AAPS News February 2019 – Fail First


The managed-care method for controlling the use of expensive pharmaceuticals is to insist that the patient use the formulary drug first, then ask for authorization for a different one if the first (or second or third) drug fails. Failure may involve having a seizure or asthma attack. Wisconsin is proposing standards for requiring such “step therapy”—use of a certain sequence of drugs.

To make matters worse, the favored drug or brand may change frequently, based on deals made with pharmacy benefits managers (PBMs). This is a special problem with insulin, the price of which has tripled between 2002 and 2013. Instead of lowering prices, PBMs have an incentive to raise them in order to get a  bigger “rebate.” While struggling to navigate the bureaucratic morass to obtain insurance coverage, patients may be rationing or skipping their insulin (NYT 1/19/19).

To reduce expensive consultations, a “midlevel provider” sees the patient first. If a barely trained provider botches the repair of a facial laceration, it can be revised later by a skilled plastic surgeon—possibly at the patient’s expense. If a post-op infection or hemorrhage is missed, the patient may end up in the intensive care unit or morgue. If endophthalmitis is missed, the patient may be blinded. Delay may avert some diagnostic testing or treatment—the patient may get better, go out of network, or die.

Price Controls First

Whenever prices are deemed too high, the first and often only idea proposed is for the government to prosecute “price gougers” or use its “market clout” to put a lid on prices. Or if prices are deemed to be too low, the government may use price supports or create artificial shortages, e.g. through licensure.

In 1933, FDR’s Agriculture Adjustment Administration slaughtered 6 million young pigs, while millions of Americans went hungry. The price of a slice of bacon became prohibitive.

The ill effects of price controls can be reversed very quickly. The gas lines that were crippling productive enterprise in the 1970s melted away soon after Nixon’s price controls on gasoline were lifted. Prices went up a little, but competition kept them in check. The postwar German economic miracle began when Minister of Economic Affairs Ludwig Erhard ended the Allies’ rationing and wage and price controls (AAPS News, October 2014).

To lower drug prices, the Administration and Congress are proposing to import foreign price controls by tying prices for Part B drugs administered in doctors’ offices to an international index of prices in countries with similar economies. The American Cancer Society requested that chemotherapy drugs (42% of the total) be excluded lest cancer patients lose access (Wash Post 1/11/19).

To bring supply and demand into balance requires honest price signals, with decisions made by buyers and sellers, not third parties. The federal government now mandates price transparency by hospitals, but the price list may be very difficult to find and  impossible to understand, listing thousands of fictitious high (“chargemaster”) prices used primarily for negotiating with insurers.

Socialism Fails First, Last, and Always

The failure of price controls, sometimes mistaken for a free market, triggers demand for the next level of coercive central planning (socialism). However glorious its promises seem to idealists, socialism leads to failure and death. Early American colonists escaped starvation and thrived only when they abandoned socialism and allowed all to keep the fruits of their labor. The death toll of socialism worldwide has been estimated to be 100 million, including starvation and mass executions. Democratic Socialist media darlings point to Sweden,  which became prosperous under a  free-market economy that still exists, and do not explicitly deplore or even acknowledge the socialist harvest of sorrow. Many leftist intellectuals actually defend mass murder.

George Bernard Shaw considered the Soviet Union to be the pinnacle of civilization. In a 1931 newsreel, he stated: “If you can’t justify your existence, if you’re not pulling your weight…then clearly, we cannot use the organizations of society for the purpose of keeping you alive.” In 1948, he asked: “[T]he ungovernables, the ferocious, the conscienceless, the idiots, the self-centered myops and morons, what of them?” His answer: “Do not punish them. Kill, kill, kill, kill, kill them.”

Fabian socialists Sidney and Beatrice Webb wrote in 1936 that “any public expression of doubt…is an act of disloyalty and even treachery” to central economic planning. Thus, the Soviets were entitled to execute anyone who criticized the Five Year Plan. Once private property is abolished, and the only employer is the State, “opposition means death by slow starvation…who does not obey shall not eat,” as Leon Trotsky explained.

