many codes. The transition is estimated to cost a three- physician office more than $80,000; additional coders and increased documentation time will be a permanent ongoing cost. HHS anticipates a possible significant disruption in claims, and an initial 10% error rate (Physicians Practice, March 2009).


Who Are the 40+ Million Uninsured?

Most of the 45% of 40 million uninsured who are without health coverage for less than 4 months are between jobs. Nearly half are eligible for retroactive COBRA coverage for 3.5 months before a premium is due. It is expensive; why pay if it's not necessary? Of the remainder, 4 5 million are actually enrolled in Medicaid but undercounted, according to the Congressional Budget Office. There are also millions who can apply for Medicaid any time they need a significant medical service, and receive retroactive coverage. Between 25% to 43% of the uninsured population are illegal aliens; the Center for Immigration Studies estimates that 75% of the increase in uninsurance over the past 15 years results from immigrants and their children. Medical care is available without insurance; besides EMTALA, a Google search for "free medical care" turned up 275 million Web sites, including 13,500 in Maine. Only 2,000 previously uninsured individuals, of a claimed 135,000 uninsured, bothered to sign up for Dirigo Health, notes Gerard Gianoli, M.D. (ENT Today, January 2009).

Dr. Gianoli has been third-party-free for 3.5 years.


Health Disparity Intervention

Here is "strong circumstantial evidence" that "universal health insurance coverage sharply narrows disparities": In the NHANES study, the difference between mean systolic blood pressure of blacks and whites is 7.0 mm Hg before age 65, and only 2.8 mm Hg after (Ann Intern Med 2009;150:561-562)!


AAPS Calendar

Jun 5-6, 2009. Workshop on Building a Healthy Independent Practice, briefing, and board meeting, Dallas, TX.
Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.
Sep 15-18, 2010. 67th annual meeting, Salt Lake City, UT.

Safety Net Dragnet Tightens

A safety net is supposed to catch people when they fall. True insurance is a safety net.

A dragnet entangles everyone, even those who don't need help. Social Security and Medicare are classic dragnets. Such programs give politicians vast power, foster dependence, and create huge constituencies who will fight to preserve them (Downsizer-Dispatch 4/16/09, www.downsizedc.org).

As the liabilities of these Ponzi schemes mount, law- enforcement dragnets are seeking to capture the providers and suppliers of the promised benefits.

"State Medicaid agencies are likely to become more aggressive as they search for revenues desperately needed to cover budget gaps created by the recession," states N.Y. attorney Robert Belfort. Medicaid Fraud Control Units (MFCUs) "recovered" more than $1.1 billion, even more than the Medicare Recovery Audit Contractors (RAC) pilot program, and obtained 1,205 convictions and 805 exclusions from Medicare and Medicaid programs (MCA 4/20/09).

After 10 years in court, Utah MCFU officials won summary judgment on most of the claims against them, and prosecutorial immunity was affirmed, in the case of Becker v. Kroll, Case No. 2:02-CV-24 TS. Qualified immunity was, however, denied to chief inspector Jeff Wright. By withholding exculpatory evidence from the prosecutor, Wright caused neurologist Taj Becker, M.D., to "suffer an injury a retaliatory prosecution which would chill a person of ordinary firmness from continuing to engage in the public debate about MFCU" (BNA's HCFR 4/8/09). See AAPS News, October 2007. For decision see: http://op.bna.com/hl.nsf/r?Open=jthn-7qurqt.


Enrollment: "Mission Impossible," Expert Says

Along with durable medical equipment suppliers and diagnostic testing facilities, physicians are already under intense scrutiny as they try to enroll or re-enroll in Medicare, warns consultant Belinda Holmes. Carriers and Medicare Administrative Contractors (MACs) have no way to distinguish innocent mistakes from attempts to defraud. Re-enrollment means starting from scratch; you'll need copies of professional degrees and licenses. If there is a mismatch in the business name the IRS has on file and the rest of the documentation, the applicant has to appeal to the IRS. If there are outstanding overpayments, the application will be rejected (MCA 5/4/09).


