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

Volume 64, No. 9 September 2008


Franklin Delano Roosevelt remarked that his programs "created powers which in other hands would be dangerous."

Since then, in the name of compassion, safety, protecting the vulnerable, achieving fairness, and other alleged good intentions, the powers have expanded vastly along with the revenues and the debt of the federal government.

The real motive, suggested Fred Kilbourne in a 2007 address to the American Academy of Actuaries, is politicians' lust for power, "an aphrodisiac beside which the love of money is but a meager coin." (See www.concernedactuaries.com).

Money and power are of course inextricably intertwined. With money, one can buy power, and with power, one can appropriate money. And if the money runs out, what then?

Operation Bernhard

The greatest counterfeiting operation in history, fictionalized in the Academy Award-winning film Die Falscher (The Counterfeiters), used forgers imprisoned in the Sachsenhausen concentration camp. The initial plan to destabilize the British economy by dropping bank notes from aircraft was not carried out, but the fake currency was used to finance strategic imports and to pay German agents. From 1942 to 1945, the Germans forged more pound notes than all the reserves in the Bank of England, 132,000,000 pounds, equal to about 15% of the notes in circulation and enough to cast suspicion on all of England's paper currency. Ironically, some of the notes passed through a Jewish money launderer bought war materiel for the nascent Israeli army and helped bring exiles to Palestine.

The Bank of England detected the existence of the notes because, as late as the 1940s, every banknote it issued was recorded in large leather-bound ledgers as a liability of the bank. A clerk noticed that one of the notes had already been paid off, according to the record.

Hitler's propaganda minister, Josef Goebbels, feared that the plan might be turned against Germany's own fragile finances by the Allies. In fact, Churchill and Roosevelt considered counterfeiting the enemy's currency, but rejected the idea (Lawrence Malkin, Krueger's Men: the Secret Nazi Counterfeit Plot and the Prisoners of Block 19).

The Stability of the Dollar

Though a profound embarrassment to the Bank of England, the Nazi counterfeiters ultimately did not sink the British pound: but the Kaiser's army and Hitler's bombs did, said Richard W. Fisher, President and CEO of the Federal Reserve Bank of Dallas, speaking to the Commonwealth Club of California on May 28. England had to liquidate its international reserves to pay off the costs of the Great Wars.

Now, Fisher said, the United States is launching fiscal bombs against itself. He warns of an impending "frightful storm" owing to untethered government debt. He estimates unfunded entitlement obligations as $99.9 trillion.

To fund this obligation today would take $1.3 million from every family of four, or 25 times the average family income. To fund it by cutting spending over time, we would have to cut 97% of federal discretionary spending, including defense, in perpetuity, assuming a stable GNP.

Kilbourne (op. cit.) estimates the aggregate excess of promises over provision at $75 trillion, which he terms the real national debt (RND). That is more than five times the GNP. He warns of the "upcoming actuarial collapse of the country" a process more insidious than that from an earthquake or windstorm, but more like that from termite damage.

The termites, he says, are the past several generations of politicians whose monument to themselves is a $75 trillion termite mound of debt "that will enslave the next several generations as surely as two plus two doesn't equal five."

"It is not compassionate to finance your programs by stealth, selling into unsustainable debt those least able to help themselves, the children of America."

The Growing Mound

Because the termite mound is a present value, Kilbourne says, it grows without being fed, merely by the passage of time. But remember that, as Jarvis Farley wrote 65 years ago in "An Approach to the Philosophy of Social Insurance," "a decision on any proposal for government control of medicine requires recognition of the certainty of increased cost." For the first two-thirds of the 20th century, medical care averaged less than 5% of GNP, but began its upward march to 15% or more after the passage of Medicare. Even if some procedures or delivery methods are made illegal, the 15% of GNP will go up: "expanded medical services will be promised to more people, or the votes won't be there to be bought."

The key to tight control over medical decisions the interoperable electronic record requires a huge "investment." Recent legislation proposes $560 million in grants and loans.

