AAPS is a membership organization, which is tax-exempt under Section 501(c)(6) of the Internal Revenue Code. Its revenue is derived primarily from membership dues and activities and publications related to its exempt purpose. Unlike many other physician organizations, including the AMA, AAPS does not accept and rely upon revenue resultant from contractual arrangements with the government. Nor does AAPS accept monies from large foundations that have an interest in expanding government involvement in medicine. Specifically, AAPS has no grants or contracts to produce codes, guidelines, educational materials, software, forms, or other products related to compliance with any law or regulation or to the collection of third-party payments. It derives no royalties or revenues from the sale or licensure of such products.

Jane M. Orient, M.D., is a physician who has been in solo private practice since 1981. She is also a writer, editor, and lecturer, and serves as Executive Director of AAPS. She has not been the recipient of any federal grants or a party to any federal contracts or subcontracts in the current or preceding two fiscal years. She discontinued accepting any funds from Medicare since September, 1990. An abbreviated curriculum vitae is appended.

INTRODUCTION

The Internal Revenue Service has been under recent scrutiny, and Americans are well aware of the power and lack of accountability of this agency. They are less aware of the other government agencies that have comparable power. We are glad that this committee is taking a broader view and appreciate the opportunity to focus attention on the Health Care Financing Administration, which administers regulations that are even more complex than the Internal Revenue Code.

Any physician who is the recipient of federal funds through the Medicare or Medicaid program is subject to all administrative rules as well as the criminal law pertaining to such programs. Since the enactment of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, federal criminal and civil penalties attach to all insurance arrangements, public or private. Physicians face a Hobson's choice: attempt to comply, or refuse to accept any insurance payments (a choice that for many probably means retiring from medical practice).

Additionally, any physician who performs a laboratory test (as defined by federal law) is subject to the Clinical Laboratory Improvement Act. Physicians who have any interest in laboratory, imaging, rehabilitation, or other ancillary facilities are subject to "Stark rules" (named for Congressman Pete Stark). Physicians who are on the medical staff of any hospital which has a Medicare or Medicaid contract are subject to "anti-dumping" rules in the 1985 Consolidated Omnibus Budget Reconciliation Act and the Emergency Medical Treatment and Active Labor Act (codified at Title 42, US Code, Section 1395dd). These require all emergency facilities to provide "screening" examinations to all patients, stabilize all unstable patients, and meet stringent requirements (including prescribed documentation) before referring a patient to another facility. They also prescribe severe financial penalties up to $50,000 for on-call physicians who fail to respond quickly (even if delayed by other patients or by circumstances beyond their control such as failure to receive a message). This list is by no means exhaustive, but it illustrates that federal law enforcement casts a shadow over nearly every action taken by physicians today.

Physicians are subject to either civil or criminal penalties, or conceivably both, under many of these laws. The government's burden of proof is substantially less in administrative or civil proceedings. However, the specter of a criminal indictment, even if the physician believes that a prosecutor could never prove his case, is so threatening that a physician will often agree to settle and pay huge penalties rather than take the risk. A malpractice action is far less frightening; under tort law, a physician has clearly defined rights, and his liability policy covers the cost of his defense.

Under administrative law, the physician is, in effect, presumed guilty and must prove his innocence. There is an affirmative duty for "compliance," and compliance must be demonstrated. Physicians are repeatedly told that "if it isn't documented, it isn't done." A highly trained and experienced physician may make a large number of observations about a patient, and rapidly consider a complex and lengthy differential diagnosis, before writing a few lines on the chart. If he claims payment that he believes is rightfully his due on the basis of the expertise needed to do the job, rather than on the "bullets" in the chart record, he could be charged with fraud. Suppose, for example, that he wrote that a complicated patient was "stable," without writing down that he had spoken to the patient, the nurses, and the primary physician; checked the lab results on the computer; looked at the x-ray and electrocardiogram; and decided against performing further tests that day. Is that fraud? After all, the physician failed to prove his innocence by writing the prescribed verbiage. The civil monetary penalty is $10,000 per item, even if the difference in payment due for using a code for a more complex visit as opposed to a simpler one may be a very small sum of money (even less than $10). These fines can quickly mount to more money than a physician could conceivably see in many lifetimes of unremitting toil; they are not proportional to the size of the enterprise, individual physicians being liable for the same fines as a huge corporation.

