AAPS News – May 1999


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

Volume 55, No. 5 May 1999


The Information Age promises unprecedented advances in
science, technology, and human freedom. At the same time, it is a
threat to would-be monopolists and oppressors.

A direct assault on the free electronic exchange of
information is likely to fail. A better strategy for blunting the
power of the worldwide web (perhaps turning into Al Gore’s
Internet or an equivalent) would be to capture it in the name of
protecting intellectual property.

Consider this hypothetical plan: Pass a law supposedly
intended to “incentivize” useful collections of information by
protecting the initial database compilers against “piracy.”
Include broad proscriptions against “use” of the data without the
permission of those who, for all intents and purposes, now own
it. Demand (by other laws) expansive data collection, with
reporting in standardized electronic format-say as a condition of
insurance reimbursement or access to medical care.

This could be a perpetual profit machine for the first-
comer. For medical databases, there could be especially handsome
rewards for minimal investment: “Providers” would do the work of
gathering the data, pay for the equipment and standards to submit
it, and then pay again to use it. The profit potential of a small
levy on every medical transaction is immense (as Ross Perot of
EDS can testify).

Corporations threatened by technologic advance could enter
agreements blocking would-be innovators’ access to necessary
information (Fraser Forum, March 1999).

Power to the public partner, profit to the private partner:
an irresistible concoction. Many ingredients are ready to mix.
Take the Medicare price control system (the Resource-Based
Relative Value Scale and the Prospective Payment [DRG] System).
Add increasingly Draconian enforcement provisions and coding
requirements. Sift in the “Administrative Simplification”
provisions of Kassebaum-Kennedy, including unique patient and
provider identifiers. Fold in more data requirements in the name
of “quality assurance,” “patient protection,” immunization
tracking, medical and psychological risk assessment of children
in school-based clinics, medical credentialing, and “resource
allocation” (rationing and central planning). Leaven the mixture
with the Collections of Information Antipiracy Act (H.R. 354) and
watch it rise: the ultimate system for centralized command and

H.R. 354, which has passed the House of Representatives
twice in previous sessions of Congress, makes no mention of
medical information. However, the bill is very broad, and private
medical records are not among the specific exemptions. Staff of
the Subcommittee on Courts and Intellectual Property of the
Committee on the Judiciary denied a request by AAPS to testify at
the March 16 hearing. AAPS written testimony is posted at www.aapsonline.org, along
with a letter to more than 500 medical societies concerning this
important legislation.

A key witness urging passage of the bill in the 105th
Congress was Richard F. Corlin, M.D., Speaker of the AMA House of
Delegates (see
or the AAPS web site).
Dr. Corlin cited the “significant revenue” derived by the AMA
from its databases, including the Physician Masterfile, the
Current Procedural Terminology (CPT), FRIEDA, and Practice
Parameters. Annual revenue of at least $15 million is threatened
by court decisions holding that the AMA has abused its copyright
on CPT codes by charging high royalties for information that
physicians must have in order to comply with federal regulations.
An amendment suggested by Dr. Corlin, to expand the bill’s scope
to cover qualitatively or quantitatively substantial
extractions of information so as to harm an “actual or potential
market,” has been incorporated in this year’s version. He
discussed how someone could harm the AMA by extracting and
republishing a mere 150 of 7000 CPT codes.

The AMA was absent from this year’s hearing. Dr. Randolph
Smoak, Chairman of the AMA Board of Trustees, when asked about
the AMA’s position, stated that the Council on Legal Affairs was
reviewing the matter. There was a need, he said, to balance the
integrity of the medical record with its use by Plans, as for
developing new management strategies.

AAPS was, by the time of the hearing, the only physicians’
organization to join 116 others in a statement opposing
“legislation that would grant the compiler of any information an
unprecedented right to control transformative, value-added,
downstream uses of the resulting collection.” Such a right would
reverse long-standing policy that facts cannot be

According Charles Phelps, Provost of the University of
Rochester, the bill would provide a database proprietor “with
sufficient ammunition to … foreclose the very educational,
scientific, and research activities that should be preserved.”