What Is to Be Done?

This is the title of the famous book by Lenin, whose answer was to "put an end to the third period," otherwise known as the moderate socialists. The equivalent in America would be to skip the suggestions of the AMA, or even Physicians for a National Health Program, and go straight to expropriation of wealth, show trials, and concentration camps.

Kilbourne hopes that instead we will carry out the needed pest control, starting with overcoming the "actuarial ignorance" of Americans. Each actuary needs to educate 20,000 people, he says. And each AAPS member about 200 doctors and 75,000 patients "in whatever pitiful remnant of the future remains."

Contrasting Programs

It appears that the AMA is taking us to a third-party-payer- dominated system that will result in substantial monopsony powers for a few favored companies, writes David McKalip, M.D. Current AMA policy appears call for a system that would: (1) Mandate insurance for all; (2) Provide publicly financed subsidies to those with incomes below a certain level to purchase insurance, funded by those with incomes above a certain level; (3) Have no real control over the cost of insurance; (4) Offer few to no real consumer choices; (5) Use "value-based purchasing" of services through third parties using Physician Consortium for Performance Improvement (PCPI) and other measures; (6) Insert politics into all medical care; (7) Kick out good doctors; and (8) Result in lower quality, higher cost, waiting lines, rationing, cookbook medicine, early death, and longer disability.

Alieta Eck, M.D., echoes AAPS in advocating that we: (1) Get the government out of medicine; (2) Get the government out of health insurance, with its mandates and edicts to insure "fairness." People should be held responsible for their own bills, she writes. For protecting their assets, they should be allowed to purchase the insurance of their choice, including across state lines. Free or low-cost clinics can provide for the poor; she notes that the federal government provides free professional liability insurance for such clinics. Local governments can fund a safety net without federal interference.


AMA 2007 Financial Report

Total assets: $520.6 million.

Revenue: $289.5 million. Major sources are:

Publications: $71.0 million (JAMA, Archives, AM News: including advertising, subscriptions, etc.)

Database products: $46.7 million (includes credentialing products revenue)

Books and products: $67.8 million, up $4.8 million from 2006 (includes reimbursement products such as CPT codes, workshops, and licensed data files)

Insurance agency: $35.5 million

Dues: $46.4 million, down $1.8 million from 2006

Grants, other: $11.7 million

Government, $1.4 million. Projects include electronic health records, chronic care, and quality measures; Robert Wood Johnson Foundation, $915,000, for disparities in healthcare, and underage and college drinking. Industry-supported educational funding, mostly from pharmaceutical companies, $1.9 million.


Accountable Care Systems (ACS)

Most physicians "still" practice alone or in small groups. "Comprehensive health care reform will require proposals that both expand coverage and redesign the delivery system so as to achieve greater value for the increased investment." An ACS would "assume responsibility for patients across providers...and settings." It would need "strong leadership, governance, and enough [aggregated] patients...to support information technology and case management systems" (JAMA 2008;300:95-97).

* * *

"Higgledy piggledy, Senator Kennedy, promises everything voters may wish; but if his programs are unactuarial, can he provide with two loaves and five fish [sic.]?"-- Fred Kilbourne


Who Profits from Smoking Bans?

Smoking bans based on dubious evidence about "second-hand smoke" have cost family-owned businesses and private clubs billions of dollars in potential revenue, according to Opponents of Ohio Bans. Meanwhile, profits for Johnson & Johnson (JNJ), manufacturer of Nicoderm CQ and Nicorette, increased 40% in the first quarter of 2008. There is an emerging, multi-billion dollar market for long-term nicotine maintenance (ScienceDaily 10/2/97).

The Robert Wood Johnson Foundation awarded nearly $450 million in grants to entities involved in anti-tobacco education and advocacy. RWJF owns $2.3 billion of JNJ stock. As a tax- exempt entity, RWJF pays only 1% tax on capital gains or dividends from its investments.

