AAPS News – July 1991

Volume 47, No. 7 July 1991

TAKING FROM THE POOR AND THE
SICK

In a widely publicized experiment, Oregon proposes to expand
Medicaid eligibility to an additional 116,000 persons. To lessen
the tax increase needed pay for this largesse, the state proposes
to eliminate “low priority” services previously available to
the poorest of the poor.

In March, 1991, the Oregon Basic Health Services Program
released a prioritized list of 700-plus health services.

“This document is the cornerstone in a process which will
expand access to health care for all our citizens who are
uninsured,” said its chief author, John Kitzhaber, MD, president
of the Oregon State Senate. He praised commissioners for
“completing a daunting task no one else in the country was
willing to confront.”

After 20,000 hours of volunteer time, 1,000 telephone
surveys, and 60 public hearings, the list is ready. All the
legislature has to do is draw a line. (Lawmakers are not allowed
to tamper with the order.) To fund all the services would add
about $40 million to the Medicaid budget in the first year.
Drawing the line after #310 would result in a $700,000 cost
increase.

The first draft of the list was so obviously flawed that
“opponents of the plan seized on this as an opportunity to
criticize and ridicule the entire process on the basis of what
resulted from the first test of the methodology” (Arch Intern
Med 151:912-916, 1991). The data have been “cleaned.” It might
now be fair to look at the order of the services.

At the top of the list are life-threatening medical condi-

tions, for which treatments of variable efficacy are available.
At the end are conditions for which treatment is unnecessary
(superficial wounds) or futile (anencephaly) or excessively
expensive (organ transplants). In the middle are treatments that
are effective but do not return a patient to “full health.” A
sampling of conditions above and below #310 are as follows:

142. Withdrawal from alcohol and other drugs

143. Preventive services, children

161. Sterilization (vasectomy)

162. Sterilization (tubal ligation)

163. Birth control (contraception management)

166. Preventive dental services (cleaning and fluoride)

167. Preventive services for adults; proved effectiveness

168. Cancer of cervix (treatable)

Around 200. Many congenital cardiac lesions

322. Unwanted pregnancy (abortion)

Around 325. Hyphema, glaucoma, vitreous hemorrhage,
enophthalmitis, other ophthalmologic conditions

434. Cerebral palsy (surgical treatments)

525. Retinal tear (laser prophylaxis)

526. Spontaneous and missed abortion

552. Congenital dislocation of hip (repair/reconstruction)

693. Metastatic cancer with less than 10% 5-yr survival
after treatment

Applying this list to individual real patients immediately
raises questions. Shall a patient with a imminent cord com-

pression due to advanced metastatic cancer be denied surgery or
radiation so that thousands can get contraceptives courtesy of
Medicaid (instead of having to buy them at a drug store)? Shall
a few patients be denied surgery that might save useful vision,
so that thousands can have their teeth cleaned at public expense?
Is it better to spend $100,000 on one child with leukemia, or on
screening 1,000 women for breast cancer (with a 50% expectation
of saving one life in that way)?

The problem with the initial Oregon list was that it
violated the Rule of Rescue, which cannot be expunged from human
nature even by the most “evangelical utilitarian.” This human
trait must be taken into account if the plan is to be acceptable
to society, although “there is an emotional component to the
Rule of Rescue that can interfere with the development and
implementation of fair allocation systems” (JAMA 265:2218-2225,
1991). (Note that tenderheartedness is a fatal flaw in a
Communist, according to the Chinese.)

The Rule of Rescue focuses on the individual. The Oregon
plan looks at the “degree of benefit each service can be
expected to have on the health of the entire population”
(Kitzhaber, Issues in Sci Technol, winter 1990-91, emphasis
added). If there is an appearance of unfairness, it results from
rationing services for the poor only. Kitzhaber believes that
the rationing should be applied to everyone, regardless of
personal resources, but that the goal will have to be reached in
several steps. In the meantime, the proposed system would have
less inequity than the status quo, even if current Medicaid
recipients are the ones to make the initial sacrifices.