WHAT IS THE INTENT OF THE LAW?

The stated intent of the law is to preserve the integrity of the Medicare program and to punish true fraud. No one would defend perpetrators of fraud. Spokesmen for law enforcement agencies can easily find examples of scams involving millions of dollars in claims emanating from post office boxes for fictitious services provided to nonexistent patients. The fact that such scams exist is a grave indictment of the Medicare program as well as law enforcement. However, there is no evidence that private physicians are responsible for any significant amount of Medicare fraud, much less that such fraud is responsible for the imminent insolvency of the Medicare program. Inspector General June Gibbs Brown stated: "We aren't finding the individual physician to be a prevalent offender. Most of them are caring people, dedicated to medicine and their patients" (quoted in Medical Economics, Sept. 9, 1996).

Allegations about "inappropriate" levels of payment or "medically unnecessary" services (once called a billing dispute and now called fraud) are judgment calls based solely on what is or is not written in the medical record. Skilled, busy physicians do not and cannot "document" every move they make or every thought that passes through their mind. Increased regulatory burdens, audits, and threatened prosecutions may suffocate the delivery of medical care, but they do nothing to deter fraud. In fact, they may expand the opportunities for system-gaming by unscrupulous "providers."

Even if there were evidence of actual fraud by some physicians, this would not be a rationale for armed invasions of doctors' offices by federal agencies, or for treating all physicians like convicted drug dealers. When asked about abuses, the responses from law enforcement and from organized medicine (usually the American Medical Association) are of several types: (1) Such things don't happen. (2) If they do, then they are mere "anecdotes" or the doctor was really one of those "bad apples." (3) If the issue is pursued, the response is eventually silence.

Another official's testament to good intentions appeared in the Wall Street Journal on May 1, 1998, p. A15: "As we do in other enforcement areas, we are continuing to refine our approach in fraud cases to ensure that we are using the tools that Congress has provided us fairly and responsibly....Honest hospitals and other health-care providers have nothing to fear." This letter was written by Deputy Attorney General Eric Holder, echoing reassurances previously offered by Mr. D. McCarty Thornton, Chief Counsel in the Office of Inspector General of the Department of Health and Human Services. Mr. Thornton severely criticized my Wall Street Journal article of May 30, 1996, and stated that it is "simply not possible to convict a person for a mistake which is the product of an honest error...." However, my letter of July 15, 1997, which is appended to this testimony, is still awaiting an answer. As noted in my letter, statements such as those by Holder and Thornton do nothing to limit the unbounded discretion of prosecutors. The laws under which they are acting are a virtual invitation to prosecutorial abuse. Neither the Department of Justice nor the Office of Inspector General have taken any action to investigate abuses that have already occurred.

The intent of the law may very well be to punish persons who deliberately defraud the Medicare program and to leave honest physicians in peace. However, the effects of the law are vastly different, and it is the effects that must concern us.

THE MACHINERY OF THE LAW

The resources and "tools" of federal law enforcement were vastly expanded by HIPAA. Besides extraordinary new funding levels, a bounty system was established for depositing fines into a self-perpetuating fund for new investigations. Civil monetary penalties were quintupled from $2,000 to $10,000 per item and extended to new areas such as the provision of "medically unnecessary services" (visits that are too frequent, extra laboratory tests, surgery before disability is far enough advanced, too many complex services, etc.) The subpoena powers of the Inspector General, once restricted to investigations in which federal funding was involved, were expanded to include any activities under the fraud-and- abuse control program (which encompasses private insurance claims also). Asset forfeiture powers, originally intended to fight drug dealers, can be used against physicians on mere suspicion that they are about to commit an offense, lest they alienate or dispose of assets that may be needed to pay a fine, according to a conference committee report. The act provides incentives to informers and additional mechanisms for reporting suspected abuse. Even the attorney-client privilege is threatened with respect to investigations of suspected federal health-care offenses; doctors are warned to beware of their own "compliance officers."