RWJF has now pledged $500 million in grants for anti-obesity campaigns; JNJ stands to profit through its Splenda brand of artificial sweetener.

Although no one advocates smoking or obesity, there is a money trail to follow in coercive measures purportedly intended to improve public health. "Tobacco control is the best marketing strategy pharmaceutical dollars can buy" (Market Watch.- com 7/23/08). Drug companies spent nearly $60 billion on promotion in 2004 (ScienceDaily 1/7/08).


Stages of Inflation

According to Ludwig von Mises in The Theory of Money and Credit, in stage one people restrict their spending, waiting for prices to fall. In stage two, people discover that the inflation of the money supply will continue, and begin to stock up on things they think they will need in a year or two.

"When government official start complaining about hoarding, that's a sign the whole country is in stage two," writes Richard Maybury (Early Warning Report, August 2008).

In stage three, when the catastrophic end of inflation is close, the housewife buys a table she knows she will never need, rather than hold onto scraps of paper called money.

Recently, Europeans have been trading dollars for top- quality items, such as luxury European cars. Dealers are booked months ahead (WSJ 6/12/08). The government of Abu Dhabi bought the Chrysler building in Manhattan. Tata Motors of India bought Ford's Jaguar and Land Rover divisions (WSJ 6/1/08). "They're buying the crown jewels," says Maybury.

Meanwhile, without considering inflation, a family physician in New Orleans reported that Medicare payments have dropped 10% since 2005 (CPR 7/11/08).


AAPS Calendar

Aug 27, 2008. Dr. Huntoon speaks on sham peer review, Lake County Medical Society, Wickliffe, OH.

Sep 9-13, 2008. 65th annual meeting, Phoenix, AZ.

Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.

Extortion Victim Excluded from Medicare

After local police and district attorney told him they could do nothing about threats of violence, Dr. Henry L. Gupton of Tennessee finally gave in to threats against him and his family and wrote prescriptions for Ritalin. He was then prosecuted for Medicaid fraud for prescribing unnecessary drugs, and pleaded nolo contendere to one count. Other counts were dismissed because the prosecutor believed the threats had been genuine. Even though the record was expunged, he was excluded from Medicare, Medicaid, and all other federal health programs for 5 years. A federal district court upheld the exclusion (Gupton v. Leavitt, E.D. Tenn., No. 3:07-cv-00185).

Judge Robert Leon Jordan found that "it is the admission of a criminal act, that is the conviction, that is important."

The penalty was found not to violate the Excessive Fines provision of the Eighth Amendment: "The value of the unnecessary prescriptions is not the issue; the result would be the same even if there was no monetary value to the prescriptions," Judge Jordan held.

"Rather, balancing the protection of beneficiaries and the federal [funds] against any potential loss of income to Dr. Gupton shows that there is no disproportionate fine being imposed on Dr. Gupton by the exclusion."

The due process clause of the Fifth Amendment was not violated; the prescriptions were indisputably written. The Tenth Amendment argument that HHS interfered with the express goal of the State of Tennessee to resolve the issue so Dr. Gupton could continue to practice was rejected on the basis that Dr. Gupton could continue to see anyone who could afford to pay him (BNA's HCFR 7/2/08).


News from the Front: War Against Doctors

1. The Centers for Medicare and Medicaid Services (CMS) is appealing many administrative law judge (ALJ) decisions that support doctors against recovery audit contractors (RACs).

2. Compliance programs need to be reviewed if there is an organizational change, such as the election of new directors, experts say. The compliance officer needs to be a full-time position, and all compliance activities should be documented.

3. By October, all Medicare reimbursements paid through the CMS integrated financial system are to be subjected to continuous levy to collect unpaid taxes. Providers are estimated to owe the tax collector about $4 billion.

4. Since 1986, lawsuits filed under the False Claims Act have brought in $20 billion. Still more billions could be recovered if proposed amendments in H.R. 4854 pass, extending the FCA to all claims submitted to anyone using government funds, including independent contractors. This would "virtually guarantee a dramatic increase in parasitic lawsuits," said attorney Peter B. Hutt II (BNA's HCFR 7/2/08).

