AAPS News – Apr 2007


Volume 63, No. 4 April 2007


The flagship of American military hospitals, Walter Reed,
has made national news and congressional hearings because of
squalid conditions in housing for wounded soldiers.

“We needed to do a better job,” admitted Army surgeon
general Lt. Gen. Kevin Kiley, M.D. He said all the problems had
been fixed: “They weren’t serious, and there weren’t a lot of
them.” Detracting from his credibility, men wearing Tyvek hazmat
suits and gas masks walked through the lobby while the camera
crew awaited a tour. A few minutes later, Kiley said that the
building needed to be closed for a complete renovation
(Washington Post 2/23/07).

Rodent droppings, leaky plumbing, and mold are just the most
visible symptoms of systematic rot in military and Veterans
Affairs facilities. Vermin infestations don’t develop overnight;
complaints about bureaucratic indifference have moldered for
years and go far beyond decrepit buildings.

Patients may wander about lost; soldiers go months without
pay; medical appointments are cancelled; disability records go
missing in the “stovepiped, paper-choked process.” Complaints,
even from congressmen, are rebuffed or ignored.

There’s a pervasive culture of denial. “[N]othing can be
allowed to shake the confidence in that system, to include the
superb performance of Walter Reed in ensuring that our soldiers
are cared for,” Kiley told Congress.

After the Walter Reed story broke, wounded soldiers were
subjected to early-morning room inspections and forbidden to
speak to reporters (Washington Post 3/1/07).

VA professionals who complain about problems that could
cause imminent harm or death to patients risk career-ruining
retaliation, despite a law that is supposed to protect whistle-
blowers (AAPS News, December

Now that the barrier has been breached, reports of neglect
and substandard care are pouring in from military bases and VA
hospitals nationwide. One veteran suffered third-degree burns on
his leg when a nurse left him unattended in a shower, unable to
move away from scalding water. Now hospital staff quarrel over
who has to give him a bath (Wash Post 3/5/07).

The U.S. government’s premier medical facility has a
“tortuous system that has so far proved stubbornly incapable of
reaching the standard of care this nation is honor-bound to
provide returning warriors,” Rep. Thomas Davis (R-VA) told the
House Committee on Oversight and Government Reform, Subcommittee
on National Security and Foreign Affairs, in a hearing on March
5, 2007. It also failed to anticipate the types of injuries that
would be sustained in Afghanistan and Iraq.

Perhaps Americans will begin to doubt the ability of the
same government to assure quality and plan the allocation of
medical resources to meet the present and future needs of all.

The VA is said to be a model of modern information
technology. But many soldiers say they get the wrong medical
records; one guardsman had the gynecologic report of a female
soldier sent to him. The Department of Defense cut off VA
physicians’ access to DOD medical records because the two
bureaucracies had not finalized data-use agreements. Citing
concerns about potential HIPAA violations, DOD lawyers cut off VA
polytrauma center physicians’ access to records.

What is to be done?

Instead of interrogating military brass and civilian
officials in an ornate hearing room, writes Craig Cantoni,
politicians who want to learn the cause of the problems should
hold closed-door meetings with physicians, nurses, pharmacists,
lab technicians, janitors, and others who interface directly with
patients. They’d find that “initiative, judgment, common sense,
flexibility, and morale are being squashed by a massive pyramid
of central control,… mind-numbing bureaucracy, and an
information system that doesn’t provide needed information.”

Advocates of nationalized medicine want the government to
construct the “most massive pyramid ever” and put it on top of
300 million Americans and their physicians, Cantoni notes.

“This country has finally reached a tipping point that no
national politician can afford to ignore any longer,” opines the
San Francisco Chronicle. A majority of Americans now
believe that the federal government should guarantee universal
insurance, according to a NY Times/CBS News poll.

However, even left-leaning San Francisco is taking note of
the Walter Reed scandal. “Americans and Californians are right
to push for more answers than just a government-run health-care
system” (SF Chron 3/11/07).

