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

Volume 60, No. 9 September 2004


In every sector of a free economy, payment for performance is normal and expected. Competitive pressures serve to increase quality. Expectations and responsibilities are formalized by contract. Superior products and services command a higher price. The ultimate judge of value is the customer, who can choose from a wide variety of products and vendors.

If "P4P" sounds like a revolutionary concept in medicine, it is only because it has been suppressed by price controls. Socialist leveling has been pervasive and deliberate. The allowed fee is set by the CPT code, whether the service is performed by poorly trained resident or the world's premier neurosurgeon.

The New version of pay for performance, however, will bear no resemblance to the free-market concept, but will only tighten centralized command and control. The originators include the usual suspects such as the Robert Wood Johnson Foundation and other advocates of the Prussianization of American medicine. Related jargon is found throughout the documents of the Clinton Task Force on Health Care Reform, for example, from the Jackson Hole Implementation Team:

"We propose...tabulations of selected provider activity records to document performance of desirable services such as mammograms and immunizations" (Box #3305).

To "put IHP [Integrated Healthcare Association] on the map," this brain trust of California managed-care organizations has a P4P plan that counts mammograms and the number of vaccines given to children under two for DPT, polio, hepatitis B, H. influenza b, chicken pox, and measles-mumps-rubella. Doctors who have a high score on these and other measures collect a bonus averaging $10,500 per quarter. About one in seven receive nothing (PhysicianExecutive May/June 2004).

Standards and values are not to be consumer-driven. Instead, national boards would "assure uniform definitions and performance measurement standards.... Appropriateness of services should be based on widely held beliefs about the value of a service to society (e.g., public health impact, social costs, community compassion), the value of a service to the individual at risk of needing that service (e.g., personal ability to function, length of life, equity), and the extent to which a service is considered an essential component of a basic level of health care below which no person should fall" (Box 1479, policy document from the 21st Century American Health System, the Public-Private Partnership, and the National Health Board).

Individual priorities are irrelevant: rather, "public values can be periodically assessed through surveys, focus groups, public hearings, and other community meeting formats (ibid.)."

P4P only represents the incentive side of what is likely to lead to federal regulation of the practice of medicine. Initially, private entities (health plans) are to "assume more responsibility for quality and for sanctioning substandard provider performance" (Trial Lawyers' Briefing Book for the Clintons).

Outright coercion is the next logical step, alluded to somewhat obliquely by W.K. Kellogg Foundation President William Richardson in a 2001 Institute of Medicine (IOM) briefing on "Crossing the Quality Chasm." He said that "people working in the health care system" [the word "physician" occurs but once in the lengthy statement] "may be required to do their work differently and in new types of organizations that may use a different mix of health professionals." Richardson suggests a "multidisciplinary summit" to "prepare the work force" and to develop credentialing programs. Reporting physicians to licensing boards for not following certain quality standards has also been proposed (AM News, Dec. 23/30, 2002).

This IOM Quality Initiative was a follow-on to the 2000 To Err Is Human report (AAPS News April 2000). Reinforcing the message of a need for a radical structural change is a 2004 RAND study asserting that Americans have only a 50/50 chance of receiving "proper health care" (USA Today 6/25/03). The proper interventions included mammography, immunizations, use of beta blockers and aspirin after a myocardial infarction, inhaled corticosteroids for asthma, and anti-smoking exhortations (N Engl J Med 2003;348:2635-2645).

According to an accompanying editorial, the "current system of care" is responsible for dismal performance. Without a "computerized infrastructure," it is "ludicrous to expect physicians to comply consistently with hundreds of practice guidelines." It is confidently asserted that "adequate system- wide investment "will yield savings that exceed the cost of achieving them" (N Engl J Med 2003;348:2681-2683).

Since 1989, the Agency for Health Care Policy and Research (AHCPR) has spent hundreds of millions of dollars to measure "what works" and to develop clinical guidelines. As of 1994, the agency could not point to a single example of its work affecting clinical practice. Oxford University epidemiologist Richard Peto said that spending on outcomes research was "worse than just destroying the money because it gives the illusion of information" (Science 1994;263:1080-1082).