  Could such killing happen here? When teenage boys from Covington Catholic high school were falsely accused of a racist slur, calls for violence against them went viral, unsuppressed by Twitter. One of the boys had smiled (“smirked”) when a professional Native American agitator beat a drum in his face. From Orwell’s 1984: “to wear an improper expression on your face (to look incredulous when a victory was announced, for example) was itself a punishable offence. There was even a word for it in Newspeak: facecrime.”

Fail First in Medicare and Medicaid

Medicare Advantage: Since Jan 1, insurers can force all patients in Medicare Advantage plans, which cover one-third of all beneficiaries, to initially try a cheaper treatment than the one recommended by their doctor. There are no boundaries, no prior notification, and no emergency doctor’s override. The appeals process is heavily stacked in the insurers’ favor. There is evidence that even before this, some plans had a “deny first” policy (Townhall 12/21/18).

Hyperbaric Oxygenation: Based on an audit of First Coast Options, the HHS Office of Inspector General reports that $39.7 million may have been overpaid to providers for wound or chronic osteomyelitis care because of failure to comply with medical necessity requirements. A diabetic wound must be Wagner grade III or higher and show no signs of healing after 30 days of standard wound therapy. Refractory osteomyelitis must be unresponsive to both medical and surgical therapy.

Denial for Profit: The denial nurse is an important employee of private subcontractors such as Agilon, an equity firm, which was paid to coordinate care for about 400,000 California Medicaid patients. Medi-Cal officials claimed that it improperly delayed or denied care for 1,400.

Curtis W. Caine, M.D.: R.I.P.

A heroic warrior to the end, Curtis Caine, M.D., departed this world on Jan 1, 2019.  He joined AAPS in 1949, served as president in 1980-1981, and was our longest active member.

Dr. Caine was the first anesthesiologist in Mississippi, where he practiced for 60 years. His life was guided by Holy Scripture and the U.S. Constitution. His writings included a 34-article series on the U.S. Constitution published in the Medical Sentinel, the precursor to the Journal of American Physicians and Surgeons.

Dr. Caine’s 1966 Letter to Mississippi Physicians correctly predicted the damage the imposition of Medicare would inflict on the practice of medicine and the primacy of the patient-physician relationship.

“Curtis was a visionary,” writes AAPS past president Thomas Kendall, M.D. “What he saw regarding the devolution of medical freedom caused him to stand with vigor against the forces of darkness. He knew, however, that the power of love and the precise and articulate demonstration of the truth, are the only means of both political and spiritual freedom.”

“Few men measure up to the stature of a Curtis Caine. His legacy lingers to remind us of timeless principles. Let’s admonish one another as AAPS members to remain faithful and never depart from the determinations that distinguish excellence from mediocrity, freedom from tyranny, and courage from fear.”

Dr. Caine recorded a special message (video, text) on  saving American medicine for our 75th annual meeting in October 2018.

“This present day socialized medicine is not the wave of the future—it is not progress; it is a resurrection of the same ancient, worn out, discredited, discarded, warmed-over, old world fraud it has always been.”

Curtis Caine, M.D., 1966


If you have not already done so, please sign the Freedom to NOT CHOOSE Medicare Petition from the Citizens’ Council for Health Freedom:


Affordable Care Act (ACA) Failures

No Increase in Private Coverage: With ObamaCare, the net increase in persons with private insurance was 1.7 million persons, less than half of the natural increase in the civilian labor force. The government spent $341 billion subsidizing private coverage: $200,000 per person or almost $70,000 per person/year. (Linda Gorman)

Medicaid Overpayments: States may have overcharged the federal government as much as $60 billion a year, mostly caused by problems with the eligibility process, made worse by the explosion in enrollment thanks to Medicaid expansion. In Louisiana, eight of 10 enrollees were ineligible. Eligibility checks aren’t done often enough because of Obama-era regulations, stated Sam Adolphsen of the Foundation for Government Accountability.