With these new resources, and the high priority assigned to health-care fraud by the Department of Justice, it is not surprising that the number of audits is expected to double. In 1996, the federal government collected more than $1 billion in fines and settlements, a seven-fold increase over the previous year. More than 4,000 civil health care matters were opened (an increase of 61%), and 282 criminal indictments were filed.

THE REQUIREMENTS OF THE LAW

Informed physicians believe that total compliance with the law is impossible. Most physicians would prefer an IRS audit to an audit by the Health Care Financing Administration (HCFA), despite the notorious cases of abuse by the former agency.

The acknowledged complexity of the tax code pales by comparison with the regulations applicable to medicine. Medicare regulations run to 42,000 pages, compared with a mere 17,000 pages of IRS regulations. Moreover, coding updates are published monthly by the AMA. There are literally thousands of forbidden coding combinations, and thousands of errors in the lists. An example of the communications with which physicians must deal every day is appended (letter from Linda Dietz, Project Manager/Coding Specialist for the National Correct Coding Initiative to Dr. Lawrence Huntoon, July 16, 1997, and Dr. Huntoon's letter of July 21, 1997, to Mr. Preston Lowen.) In this instance (which is by no means unusual), it was the carrier who made the error and then accused the physician of malfeasance in a letter to the patient.

The interpretations of the codes may actually be a secret; physicians have had to file Freedom of Information Act requests to find out the precise interpretation of a requirement, as they attempt to defend themselves against a $50,000 sanction for noncompliance. The carrier may attempt to penalize a physician for a "violation," when in fact the carrier's requirements are at variance with those of HCFA. While physicians can be investigated because of a "profile" that shows them to be "outliers," the norms by which they are judged are deliberately kept secret. If physicians knew the standards, it is argued, they could "game the system." In other words, HCFA demands that physicians abide by the speed limit, but refuses to tell them what it is.

It is possible that certain important rules are not actually written down anywhere, but are simply conjured up whenever desired at the whim of law enforcers. When one physician, who is now in federal prison, demanded that the prosecutor submit in writing the rule that he was accused of violating, the prosecutors replied that they were under no obligation to do that.

WHAT CONSTITUTES A LAW, AND WHO WRITES IT?

Writing the wrong code on a claims form is an offense carrying a fine of $10,000; thus, it is extremely important to know what constitutes the wrong code. The procedure involved was highlighted at an April 27, 1998, "fly-in" held by the AMA, with participation by HCFA in Chicago to discuss proposed new "AMA/HCFA Evaluation and Management Documentation Guidelines." A judgment about the correctness of the code is made by claims-processing clerks on the basis of the medical record, which is now supposed to objectify such imponderables as the complexity of the physician's decision- making process.

Physicians have expressed their outrage that heavy penalties may be exacted because a clerk does not find the right number of appropriate "bullets" written on a chart. However, an official of the AMA has stated that the "guidelines" are simply that, rather than a "rule" or a "law" (see correspondence from Mark Segal to Jane Orient dated April 13, 1998). Yet, publications of the AMA stated that the "guidelines" were to become mandatory in July, 1998. By what process? No such rules for coding have ever been promulgated according to the requirements of the Administrative Procedure Act. The proposed rules have not been published in the Federal Register. The public, including the physicians facing $10,000 fines for each "violation," has had no opportunity to comment. Nor have the rules met the requirements of the Paperwork Reduction Act. This Act protects small businesses and others, including physicians (most of whom are small businessmen), from onerous, irrational regulatory requirements. Why should HCFA ignore this requirement with regard to physicians?