In 1996, the Agency stopped working on practice guidelines and left that to professional organizations, which have developed more than 1,000. It now concentrates on "how we can reduce inappropriate variation" (AM News 2/24/03).

It is clear that "performance," like "quality," equals compliance or conformity (AAPS News Nov 1998). The same key "proved" interventions are being touted now as in 1998, although acceptable blood pressures and LDL/cholesterol levels are being reduced no need for medical innovation.

Equally obvious is that independently thinking physicians are a threat to the New System. It is imperative that both physicians and patients declare independence from managed systems while some semblance of free enterprise survives.

Performance Measures Can Be Harmful

At a presentation on new practice guidelines at a university hospital, George Fisher, M.D., disagreed intensely with the "right" answers in every single case. In four cases, it had taken so long to reach a consensus that the answer had been overtaken by developments and was obsolete. In two cases, the clinical specifics, such as a pleural effusion in a supposed case of pneumonia, seemed to invalidate the premises of the guideline. And in the other two, there were patient characteristics that called for a different approach.

The number of falls is one of the inputs on the Medicare report card for nursing homes. Hospitals are now seeing patients who are frozen in a sitting position. It is apparently too dangerous to get patients up to walk, says Linda Gorman.


No Evidence For Evidence-Based Medicine (EBM)

It is assumed without any evidence that EBM would accept that EBM will improve the quality of care, and that physicians who use it provide better care than those who do not. By declaring itself to be above criticism, EBM has gone directly from the bright idea to the implementation stage, bypassing the usual period of critique and evaluation.

"EBM involves a takeover of the clinical consultation by an alliance of managers and their statistical technocrats...easily regulated by politicians, bureaucrats and their statistical technicians" (Charlton BG, Miles A. QJM 1998;91:371- 374).

"The lack of evidence may be used as a cost-cutting tool to deny patients treatment for conditions where there is nothing `proven' effective, even though accepting an unproven treatment may be what the patient decides is the most attractive option" (Cohen AM, et al. IJMI 2004;73:35-43).


"Systems Approach" to Research

It is also assumed that the IOM regulatory approach to "protecting" research subjects will not kill good medical solutions in the cradle, and that more rules will cost nothing in terms of lost cures. To keep medical research from falling into the maw of litigation, it is proposed to dig a moat of federal regulation. As Daniel Henninger observes, "Run of the mill research will muddle through the sludge." But the regime built by the IOM's "Responsible Research" panel could well deter or frustrate the genius who is dreaming of the next L-dopa, lithium, or open-heart surgery (Wall St J 10/11/02).

Laparoscopic surgery was developed by a French surgeon in private practice, who initially lost his hospital privileges because of it. In the U.S., it was at first disseminated outside academic circles, writes Robert Hamilton, M.D.

The technique that revolutionized cataract surgery was inspired by a dental procedure. Dr. Charles Kelman, who was honored by President George H.W. Bush for being one of the most important innovators of the century, endured years of scorn before his technique became mainstream, writes AAPS Director Robert Gervais, M.D., in a forthcoming issue of AzMed. It was unthinkable to go back to an "extracapsular" technique after the invention of the supposedly perfect "intracapsular" method.

Physician researchers, however, are no more to be trusted than clinicians. "If there is one overarching issue here," writes Henninger, "it is the steady, disintegrating status of the physician in U.S. society."

Nursing Home Quality Data 80% Inaccurate

In a July 13 letter to CMS, Senate Finance Committee Chairman Charles Grassley (R-IA) charged that consumers had only a one-in-five chance of getting reliable data from the Nursing Home Compare program.

"Couple those odds with the disturbing reality that the very integrity of the quality data contained in the nursing home inspection results and complaint histories has been called into question and the bedrock value of the Nursing Home Compare crumbles," Grassley said (BNA's HCFR 7/21/04).

JCAHO 70% Inaccurate

According to a July 2004 report by the U.S. Government Accountability Office (GAO), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) failed to identify 69% of deficiencies in Medicare requirements found by state agencies. The agency is a "lap dog," charged Sen. Grassley.

Under current federal law, any hospital accredited by JCAHO is eligible to receive Medicare reimbursement. No other private agency has this much authority.

Legislation proposed by Rep. Pete Stark (D-CA) would give CMS the power to revoke JCAHO's authority. This begs the question of whether CMS is any better. What is the gold standard for identifying false positives or false negatives?