RACs to Make Criminal Referrals

Using data mining, new Medicare program integrity contractors are expected to generate criminal referrals to the Department of Justice. The DOJ, "surprisingly," received none during the demonstration projects. Billing aberrancies should trigger law enforcement involvement because of the possibility of fraud (BNA's HCFR 5/6/09).


Compliance Officers May Be Personally Liable

After certifying that Tenet Healthcare was in material compliance with a corporate integrity agreement, program director Christi Sulzbach faces an $18 million bill plus treble damages. Lessons: make sure you understand what a government document requires, and be careful what you certify to the government (HIPAA Compliance Alert, June 2008).


Orders to Kill on Demand

Unlike Oregon and Washington laws, the Montana "right to die" law does not include a provision for physicians to opt out. First District Court Judge Dorothy McCarter ruled, in a case backed by Compassion & Choices (formerly the Hemlock Society), that this means a patient has a constitutional right to obtain a prescription for a lethal drug (Baxter v. Montana). An appeal is pending before the Montana Supreme Court.

"The laws governing the medical profession say the medical profession is to heal, not to kill," argues Montana Assistant Attorney General Anthony Johnston.

The Christian Legal Society and the Christian Medical Association filed an amicus brief supporting the conscience rights of medical professionals.

"There is certainly a push from government to tell people to set aside religious or ethical qualms and to abide by whatever the government tells you is appropriate," states CLS attorney M. Casey Mattox (World Net Daily 5/2/09).

Foundation funding is fueling the ongoing effort to change Americans' attitudes toward death and to overturn Judeo-Christian morality. In 1997, the AMA began a program to "educate" physicians about end-of-life care, after receiving a $1.54 million grant from the Robert Wood Johnson Foundation (NY Times 11/22/97). RWJF played a leading role in the Clinton Task Force on Health Care Reform, which prominently featured "futile care" and related issues. Zeke Emanuel (AAPS News, April 2009) was a prominent participant in the "Ethical Foundations of the New System" cluster group.

Also a part of the "Clinton team," George Soros funds the Project on Death in America (PDIA). Soros's plans for America are indistinguishable from Obama's, writes Joy Tiz (Canada Free Press 5/8/09; 2/18/09). Called the "world's largest single donor" by the New York Times, Soros uses his philanthropy to deconstruct the moral values of the Western world. He asserts that laissez-faire capitalism is a greater future menace than Nazism or communism. His "Open Society Institute" rejects ordered liberty and favors radical redistribution (Forbundet Mot Rusgift, fmr.no 1/15/97).

Soros doesn't think much of conscience it "clouds an investor's judgment." He has said he has no remorse for work he did in Hungary in the 1930s: handing out flyers deceptively directing Jews to turn themselves in for deportation to the death camps, and helping to confiscate Jews' valuables (David Horowitz and Richard Poe, The Shadow Party, 2006).

Human lives are expendable in a socialist society, Tiz warns. Oppressed humans do not value their own lives or the lives of others as do citizens in a free society.

Said Soros of himself: "I am sort of [a] deus ex machina I am something unnatural" (fmr.no, op. cit.).


Consensus Rules

A New Jersey appellate court ruled that a patient could sue her physician for failing to provide her with informed consent when the physician did not tell her that a fetus is a "complete, separate, unique, and irreplaceable human being" (Acuna v. Turkish). The N.J. Supreme Court overturned the ruling on the basis that there is no consensus in the medical community or society concerning the nature of an 8-week embryo. The court refused to set public policy on when life begins, notes Dr. Lawrence Huntoon, "but it does set policy that issues of biological fact shall be decided by consensus of society."


News from New York. AMA president and "home town girl" Nancy Nielsen was the featured speaker at the annual meeting of the Erie County Medical Society in Buffalo. She is quite taken with Michelle Obama and with being frequently invited to the White House so the Administration can ask her about the AMA's opinion on health care reform. Based on her conversations, it appears that fee for service in Medicare is headed for the trash. Obama is reportedly committed to scrapping the sustained growth rate (SGR) payment formula, but the money will have to come from somewhere. The new method will apparently be "quality-based" (read P4P) and outcomes-based payment of some sort. The AMA seems to be fully on board. Nielsen sees in Obama and the current Congress the opportunity to move ahead with the agenda of insurance coverage for everyone lack of which she sees as a moral stain. The AMA also plans to "bend the cost curve," especially for chronic care, which she says doctors don't do well. She's asked specialty societies to list their top three chronic conditions and find ways to decrease costs.