In addition to the legal question, there is a scientific issue. The present set of procedure (CPT) and diagnostic (ICD-9) codes, which are supposed to "match," and which must be carried out to the highest possible level of specificity (say four or five significant digits), have never been scientifically validated. Practicing physicians state that the level of uncertainty in diagnosing patients, especially when first seen, does not admit of such specific coding. Studies have shown that perhaps 60% of charts are coded "incorrectly." Thus, physicians may be held to a standard, under penalty of bankruptcy and a lifelong nondischargeable debt, that the majority of them cannot meet under conditions of actual practice. As to "peer review" by practicing physicians, their response was overwhelmingly negative, even though the "guidelines" were written by the AMA. Representative comments: "a political tool to destroy private medicine"; a "complete waste of time and effort"; a "first-year medical student exercise"; "really really stupid"; a "violation of patient privacy"; "part of a systematic breakdown of the patient-physician relationship"; "busy work that takes time away from patient care"; "impossible to enforce fairly"; and so on.

At the April 27, 1998, "fly-in" in Chicago, the need for assessing the "reliability" of the guidelines (which support the coding) was mentioned. One attendee stated that at her institution, trained coders, looking at the same set of data, disagreed on the correct code in 30% of cases. Yet there are no written standards that give a permissible range of "error" or variance for purposes of assessing multiple $10,000 fines. Nor are there standards for what constitutes a "pattern" of upcoding or provision of "medically unnecessary" services (itself an undefined and undefinable term). One physician in federal prison was declared to have a practice "permeated with fraud" on the basis of less than 0.1% of his practice. (All charts were reviewed, and the very worst brought to trial. His entire earnings from all insurance payments for an extended period were seized.)

What constitutes the gold standard for accurate codes in the case of a dispute? The prosecutor's witnesses at trial may have the final word. One Michigan office manager spent one year in the Ingham County Jail because the jury believed expert testimony that a certain code required a physical examination. Actual reading of the coding manuals in effect at the time lead to the conclusion that the office manager's coding was quite correct. And in administrative proceedings, it is not even necessary for the prosecutor to convince a jury, but simply a judge who is hired by the agency.

How, then, do these unvalidated codes, developed in defiance of government-in- the-sunshine requirements and never even subjected to the rigors of the Administrative Procedure Act or Paperwork Reduction Act, acquire the functional equivalent of the force of law? On the basis of these codes, a person may lose his liberty, his medical license (because of a felony conviction), his reputation, and his accumulated assets (if criminally convicted). How can he even lose all the assets he has ever earned or hoped to earn on the basis of a civil, administratively imposed fine? Persons convicted of violent crime are often punished far less severely, and only after a trial in which their rights are scrupulously guarded.

Apparently, the codes acquire their force through a process of government by behind-the-scenes deal-making. The codes, along with the "guidelines," are apparently authored by AMA-appointed committees based on an exclusive contract with HCFA. They acquire their credibility from the AMA imprimatur, even though the AMA probably now represents less than one-third of practicing physicians. They require their legal force from the power of the executive to simply impose them.

This procedure goes far beyond the delegation of power from the legislative to the executive branch (which in itself needs to be examined to see whether constitutional limits have been exceeded). Here, an executive agency is apparently delegating its power to private entities: the Medicare carriers (see again the correspondence to Dr. Huntoon from AdministarFederal) and the AMA. The private organization stands to profit enormously from the "public-private partnership." For example, the AMA sells monthly coding updates (CPT Assistant) for a subscription price of $139 per year. The code books need to be purchased yearly; the regular price for a set suitable for a small office is $210.