Cost and Availability: Average premiums have more than doubled since 2013. Many health insurers have left the market.  In 2018, over half the nation’s counties had only one insurer selling exchange coverage; another 30% had only two. In 2018, 44 insurers abandoned the exchanges, while only seven new insurers entered those marketplaces. (Sally Pipes)

Socialist Disasters

Venezuela: Diseases eradicated decades ago are surging. Last year, more than 400,000 had symptoms of malaria, and 10,000 are known to be ill with tuberculosis. More than 55% of medical professionals have fled the country. There are no antibiotics, X-rays, or infant formula. Women and girls as young as 14 are selling hair, breast milk, or sex. Some 70% are facing acute malnutrition. Crime is rampant, with tens of thousands of government-backed street gangs.

British National Health Service: Now that it has turned 70, “it’s time to give up on the [NHS],” writes Antony Sammeroff, co-host of the Scottish Liberty Podcast. But it is the national religion, and even conservative governments have been able to do nothing more than trim the rate of increase in spending. Before the NHS, Britain led the world in medical breakthroughs—no more. In one month, more than 300,000 waited more than 4 hours to be seen in an emergency room, and thousands more waited in ambulances; more than 6% of the UK population is on an NHS waiting list. The government can make waiting lists look shorter by denying care outright. Medically untrained managers make rounds to urge patient discharges.

AAPS Calendar

Feb 6, Mar 6, 2019: Texas Chapter Capitol days, Austin
Feb 9, 2019: Missouri chapter meeting, Columbia, MO
Feb 22-23, 2019: Thrive, Not Just Survive; Board meeting, Dallas.
Sep 18-21, 2019: 76th Annual Meeting, Redondo Beach, CA.
Sep 30-Oct 3, 2020: 77th Annual Meeting, San Antonio, TX

AOA Settles Antitrust Lawsuit

Judge Noel Hillman, a federal judge in Camden, N.J., has approved a $84 million settlement in the osteopathic physicians’ class action suit against the American Osteopathic Association (Talone et al. v. AOA). The  centerpiece of the complaint was the AOA’s conditioning board certification on purchasing annual membership in AOA for a fee of $683. The AOA must decouple membership from certification, reduce membership dues by $90, provide certain other benefits including CME, and spend $4 million on a brand-awareness campaign for osteopathic physicians. Attorneys will get $2.62 million, slightly less than the lodestar amount of $2.65 million, which is based on $601 times 4,418 hours spent investigating and litigating the case. The four original plaintiffs, Albert Talone, D.O., Craig Wax, D.O., Richard Renza, D.O., and Roy Stoller, D.O., will each receive a $15,000 service fee. Class members will not be able to opt out of the settlement and sue AOA. See https://ip4pi.wordpress.com/2018/12/07/federal-judge-ends-mandatory-aoa-membership-tied-to-board-certification/ for history and details.

Tip of the Month: Medical Staff Bylaws.

The Joint Commission for hospital accreditation requires hospitals to have medical staff bylaws. Traditionally, no changes should be made to these unless there is medical staff approval. But Joint Commission guidelines allow the Medical Executive Committee (MEC) to approve changes. See the “Instructive Infographics” chart in Medical Staff Essentials.

Be aware that the MEC might quietly approve inserting a requirement of Maintenance of Certification (MOC) into the medical staff bylaws without the medical staff ever voting on it. To combat this, it is important to know someone on the MEC and constantly check with him to see what is on its meeting agenda. Immediate objections should be made to any proposed changes to the medical staff bylaws unless there is a full discussion and vote by the entire medical staff. Hospitals might remove flyers and even tell physicians not to attend a staff meeting to vote on medical staff bylaws changes, but at a hospital in Florida the physicians reacted to such tactics by having their largest attendance at a staff meeting in 62 years.