Given the harsh penalties (5 years in prison and/or a
$250,000 fine), few will be willing to test the limits of the
law, which is extremely broad, ambiguous, unpredictable, and
subject to manipulation by private interests, according to Andrew
J. Pincus, General Counsel, U.S. Dept. of Commerce (oral
testimony posted at

Though a subcommittee staffer denied that the bill was
intended to apply to medical records, the fact is that
“a growing number of entities are staking increasingly aggressive
claims to medical records.” In the past, physician ownership of
medical records “was nearly synonymous with `owning’ or
controlling the patients” (AM News 4/5/99).

“Information is the currency of our economic age,” stated
Mr. Pincus. It is also the key to building the infrastructure for
a command economy and for enforcing its dictates.

In the upcoming Data Wars, the battle for freedom in
medicine may be won, or lost.

Capturing the Old and the Young

The Outcome Assessment and Information Set (OASIS) (also see
p. S2), required of home health agencies as a condition for
federal funding, has no statutory foundation, according to Twila
Brase, R.N., President of the Citizens’ Council on Health Care
(cchc-mn.org). Contrary
to the assertions of HCFA officials, 1997 Balanced Budget Act
requirements to provide data for developing a prospective payment
system for home health could be met with aggregate Medicare
claims data. For this objective, HCFA does not need 12 pages of
fine print, each one bearing a copyright notice, including no
fewer than 53 boxes about toilet or “elimination” performance.

“This is … unconsented government research on vulnerable
subjects,” stated Ms. Brase.

OASIS has been under development by HCFA and the Robert Wood
Johnson Foundation (RWJF) for 10 years. Its use in home health is
the first step. HCFA is “considering the possibility of using the
OASIS in our monitoring of managed care organizations in the
future” (Federal Register, 3/10/99).

Centralized records
for children are a feature
of the CATCH (Community
Access to Child Health)
program, a project of the
American Academy of
Pediatrics, funded by
Wyeth-Lederle Vaccines,
RWJF, and others. CATCH
2000 envisions that all
children will have a
“medical home” and not miss any preventive medical care (e.g.

“Universal access, with a defined benefit plan and a
population focus, to which physicians are bound, has all the
elements of socialized care,” wrote pediatrician Susan Atkins,
M.D., of Richmond, VA, upon reviewing the plan. “Centralization
of records, with linkage to (unspecified) support, education, and
other services, represents a serious loss of patient
privacy….Pediatric records frequently contain substantial
family information, including financial details for income-based
programs. Fully implemented, this plan would result in a major
transfer of medical and family decision making…to an ill-
defined group with unclear accountability.”

Meanwhile, the Robert Wood Johnson Foundation program All
Kids Count, which is ostensibly about local immunization
registries, is working toward the much broader goal of “making
medical homes real.” The spring, 1999, report notes that 18
states now have registries, and 10 mandate reporting by
physicians. There may be an exemption-which local medical
societies may fail to mention-if the patient or parents object.

(Many states’ statutes are searchable through the National
Vaccine Information Center web site, www.909shot.com.)

RWFJ President Steven Schroeder dismisses the idea that his
organization has a specific agenda; it merely provides data.
However, in the 1880s Richard Ely, a proponent of the New
Political Economy of government intervention, wrote: ” It is
clear that the aim of fact-gathering is to mold the forces at
work in society.”

Accessing Federal Data

The federal government and its private partners have a very
different view of their data, as opposed to our
data (the latter may be seen as rightfully theirs, but
not vice versa).

Thus, consternation followed in the wake of an add-on to the
giant FY 1999 Omnibus Spending Bill, sponsored by Sen. Richard
Shelby (R-AL). This provision requires that data obtained in
federally funded research be released under the Freedom of
Information Act (FOIA). (FOIA has exemptions to protect
proprietary or identifiable patient data.)