ACCOUNTABILITY

Even though "private" entities (Medicare carriers, Peer Review Organizations, and other contractors) carry out much of the actual enforcement activity, as well as the rule-making, it is nonetheless done under the protection of sovereign immunity. The "public-private" partnership thus allows each partner to avoid accountability. The private partner escapes tort liability by collaborating with the government, and the government apparently escapes due-process requirements and Constitutional restrictions by collaborating with the private partner. The private partner also escapes the pressures of market competition by virtue of its assured monopoly for "compliance" materials. A lucrative industry has arisen to supply the "need" for such materials-a need created by the suppliers themselves.

The authority of the private-public partnership affects physicians every day. At the lowest level, the enforcement simply consists of claims denial, which is accompanied with a letter to the patient that implies that the physician is a criminal and states that the patient is under no obligation to pay for the services that he received. Such letters cause, at least, significant anxiety and uncompensated labor to the physician, who must respond, and often cause irreparable damage to the patient-physician relationship. Even when the physician shows that his interpretation was correct, and the carrier made an error, a simple letter to the patient admitting the error will not be forthcoming.

Carriers and HCFA are supposed to be subject to certain laws. It is, for example, illegal to alter claims. Nonetheless, carriers, such as Upstate Medicare of New York, frequently change the status of claims, as from unassigned to assigned, with impunity. Carriers are required to pay clean claims within a certain period of time, and reimbursement is supposed to be a certain amount. But again there are no enforcement mechanisms. When a carrier paid a physician as much as 40% less than the prescribed amount for an entire year, it eventually acknowledged its error and corrected the rate for subsequent payments, but never repaid the $15,000 the physician lost due to its "mistake."

While much attention is focused on "waste" allegedly caused by physicians, carriers themselves are probably responsible for much more waste. Yet rarely do they face an audit or other type of scrutiny for claims that they improperly pay. The Report on the Financial Statement Audit of the Health Care Financing Administration for Fiscal Year 1996 (A-17-95-00096, July, 1997) showed that HCFA failed to "provide adequate support for its accounts payable estimate" [of $36.1 billion]." Medicare contractors "did not maintain adequate documentation to support reported accounts receivable activity" [accounts receivable reported to be $2.68 billion]. These material weakness "were reported in previous Chief Financial Officers Act audit reports and remain uncorrected." Meanwhile, the government's search for fraud is focused elsewhere, based on an examination of 5314 claims (a sample of 6.6 per million, or 0.00066% of claims submitted). An analogous response would be for Congress to identify abuse and waste by the IRS, then seek to increase IRS powers in order to solve the problem of occasional taxpayer error. A better solution would be to allow lawsuits to address unscrupulous IRS or Medicare carrier activities.

In the event of administrative proceedings or investigations prompted by malicious informants, prosecutorial career ambitions, "targets" (quotas), or simple error, a physician may spend years and tens of thousands of dollars in legal fees, but even if vindicated can never be made whole. The agency can simply shift its attention to another "target" (the term also refers to physicians), once it has exhausted every possible avenue or level of appeal, and apply the lessons it has learned at the expense of the first physician to increase its likelihood of future "success." Success is always measured by convictions obtained or penalties collected, never by justice done.

The sense of injustice is heightened by awareness of the high-profile case, AAPS v. Clinton, which challenged the illegal secret operations of the Clinton Task Force on Health Care Reform. Eric Holder, who now reassures doctors about the fairness of the Department of Justice, is the attorney who decided that there was insufficient evidence to prosecute Ira Magaziner for perjury. Magaziner had filed an affidavit stating that the working groups of the Clinton Health Care Task Force were made up solely of full-time employees of the federal government and hence could legally reinvent American medicine in secret. A federal court relied on that affidavit in the case of AAPS v. Clinton. Recently, Judge Royce Lamberth ordered the federal government to pay plaintiffs more than $285,000, part of their legal costs. Instead of following the order, the government decided to spend more taxpayer dollars appealing the decision. Interestingly, the amount that the taxpayers may have to pay in sanctions for Magaziner's conduct is of the same order of magnitude as is demanded of Dr. George Krizek for inadvertently billing under some incorrect codes for long days and nights of serving severely disturbed patients. Magaziner is still a senior government official; Dr. Krizek's career was ruined long ago, and the federal government is trying to seize his home as well. Magaziner supposedly didn't know who he was appointing to serve on Task Force working groups; Dr. Krizek should have known how much time he had to spend face to face with a patient, and which room he had to be in to make telephone calls, in order to use certain codes.