The full GAO report may be downloaded from www. gao.gov/cgi-bin/getrpt?GAO-04-850.


Doctor Becomes "Inactive Provider"

A physician in solo practice stopped providing "Medicare covered services" to Medicare beneficiaries in January 2001 and was notified by his Medicare intermediary in March 2002 that he was being placed in the inactive file. He had been advised by his attorney that this was safer than opting out and obviated the paperwork. Many physicians may find themselves in a comparable situation if they fail to apply for a new unique Medicare identifier. What will CMS do if they provide a potentially covered service to a Medicare-eligible patient without filing a claim?

Please send a copy of any communications concerning this point from attorneys, carriers, or Medicare to AAPS.


AAPS Calendar

Oct. 13-16. 61st annual meeting, Portland, Oregon.
Sept. 21-24, 2005. 62nd annual meeting, Arlington, VA.

"A statistic has been planted, and makes its appearance in tables, graphs, learned discourses, becoming part of the world's wisdom. In the beginning was the Lie, and the Lie was made news and dwelt among us, graceless and false."
Malcolm Muggeridge

Watch Out for "Quality of Care" Cases

Since Redding Medical Center paid $54 million to resolve quality concerns over allegedly unnecessary heart surgeries, compliance officers are scrutinizing all complaints and lawsuits for a potential quality issue. The government pursues quality cases as fraudulent billing under the False Claims Act if "the provider fails to follow the conditions of Medicare by not promoting the patient's quality of life," stated attorney Lester Perling of Broad and Cassel, Ft. Lauderdale, FL (Medicare Compliance Alert 7/19/04). All invasive surgeries are considered potentially unnecessary by the government.


Compliance Industry Worried about Blakely

The Supreme Court decision that could limit sentence enhancements based on factors not proved to a jury (Blakely v Washington, see AAPS News, Aug 2004) has caused "angst and hand-wringing in corporate compliance circles," according to attorney Rebecca Walker of Walker Compliance, Santa Monica, CA (BNA's HCFR 7/21/04). Demand for expensive programs may depend on the hope of a downward departure from sentencing guidelines in the event of a criminal conviction. According to Walker, it seems unlikely that these would survive if enhancements are forbidden.

Some analysts say that "providers should continue efforts to strengthen their compliance programs," as these may influence the government's decision to pursue a case.

In any event, institutions, the industry's biggest customers, are rarely prosecuted criminally. "They are just too important" (ibid.). Doctors, in contrast, are expendable.

Government attorneys are now including waivers in plea agreements that bar defendants from using the Blakely decision to challenge their sentence.


Beware of Provider Identity Theft

If someone uses a stolen Medicare provider number to bill for fraudulent services without the doctor's knowledge, the doctor might be investigated also. One innocent young physician was "ravished" and "devastated" when someone billed Medicare for $2 million using his number. The FBI assumed that he was trying to skim extra money to pay his student loans (Medicare Compliance Alert 8/2/04).


"Three Strikes and You're Out" in Florida

Florida personal-injury attorneys have managed to put a proposal on the November ballot to delicense physicians who have three malpractice judgments. "No more than a few hundred practicing physicians would lose their licenses" if the measure passes (St. Petersburg Times 7/21/04).

This proposal "appears to be a P.R. stunt, and also leverage to coerce physicians into settlement," writes AAPS General Counsel Andrew Schlafly.

The referendum reads as follows: "PUBLIC PROTECTION FROM REPEATED MEDICAL MALPRACTICE: Current law allows medical doctors who have committed repeated malpractice to be licensed to practice medicine in Florida. This amendment prohibits medical doctors who have been found to have committed three or more incidents of medical malpractice from being licensed to practice medicine in Florida. (Settlements are excluded.)"


New Jersey Deals Blow to Private Contracting

On April 17, 2003, a New Jersey court rejected a hospital's claim for $257,189 against a patient for post-Medicare Part A services in Valley Hospital v Halina Kroll (Passaic Co., No. PAS-L-005389-01). Valley Hospital had a signed contract with the patient, but the court held that it was unenforceable as a contract of adhesion (a one-sided agreement, typically "take it or leave it"). The court held that state regulations ban balance billing even if federal rules do not. Alternatively, the hospital argued for recovery of the reasonable value of its services. The court responded that government payments cover the reasonable value of the services, almost by definition.