One reason for the requirement is the Environmental
Protection Agency’s (EPA’s) refusal to allow outside analysis of
controversial data used as the basis for Clean Air Act
regulations on particulate matter. EPA head Carol Browner stated
that the material belongs to Harvard. Some scientists within the
EPA risked their careers to write a letter of protest, alerting
the public “that EPA regulations and enforcement actions based on
poor science stand to harm rather than protect public health and
the environment” (DDP Newsletter, July 1998,

Proposed rules-contrary to statutory language-would permit
access only to published data actually used in
promulgating rules, and would impose extra costs. Still, many
federally funded institutions are calling for outright repeal, as
in H.R. 88, introduced by Rep. George Brown (D-CA)
(Science 283:307, 309; 283:1114). According to an April
2 report in Science, 1,600 public comments were running
4:1 in favor of restricting access. However, supporters of data
access, such as AAPS, were in the majority by the deadline of
April 5-a testament to the power of the Internet. AAPS comments
(posted at www.aapsonline.
) were sent to all members who have supplied e-mail

Data of particular interest include the results of vaccine
trials, especially of those vaccines that are forced upon
children, and psychological questionnaires administered to
children in federally supported school-based clinics.


Donna Shalala, in 1997 patient privacy
recommendations: “Individuals’ claims to privacy must be balanced
by their public responsibility to contribute to the common good,
through use of their information for important, socially useful
purposes” such as health care system oversight, public health and
safety, health research, and law enforcement.

Don E. Detmer, M.D., Chairman of the National
Committee on Vital and Health Statistics: “The privacy
fundamentalists seek the right to remain unknown. The most
extreme of this group would also demand that everyone’s data be
treated that way as well. They would hold the entire culture
hostage to their viewpoint and in this sense have been referred
to as privacy terrorists.”

AAPS Calendar

May 21-23. AAPS Board Meeting, Chicago.

Oct. 13-16. 56th annual meeting, Coeur D’Alene, ID.

Innovative Data Collection

On-Line CME. Interactive propaganda, with tracking of
multiple-choice or true-false responses, is now required as
ethics CME in Texas (see p. 4). Monitors can check whether
physicians have accepted such ideas as “the best means of
asserting autonomy in the health care setting” is to “have
representation on committees charged with developing the rules.”
Reading materials are carefully worded to appear “balanced,” but
frame the terms of debate in a particular way. The conflict is
portrayed as one of “commercialism vs. professionalism,” not as
traditional, Hippocratic patient-based vs. collectivist
population-based ethics. Dogma is stated as fact: “Such risk
avoidance [underwriting?] denies care to those most in need and
is not a characteristic of national health insurance plans in
other industrialized countries.”

“Frequent Shopper” Cards. Many grocery stores and
pharmacies now offer (or just send) bar-coded “discount” cards to
collect purchase information to “share” with retailers,
manufacturers, and unnamed others. The IRS? The Fat Police?

Ron Paul Seeks Defunding of Unique Identifier

Last year, Congress passed a provision in the Omnibus Budget
which forbade the expenditure of funds to implement the unique
personal identifier authorized in the Kassebaum-Kennedy Act. This
identifier could be used to create a national data base
containing everyone’s medical history.

The prohibition will expire this year unless it is
reenacted. Congressman Ron Paul, M.D., (R-TX) will again take the
lead on this issue.

“What ID numbers do is centralize power,” explained Richard
Sobel, research fellow at Harvard Law School, “and in a
time when knowledge is power, then centralized information is
centralized power
” (NY Times 7/19/98).

The whole idea of the American political system, Sobel
stated, is “to be inefficient, to divide power.”

Update on the Physician Profiles Project (PPP)

As other states contemplate placing physician data on the
Internet, they may wish to review the results of the PPP now in
effect for three years in Massachusetts.