5. Private payers are joining in government fraud dragnets by deploying special investigations units (SIUs), which may go "under cover," posing as a member (MCA 7/28/08).


Tip of the Month: Increasingly, the goal of hospitals appears to be to deprive physicians of any due process whatsoever. One method is to talk a doctor into resigning, with the promise that he won't be reported to the National Practitioner Data Bank (NPDB). In one case, a physician took the hospital CEO at his word. Shortly thereafter, the hospital reported him to the NPDB. Since the promise was not in writing, the CEO will probably deny having made it. The doctor had been accused of doing "too many" of a kind of case that no one else in the area did, and of being "disruptive." By resigning, he waived his right to any peer-review hearing or appeal. Taking the case to court would be an uphill struggle; the hospital would probably just say, "Look, he did it voluntarily." In any event, the law requires hospitals to report if physicians resign while under investigation. This applies even if the physician has not been notified of an ongoing investigation.


Fifth Circuit Overturns Poliner Victory

A rare case of sham peer review to make it to a jury verdict, which initially pegged damages at $366 million, Lawrence R. Poliner v. Texas Health Systems was overturned by the Fifth Circuit Court of Appeals (No. 06-11235). The Court held that failure to comply with medical staff bylaws does not defeat a peer reviewer's right to immunity from damages under the Health Care Quality Improvement Act (HCQIA). While acknowledging that this immunity "may work harsh outcomes in certain circumstances," the Court held that these were outweighed by the "systemwide benefit of robust peer review in rooting out incompetent physicians, protecting patients, and preventing malpractice." Physicians still had access to the courts to "assure procedural protections," and that, the Court felt, "strikes the balance of remedies essential to Congress' objective of vigorous peer review."

See AAPS News, October 2004, May 2006.


Doctor Persists; Quest Caves on NPI

As an AAPS member persistently pointed out, it is Quest Diagnostics that is providing laboratory services and collecting payment for them; he only orders them. He provided copies of the regulation concerning noncovered entities (see www.aapsonline.org/npi/npi-letter.pdf); he complained that the lab was engaging in willful and arbitrary discrimination based on an unnecessary rule that harms the delivery of patient care.

After repeatedly harassing the doctor and refusing to process orders for Medicare beneficiaries, Quest finally assigned him a special identification number for submitting his claims. This is a great victory; Quest is the largest clinical lab in the world. The physician can now tell other vendors he will take his business elsewhere if they do not do the same.

At an Apr 17, 2007, CMS roundtable on the NPI, a software vendor asked about a physician who didn't have and never planned to get an NPI. Clients want to be able to "flip a setting" to use a legacy number for such physicians.

Karen Trudel said that "there are a number of reasons why [HIPAA noncovered] providers should have NPIs.... [W]e will be...increasing...our outreach efforts to those providers to recommend that they do obtain an NPI [emphasis added]."

Kathy Simmons said: "If you did have someone who was not a covered entity, the alternative to reporting the NPI is reporting their taxpayer identification number which if you're a small provider might be your social security number. If I was going to be secretive or not want to use my NPI, I'd prefer to keep my social security number or my employer identification number more secret than an NPI. So, you know that might be another reason why they'd want to get one so that they don't have to be giving out those other numbers [sic.].

The full transcript can be found at http://cms.hhs.gov by searching on "NPI, HIPAA non covered, Trudel."