The AMA has generally viewed the Oregon proposal with favor.
The emphasis on “aggregate health status,” with reference to
the values of those who pay the premiums (JAMA 265:2232-2238,
1991), is in accord with the AMA Principles of Medical Ethics
(1980 revision), whatever violence it does to the Oath of Hip-

pocrates: “a physician shall recognize a responsibility to
participate in activities contributing to an improved com-

munity.” Should the Oregon plan be enacted into law, the
“physician shall respect the law and also recognize a respon-

sibility to seek changes in those requirements which are contrary
to the best interests of the patient.”

In a step that could mitigate some of the effects of
rationing, Oregon is considering legislation that would allow
physicians to give lethal injections to certain patients, whether
competent or incompetent, upon request (AM News 4/1/91).

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Another View of “Community Health”

“We may say that the doctor standing at the ramp [at
Auschwitz] represented a kind of omega point, a gatekeeper….”

A mathematics textbook asked students to calculate how many
government loans to newly married couples could be granted for
the amount of money it cost the state to care for the “crippled,
the criminal, and the insane.”

“One views one’s group as an `organism’ whose `life’ one
must preserve…in ways that transcend individual fate.”

Definitions: das Recht auf den Tod (the right to die);
Sterbehilfe (death assistance); Ballastexistenzen (human
ballast; empty shells of human beings; people who are, in effect,
already dead).

“Ordinary medical behavior is predicated upon maintaining
life-and refraining from actual or potential killing or maiming
one’s patient in the name of enhancing the life of one’s own
group or people. Paradoxically, that medical vision of social
cure contributed directly to using medicine to kill or
injure….In experiments in sterilization, of course, the
ideological source and goals are clear.”

“The healing achieved by killing could also become part of
the immortalizing vision, and of the holiest human right and
obligation….”

Robert Jay Lifton, MD, The Nazi Doctors

A New Oath for the Healer

“…I shall always…remember that it is wrong to terminate
[human] life in certain circumstances, permissible in some, and
an act of supreme love in others….I shall understand that
preserving health is as important as treating disease….

“I shall have as a major focus in my life the promoting of
a better world in which to live…To become the Healer I wish to
be, I must expand my thinking and practice…to one of a
preventive approach to the problems of mankind, including the
social ills of malnutrition and poverty.”

Louis Weinstein, MD, JAMA 265:2484, 1991

The German Model

While the media are extolling Canada, the Physicians Payment
Review Commission is looking east, to the system founded by the
Iron Chancellor Bismarck. Features the Congress will probably
like best: an emphasis on obligations rather than rights;
mandated insurance, with all employers compelled to contribute (a
payroll tax); a national relative value scale; and expenditure
caps. The medical marketplace is heavily regulated so that
“society as a whole” decides how much should be spent for goods
called “health services.” Organized medicine likes it:
physicians are required to belong to the German Chamber of
Physicians, which negotiates with insurers. Patients like the
absence of copayments and the coverage of a yearly Kur at a
health spa.

The German system represents a “judicious set of trade-offs
between fairness, economy, and professional freedom” (Uwe
Reinhardt, PhD, Internist, May, 1991). And “[t]here seems to be
a resonance between the values in the health care system…of
Germany and traditional American values” (Bradford Kirkman-Liff,
JAMA 265:2496-2502).

Some drawbacks are noted by a physician who voted with

his feet. A huge administrative bureaucracy forces everyone
to live by “the same iron-clad set of rules and regulations that
have evolved and expanded over the course of a century.” Physi-

cians’ independence is an illusion. Physicians must routinely
see 70 or more patients per day, and may be penalized
retroactively for exceeding their quota of prescriptions or
services by having to pay for them out of their own pockets
(Helmut Haar, MD, Internist, May, 1991).

More States Add “Provider” Tax

Kentucky and Arkansas have imposed excise taxes on the
Medicaid revenue generated by hospitals, nursing homes, and
physicians. The money is put back into the Medicaid program and
matched three to one with federal dollars.

“We didn’t have much choice,” said Preston Nunnelly, MD,
President of the Kentucky Medical Association. The other
alternatives-a cut in services, decreased reimbursement rates, or
a general tax increase-seemed even less attractive (AM News
5/13/91).