Leonard Morse, M.D., who served on the Massachusetts Board
of Medicine for 5 years, notes that “errors have occurred and
physicians have been indelibly harmed by misinformation recorded
on their profile.” Barbara Rockett, M.D., like Dr. Morse a past
president of the Massachusetts Medical Society, stated that the
Board has received 4500 calls due to errors. The program has
diverted substantial funding from the Board’s disciplinary

Physicians are singled out although 92% have an unblemished
record. None of the other 27 licensing boards in Massachusetts
have a profile program.

Time to Opt Out of Medicare or Managed Care?

Before you put all of your tax information away, you might
want to use the data to do the “HCFA” (the AAPS Hassle
Coefficient Factor Analysis) for the Medicare, Medicaid, CHAMPUS,
or managed-care part of your practice. The enclosed form is
reprinted as originally distributed in October, 1996-before the
1997 E&M Documentation Guidelines, the Correct Coding
[downcoding] Initiative, the Medicare Integrity Program, and the
deputizing of senior citizen bounty hunters.

While AAPS has always advocated nonparticipation on
philosophical grounds, a respected practice management consulting
firm is raising the question for purely economic reasons (“Is it
time to re-think being a Medicare provider?” Conomikes
18(9):4-5, April, 1999).

Conomikes suggests determining these figures: total charges,
Medicare charges, Medicare percent; and total payments, Medicare
payments, Medicare percent. Then consider the projected drop in
Medicare payments, as with changes in the computation of the
overhead component.

Now ask: What would be the maximum impact of opting out? If
all patients changed physicians rather than pay privately, volume
might drop 25%, but payments might drop only 19%. Chances are,
some Medicare patients would stay, and some of the Medicare
volume could be replaced with other sources of payment.

“While dropping out of the Medicare program would be a major
strategic move for any practice, it is not inconceivable,”
Conomikes concludes. Factors favoring the decision to opt out
include : Medicare volume less than 25% of total charges; a two-
week waiting list of patients; a solo or very small group
practice; physician’s personal finances under control; payment
differential from other payers of at least 10%; and an ability to
market covered and non-covered services to attract new patients.

A kit for taking advantage of the opt-out provisions of
Section 4507 of the Balanced Budget Act is available at www.aapsonline.org. Member
physicians may obtain personalized advice from the AAPS Limited
Legal Consultation Service. All are invited to share experiences
on the AAPS forum, accessible from the home page or directly at


Bankruptcy Postponed

In 1993, the Medicare Trust Fund was slated to go broke in 6
years (1999). The 1998 Trustees’ Report projected bankruptcy in
2010. The 1999 Trustees’ Report places the Day of Reckoning in
2015: before most baby boomers retire. Reasons given by CBO
Director Dan Crippen: a significant increase in payroll tax
collections in 1998; a $4.6 billion slowdown in payments to
providers; and “reverse creep” (downcoding in response to
stepped-up compliance actions).

What will happen when the year 2000 rolls around is
anybody’s guess, concluded AAPS Public Relations Counsel Kathryn
Serkes, who attended the April 6 briefing on the Trustees’
Report. “Y2K preparations have been negligible so far,” stated
former CBO director Robert Reischauer. The medical field is one
of the least prepared.

Despite the graphs showing huge gaps between projected
income and expenditures, Marilyn Moon of the Urban Institute
said: “The Trust Fund report is relatively good news….We must
be doing something right.” She assumes that “health care spending
will decline per capita over time” as “mortality cannot endlessly
increase.” She apparently believes, however, that Medicare is not
sufficiently generous: “Where we are today is not where we should
be today. A wealthy population can afford to share its resources
with seniors.”

The prospect of physicians opting out of Medicare is “not on
the radar screen yet,” Ms. Serkes reported.

