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

Volume 63, No. 12 December 2007


While many are preoccupied with fighting the Single-Payer bogeyman which is not too likely at the present time in the United States the real threat is unopposed, writes Greg Scandlen of Consumers for Health Care Choices. That is mandatory insurance coverage for all Americans.

"Universal coverage" is the stated goal of the AMA as well as most presidential candidates. And "there is no voluntary path to universal coverage," writes George Halvorson, chairman and CEO of Kaiser Foundation Health Plan and former CEO of HealthPartners of Minneapolis.

The American model will probably be different from the British or Canadian. "Government-controlled public/private arrangements in which federal subsidies are used to justify the federal government regulating and controlling everything, but leaving the financial risk to private parties...are the risk in...all the proposals coming from Democratic candidates for president," writes AAPS member Richard B. Warner, M.D., immediate past president of the Kansas Medical Society.

There's a $2.5 trillion pie to divvy up, and stakeholders are gathering: the American Hospital Association, America's Health Insurance Plans, Service Employees International Union, Phrma, the Business Roundtable and the AMA.

The Pieces Are Already in Place

Eight developments "finally make health care reform possible," states Halvorson in his book Health Care Reform Now! a must-read, according to Rep. Pete Stark (D-CA) and Alain Enthoven. The first is the "common provider number," the NPI, which makes it possible to "track individual provider performance using available electronic data bases." (He ignores HIPAA-noncovered entities). Other essentials include inter-oper- able computer databases; the government's willingness to make its Medicare data on provider performance available to the public; and lawmakers' readiness for reform.

Competing Behemoths (a.k.a. "Managed Competition")

Once all that data is available, plans can compete on the basis of performance. Since individual consumers are unlikely to make caregiver selection decisions well, and will not have the market clout to "transform any single multimillion-dollar revenue provider of care into a more accountable vendor," Halvorson writes, "we need to hire a vendor to set up and administer those market forces," using both wholesale and retail purchasing leverage: an infrastructure vendor (IV).

Six-Sigma Goals

Companies like General Electric, which has "world-class reengineering capabilities," set Six-Sigma quality standards for themselves. These allow only 3.4 defects per million opportun- ities. The best score among all health plans in the country for breast cancer screening compliance is 88.6%, a mediocre two-sigma level. Only with extensive and 100% complete data collection impossible without universal coverage can we hold providers accountable to a six-sigma standard of compliance with best practices. And to find out what the best practices are, "we" need to hire someone to do the "keeping up" work, as no mere physician can possibly read all relevant studies.

Already, for the chronic-disease patients who incur most medical costs in America, "we know exactly what care they need." Patients with congestive heart failure, asthma, diabetes, coronary artery disease, and depression need to have their lab tests and take their medicine. And they need to make lifestyle changes (the IV will therefore assign patients a case manager and care teamlet): "The potential positive impact of patients giving up cigarettes, losing weight, and exercising regularly are massive." If we could achieve those goals, "Medicare funding would disappear as an issue," Halvorsen thinks.

Since America still has some independent physicians, the IV needs to create the functional equivalent of vertically integrated care: "virtually linked" care to overcome endemic care linkage deficiencies (CLDs).


Employers will continue to be major buyers, and they'll be purchasing benefit delivery packages and a health reform agenda from IVs. They will also be paying for population health improvement and provider performance management. IVs will have "negotiated prices with each care provider," and will have patients "appropriately incented and supported to make the right decisions about coverage, care systems, caregivers, and care." Only "higher income" (>300% of federal poverty level) working people would buy coverage directly and be forced to buy a $10,000-deductible plan from the government if they didn't attach proof of insurance to their IRS form 1040. Taxpayers, of course, would be buyers for others without employer-owned coverage. A new program called HealthPrime would use Medicaid's infrastructure for those not qualified for Medicaid. The problem with just expanding Medicaid is getting enough providers to sign up.

The cost shift from the uninsured could be ended. (There apparently is no cost shift from Medicare or Medicaid.) A health care sales tax and/or an in-lieu tax on employers who don't provide insurance would provide any needed extra money in case the cost savings were insufficient.

Universal Control

It is essential for everyone, including noncitizen residents (and all "providers"), to be in the system to eliminate health disparities, to know every needed service that a patient is not receiving, and to achieve health solidarity as a core value.


"We are truly blessed by living in a democratic form of government, where all voices can be heard some better than others.... But the people who are heard the most may have interests not optimally aligned with the cause of true reform."

While it's generally good that "it's hard to stampede American lawmaking in any given direction" its stability protects us from "the dictatorship of the current majority," it "also makes crisp and immediate reform in any area highly unlikely." Thus, while we "need the government to do some heavy lifting to move the reform process along," we need to use "another leverage factor": market forces.
George Halvorson, Health Care Reform Now!