Dr. Herrera's License Reinstated

Upon the order of a Montgomery County judge, the Alabama medical licensing agency reinstated the license of Pascual Herrera, Jr., M.D., which had been revoked on the pretext of "poor handwriting" in the hysterical aftermath of the death of several youths who had used OxyContin. Dr. Herrera had not prescribed OxyContin to any of those patients.

AAPS filed an amicus brief in support of Dr. Herrera (AAPS News, May 2003), posted here.


AAPS Files Amicus in Sham Peer Review

If physicians complain about a quality issue, a hospital can retaliate by bringing a licensure action as well as by revoking staff privileges. Several years after the Tenet-owned hospital Encino Tarzana Regional Medical Center filed a complaint, the California Medical Board finally acted by ordering a psychiatric evaluation of Gil Mileikowsky, M.D., under pain of license revocation. The Board took no corrective action on Dr. Mileikowsky's allegations against the hospital, including removal of a patient's fallopian tubes without consent, a serious battery, and improper destruction of frozen embryos.

"AAPS is all too familiar with the use of state-mandated psychiatric examinations to unfairly destroy good physicians. The state selects and pays the psychiatrist.... AAPS has painfully watched physicians agree to seemingly innocuous psychiatric examinations paid by their adversaries, only to be shocked at how the evaluation departs from the standard of care in finding impairments where none exist. These tragic misuses of psychiatric examinations to retaliate against physicians have become a national calamity for medicine," writes AAPS in a Motion of Amicus Curiae in Mileikowsky v Medical Board of California (Case No. 04CS00969).

The Business and Professions Code section 820 allows such examinations only upon an express showing of a threat to patient safety, which did not occur in this case.

The brief is posted at www.aapsonline.org.


Biometrics to Detect Medicaid Fraud

The $10 million Medicaid Integrity Pilot in Houston, TX, the first use of biometrics to identify Medicaid recipients seeking care in doctors' offices, is expected to curtail about $30 million in fraud in one year. Participants receive identification cards with a microchip imbedded fingerprint. About 900 physicians and 180,000 patients volunteered to participate. "Providers try to use fingerprint readers as discretely as possible" to avoid stigmatizing patients (BNA's HCFR 7/7/04).


The Movement Has Begun. The Medical Society of the State of New York recently surveyed physicians about credentialing and recredentialing for managed-care plans. The real story here is how many physicians are beginning to drop HMOs and other insurance plans. Never before have we seen so many physicians opting for patient-based care. The movement away from "participation" has started. As one physician commented, "If the physicians had refused to sign up for these plans, we wouldn't be having these problems. I've remained independent, at great financial cost, but with a better quality of practice and a better family life."
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


The Dangers of the "Quality" Movement. I enjoy reading Bob Moffit's monthly piece and usually agree with him. However, in the July 2004 supplement I find one major point of disagreement. In advocating for price transparency, Dr. Moffit says: "We need to accelerate the trend toward price disclosure, along with readily available information on quality of care and performance." We must never let government or other centralized entities (such as HMOs) be arbiters of quality or performance, let alone reporters of such. Advocates of "best practices" and evidence-based medicine, including Hillary Clinton and cost- containment Republicans, are pushing this proposal across the country. Although Dr. Moffit's statement is qualified with the words "readily available," even that begs a definition. Who has this data? And where did they get it? And who decided what was "quality"?

In light of the egregious actions taken against physicians in the name of prosecuting fraud, it should be obvious that physicians who accept government dollars but don't "measure up" according to government-defined standards could become the next targets of prosecutors. As advocates of "quality improvement" so often reiterate, "quality" addresses "underuse, overuse, and misuse" of services. It'll be hard for any physician to escape that all-encompassing net.
Twila Brase, R.N.
Citizen's Council on Health Care, www.cchc-mn.org