Americans might be willing to pay as much as $500 per year
more in taxes to “guarantee health insurance for all,” as the
poll showed. But socialized medicine for the elderly and the poor
is already bankrupting America. On March 4, Comptroller General
David Walker told 60 Minutes that “the survival of the
republic is at stake” because of entitlement programs.

As some conditions at Walter Reed resemble those in the old
Soviet Union (convergence?), it is worth reviewing books such as
Inside Russian Medicine by William Knaus, 1981. Soviet
doctors could not make decisions independently; case managers at
Walter Reed cancel studies that doctors ordered. VA, like Soviet
medicine, is “free” but limited in amount and constrained by the
“plan.” One Soviet engineer explained that the cost of his “free”
medical care was the difference between his $300/month salary and
the $3,000 he could have earned in the United States. How much
are hidden taxes in America?

Walter Reed is a perfect example of Gammon’s Law of
Bureaucratic Displacement, writes Alieta Eck, M.D., of
Piscataway, NJ. As rigid rules exclude human initiative,
productive activity is progressively displaced by nonproductive
or counterproductive activity. We must get the government out of
medicine. Perhaps Walter Reed can tip us back to sanity.

British Troops Complain of NHS Care

The care that British troops wounded in Afghanistan or Iraq
receive in National Health Service hospitals is appalling,
families say. A father had to change his 18-year-old son’s
colostomy bag because nurses said they didn’t know how. Soldiers
are deprived of pain medication for long periods when wards run
out of supplies. Many wait 18 months or longer for critical
mental health services, said a spokeswoman for the Royal British
Legion (Washington Post 3/12/07).

Swiss Reject Single Payer

More than 71% of Swiss voters rejected a proposal to replace
the 87 insurers that now write coverage by a single state-run
entity. Proponents claimed the current system is too costly, and
wanted a replacement that would base premiums on wealth and
income. Medical insurance is mandatory in Switzerland
(Business Insurance 3/12/07).

The Cost of “Free” Medicine in Canada

Based on average waiting times for treatment and the
assumption that 9.8% of waiting patients suffer substantial
disability, Globerman and Hoye calculated a private cost of $680
million per year in lost wages from queuing. This places no value
on the efforts of family members caring for patients nor on time
outside normal working hours, and it ignores increased mortality
or adverse medical events owing to delays. “Since this lost time
is `free’ to the provincial health ministries…while the costs
of providing additional treatments…are not, patients’ time is
used profligately, as most `free’ goods are” (Fraser
December 2006/January 2007).

Also not counted in Canadian expenditures are amounts paid
out of pocket by 39,282 Canadians who sought care outside the
country in 2006. If private payment were allowed, these dollars
would probably have supported Canadian medical facilities
(Fraser Forum, February 2007).

Capped fees, increasing overhead, and heavier adminstrative
burdens are driving family physicians from practice, leaving 40%
of Albertans without a physician (National Post 3/3/07).
Medical schools cut enrollment in the 1990s to prevent a
physician surplus. Now it is difficult to increase class size
adequately because of lack of physicians available to teach
(Financial Post 11/15/06).

Massachusetts Watch

About 200,000 people will have to buy more expensive
policies because their prescription drug benefit isn’t rich
enough to satisfy the Connector. One couple complains of being
taxed $700/mon to upgrade a catastrophic plan for which the
premium was $300/mon. The Connector Board can’t say no to special
interest pleaders such as providers of in vitro fertilization,
substance abuse treatment, or mental health services. It also
wants to require first-dollar coverage of three physician office
visits, so HSAs would not be allowed.

The Connector, writes Linda Gorman, is to set rates, manage
subsidies, and keep people from buying nonapproved insurance a
super FEHBP that can do income transfers. Time will tell whether
the subsidies cost more than the uncompensated care they were
supposed to replace. The plan could easily end up as a single
payer, no more legislative effort needed.

Arvind Goyal, M.D., Runs for AMA Vice Speaker

The AAPS Board of Directors voted to endorse long-time AAPS
member Arvind Goyal, M.D., of Chicago, for the position of AMA
Vice Speaker.