Members’ Page

Mandated Inaccuracy. The ICD-9 codes have expanded to
include new and absurd details, to clinically irrelevant degrees
of specificity. Often, there isn’t a code that fits, or one’s
knowledge, at the time of the medical service, cannot reach the
degree of specificity demanded. Data implying a higher level of
precision than exists are inherently more inaccurate. HCFA’s
Byzantine coding system has reached the point in which most
physicians will begin to equate the fifth digit, without which
the claim is unprocessable, to mean “I simply don’t care.”

HCFA’s coding requirements change so rapidly that not even
HCFA can keep up with them. In fact, bureaucrats should be
heavily fined and imprisoned for producing hundreds of thousands
of Medicare manuals containing outdated and inaccurate
information. Such actions represent deliberate ignorance and
reckless disregard for Medicare law and clearly constitute health
care fraud on an enormous scale.

Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

The Leading Edge. I feel that AAPS has been at the
leading edge of the proper response physicians should take to the
terrible damage now being done to American medicine….

Today some would argue that telling the truth doesn’t count.
Managed care came in on a flood of lies…I am convinced they
want to create waiting lines and will feed off the “float.” Those
of us who believe in truth will have to keep hammering away.
Since entering practice, I have belonged to the AMA and the state
and local medical society. I have done all I can to awaken them
to the fight ahead. In St. Louis, physicians of like mind started
as a dissident voice at the local society and now have had a
string of presidents at the local society, some state
councillors, and will soon have a state president. We are still a
minority, but I see signs of awakening.

Newton B. White, M.D., Town and Country, MO

Two Americas. From a letter to Rep. Henry Hyde: In the
second america, law after rule after regulation is imposed upon
“we, the people.” We are also forced to give up more and more of
our property to support the First America, the denizens of the
Federal Gigantocracy, who exempt themselves from the rules that
govern the rest of us, as well as from the most basic standards
of morality and common sense. Sad to say, the majority of your
colleagues, Democrats and Republicans alike, have their
allegiance to the First America.

Jesse A. Cole, M.D., Butte, MT

A Private Partnership. We are an HMNo …We are
doctors, not providers: a small, independent family medicine
practice that is focused on the patient. We don’t handle
insurance. Patients pay us directly-so our bills are written in
plain English….[excerpts from a patient brochure]
Jonathan Sheldon, M.D. and Heather Sowell, M.D.,
Englewood, CO

The Philosophy in Required CME. To renew my Texas
license, I was required to take ethics CME from Medical Education
Group Learning Systems (www.megls.cme.edu). Now they
disguise the neosocialist agenda under the cover of ethics
newspeak in a travesty of dishonest hired philosophy in which the
ends justify the means. The new medical ethic places the
doctor-population on top of the doctor-patient
relationship. Medical autonomy becomes a mockery: acceptance of
the rules made by “representatives” of our profession becomes a
legal justification. This is unacceptable. And the AMA is not my
representative….I have moved to Peru. Things are bad, but we
still have freedom and medicine is not criminalized.

Jaime Durand, M.D., Lima, Peru

Breakfast Rights. I’m giving a speech on “Liberals in
Republican Clothes: Why the Left Has Won the War.” The last
straw: Sen. *** coming out for passenger rights because he wasn’t
served breakfast on a flight from Phoenix to California. I should
pay more airfare so he can have an airline breakfast!

Craig Cantoni, Capstone Consulting, Scottsdale, AZ

The Key to Fraud. From a letter to Rep. Ron Paul, M.D.:
The magnificent magnitude of data conceals criminal tapping into
the money pipeline. The theft of millions of Medicare dollars
would be impossible if the current Medicare electronic claims
system did not exist. Electronic claim filing with automatic
payment to any sender was the brilliant scheme of insurance
carriers to force physicians to do all of their administrative
work for free. I now receive more mail from the Texas Medical
Association about regulations than about the science of medicine.
The headline (“Don’t let Medicare billing slow your payments”) is
followed by a pitch on how TMA members may buy a book for the
special price of $205 instead of $297 to unlock the money
pipeline to Medicare. Selling such merchandise and doctor name
lists is the way medical associations generate income as a

Richard Swint, M.D., Paris, TX

Physician Cleansing. Medicare could run out of doctors
before running out of money as a result of the new Bounty Hunter
program, creating an opportunity for provocateurs disguised as
patients to shake down or entrap physicians.