New York Passes Radical Abortion Law

On the 46th anniversary of Roe v. Wade, the New York legislature passed the most radical abortion law in the U.S., the Reproductive Health Act, then gave itself a rousing standing ovation. The law explicitly restricts legal personhood to those who are born. This may prevent civil or criminal courts from pursuing homicide charges if an assault on a pregnant woman results in the loss of her child. In the first 24 weeks of pregnancy, there are no restrictions, and up to the moment of birth abortion is allowed “if  doctors determine it is necessary for the health of mother” (WSJ 1/22/19) [to give birth to a dead child rather than a living one]. An infant born alive need not receive care. Any licensed “health care practitioner” can do abortions if within his scope of practice. Abortion is moved from the state criminal to the public-health code. Gov. Andrew Cuomo hopes to have a fundamental right to abortion on the ballot as a constitutional amendment next year. To celebrate the law, Cuomo, a professed Catholic, had One World Trade Center illuminated with pink [not blood red] light. New York already has 392 abortions/1,000 live births.

Civil Asset Forfeiture

In oral argument before the U.S. Supreme Court, Justice Stephan Breyer asked the Indiana Solicitor General a hypothetical: if a state needs revenue could it force someone to forfeit his Ferrari or Mercedes for speeding? The answer was yes. The official government position is that they can take any amount of your property in “connection” with any crime whatsoever…even driving 5 mph over the speed limit.

A 2015 report showed that law enforcement took $4.5 billion of cars, cash, homes, and other property, more than all common criminals combined (James Cook Market Update, late Dec. 2018).

Physician Exclusions Increase

The number of physicians excluded from public insurance programs increased by 20% per year between 2007 and 2017.   Some 2,000 physicians (0.3% of U.S. physicians) were temporarily or permanently excluded from Medicare or state public insurance programs for fraud, unlawful prescribing of controlled substances, or “health crimes.” The last can apparently include performing “medically unnecessary” procedures. ACA added $350 million to the HHS Health Care Fraud and Abuse Control Account. Since 2011, CMS has used predictive analytics to detect improper billing.

Older, male, or osteopathically trained physicians were significantly more likely to be excluded.

A physician accused of improper prescribing is likely, in AAPS experience, to also be charged with fraud. “If you don’t take their money, they can’t accuse you of fraud,” noted AAPS executive director Jane Orient, M.D. After CMS itself, AAPS is Google’s top-ranked site on opting out of Medicare.

Comply, Conform, or Starve

Popular social media sites such as Facebook, Twitter, YouTube, and Patreon are increasingly accused of deplatforming, demonetizing, censoring, or shadow-banning conservative or libertarian ideas—while enabling the “doxing” of people like the Covington students. Credit-card companies or Paypal may refuse to process payments. Canadian psychologist Jordan Peterson, whose fame soared when he opposed the forced use of made-up pronouns, is attempting to develop an alternative to Patreon.

This fall, Eric Bauman, chairman of the California Democratic Party, called for a boycott of the popular hamburger chain In-N-Out Burger—because it had contributed to the California Republican Party. “Let Trump and his cronies support these creeps…perhaps animal style,” he tweeted. Californians did not go along, and the Democrats’ communications  director announced that the chairman’s tweet was “just his personal view.”

In Venezuela, only holders of the Carnet de la Patria can purchase gasoline at heavily subsidized prices. Others must pay market prices, unaffordable to nearly all. This is following the playbook of other totalitarian regimes, writes Barry Brownstein. In 1933, the Nazi “Law for the Restoration of the Professional Civil Service” led to the “immediate dismissal of all ‘non-Aryans’ from state-subsidized theaters, orchestras, museums, schools, and research institutions.”

Which way are we headed?


Hidden No More. A front-page story has outed the “hidden system” that hospitals use to control referrals and to maximize profits (WSJ 12/28/18). Hospital systems that merge with many other hospitals and buy physician practices claim that they are only pursing “efficiencies” and higher quality care. The Federal Trade Commission (FTC) seems to have bought this explanation, viewing them as “beneficent monopolies.” Contrary to claims about controlling costs, hospitals’ increasing control over physicians has dramatically increased costs, including out-of-pocket costs for patients. What the hospital controls is referrals. Referring a patient outside the system for testing or consultation is called “leakage.”