"Socialism is democracy."
Hugo Chavez

"Democracy is like the grave it perpetually cries `give, give,' and, like the grave, it never returns what it has once taken. Do not surrender to democracy that which is not yet ripe for the grave."
Bulwer Lytton, quoted in TCSDaily 10/3/07


"Replacement of `republic' with `democracy' has done very great damage to our country.... It is the remnants of our republic that protect our freedom remnants that are continually under assault from the advocates of democracy."
Arthur B. Robinson, Access to Energy, June 2007


Debt Tsunami Begins

The first baby boomer has filed for Social Security heralding what David Walker, comptroller general of the Government Accountability Office, calls a "tsunami of spending." Payouts will exceed tax receipts in 2017, and the loans made by the "trust fund" to finance government spending will be called. The unfunded liabilities of Social Security and Medicare, over the next 75 years, total $440,000 for every American household (Natl Center for Public Policy Research).

"Medicare has really been bankrupt since it began in 1965," wrote Anthony Gregory of the Independent Institute in 2004. Even with seven payroll tax hikes in 21 years, today's elderly spend twice as much out of pocket as they did before 1965, even accounting for inflation.

Medicare is "democracy at work," wrote Rep. Morris Udall (D- AZ) in 1965. The people got what they wanted, after a bitter and protracted fight. Private insurance had failed.

"Plans vary enormously; the lower the premium, the less you get. The `Golden 65' plan of Continental Casualty is fairly complete, but costs a couple over $600 a year obviously more than millions of retired persons can afford."

From Medicare, physicians should have learned that today's congressional promises as to pay well and not interfere with medical practice are not binding on future Congresses, points out Greg Scandlen.


Curtis Caine, M.D., Honored

Curtis Caine, M.D., long-time AAPS director and a former president, received the Eileen Shearer Eternal Vigilance Award at a national gathering of the Constitution Party. Dr. Caine is a member of the party's Executive Committee and also serves as its Parliamentarian.


AAPS Elections, Committee Report

At the 64th annual meeting in Cherry Hill, NJ, Mark J. Kellen, M.D., of Rockford, IL, was elected President-Elect. Other officers: Tamzin A. Rosenwasser, M.D., of Lafayette, IN, is President; Charles A. McDowell, Jr., M.D., of Alpharetta, GA, is Secretary; R. Lowell Campbell, M.D., of Corsicana, TX, is Treasurer; Kenneth D. Christman, M.D., of Dayton, OH, is Immediate Past President. Elected to the Board of Directors are: John H. Boyles, Jr., M.D. of Dayton, OH; Claud A. Boyd, Jr., M.D. of Augusta, GA; Robert J. Cihak, M.D., of Brier, WA; Richard Dolinar, M.D., of Phoenix, AZ; and Dennis K. Gabos, M.D., of Allison Park, PA.

Resolutions Committee Chairman John Boyles announced rules for the 2008 annual meeting: Resolutions must be received, in writing, 90 days before the meeting.


AAPS Testifies at Hearing on TMB

On Oct 23, the Texas House Appropriations Committee held hearings concerning alleged abuses by the Texas Medical Board. AAPS General Counsel Andrew Schlafly and several AAPS members testified. AAPS was the only medical organization speaking on behalf of physicians. Video and audio recordings are available at www.aapsonline.org.tmb.php.

Formal complaints against TMB president Roberta Kalafut, D.O., and executive director Don Patrick have been filed with the Travis County District Attorney for alleged abuse of power. Stephen Hotze, M.D., charged that Kalafut had her husband file anonymous complaints and then used her position to see that their competitors were disciplined by the board.


British NHS Updates

Required to ensure that everyone has a general practitioner (GP), the National Health Service has responded to shortages by trebling "compulsory allocations" in some areas forcing doctors with closed lists to accept hundreds of new patients. A downward spiral could occur as doctors choose to retire at age 55 or even sooner (Independent 11/1/07).

Since 2003, GPs have had static pay but rising expenses, except for performance-related pay based on patient outcome. Doctors hit far more targets than expected, and earned much more than the government intended. Salaries soared to 110,000. "My profession is being vilified for doing what was asked," writes Dr. Laurence Buckmann (Independent 11/1/07).

"This is a pay scheme imposed by government and now they don't like it that we have done well."


AAPS Calendar

Feb 1-2, 2008. Seminar, Board of Directors, St Petersburg, FL. Sep 9-13, 2008. 65th annual meeting, Phoenix, AZ.
Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.

State Raids Fund; Wisconsin Medical Society Sues

Wisconsin Gov. Jim Doyle's third attempt to raid the Injured Patients and Families Compensation Fund succeeded; the legislature voted to transfer $200 million out of the fund as part of a deal to finalize the state budget.