Samuel Nigro, M.D., Cleveland Heights, OH

[Copies of the Grassroot Grannies alert on this program,
for you to duplicate and distribute to patients, are available on

Legislative Alert

Setback for Medicare Reform

The bipartisan National Commission on the Future of Medicare
failed-by one vote-to approve the reform plan put forward by its
Chairman, Sen. John Breaux (D-LA). HCFA bureaucrats just missed
being hit by the political equivalent of an asteroid. Close call
for them. But the fallout is still continuing: health policy
analysts, from the conservative think tanks to the Progressive
Policy Institute, view the failure to reach a viable consensus as
the loss of an extraordinary opportunity to secure a superior
system of patient choice for today s seniors and for future
generations of retirees.

In the tortured area of health care policy, butchered with
bad law in a bipartisan spirit since the failure of the Clinton
Plan in 1994, the Commission started to emerge as one of the few
positive features of an otherwise badly flawed 1997 Balanced
Budget Act. Such panels normally don t have a great track record.
But in this case, the panel really performed a public service,
collecting data and solid testimony-as from Dr. Robert Waller s
(of Mayo Foundation fame) account of the mind-numbing
complexity of Medicare s regulatory system : 111,000 pages of
rules, regulations and related paperwork.

Again, when crunch time came this past month, the Commission
voted 10-7 in favor of the Breaux plan, just one vote short of
the statutory requirement for a formal commission recommendation
to Congress and the White House. All of Clinton s appointees
voted against it.

In the days leading up to the final vote, Senator Breaux,
who had secured the support of Senator Phil Gramm (R-TX) and a
solid phalanx of conservative members of the panel, had hoped to
get the White House on board. His failure wasn t for lack of
effort. If this doesn t put an end to all of the “New Democrat”
rhetoric, it s hard to imagine what will.

The outcome is perhaps summed up best by Chris Matthews,
former top staffer with Speaker Tip O Neill and now columnist for
the San Francisco Chronicle and host of the nationally
televised talk show Hardball: “Mediscare.” Politicians
think that the best option for them is to “scare the hell out of
the old people,” hoping that it will carry them through just one
more election.

Make no mistake about it. The Breaux plan, as outlined, was
no free marketeer s dream. The attempts to woo liberals on the
Commission made it less so. Nonetheless, it was a substantial
improvement over what doctors and patients are struggling with
today, and an excellent starting point for a real debate about
the structure of Medicare. The congressional fights about the
details, such as the level of insurance regulation, would have
been tough and tiring, and even bitter. But the fights would
have taken place on a new and unfamiliar terrain of patient
choice and competition, and not on the terms of regulation and
cost control

Different terms of debate lead to different outcomes in
debate. This debate would have dramatically changed the dynamics
of the system. It would have been a massive shift to patient
choice of plan, and it would have forced health insurers to do
something that they do not normally do in the American employer-
based health insurance market: compete directly for patients’
dollars. Competitive private plans are superior precisely
because they stand a good chance of being de-selected by
if they start playing the kinds of games that are
routine in the comparatively unpopular managed care networks that
now dominate employer-based insurance.