If an independent physician is not willing to sell his practice to the hospital, the hospital has a cheaper way of getting rid of the competition—sham peer review.

Note the similarity to Italian dictator Benito Mussolini, who claimed fascist “efficiency” in keeping the trains running on time, to persuade citizens of the benefits of fascism. The trains, however, did not actually run on time—it was a complete myth.

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

Republicans Hit Mute Button. Why did many Republicans remain silent about Judge Reed O’Connor’s ruling that ACA is unconstitutional, or steer clear of embracing the decision? Many may favor ACA, as it empowers health plans to impose rationing—while giving Congress political cover. They may have no arguments against socialism (guaranteed issue/community rating). Or they may be afraid to speak up against “protecting people with pre-existing conditions,” not realizing that public support for these requirements drops from 65% to 44% when people learn that they reduce their quality of care and access to treatment.

Twila Brase, R.N., Citizens’ Council for Health Freedom

It’s a Border Insecurity Crisis. Don’t believe the fallacy that illegal aliens are harmless and benefit America. Remember that if the co-conspirators of the transnational crime cartels were not already in the U.S., foreign criminals would not trust agents in all 50 states to receive and distribute their illegal opiates. The opiate overdose crisis is not the fault of doctors and pharmacists: try to fill a prescription for heroin at Walgreens, Rite-Aid, or CVS.

In 2015, criminal offenses by incarcerated SCAAP (State Criminal Alien Assistance Program) illegal aliens in Ariz., Calif., Fla., N.Y., and Texas numbered 44,200 (21% homicide, 15% drugs, 21% sex offenses, and 11% assaults).

Zack Taylor, Rio Rico, AZ

Surprise Billing. Big Insurance oligopolists want to swallow up all independent practitioners—and now they want to convince the people that independents are outliers and liars. Nine groups representing health plans, which are calling for federal restrictions on out-of-network billing, state: “When doctors, hospitals or care specialists choose not to participate in networks, or if they do not meet the standards for inclusion in a network, they charge whatever rates they like.” In fact, it is not true that the best-trained, ethical “providers” are in network. “Surprise billing” is also sophistry by the insurance guild and hospital-clinic systems that now hold sway in government legislatures and agencies. They are promoting the security of prepaid (“priceless” or un-priced) medical care.

Lee Beecher, M.D., Maple Grove, MN

No-Win Situation. Clinicians cannot win in a downside-risk Accountable Care Organization (ACO). Their future pay is the ACO’s insurance reserve. Losing money is the doctors’ fault for not keeping patients healthy; the rubric of the industry and social engineers is “accountability.” “Value-based” downside risk is scheduled to be the system of cost control, unless the cultural mindset is changed from empowering ACO-HMO barons to re-empowering patients and their families. We already see doctors beginning to opt out into independent practice.

Robert W. Geist, M.D., North Oaks, MN

What Is This System Called? Consider: Government creates tax incentives and funding mechanisms to assure that the general public accesses the services of a given industry, and grants de facto monopoly status to some of the major players.  The industry pays lobbyists to assure that legislation tilts the playing field to its advantage and buys off political candidates. Government adds multiple layers of requirements that assure that the costs of doing business are prodigious. Many of the players are disguised as altruistic non-profits even though their numerous executives and higher level managers are paid very handsomely. [For-profits distribute profits to shareholders. Non-profits distribute them internally.] This describes the State Health Plan in North Carolina. It is classical fascism, in which government and industry function as almost a single unit, intertwined and interdependent to the point that one is nearly the agent of the other.  Secretary of State Dale Folwell is trying to change the situation, which developed over 75 years under both political parties. He would like to save taxpayer money and save the giant plan that covers state employees from insolvency. The institutional GOP and the hospital community are trying to stop him.

Joseph Guarino, M.D., Reidsville, NC