Although the Medical Society for the State of New York (MSSNY) teamed up with the AMA to expose the fraudulent database implemented by UnitedHealthcare, MSSNY now runs a UnitedHealthcare ad: "Healing health care. Together. "

One of the "highlights" of the MSSNY meeting was "to recognize Assemblyman Gottfried's and Senator Duane's NY Health Plus proposal as a possible first step toward addressing the problem of the uninsured and healthcare delivery throughout the state." They want to expand Medicaid HMO plans.

In 2008, NY recovered $263.5 million from Medicaid fraud, compared with $113.6 million in 2007, and $59.3 million in 2006. One of the largest single settlements ($35 million) came from the largest managed-care plan (Buffalo News 5/6/09).

The average age of physicians in our area is 55 to 60.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Government Management. Every business in America is supposed to verify Social Security numbers. When the auditor's office in Washington State looked at Medicaid eligibility in 2006, it identified 2,741 Medicaid clients who appeared to have invalid SSNs or to have made claims after their deaths. An intensive examination of a set of 267 turned up 66 cases of provider fraud, 57 of using a deceased relative's SSN, 65 cases of probable theft of an unrelated deceased person's SSN, 29 departmental errors, and 3 cases of probable theft of a living person's SSN. These sample cases generated nearly $4 million in expenditures. Questionable payments for the nonemergency treatment of illegal aliens amounted to nearly $55 million.
Linda Gorman, Ph.D., Independence Institute, Golden, CO


Outsourcing. We may see medical care being outsourced to the best centers in the world because our system is too expensive. I have no doubt that U.S. physicians can compete on a global level in value but not if they are a part of Fannie Med and Freddie Doc, or any managed-care arrangement. There are successful "centers of excellence" started regionally with cash- based surgeons in the U.S., with prices at international levels. But they have to opt out of the current system.
Richard A. Matthews, CEBS, Royal Oak, MI


"New" Payment System. In a new bold experiment, Massachusetts may replace fee-for-service payment. "A single, yearly fee is intended to discourage doctors and hospitals from providing unneeded tests and treatments" (Boston Globe 5/7/09). It is hoped that doctors and hospitals will "coordinate" care better, and thereby improve quality.

As a boy, I recall an Australian physician visiting our home for a week in August. The government capped his salary, and he had earned the maximum by June 1. He traveled the next 7 months of the year, and ultimately moved to the U.S.
William K. Summers, M.D., Albuquerque, NM


Unity. Libertarians, neocons, the religious right, etc. all seem to undermine their principal common denominator, personal liberty, by feuding among themselves. We are where we are because the opposition is so organized, and so in control of the corrupt media, that their tent (which has far more contradictory factions than ours) manages to keep all their sheep inside.

Our leaders need to organize the message that would resonate with the vast majority of the public. They have not learned to press the simple question: "Do you believe in freedom of action, or do you prefer to be a ward of the state?"
Frank Timmins, Dallas, TX


Growth of Insurance. As late as 1965, only 72% of the population had any coverage at all, and that was for hospital- ization typically 21 days inpatient per year. Only 50% had "major medical." The huge growth in coverage was achieved without any mandates at all.
Greg Scandlen, Heartland Institute


Myth Pronounced Dead. Preventive medicine (Pap smears, mammograms, checkups, prostate cancer tests, etc.) is a consumption good, not an investment. Politicians keep repeating it, but the myth of cost savings died decades ago. Here's a recent nail in the coffin: "[C]ost-effectiveness ratios...from studies published between 2000 and 2005 [show that] less than 20 percent of the preventive options...fall in the cost-saving category (Russell LB Health Affairs 2009;1:42-45).
John Goodman, Ph.D., Dallas, TX