Instead of embracing the Breaux Medicare reform, a proposal
also backed by fellow commission member Sen. Bob Kerrey (D-NE),
Bill Clinton has proposed earmarking 15% of projected budget
surpluses to the Medicare “trust fund.” This approach has come
under fire from government accountants at the General Accounting
Office (GAO) and the Congressional Budget Office (CBO), who note
that pouring money into the trust fund is merely a paper
that does nothing to solve Medicare s structural
problems. The GAO has scored this approach as a loser, noting in
devastating testimony before the Senate Finance Committee that
simply throwing money at Medicare only lulls an unsuspecting
public into complacency and makes the job of real reformers even

The good news is that the issue is not going to go away.
Even though he failed to secure the requisite number of votes on
the bipartisan commission, Breaux has vowed to offer legislation
this year. Expect House and Senate Republicans to join him, and a
preponderance of moderate and conservative Democrats, as well.
This thing is not over. Members of Congress can run from it, but
they cannot hide. They cannot continue to just keep extending the
life of the trust fund with accounting gimmicks or price controls
or various other legislative shenanigans designed to make its
patchwork approach seem like statesmanship. Congress is going to
have to make a profound policy choice about Medicare.

The key to real reform of Medicare may not rest with the
graying legions of the American Association of Retired Persons,
but with the bulging baby boom generation, a generation big on
personal experimentation and autonomy, not the kind of folks who
are much into following the kind of rules dreamed up by Nurse
Ratchet over at HCFA. Stay tuned.

The Arrogance of Power

Probably no agency in Washington daily makes a better
case for reforming Medicare than the very agency that is charged
with running it. The Health Care Financing Administration (HCFA)
is achieving a rare status among federal agencies. HCFA is
starting to make the Internal Revenue Service, which administers
a measly 17,000 pages of rules and regulations, look good in

Let us count the ways. HCFA s been having a tough time with
its administrative pricing; its mounting paperwork requirements
on doctors, hospitals and other “providers”; its struggles to
implement new regulations on private sector health insurance
plans as mandated in the Kassebaum-Kennedy bill; and, most
recently, the botched “Medicare+Choice” mess. HCFA, armed with
more than 800 pages of regulations and restrictive language,
managed to deter hundreds of private sector health plans from
offering additional choices to senior citizens.

In the face of all of this, Congressional liberals, who can
never be accused of learning much from their previous experience
with prescription drug coverage in the failed Medicare
Catastrophic Coverage Act of 1988, now want to give HCFA
authority to manage and price prescription drugs, of all things.
Think about that.

To be fair, HCFA has too much to do, and the reason it has
too much to do is because Congress, regardless of the free-market
rhetoric of its members, insists on expanding, not contracting,
HCFA s regulatory authority. One might almost feel sorry for the
Clinton team running HCFA. But give them a little time, and then
they go out and justify, once again, the mounting Congressional

Take, for example, HCFA s handling of the nursing home mess.
HCFA is supposed to be responsible for monitoring the performance
of the thousands of the nation s nursing homes that get Medicare
reimbursement-to the tune of $39 billion. Without developing all
of the ghastly details, suffice it to say that HCFA performance
leaves something to be desired. According to the GAO, neither the
federal government nor the states were doing such a hot job, and
a quarter of the homes were in such a condition as to put
residents at risk of harm. On March 8, the Senate Aging
Committee, chaired by Senator Charles Grassley (R-IA), asked HCFA
Administrator Nancy Ann Min DeParle to testify about the nursing
home mess.

The Senate Committee heard the complaints of ordinary
citizens first, the ones who, as a famous White House
communicator never stops telling us, are the kind of people “who
work hard and play by the rules.” In a Republic, these folks,
sometimes called taxpayers, are precisely the folks who are
supposed to be in charge. Well, according to Robert Pear, the
fact that the ordinary, hard-working, rule-abiding folks, the
ones without fancy official titles, testified before the
Administration witnesses were called got the Clinton
Administration into a snit (NY Times 3/23/99). So, the
Clinton Administration refused to testify, saying that the
Committee “violated protocol” by calling the ordinary folks
first. The very idea. Back during the Reagan Administration,
Democratic Committee chairmen “violated protocol” whenever it
suited them, to score political points. As Pear reports, Senators
from both sides of the Senate aisle said that the Clinton
Administration s demand on this occasion was “petty and
unreasonable.” By the way, the Senior Democrat on the Committee
said the Clinton Administration s behavior in this instance was
“totally unacceptable.” His name is Senator John Breaux (D-LA).