"This amounts to a special tax on physicians to help balance the state budget," writes AAPS member Al Fisher, M.D., a family physician in Oshkosh. Wisconsin physicians are forced to contribute to the fund or lose their license. Any deficits will be covered by increased assessments on physicians.

The purpose of the Fund is to pay malpractice judgments exceeding policy limits. Its establishment has been touted as one of the great accomplishments of the Wisconsin Medical Society. Those who support similar funds in other states "should be studying what is going on with the Wisconsin Compensation Fund now," writes Dr. Fisher.

The Society filed suit on Oct 29, asserting that the raid is an unconstitutional taking of property without just compensation, an unconstitutional impairment of a contract between physicians and the state, and an illegal tax on physicians. The complaint is posted at www.wisconsinmedicalsociety.org.


Doctor Excluded Until Loan Repaid

If a physician is excluded from federal health programs because of default on a loan for his professional education, there is no basis whatsoever on which an administrative law judge can overrule the Inspector General's decision, as long as it has a foundation in some nexus of fact and law. The minimum exclusionary period lasts until the debt is paid. (Michael J. Rosen, M.D. v IG DAB No. 1566, Feb 22, 2007, Civil Money Penalties Reporter, Fall 2007). An excluded person cannot be employed in any capacity by any medical facility that accepts money from federal programs, or in an organization that contracts with such a facility (see AAPS News, May 2006).


Tip of the Month: Most conflicts over Medicare opting out have resulted from a failure to renew the opt-out every two years, pursuant to the regulations. Remind yourself to do this, and start the process early. When communicating with Medicare, physicians should build in a level of redundancy in anticipation that officials will "lose" what they were sent. Include a cover letter with your opt-out documents requesting acknowledgement. Send copies of important mail to the administrator of the CMS regional office as well as the Medicare contractor. It is desirable to have your opt-out affidavit notarized. Review the section on opting out on www.aapsonline.org for any updates.


Hospital Enjoined Against Filing NPDB Report

In an amicus brief filed Nov 9, AAPS urged the Supreme Court of Montana to uphold a preliminary injunction by the District Court that prevented a hospital from improperly denying medical staff privileges and filing a report with the National Practitioner Data Bank (Jesse A. Cole, M.D., v. St. James Healthcare, No. DA-07-0410).

The case concerns whether a hospital can circumvent the procedures established in its own medical staff bylaws. Dr. Cole, a radiologist, was "investigated" by an attorney with no medical qualifications, who was hired by the hospital's board of directors, not the medical staff. The hospital was enjoined from disseminating the results of this sham peer review.

"An unjustified, adverse report to the...NPDB is plainly `irreparable harm' that has no adequate remedy at law," states the AAPS brief. The NPDB procedures provide less protection than required by the Privacy Act by permitting dissemination of a disputed report, without even requiring a "reasonable" check on its accuracy, completeness, or relevancy.

The Health Care Quality Improvement Act (HCQIA) only provides immunity from monetary damages, not from injunctive relief, AAPS notes.

The hospital pleaded for deferential treatment on the basis of poverty. Being held accountable for violating a physician's rights might "reduce...ever diminishing margins." Amici argued that the hospital might have a difficult time making a credible case on remand, referring to the hospital's form 990.

Implicit in the hospital's case is the assumption that the judiciary is not up to the task of assessing the issues involved in hospital staffing disputes. The Michigan Supreme Court rejected that argument, noting that courts routinely review complex issues of all kinds.

"Sham peer review interferes with quality medical care and impedes the benefits of competition and free enterprise. In short, sham peer review is not `peer review' at all, but rather tortious conduct disguised as `peer review' to escape liability," amici argue. The brief is posted at www.aapsonline.org.


High Technology Targeted on Medicaid Fraud

Colorado Gov. Bill Ritter aims to save the state $47 million over the next 5 years through a high-technology initiative to reduce Medicaid fraud. Claims will be reviewed using artificial intelligence. To assure that providers meet minimum fiscal standards, they will be required to reapply every 3 years. New applicants will be subject to site visits and to criminal background checks (BNA's HCFR 10/24/07).


Perez Seeks Post-Conviction Relief

Office manager Edgardo Perez-DeLeon was convicted of health care fraud in 1993, along with his wife Wanda Vlez-Ruiz, M.D., and served one year in the county jail. The Supreme Court of Michigan refused to hear the appeal. The issue was whether a physical examination is the sine qua non for billing for an office visit. Through the Freedom of Information Act, Perez turned up evidence of perjury by a key government expert. He also alleges that the prosecutor, Ronald Emery, tampered with evidence by not placing on the witness stand one of his listed experts, who recently testified at a trial that the physical examination was not required for billing for an office visit of an established patient, under codes applicable to his conviction. A conflict of interest of trial judge Peter D. Houk is the third basis cited in an appeal for relief.