“The AMA could be a powerful voice in opposing intrusions by
government and other third-party payers into the physician-
patient relationship,” writes AAPS President Tamzin Rosenwasser,

Ron Paul, M.D., Enters Presidential Race

On March 12, AAPS life member Rep. Ron Paul, M.D., (R-TX)
announced his candidacy for President of the United States. He
said he is running “to restore the Republican Party,” which has
become “the party of big government,” and to return to a
noninterventionist foreign policy.

Paul said: “A lot of people want to hear my message, and I’m
willing to deliver it.”

To contact the campaign, call (703) 650-9559 or visit www.ronpaul2008.com.

Wait List Rescue Project

Film producer Scott McConnell needs additional American
doctors and at least one hospital to volunteer to help Canadian
patients stuck on waiting lists, at an affordable cost. He is
also looking for doctors to interview for a film intended to
respond to Michael Moore’s forthcoming movie Sicko,
which will promote socialized medicine. Have you treated
Canadians who couldn’t find timely care at home? Contact:
[email protected].

Catastrophic Insurance

For years, AAPS has sought an association plan of true
medical insurance. Deductibles of $10,000 or higher have been
virtually impossible to find. The $20,000-deductible plan offered
through the AMA insurance agency now requires new subscribers to
have an underlying “basic” plan. LehrmanGroup (see enclosure) has
put together a hybrid product with some features of a “mini-med”
and access to “network re-pricing” if care is obtained from a
member of the MultiPlan network (see www.multiplan.com). An HSA-
qualifying option is also available. Open enrollment extends from
April 1 June 30, 2007. AAPS members who are fully employed, under
the age of 70, and not on Medicare are eligible. Call: (800) 600-

AAPS Calendar

Jun 8-9. Thrive, Not Just Survive VI, and
Board of Directors meeting, Milwaukee, WI.

Oct 10-13. 64th annual meeting, Cherry Hill, NJ.

NPI Update

AAPS members at the Ear and Balance Institute of Baton Rouge
send the following letter to entities requesting an NPI:

“We are not HIPAA-covered entities, as
defined at 45 C.F.R. 160.103.

“We take absolutely no third-party insurance payments, do
not transmit health transactions electronically, and are not
required to obtain an NPI.

“We have included the appropriate pages from the Federal
Register and circled the section addressing this topic, and we
have included a link to this document on the CMS website.

“Please update your records to reflect this information.”

The CMS link: www.cms.hhs.gov/NatonalProvidentStand/Downloads/NPIfinalrule.pdf.

The letter with circled section from the Federal Register is
posted at www.aapsonline.org: “Health care providers that are
not covered entities that do not wish to apply for NPIs will
necessitate the need for healthcare clearinghouses to accommodate
health care provider identifiers in addition to the NPI.”

Justice Dept. Targeting “Improper” Prescriptions

Although physicians may legally prescribe drugs and devices
for unapproved or “off label” uses, they may not necessarily bill
Medicare for them.

“One of our biggest prosecutions areas right now is off-
label” prescriptions, said Assistant U.S. Attorney Robert
Nicholson, because “most of the time Medicare and private payers
don’t cover [those uses].”

A “pattern” of claims or denials for unapproved uses could
trigger accusations of filing medically unnecessary or false
claims, or even of drug diversion. And “devices are next.”

Physicians are advised to justify off-label uses by citing
reputable medical research in the patient’s record supporting the
item’s use in the patient’s condition (MCA 3/5/07).

Billing Companies Increase Physicians’ Risk

Using a billing company could actually increase your
compliance duties and increase risk of a government investig-

ation, as the Inspector General wants to be sure third-party
billers aren’t driving up charges to increase the value of their
contracts. Percentage-based compensation or use of the same
company for management or auditing services, creating a perceived
conflict of interest, are especially risky (ibid.).