PHYSICIANS' PERCEPTIONS

Despite official reassurances, physicians do not believe that simple honesty and conscientious efforts to comply will be sufficient. They receive far too many contrary messages: invitations to subscribe to publications such as the Medicare Compliance Alert with Civil Money Penalties Report or BNA's Health Care Fraud Report, invitations to attend compliance seminars, warnings that they had better hire a compliance officer and draft a compliance plan, communications from insurers in envelopes stamped with fraud-reporting hotline numbers, and reports by other physicians who have been audited and forced to pay tens of thousands of dollars. There are news reports of how Medicare has "recovered" a billion dollars and that $23.6 billion in "improper" payments were made. A Florida physician reports hearing that 38% of physicians are to face an audit, with fines ranging from $10,000 to $500,000, and an average of $80,000. (Perfect compliance or a fine of $0 is not even one of the possibilities.) Conversation at medical society meetings concerns the intricacies of coding or horror stories about dealing with incompetent, threatening Medicare clerks; no more shop talk about interesting cases or exciting advances in medicine.

Even if the cases known to AAPS are mere "anecdotes," it doesn't take very many atrocities to terrorize a population. If one American's rights can be violated, and the officials never called to account, is any American safe? Physicians are certainly altering their practices. Instead of devoting their full attention to the needs of their patients, they are constantly looking over their shoulders. Many who might be inclined to remain in independent private practice are being driven to join HMOs and other managed-care organizations partly because a larger group can better afford the cost of the unfunded regulatory mandates (the need for the codebooks, the coding software, the in-house coding expert, the compliance officer, and the legal staff). This additional overhead must, of course, be taken away from patient care and physician compensation.

Physicians feel, with good justification, that they have been turned into paper- pushers and informants for insurance companies and government. To be paid for their services, they must behave in ways that are contrary to the best interests of their patients. The patient's medical needs, and also his confidentiality, are to be sacrificed to the demands of the payer. The impact on physicians is harmful; the effect on all patients is destructive.

THE REALITY

Physicians in many different states report a variety of abuses by federal or state law- enforcement agents. These include:

Knocks on the door of their home in the evening by armed agents.

• Armed invasions of their offices when patients are present, sometimes with unholstered firearms. Doors may be kicked in.
• Detention of personnel in the office even when not under arrest.
• Telephones ripped out of the wall so that an attorney could not be called.
• Terrorized personnel requiring emergency medical treatment as for cardiac arrhythmias.
• Seizure of all office records, without patient consent, with records unavailable for patient care for months.
• Seizure of financial records so that normal business operation is impossible.
• Intimidation of patients, even or especially psychiatric patients-with open threats that if the patient does not testify against the doctor, the patient himself will be charged.
• Wired informants posing as patients, trying to trap physicians into doing things that might be justified if the "patient" were actually telling the truth but are actually "medically unnecessary" or otherwise not indicated.
• Reputation-destroying publicity before the physician even knows that there is a problem.
• Use of perjured testimony.
• Threats of criminal penalties based on charges that turn out to be trivial, even absurd, possibly because of malicious motives by competitors in collusion with prosecutors.