CLIA Update

John Dingell (D-MI), Chairman of the Energy and Commerce
Committee, recently grilled William Roper, MD, Director of the
CDC, on his position regarding waivered tests. Initially, the
CDC had stated that there should be no waivered tests, however
simple, because there are no error-free tests. Apparently, this
position had to be modified in order to mute opposition to the
regulations.

Dingell also questioned HCFA’s plan to bill physicians $261
for “provisional certificates,” which are not authorized by the
legislation. He said that it would entitle holders to pay $261
for the privilege of hanging up a worthless piece of paper that
said nothing about the holder’s competence. HCFA Administrator
Gail Wilensky defended the plan to mail bills to 640,000
physicians, starting in July. It has nothing to do with com-

petence; the purpose is to find out where the labs are and what
kind of tests they are doing. The information received will be
entered into a computer database.

Labs that fail to apply for certification could be fined
and/or excluded from Medicare and Medicaid participation. Those
labs would eventually be caught if they applied for Medicare or
Medicaid reimbursement (AM News 5/20/91).

CLIA requires that HCFA conduct five studies to determine
the impact of laboratory errors and the cost of regulation. The
results of the first will not be available for two to five years.
The Health Industry Manufacturers Association estimates that the
regulations will add $4 billion annually to the nation’s medical
bills.

Veterans Administration laboratories will be exempt from
CLIA requirements under a bill approved by a House panel (HR
2280). Panel chairman Sonny Montgomery (D-MS) said that HCFA has
no business overseeing VA lab quality; the VA is a Cabinet-level
department, and HHS is a “bureaucratic vacuum.” At the same
time, the VA, despite quality oversight by 46 different
organizations, has recently been under fire for “botched
surgeries, bad transfusions, missed diagnoses, failure to render
proper care”, etc. (Medicine & Health 6/3/91).

A copy of AAPS comments regarding HCFA’s proposed
“intermediate sanctions” is available for $2.00.

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US Supreme Court Rules that Physician’s Federal Antitrust
Case May Proceed

On May 28, 1991, the US Supreme Court ruled that a physician
whose medical staff privileges were terminated stated a claim for
violation of the federal antitrust laws. The case (Summit
Health, Ltd. v. Pinhas, 59 USLW 4493) resolves a conflict among
the lower federal courts over the extent to which the Sherman
Antitrust Act may be applied to hospital peer review activities.

The five-to-four decision is the second Supreme Court case
in the past decade to concern the application of federal
antitrust law to hospital peer review. The first such decision
was Patrick v. Burget, a 1986 case in which AAPS participated as
amicus curiae in support of the plaintiff physician.

The majority opinion in Pinhas was authored by Justice John
Paul Stevens, joined by Chief Justice William Rehnquist, Byron
White, Thurgood Marshall, and Harry Blackmun. Justice Antonin
Scalia filed a dissenting opinion in which Sandra Day O’Connor,
Anthony Kennedy, and David Souter joined.

The Pinhas case arose in 1986, when Simon J. Pinhas, MD, an
ophthalmologic surgeon, requested the Midway Hospital Medical
Center in Los Angeles to eliminate its requirement for an
assistant surgeon in the performance of eye surgery. Dr. Pinhas
explained that because Medicare reimbursement was no longer
available for the assistant’s fee, the requirement would cost him
$60,000 per year in payments to competing surgeons for assistance
that he did not need. Although Dr. Pinhas wished to maintain the
preponderance of his practice at Midway, he nevertheless advised
the hospital that he would leave if the assistant surgeon
requirement were not eliminated.

In response, Midway, its parent corporation, and certain
members of the medical staff offered Dr. Pinhas a “sham”
contract that provided for payments of $36,000 per year (an
amount later increased to $60,000 per year) for services that he
would not be asked to perform. When Dr. Pinhas refused to sign
or return the “sham” contract, certain members of the medical
staff and the hospital initiated peer review proceedings against
him and summarily suspended, and later terminated, his medical
staff privileges. The peer review proceedings were conducted in
an unfair manner by biased decisionmakers and ultimately resulted
in an order upholding one of seven charges against Dr. Pinhas and
imposing severe restrictions on his practice.