Ohio Pain Doctor’s Conviction Reversed

In a unanimous opinion, judges in the Court of Appeals of
Clark County, Ohio, reversed the conviction of William Nucklos,
M.D., and remanded the case for further proceedings.

“The prosecution and the trial court wrongly shifted the
burden of proof to the defense,” writes defense attorney John P.
Flannery II. Also, “the prosecution threw in all sorts of
evidence that was prejudicial that had nothing whatsoever to do
with the case at hand, in order to smear Dr. Nucklos’s
character more like you’d expect in a political campaign, rather
than a criminal prosecution.”

The jury was not allowed to know that one of the prosecution
witnesses had also been deceived by one of the three patients
included in the charges.

See www.aapsonline.org for appeals brief and opinion.

Doctors Decline to Return, Cite Distrust

Three physicians who resigned from the medical staff at the
Beeville hospital because of concerns about sham per review were
asked by the Bee County (TX) Ad Hoc Hospital Committee what it
would take to get them to return. They said they wouldn’t work
there as long as it was managed by Christus Spohn, saying they
no longer trusted the company with their careers and livelihood.

Dr. Rodney Schorlemmer detailed problems, for example: The
hospital altered the minutes of medical staff meetings without
doctors’ knowledge or permission; refused to change a guidebook
that promised patients they would have no pain during their stay;
and attempted to discipline a physician and terminated a staff
member without going through the prescribed procedure.

Colleagues said that Christus Spohn attempted to discipline
Dr. Michael Belew for throwing guidebooks in the trash and
pouring orange juice over them to prevent use. He said it was
unwise and even dangerous to overmedicate patients for post-
operative pain.

Dr. Belew and others had complained repeatedly that Christus
Spohn charged patients much higher prices for tests than other
facilities did, sometimes twice as high.

Dr. Schorlemmer deplored the decline in staff morale at
Beeville owing to administrative policy. “I will not compromise
my…ethics, or my duty to my patients to play games with any
organization,” he said (Bee Picayune 2/24/07).

Tip of the Month: Be sure to mark your calendar well in
advance of the two-year anniversary of your Medicare opt-out. If
you miss the date, you may receive a demand from your carrier to
fill out CMS form 855I, CMS form 588, a copy of your NPI
notification letter, and another Opt-Out Affidavit in order to
opt out again!

OIG Reviews Uncompensated Care Pool

In a November 2005 report to the House and Senate Committees
on Ways and Means, the Office of Inspector General of the
Commonwealth of Massachusetts detailed findings of interest to
any states contemplating insurance reform. The uncompensated pool
evolved from a private, small-scale, hospital-sponsored cost-
sharing pool into a huge public/private, legislatively mandated
program. The Massachusetts program had a $800 million budget in
FY 2005. Problems include a “largely non-transparent accounting
system” and an “arcane, controversial and ever-changing method of
assessment and cost redistribution.” The IG found, inter alia,

1. The Division of Health Care Finance and Policy failed to
follow legislative mandates and take steps to improve oversight.

2. Inadequate Medicaid payments created “public payer” revenue
shortfalls at acute care hospitals.

3. Under any of the reform plans under consideration, some
Massachusetts residents will remain uninsured.

4. Hospital charges were not clearly related to costs.

5. Emergency bad debt payments were being used to cover
hospital losses for non-emergency services.

The IG noted that “hospitals can manipulate their
prices and ignore economic theory that keeps prices in line with
market demand because the Division of Health Care Finance and
Policy doesn’t act like a typical consumer.” Read the report at:


Insurers Hate Self-Payment. As Health Savings Accounts
(HSAs) become increasingly popular, insurers are scrambling to
maintain control. Most HSA products are linked to networks
(PPOs). The Blues are developing their own bank to enable them to
monitor all transactions. Univera Healthcare told participating
physicians that “it is imperative that you submit a claim…for
all services delivered. Please do not bill the member or collect
any payment at the time of the visit. Claim information is
necessary for us to determine when the member has met his or her
deductible.” Univera also tells enrolled patients that they
should never pay any physician “upfront” at the time of the
visit for any service.

Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

We Told You So. In my 40 years in private practice, I
witnessed the devolution of medicine, owing to third-party
medicine in which the patient/doctor private relationship is
negated. Nowadays, thousands of five-digit numbers are used in
billing, not the patient, but a remote third party.

How prophetic some of us were back in 1963 in declaring that
a system of socialized medicine for some Americans (Medicare)
would be enormously expensive, be abused by both doctors and
patients, and would lead to a deterioration in the quality of
personal medical care! Gone are the days of house calls,
professional courtesy, “be my guest” care of the indigent and the
aged, fraternal societies, and Voltaire’s exclamation, “Medicine,
that most estimable of professions!”

Marx said, “Socialize medicine first. Then, all other
activities of a nation will follow as night follows day.” Bastiat
said, “See if the law benefits one citizen at the expense of
another by doing what he, himself, cannot do without committing a
crime. Then, if found, abolish such a law without delay, because
it will breed a system!” How right they were!

Stu Pritchard, M.D., Philipsburg, MT

Pre-conceived Answers. The “health care” debate is less
concerned with solving problems than with dictating an
ideologically correct solution. I’ve spent 3 months repeating
that the language in a request for proposal should require, as a
baseline estimate for discussing the imperative to cover
everyone, a determination of how many people lack care. There is
a blank refusal to consider that insurance may be an unnecessary
solution to a problem that is already being solved in a variety
of other ways. From this I conclude that the focus on the
uninsured has nothing to do with the welfare of people who lack
medical care and everything to do with erasing the role of the
private sector in medicine.

Linda Gorman, Independence Institute, Golden, CO

The Real Question. I applaud Michael Tanner for writing
(Des Moines Register 3/5/07) that “individual insurance
mandates, such as the Massachusetts plan, cross an important
line: accepting the principle that it is the government’s
responsibility to assure that every American has health
insurance.” Indeed, as he writes, these mandates are a
“significant infringement on individual liberty,” and raise
“serious practical questions.” But isn’t the real issue whether
the government has the Constitutional authority to mandate
insurance or to provide it? Has this authority ever been
challenged in court?

Joseph Lee Pugh, Diamondhead, MS

The 100% “Co-pay.” Michigan Blue Cross/Blue Shield
defined an office visit as a “covered service” subject to a 100%
co-pay, or no co-pay but a $5,000 deductible. This meant that
plan participants had to pay the full fee out of pocket but the
charge was limited by the plan. Physicians sued and lost. The
obvious solution is to resign from the contracts, as I did 10
years ago. The Blue Cross rate here is 80% of Medicare; the out-
of-network rate of 70% of the billed charge is twice as much.
Most physicians who resigned lost one-third of their Blue Cross
patients and increased revenue by one-third.

Thomas LaGrelius, M.D., Torrance, CA

An 87% Discount. I have a statement from CareFirst BCBS
that shows charges of $4,113.60 and $3,000 for ambulatory surgery
that were “re-priced” to $532.80 and $378.80!

Greg Scandlen, Consumers for Health Care Choices

Reversing a One-Way Course? I have been in the health
insurance business since 1971, and HSAs are the first step I have
seen in the direction of enhancing the patient/physician
relationship and bringing market forces to bear. Every other
change has meant more managed care and third-party involvement.
The prospect for change is causing great consternation.

Frank Timmins, Dallas, TX

No Compromise. Although one might accept compromise on
the tax treatment of health insurance, along the lines of the
Bush proposal, and some other details, a compromise on an
individual mandate guarantees more government involvement, not
less. Someone has to define “health insurance.” You can bet it
will be a government commission dominated by do-gooders, like the
Massachusetts Connector, where member John Gruber says, “it’s a
hard issue. There’s a trade-off between making sure we have real
coverage and minimizing disruption to the market.” I want to
decide for myself what “real coverage” is. I don’t want advocacy
groups lobbying to get their malady included, or big insurance to
get small insurers excluded….

David Hogberg, National Center for Public Policy

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