Let Patients Decide. The market has a way of sorting things out when the customer is king. Sure, some people might get hurt. But people also might get hurt with regulations. Who is one person or group to decide? Let the person who owns his or her own body decide. There is no reason to protect producers. The same group that issues licenses to physicians can restrict them for any reason they want such as our clinic's refusal to take third- party payment. A medical license could become contingent on my practice billing and accepting Medicare and Medicaid and treating everyone who comes to my door. That is not acceptable to me. Therefore, I say abolish the boards that protect physicians before they make political correctness a requirement for practicing medicine.
Robert S. Berry, M.D., Greeneville, TN


"Underserved" Areas. Dumping money into community health centers is not going to solve the problem of lack of doctors in rural communities. Promising doctors that they will have to compete with free or low-cost care provided by taxpayer- supported clinics is not an effective recruitment tool. If we could just remove that pesky constitutional clause about indentured servitude, we could simply force doctors to relocate. After all, it would be for the good of the community.
Sean Parnell, Heartland Institute


Junk the Codes. We have insiders within the CPT code training camps who will testify that they could not get their students to pass their final exams with any degree of statistical validity. They were simply "passed": the "No Coder Left Behind" program. And the coding industry complex makes millions of dollars certifying people in this area of "expertise." The CPT system is the vehicle of choice for diverting funds that have been earned by skilled professionals.

The experts said that CDs would never replace vinyl records; people had too much invested in the system to make such a radical change. And the experts said....
Herbert Rubin, M.D., UCLA


Finding Quality. I believe one could go to any mid- sized town in the U.S., talk to 20 people, and come away with an idea of who the best pediatrician is. It might take a little longer for other specialties. This requires having confidence in people instead of relying on statisticians. Because we really do know, or can find out, who is best (and probably worst), we need to allow people to pay more to see the best, and less to see the mediocre. That is how we will improve quality.
Greg Scandlen, Galen Institute


What's Effective Becomes Cheap. I've observed that the more expensive a treatment or procedure, the less effective it is. The $100,000 operation to save someone's life usually leaves him crippled or medically dependent, or fails completely, like Mickey Mantle's liver transplant. I call it Moore's Law.
Gerry Smedinghoff, Phoenix, AZ


Why MRIs Cost $1,200. It's simple: Medicare and managed care. In a free market, costs would be coming down because newer technology would be trying to replace it.
Frank Timmins, HealthBenefitsReform group

Tax-Advantaged Medical Coverage

by Madeleine Pelner Cosman, J.D., Ph.D.

This is a review of the four types of currently available tax- advantaged accounts, which may or may not require high-deductible insurance policies: the FSA, HRA, MSA, and HSA.

Of these medical spending accounts, the most free- market, patient-centered, and consumer-driven are Health Savings Accounts and their precursors, Medical Savings Accounts. The other two types invite consumer participation but corrupt the possibilities to truly influence spending choice because the account users are not the account owners. Flexible Spending Accounts (FSAs) and Health-Reimbursement Arrangements (HRAs) are beneficial but forfeit the rights of ownership.

FSAs, HRAs, MSAs, and HSAs, however, all are creatures of federal law that marry health insurance plans to tax-favored cash accounts to pay for medical expenses. They all have potential to control medical inflation. They all give patients as consumers some control over their own medical decisions. They require patients as consumers to take some financial responsibility for consequences of their decisions. But only the MSAs and HSAs achieve the rationality and savings of private ownership and free-market medical decisions.

Flexible Spending Accounts (FSAs)

Flexible Spending Accounts, the so-called Cafeteria Plans, permit employees to divert a portion of their paycheck, tax-free, to pay medical expenses not covered by insurance. IRS Section 125 controls contributions of pretax dollars for spending on medical care. FSAs are sponsored only by employers. The self-employed or those who work for an employer who does not provide FSAs cannot create FSAs.

In theory, FSAs should encourage thoughtful, circumspect use of medical money because the employee as consumer is using his own money, rather than the insurance company's, to pay for routine care. In practice, however, FSAs promote wasteful spending because the IRS code makes FSAs "Use It or Lose It" money. Unused funds at year-end revert to the employer. Employees usually go on an annual end-of-year lavish medical spending spree. President Bush has proposed eliminating this perverse incentive by allowing unused funds to roll over to the following years.