The above summary is based on communications with real physicians and review of court documents, correspondence, indictments, videotaped legal proceedings, and news reports. Most physicians, and/or their families, were interviewed personally. Although AAPS can make no definitive representations concerning all of the facts of the cases, the procedure (or lack thereof) must be of serious concern to all American citizens, even if all of the targets were guilty as charged. Although some of the targets may have been stretching the rules, AAPS believes that they probably thought and intended their activities to be in compliance with all applicable laws. It seems clear that cases of physicians who billed large sums to Medicare (and hence are especially likely to get an unsympathetic hearing from jurors) are being used to set precedents that can be used against almost any physician. (Trial lawyers recently attended a seminar in San Diego to learn how to "get" doctors based on lessons from the case of a physician who was sentenced to 11 years in prison and $16 million in fines, when the trial court found a "loss" to the government of $65,140 upon declaring some procedures to have been "medically unnecessary.") The existence of such precedents can then be used to extort very disadvantageous settlements from physicians in administrative proceedings. To assert the rights accorded to criminal defendants, physicians will have to place their liberty and their whole career on the line, and even then have no assurance of fair due process. Should they prevail in the criminal arena, the government could still bring a civil case. (Indeed, after the San Diego physician won on many issues in the 9th Circuit Court, the government filed a civil case against him, at a time when he had no resources to hire legal counsel.)

Once the integrity of the judicial process is compromised, the gates are open to widespread abuse. A crack in the bulwarks can bring down the whole structure of law with devastating rapidity. Dickens described the gruesome results of turning a once respected class (that included physicians) into scapegoats for all societal wrongs in A Tale of Two Cities:

A revolutionary tribunal...; a law of the Suspected, which struck away all security for liberty or life, and delivered over any good and innocent person to any bad and guilty one, prisons gorged with people who had committed no offense and could obtain no hearing; these things became the established order...and seemed to be ancient usage before they were many weeks old....

Before that unjust Tribunal, there was little or no order of procedure, ensuring to any accused person any reasonable hearing. There could have been no such Revolution, if all laws, forms, and ceremonies had not first been so monstrously abused that the suicidal vengeance of the Revolution was to scatter them all to the winds.

PHYSICIANS' REACTIONS

The climate of fear has affected the practice of every physician. But the impact on patients is especially worrisome. Some Congressmen are very sanguine about effects on Medicare because such a large proportion of physicians still see Medicare patients, purportedly 96% according to the Physicians Payment Review Commission. However, we think that such figures do not tell the whole story. A survey of AAPS physicians in June 1997 showed that of about 300 respondents, 33% were not accepting new Medicare patients, except possibly under special circumstances. Moreover, 40% reported restricting some services to Medicare patients, leading to an average decrease of 36% in their Medicare practice. Of all respondents, 22% said that Medicare payment did not cover overhead, 31% said that they had experienced hassles or threats from Medicare carriers, and 29% said they feared fines or prosecutions by federal or state law enforcement agencies. About 10% had experienced a Medicare audit, 2% a fraud investigation, 39% a demand to refund payment for a "medically unnecessary" service, and 35% a demand to refund payment due to coding error or other reason. About 26% reported having difficulty in finding a physician to accept a Medicare patient in referral. More than 65% said they were considering retirement at an age earlier than they would have thought possible 5 years ago. Early retirements and a higher- than-expected number of physician retirements due to disability have already been reported by others.

The position of our Association is that perfect compliance with Medicare and other insurance regulations is impossible, and that honest, conscientious physicians may be fined heavily in unfair administrative proceedings. We recommend that physicians opt out of Medicare as soon as possible and treat elderly patients on a private or charitable basis, despite the financial loss that many physicians would thereby incur. We also recommend that physicians decline to accept assignment of benefits from any insurer.

RECOMMENDATIONS

For combating fraud, the Association has previously submitted a number of suggestions, including forbidding the assignment of benefits. More extensive documentation requirements would be utterly useless for this purpose, and perhaps counterproductive; those intent on fraud would simply produce more false documentation.