While he was appealing the suspension, Dr. Pinhas filed suit
against the hospital, its parent company, its medical staff, the
hospital’s chief of staff, four competing ophthalmologists,
hospital officers and employees, and the hospital’s attorneys,
alleging violations of the Sherman Antitrust Act, among other
things. The Sherman Act prohibits contracts, combinations, or
conspiracies in restraint of trade that affect interstate
commerce.

The US District Court dismissed the suit, including the
antitrust claims, on the ground that the defendants were immune
from antitrust liability because of the “state action

doctrine,” which shields anticompetitive conduct if it is
based on a clearly articulated policy of the state government and
if the state actively supervises the anticompetitive action. The
US Court of Appeals for the Ninth Circuit reversed the District
Court and reinstated Dr. Pinhas’s antitrust claims, relying on
the Supreme Court’s decision in Patrick v. Burget. The Court
ruled that the defendants’ conduct was not immunized by the state
action doctrine and that Dr. Pinhas’s complaint stated an
adequate connection between the anticompetitive activity (peer
review) and interstate commerce (59 USLW 3416, BNA, 12/11/90).
At the urging of the defendants, the US Supreme Court agreed to
hear the case limited to the question of what connection between
the alleged restraint of trade and interstate commerce must be
shown in order for a federal court to have the power to hear the
case.

In affirming the decision of the Ninth Circuit, the US
Supreme Court wrote:

[Ophthalmologic] services are regularly performed for
out-of-state patients and generate revenues from out-
of-state sources….Petitioners contend that the
boycott of a single surgeon [does not affect interstate
commerce]…because the complaint does not deny the
existence of an adequate supply of other
surgeons….There are two flaws in the petitioner’s
argument. First, because the essence of any violation
of 1 is the illegal agreement itself, rather than the
overt act performed in furtherance of it,…proper
analysis focuses … upon the potential harm that would
ensue if the conspiracy were successful…. If the
conspiracy alleged in the complaint is successful, “as
a matter of practical economics” there will be a
reduction in the provision of ophthalmological services
in the Los Angeles market.

The Court noted that the alleged restraint of trade was
accomplished by an alleged misuse of a congressionally regulated
peer review process that constitutes the gateway to market
access. The gateway was closed to the respondent because
petitioners insisted upon adhering to an unnecessarily costly
procedure.

In an important footnote, the Court showed the limited
nature of the immunity conferred by the Health Care Quality
Improvement Act of 1986, 42 USC §11111 et seq.

The statute provides for immunity from antitrust…if
the peer review process proceeds in accordance with
§11112. Respondent alleges that the process did
not conform with the requirements…such as adequate
notice, representation by an attorney, access to a
transcript of the proceedings, and the right to cross-
examine witnesses. According to the House sponsor of
the bill, “[t]he immunity provisions [were] restricted
so as not to protect illegitimate actions taken under
the guise of furthering the quality of health care.
Actions…that are really taken for anticompetitive
purposes will not be protected by this bill.

The Pinhas decision will undoubtedly have a significant
effect on the conduct of peer review bodies by affirming that a
physician may proceed to federal court to seek relief for
anticompetitive abuse of the peer review process.