Health Reimbursement Arrangements

Health Reimbursement Arrangements (HRAs), created in June 2002, resemble FSAs. HRAs are not available to the self-employed. Companies set up HRA plans for their employees and, using employer funds only, permit employees to pay with tax-free dollars medical expenses not covered by insurance. HRAs became valuable when the IRS issued revised regulations allowing unused dollars in HRAs to roll over from year to year, mitigating "Use It or Lose It" binges.

One of the hidden wonders of the HRA is that an employer could provide, for instance, $8,000 for medical uses, not by raising salaries $8,000 (and paying payroll and income taxes on the new money) but by contributing the $8,000 to an HRA that the employee can withdraw tax free to pay for individual (or union- sponsored) coverage. For the first time since ERISA was passed, employers can pay for workers' individual health premiums on a tax-preferred basis. An HRA does not require a high-deductible plan. An HRA can work with any insurance plan, or no insurance plan at all. It can be for any amount of money. Although it is employer-only money, the employee can spend it on any 213(d) qualified expense, which includes insurance premiums.

Nonetheless, HRA monies are not employee-owned and are not "portable." If an employee changes jobs his HRA cannot be moved to a new employer. In some instances the employee with a new job may have rights to use the HRA in the former employer's company. Some employers allow the employee who changes jobs to use the HRA for the same number of months into the future as he had been employed by the company with the HRA. But since the sponsoring employer owns and controls the accounts, there is little incentive for employees to control spending. As with FSAs, the best way for an employee to gain value from an HRA is to spend every penny. There is, however, some fiscal responsibility and freedom of choice.

Health Savings Accounts (HSAs) and Medical Savings Accounts (MSAs)

The most exciting new medical instruments for all Americans are Health Savings Accounts (HSAs), the brand-new free-market medical mechanisms legislated into law in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. HSAs closely resemble Medical Savings Accounts (MSAs) that were created in 1996 by HIPAA, the Health Insurance Portability and Accountability Act. But HSAs are superior. HSAs and MSAs credit each American's intelligence, individuality, discretion, and responsibility. Every HSA or MSA has two distinct but interconnected parts:

  • a personal medical savings account
  • a catastrophic health insurance policy with a high deductible.

Visualize an HSA as a benevolent handshake. One hand is the actual savings account. The other hand is catastrophic medical insurance, whose deductible equals the amount of money annually placed in the HSA savings account. If you prefer, think of an HSA as a pair of pliers. The two arms of this tool move in synchrony and together expand the reach and power of the HSA owner's hand.

HSAs are not discounted prepayments for medical care. HSAs utilize true medical insurance that protects assets against expenses for physical catastrophes we hope will not happen. Since HSAs will be far more popular and available than MSAs, I shall refer only to HSAs, but any description here of an HSA pertains also to an MSA. The older MSAs intentionally were restricted by Congress to 750,000 people and dedicated to those who are self- employed or who work in companies of fewer than 50 employees. MSAs in theory are open to people who qualify for Medicare but in actuality, no Medicare MSAs exist because no insurance companies have had the corporate courage to leap the huge number of federal and state legal hurdles to create catastrophic polices that will conform to Medicare law. The new HSAs emulate the best of MSAs with few restrictions on who can buy them. One irony is that these magnificent consumer-directed, patient-centered HSAs created by the Medicare bill exclude people covered by Medicare. But in due time we shall fix that folly.

Companies began offering the new accounts on January 1, 2004, to thousands who applied. Both parts of HSAs are established at the same time. Anyone under age 65 is enabled to deposit into an HSA tax-free up to $2,600 for individuals and $5,150 for families. Some of the same banks and companies that establish the HSA savings account will sell or arrange for the consumer's purchase of a catastrophic health insurance policy. You can make your own contribution to your HSA savings account. Your employer can provide the annual amount. Or you and your employer each can contribute funds. Again, the amount in the savings account will be roughly equal to the deductible of the insurance policy.

President Bush clearly made HSAs "a cornerstone of his health reform plan," said Greg Scandlen, director of Galen Institute's Center for Consumer Driven Health Care. The President's plan allows 100% above-the-line tax deductibility of premiums for catastrophic insurance associated with HSAs. People who purchase catastrophic policies on their own are able to deduct 100% of the premiums. This full tax deductibility "will supercharge HSAs and make them an even more attractive option for millions of Americans, including the uninsured." Under current law, the health insurance is tax-favored if individuals are self- employed or their employer purchases the policy for them.