The Little Train That Could. Police thought they had discovered a one-way track that nasty hospitals were using to "dump" homeless persons onto the street. Further investigation revealed the other half of the story: a scheme to recruit Skid Row residents for a free ride to the hospital, where they got three hots and a cot, then dump them back on the street for a time, until they were picked up again. At the head of the train was a powerful locomotive called "universal care and assignment of benefits," fueled by an unlimited energy source called "taxpayer money." Participants in the scheme were allegedly receiving up to $20,000 per month in kickbacks from the hospitals for delivering between 30 and 50 patients. FBI agents arrested the City of Los Angeles Hospital CEO and a Skid Row health assessment center operator (Buffalo News 8/7/08).
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Following the Money. When I was interested in AMA finances a few years ago, I decided the data suggested that it had a bigger financial stake in maintaining the current system and pushing for more government control than it did in protecting physicians (see p 2). Looking at the grants reported in 2006, we're not seeing a lot of consumer-directed health care the Feds, Commonwealth, and Robert Wood Johnson. The usual suspects. Which explains why the AMA is focused on the usual things health disparities, physician communications, Cover the Uninsured Week, badgering smokers, underage drinking, assessing the nation's health literacy, etc., rather than protecting individual physicians, improving actual medical care for actual patients, and doing something about costs in medical care and training (which would require a look at deregulation and a reduction in general government interference). I'm thinking that the data show that the AMA is just one more organization that has been captured by the Left.
Linda Gorman, Ph.D., Independence Inst., Golden, CO


PQRI. The Physician Quality Reporting Initiative is really not reporting, it is Pay for Performance (P4P). To "report" a behavior, you have to "perform" the behavior. And it takes more effort to report not performing the behavior. The current PQRI amounts to giving physicians a bribe (about $0.25 per visit by my calculation) to act a certain way. Accepting money to perform a certain way conflicts directly with the AMA code of ethics. Further, when did "cookbook medicine" go from being a derogatory term to acceptance as "quality medicine"? This is another step in eroding respect for physicians, since nonphysicians can follow a cookbook. Physicians' expertise is needed to determine who needs nonstandardized care.
Stephen R. Levinson, M.D., Easton, CT


Do We Ever Learn? The liberal argument of promoting mandated prevention to lower costs was used decades ago to promote employment-based insurance. The result: costs have more than tripled the rate of inflation since individuals lost the ownership of their insurance plan.
Roger Beauchamp, D.D.S., Escanaba, MI


Maintenance of Certification; EMRs. I'm in the miserable process of recertifying. Numerous vendors are eager to sell the credit hours needed to study for the test which is taken at a center where examinees sit at computer terminals and are monitored, at a cost of $1,500. Who profits? The American Psychiatric Association. It sells the self-study based on a 2004 book that lauds nefazodone, which is no longer on the market. How do patients benefit when doctors forget current information to learn now out-dated information to pass the test? It will get worse when we need patient evaluations as from angry dementia patients whom I advised to quit driving.

A VA emergency physician tells me he cannot give verbal orders because the computer system doesn't allow it. He has to log into the system for every order. Only recently did he manage to change the blocks that required him to do smoking, depression, mammography, lipid, alcohol, lifestyle, and traumatic brain injury screening before he could order emergency medications or laboratory testing!
Martha Leatherman, M.D., San Antonio, TX


Electronic Records. Your commentary entitled "EMR a Non-consented Experiment" is one of the best statements I have read concerning problems with the EMR. When in private practice, I spent several hundred hours developing a system, only to have it fail. My current employer has the VA system. Since we had excellent technical support, we were able to avoid problems in the study by Koppel that you cited, and I believe the net effect was positive. However, I do not believe our experience is common, nor can it be reproduced in a smaller clinical setting. EMR is clearly an experiment on a national level, with potentially terrible outcomes for patient care and safety. It is tiresome to hear physicians blamed for "resisting change" as if we were backward-thinking technophobes. Could it be we have tried it and found it disappointing?
Curtis Harris, M.D., J.D., Ada, OK


Medical Home. As a solo family physician, I have always coordinated specialist care and provided a place where patients can be seen the same day. Putting a new name of "medical home" on it changes nothing. No one, however, cares enough to pay for it. P4P won't even repay the physician for the expense and time to fill out the required paperwork.
Everest A. "Tad" Whited, M.D., Pflugerville, TX