For correcting the egregious abuse of administrative law, AAPS suggests the following first steps as a minimum:

• Requiring that all regulations carrying a civil or criminal penalty be enacted in strict compliance with the Administrative Procedure Act and the Paperwork Reduction Act (the approval of the AMA may not substitute for this process) and blocking the enforcement of regulations that do not comply.
• Requiring congressional oversight of regulations, especially those imposing high costs or potential high penalties on violators.
• Making agents individually accountable for failure to abide by the law; for example, for violations of due process rights, intimidation of witnesses, unauthorized display of firearms, inappropriate searches and seizures, knowingly making false statements to judges or juries, subornation of perjury, or refusal to provide adequate and comprehensible notice of proscribed behavior.
• Abolition of the bounty system that allows prosecutors to benefit from bringing unwarranted prosecutions or administrative proceedings.
• Assuring the accused the right to confront his accuser, and applying other provisions of the Bill of Rights to physicians.
• Doing away with immunity for those who bring accusations in bad faith.

A fundamental reexamination of administrative law is in order, to the extent that it circumvents the requirements of Amendments VI and VII to the U.S. Constitution. Congress should enact the proposed Administrative Civil Rights Act, which provides as follows:

ADMINISTRATIVE CIVIL RIGHTS ACT

The constitutionally guaranteed civil rights of American citizens shall be protected in administrative proceedings.

Any agency acting under color of federal or state law shall have the right to impose only limited penalties through administrative proceedings, even when these penalties are called "deterrents" or "means of protecting program integrity" rather than "punishments." Allowed forfeitures include only:

Before larger economic penalties or loss of liberty may be imposed, the defendant shall have the right to demand a trial in a court of law and in which the defendant has all the rights accorded to criminal defendants. These include but are not restricted to: trial by jury, representation by counsel, protection against self incrimination and double jeopardy, a presumption of innocence, and protection against unlawful searches and seizures. Personnel of the court shall be independent of the agency bringing the complaint against the citizen and shall receive no direct or indirect remuneration from that agency.

Citizens who are under investigation for violation of any law or regulation by an administrative agency shall be informed of their rights and shall not be penalized for exercising or refusing to waive these rights.

No person shall be permitted to make an anonymous complaint about a condition that carries an administrative sanction, and no monetary rewards shall be given to informants.

This law shall supersede all federal laws that mandate or permit larger administrative penalties to be enforced without proper judicial procedure.

No individual agency shall be exempted from these guarantees of citizens' rights. The law shall apply equally to the Food and Drug Administration, the Environmental Protection Agency, the Health Care Financing Administration, the Internal Revenue Service, the Occupational Health and Safety Administration, and any other agency acting under color of federal or state law.

To assure adequate consideration of the serious consequences of abridging the rights of citizens, this Act may be amended only in legislation specifically directed to that purpose, not as part of the budget reconciliation process or as an amendment to unrelated legislation.

All agreements between a citizen and a governmental agency, in which a citizen has waived his rights, shall be held invalid and unenforceable if signed under duress, such as a demonstrable or perceived threat of seizure of assets, loss of licensure, loss of liberty, loss of property value, criminal prosecution, or other adverse consequence imposed upon a citizen under color of federal or state law or regulation.

Citizens deprived of economic or other rights by governmental agents acting in violation of this Act shall not be denied access to federal court or to damages at law.

The rights and freedoms of Americans are eroding at an alarming rate, and Congress must take prompt, decisive action. Most physicians are not aware of the pivotal role that their professional organizations are playing in rule-making and enforcement. Likewise, most legislators are probably unaware of the ways in which the public-private partnership manages to circumvent "government-in-the-sunshine" as well as other procedural requirements. By this means, public-private partnerships are effectively abrogating the rule of law and the system of checks and balances on which the survival of our Republic depends.

Questions:

How would you protect the Medicare program against fraud?

How will the proposed new E&M documentation guidelines affect doctors and the Medicare program?

What should be done with the E&M guidelines?