With money from your HSA savings account, you pay directly any physician you choose or any pharmacist for any medicine you choose for whatever minor medical problems you reason it worth paying a practitioner to solve. If you have a medical disaster, then the catastrophic insurance takes over payments after you meet the deductible.

You, who own your body and mind, decide what is medically necessary along with the doctor providing medical care. No one tells you whether you are permitted to go to a specific doctor or when or how or why. No one tells you what treatment is or is not "covered." No one tells your employer why you went to a physician or that you went or where. No one transmits your confidential medical records to an insurance company adjuster. You maintain confidentiality of your medical record for all routine medical problems. Only if and when your catastrophic insurance policy starts to pay for care is there any reason for anyone but you and your physician to know what is in or not in your medical record.

Moreover, you totally own your HSA savings account. You can deduct from it small or large sums to pay directly or you can use a debit card to pay any valid medical expense. The only restriction is the alphabetical list in IRS Code Section 213 (d) that identifies valid medical deductions on taxes. This includes acupuncture and physical therapy as well as drugs or surgery.

Since what you do not spend you keep, some call such an account a SIKI, Spend It or Keep It. That is a powerful incentive to prudent spending. HSAs respect your intelligence, individuality, initiative, and financial judgment. You determine the benefit versus the cost of each medicine or procedure before consent. Do you prefer the generic or the brand-name drug? Conservative or aggressive treatment? You decide.

Because you are paying cash, many practitioners will welcome you with enthusiasm and provide a cash discount on their fees because you honor their talent by directly exchanging your valuable money for their valuable skill, the customary capitalistic method of exchange in America. Furthermore, by paying cash at time and place of service you are saving the doctors' precious time and money. Good cardiologists, internists, dermatologists, and urologists have the same market incentives to behave justly and fairly when selling their medical talents and services as do other American professionals, craftsmen, and purveyors of honest products.

Deposits to HSA are tax-free, as are earnings and medical expenditures. HSA money is taxed only if you withdraw it for nonmedical purposes. Just as with an IRA from which money is removed before the statutory time, nonmedical use, before age 65, generates both ordinary income tax and a 10% penalty. After 65, the penalty does not apply. Since the HSA is your money, not your employer's and not the government's, you can roll over whatever is left over in your account at year's end and let it earn interest. Again, that is comparable to an IRA.

Furthermore, even if you suffered a medical disaster after a healthy year in which you rolled over your unused money, you would spend no more from the HSA account than the stipulated deductible for that particular year. If, for instance, the deductible is $3,000, you will pay only $3,000 cash even if by that time you have $79,000 accumulated in your HSA. A reasonably healthy person cannot fail to make money with an HSA prudently invested. Customary health insurance, the bogus insurance that is discounted prepayment for medical services, produces for the policyholder at year's end nothing but a canceled check.

The HSA is yours no matter where you work, no matter whether you change from job to job, and whether or not you work. It is completely portable. Like other property that you own, you can convey it to your family upon your death.

With HSAs, people have the same legal protections and ethical incentives as elsewhere in the American economy. HSAs are predicated on contract-law protection against false promises and overpayments. HSAs diminish the severest intrusions upon freedoms of physicians and patients imposed by laws governing managed care and Medicare. HSAs avoid: criminalizing physicians; qui tam whistle blower actions for False Claims; capitation; most forms of community rating; violation of confidentiality; third-party definitions of medically necessary treatment; and medical rationing by third parties. HSAs have no need of a Medicare Operation Restore Trust with its harsh penalties, fines, forfeitures, and prison terms for physicians and surgeons. Under HSAs the physician's allegiance is to the patient who pays, not to a third-party payer. Trust not violated needs no restoration.

HSAs are rational, logical, responsible salutes to the intelligence and comparative good health of America. Patients freely select their doctors. Employers pay no more, usually much less. Medical innovation and medical entrepreneurship thrive. Doctors need not fear inadvertently violating arcane rules. Insurance carriers, marketers, and agents benefit. Banks benefit. Everyone wins except the social engineers who want to impose "protections" against personal freedom.