"Office managers will always be held responsible for their billing decisions," Perez writes. The best protection is "not seeing patients covered by government health programs...."


Physician Punished for False Work Releases

Physicians may be tempted to simply give in and write an excuse for work on request. A New York physician who routinely wrote false sick notes for transit workers was convicted of a misdemeanor and had to pay $15,241 restitution to the MTA. The licensure board then put him on 36 months probation and fined him $50,000 (News of New York).


What's Your Color? Coming on the heels of Homeland Security's color-coded terrorist threat system is the physician profiling software that rates the purported "threat" that individuals pose to hospital administrators.

Hospitals are using very sophisticated data-mining tools to monitor physicians, such as the Physician Profile Reporter Software from the Greeley Company. Physician performance is reduced to green, yellow, or red. The same red color is used in their "Pyramid Approach to Great Performance": it means "take corrective action." Rated items include "pharm recommendations accepted," "severity-adjusted LOS index," "severity-adjusted cost index," and use of certain drugs (ACEI at discharge in patients with CHF or AMI).
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Fatherly Advice. When my two daughters applied to medical school, I advised them to get a second degree. "If things keep going in their current direction, the only treatment your M.D. may get you is the equivalent of a place on the Jiffy Lube assembly line where your job description is to open the cap to the oil pan." They both got an M.D./M.P.H.
Stephen Levinson, Easton, CT


Greed. The level of greed is astonishing. The greed for other people's money permeates health policy discussions. Taxation is discussed as "what can we collect from politically weak groups." There is no concern for the damage done by this grasping attitude. There is a complete lack of compassion for people who work hard to earn that money. There isn't even any implicit acknowledgement that it is someone else's money. Anyone who has more than someone else ought, it is presumed, to be able to get by with less. This attitude also corrupts people who are dependent on public programs. In the public hearings I've attended, these beneficiaries have never expressed any gratitude to those who fund them. They demand more. Always. If you have an inexhaustible source of other people's money, it will always be spent, and the newly impoverished will be back seeking more. And more.
Linda Gorman, Independence Institute, Golden, CO


Hospital Costs. I'd be more comfortable if I could think of hospitals as mere money-grubbing opportunists. But they fall more into the category of generally mismanaged, out-of- control financial vacuum cleaners that can't even figure out what their costs are. No doubt the primary culprit is the government. Medicare and Medicaid have so polluted the system that any kind of traditional business solutions are useless.
Frank Timmins, Dallas, TX


Referral Source. The Tennessee Board of Medical Examiners increased funding to the Tennessee Physician Health Foundation charged with monitoring and treatment of impaired physicians. The Tennessee Board also appears to enjoy a very productive cooperation with a self-proclaimed "excellence center" known as the Center for Personalized Education for Physicians (CPEP) [read: Disruptive Physicians Reeducation Gulag]. They are also helped a lot by the Vanderbilt Comprehensive Assessment Program for Professionals (VCAP). I wonder what these folks would do without the referrals coming to them from the medical board? How many physicians would voluntarily sign up for 3 months of "education" there, no matter how high their charges are, to learn to avoid problem behavior such as defending themselves if a drunken ER patient tries to beat them up?
Walter Borg, M.D., Lafayette, LA


Mandated Coverage. The healthy must be forced to enroll in health insurance to keep premiums down. That is why men in New Jersey have to buy pregnancy coverage. If nondrivers were forced to buy car insurance, the rates would be lower. And perhaps people who live in the desert ought to have to buy flood insurance, so those with nice houses on the beach could have lower premiums.
Alieta Eck, M.D., Somerset, NJ


GM's Problem. Since 1978, General Motors has complained that it spends more on health care than on steel. Yet there is nothing easier to fix than the amount an employer spends on health benefits: move to defined contribution. In fact, one reason U.S. medical expenditures are so high is because GM and others have been willing to pay so much.
Greg Scandlen, Consumers for Health Care Choices


Moving toward Fascism. Government regulations are creating such problems that businesses are forced to grow ever larger. Children are "educated" in government schools to be cogs in a machine. Government seeks to expand control, but will retain the outward pose of capitalism, while partnering with big business to restrict who gets to be a capitalist. Citizens will be told that everyone is working together for the good of society (the State), and they need to follow leaders (Fhrers) who know better what needs to be done.
Edward Dee Hinds, CLU, Paso Robles, CA


Mandates Destroy Private Medicine. If the state mandates purchase of insurance, it will soon mandate what doctors can do. It's improbable that patients forced to pay premiums for mandates could or would contract privately also.
Laurence Marsteller, M.D., Tucson, AZ