HCFA Cares About Your Feelings

It gets worse. Now HCFA wants to force 9,000 home
health agencies around America to report sensitive personal
information on patients
. The idea is to transmit this
information to a huge federal data base-and eventually to state
data bases-without the patients knowledge.

Under a recently proposed HCFA rule, officials of home
health care agencies would be compelled to report sensitive
personal information. HCFA s evolving data base-called “The
Outcome and Assessment Information Set” (OASIS)-covers a
patient s Social Security number; medical history; demographic
characteristics, including race and ethnicity; living
arrangements; supportive assistance; financial profiles; sensory,
respiratory and elimination status; mental state; behavioral
characteristics; range of activities; medications; productivity;
and “quality of life.” This detailed record includes inquiries
into whether patients had expressed “depressive feelings,” a
“sense of failure,” or “thoughts of suicide”; used “excessive
profanity”; or made “sexual references.”

While ordinary Americans would think that none of this is
the government s business, HCFA officials see it as their
regulatory duty. In a December 15, 1998, letter to Michael Hash,
Deputy Administrator of HCFA, Jay Cutler, counsel to the American
Psychiatric Association, notes: “There is no requirement that
patients would be asked for their voluntary, informed consent
before answering any questions or that they would be informed
that this information, including their names, would be disclosed
to the state and federal governments.

In its initial proposal, HCFA s data collection would not be
confined to Medicare patients. Now, with the bright lights of
publicity shining on this scheme, HCFA is backing off and saying
that it will only collect such personal information from Medicare
patients. If this is supposed to make the situation better, the
team at HCFA is once again badly mistaken. In truth, HCFA is
adding an insult to injury, saying in effect that there will
be two standards of privacy: one for senior citizens and one for
Americans under 65
. This is at least compatible with HCFA s
official attitudes toward private contracting in the Medicare
program, in which the law (Section 4507 of the bungled Balanced
Budget Act of 1997) now establishes two standards for liberty and

HCFA s latest home health rules are a showcase of Medicare s
central planning. In the March 10 edition of the Federal
Register, HCFA advises: “Once the OASIS has been administered as
part of the comprehensive assessment, the results help to
organize planning with greater precision than is currently
possible, especially in HHAs that lack a carefully structured
approach to comprehensive assessment. The increased specificity
in patient assessment (in critical areas of health and functional
status) will assist agency staff to uniquely tailor a treatment
plan to each individual patient.”

Concerning patient care, official Washington knows best: “In
the day to day effort to competently deliver effective services
to a wide variety of patients with a panoply of needs, the HHA
can easily lose sight of the big picture or how the agency is
performing overall from the standpoint of effectiveness,
efficiency and patient satisfaction.”

Technology will speed up obedience: “The nearly universal
move toward electronic information systems, including the health
industry for areas such as billing and payment, suggests that the
sooner organizations learn how to use electronic information
systems for patient care and quality assessment and performance
improvement, the better they will be able to respond when HCFA
proposes to require electronic reporting of OASIS data in the

Concerning total cost of setting up the new data collection
system, HCFA estimates $1.8 million with enviable precision: “We
define an average size HHA as having 18 nurses and other service
providers and 486 admissions per year. We estimate that the
average time required by an average size HHA to revise assessment
forms to accommodate OASIS is approximately 8 hours for revision
of the initial assessment forms. The HHA will also require an
additional 4 hours for revision of clinical record forms at the
57 to 62 day assessment and for the assessment within 48 hours
after a return to home from a hospital admission.”

Extra data collection above the routine level will be a
snap: ” When collecting OASIS data, HHAs will spend an
additional 2.5 minutes beyond what they currently use to complete
the patient assessment at the start of care.”

Members of Congress should ask themselves a big question: Is
this the kind of system they want for the next generation of
American retirees? That means, for themselves.

Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage

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