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New Members

AAPS welcomes the Augusta Institute of Psychiatry and
Behavior of Augusta, GA, and the following physicians: Drs. J.
of Augusta, GA; J. Alexander Ayres of Decatur, GA; Emile J.
Berlet of Westwood, NJ; Arthur Birnkrant of Freehold, NJ; Brian
E. Briggs of Minot, ND; Ruth Burke of Willcox, AZ; Joseph A.
DeMarco of Parasmus, NJ; John DeMays of Westwood, NJ; Alieta Eck
of Piscataway, NJ; Ronald J. Fadel of Louisville, KY; James M.
Fayle of Baytown, TX; James M. Fayle of Baytown, TX; Ronald E.
Feldman of Escondido, CA; Albert L. Fisher of Oshkosh, WI; Albert
L. Fisher of Oshkosh, WI; Marvin G. Frank of Union, NJ; John A.
Friedline of Jenkins, KY; Inge Friedrich of Old Tappan, NY;
Richard T. Furr of Ocean Springs, MS; Eugene Gorman of Westwood,
NJ; Kwang Han of Westwood, NJ; Kyle R. Hegg of Huntington, WV;
Francis H Hughes, Jr. of St. Mary, WV; Rick Jacobs of Phoenix,
AZ; Charles G. Kalko of Edison, NJ; Chang Kang of Westwood, NJ;
Grace L. Keenan of Sterling, VA; Roy E. Kerry of Greenville, PA;
Henry H. Kwah of Bel Air, MD; Jon Kyl of Washington, DC; Steven
Laskin of Westwood, NJ; Julia Levai of Tucson, AZ; Zinovy Lipsky
of Westwood, NJ; Justo Lozada of Westwood, NJ; Robert M. Lumish
of Pittsburgh, PA; Theodore F. Marshburn of Whittier, CA; Kevin
L. McChord of Dayton, OH; David J. Merk of The Plains, OH; Danine
A. Rydland of Martinsburg, WV; Ira Siegel of Westwood, NJ; Arnold
Sobel of Westwood, NJ; J. Fritz Thompson of Rockledge, FL; C.P.
Vasudevan of Bluefield, VA; William Ventura of Westwood, NJ;
Clarita V. Vicher of McDowell, KY; Nicholas A. Videtti of West
Orange, NJ; Deleno H. Webb, III of Huntington, WV; Joe E. Wilson
of Augusta, GA; John N. Withers of Kahului, HI; and John Wrigley
of Anchorage, AK.

We are especially pleased to welcome the following new
student members: Jaime L. Davis of Rochester, MN and Caroline
Kabel of Cherry Hill, NJ.

Negotiations by Organized Medicine

All over the world, the establishment medical organizations
have proved to be the profession’s worst enemy. This has been
well documented in the British, Australian, Swiss, and other
experiences. Our Ontario Medical Association has run true to
form: it has just made a deal with the government to accept a)
2% increase in the government-mandated schedule of fees for the
years 1989 and 1990…(there has been no increase since 1988),
and 3.9% for 1991, (while the consumer price index has risen over
5% per year); b) a cap on any doctor’s gross billings to the
plan, with payments reduced by

one-third to two-thirds per service billed above this level;
c) “binding” arbitration in future (an exercise in futility,
since Canadian governments have ignored the recommendations of
the arbitrator in the past, when it suited their purposes).
Worst of all, the OMA has agreed that the profession will include
patient utilization increases and consequent costs to the public
treasury, in defining future fee schedule increases; and that the
terms of reference of the arbitrator will include the govern-

ment’s perception of its “ability to pay.” You know what that
means.

In return for this abject surrender, the OMA has received
permission from the government to force all doctors in the
province, whether they’re members of the Ontario Medical
Association or not, to pay the usual annual dues (something over
$1000 per year)!….

William Goodman, MD, Toronto

The Canadian health care system creeps relentlessly toward
its ultimate destination, the Soviet model, a centrally planned
monster run by commissars issuing directives in a futile attempt
to control the uncontrollable. The end result of the Soviet
system, extensively documented, is chaos and corruption and
collapse….

Rather than fight the bureaucratization of the medical
system, [doctors] decided to join it…Members of the Ontario
Medical Association (OMA), once thought to be on the side of the
patient, voted to accept an agreement that makes the doctors
comrades in arms in the great socialist enterprise of managing
and controlling, right down to the simplest pin-prick, every
aspect of the medical needs of 9 million people.

…The agreement [the result of grovelling capitulation by
the OMA executive in the face of government threats] establishes
a Joint Management Committee, composed of OMA and government
officials. The JMC promises to become the commissariat of the
Ontario health care system. Its agenda is already full, ranging
over everything from “drug utilization” to “technology
assessment” to “hospital efficiency initiatives.”

The OMA has sold the souls of its doctors.

Terry Corcoran, Globe and Mail 5/38/91

A Reminder. . .

“To compel a man to furnish funds for the propagation of
ideas he disbelieves and abhors is sinful and tyrannical.”

Thomas Jefferson

AAPS Calendar

Oct. 17-19, 1991. Annual meeting, Lexington, KY, Griffin Gate
Marriott.

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