AAPS News May 2018 – Non-Participation


The Center for Medicare and Medicaid Services (CMS) has sent out a Request for Information (RFI) concerning a new project called DPC. This stands for Direct Provider Contracting—not Direct Primary Care or Direct Patient Care, the growing type of practices that work for patients, not third  parties. There are now about 770 such practices, the majority of them completely opted out of Medicare. CMS wants them back, offering to pay “providers,” with as little administrative hassle “as necessary” (AAPS News, March 2018).

It’s like 1965 all over again.

As the late Robert S. Jaggard, M.D., pointed out at an AAPS meeting, “When you reach out your hand to take their money, that’s when they snap on the handcuffs.”

In the Sep 25, 1966, issue of JAG (vol. 4, no. 9), he wrote: “I Say No.” He did that in 1962, when it was easy because his income was not largely dependent on government payments. He asks: “Will you say NO when you see the cost of medical care goes higher, and ever higher, while quality goes down, down, down? If 50% or more of your paycheck is from government, will you say NO?” He observed that only individuals, not organizations, could make the choice between subservience and freedom.

In the Mar 4, 1965, issue, he pointed out that having lost on Medicare, the AMA launched an expensive propaganda campaign for Eldercare (Medicare Part B) so doctors could get their cut.

In a Jun 21, 1981, letter to the Cedar Rapids Gazette, which had advised patients to seek a doctor who accepted Medicare assignment as full payment so that seniors could “take charge of our  own medical expenditures,” he noted that “a doctor paid directly by the patient is responsible to the patient,” whereas a doctor paid by Medicare or other third party may or may not be primarily interested in serving the patient.

Notes from the CMS RFI

From the Apr 25 RFI (https://tinyurl.com/ydfx4ncw), it is apparent that a CMS DPC is a type of Accountable Care Organization (ACO). Under the CMS contract, the “providers and suppliers” would “agree to be accountable for the cost and quality of care of a defined beneficiary population.” They are offered the ability to take on “two-sided financial risk.” One difference is that beneficiaries would “voluntarily enroll” in a DPC practice. They might not even know they are currently in an ACO. The practice would have “the opportunity to earn performance-based incentives for total cost of care and quality.”

HHS Secretary Alex Azar indicated, in a speech to the American Hospital Association, that he considers DPC one of the “value-based care models,” along with ACOs, that CMS wants to facilitate. He may also, some providers hope, ease self-referral restrictions (the Stark Law) that they claim keep physicians and hospitals from building ACOs (tinyurl.com/ycxnwy9m).

The Most Basic Freedom

The most basic right—the one that makes all other rights possible—is the right to quit, writes psychologist Peter Gray, Ph.D., a research professor at Boston College (FEE 2/12/18, tinyurl.com/yag8h2zg). To be able to survive, avoid injury, and live in accordance with our personal values, we need the freedom to walk away from harmful people and situations.

Gray notes that hunter-gatherer bands that lacked formal means to coerce people to follow rules still lived in remarkably orderly, peaceful ways. Those who felt exploited or oppressed could leave to join another group. Nations with the most tyrannical regimes enact laws against emigration, as the new government in Russia did in 1917, two months after the Bolshevik Revolution.

In marriage and in employment, the legal and economic ability to walk away tends to reduce domestic violence and equalize relationships between employer and employee.

When institutions such as schools become like prisons, the only real way to quit may be suicide, Gray comments. He does not consider medicine, but physicians’ sense of being trapped in a toxic workplace (jpands.org/vol22no4/robb.pdf) might account  for physicians having the highest suicide rate of any profession—28 to 40/100,000, double that of the general population (Medscape 5/7/18, https://tinyurl.com/yaz7eumu).

And what about “universal coverage”? One approach is to fill in the gaps in private coverage; the other to replace current private insurance with a national tax-financed system. This is exemplified by H.R. 676, introduced on Jan 24, 2017, by former Rep. John Conyers (D-Mich.), and S. 1804, introduced on Sep 13, 2017, by Sen. Bernie Sanders (I-Vt.). After 4 years, S. 1804 would replace all current coverage, except for the Veterans Administration and the Indian Health Service, and bar duplicative private coverage, balance billing, and most cost sharing. National spending on covered services would be capped. Americans would have to “surrender” their current coverage and “trust” the government (Henry J. Aaron, NEJM 12/7/17). Once the system was in place, with no escape, tyrannical rationing could begin.

A real way to direct care for Medicaid was outlined by Daniel Horowitz: give the money to the needy through health savings accounts, bypassing the bureaucracy and the hospital-insurance  cartel (https://tinyurl.com/ycd7y8o2).

As Dr. Jaggard said, “Freedom is [still] available.” But it must be exercised, so that there is a band of freedom-lovers to join.

Brief Reports on Opioids

  • Suicide: Although the proportion is difficult to determine exactly, it is estimated that 20–30% of opioid-overdose deaths might be intentional suicide (NEJM 4/26/18).
  • Tainted evidence: Crime lab chemist Annie Dookhan pleaded guilty to altering evidence in at least 34,000 cases. Thousands of innocent Americans may have been  unjustly incarcerated for alleged drug crimes (https://tinyurl.com/ybyqezuv).
  • Collusion: The Drug Enforcement Administration (DEA) has been accused of running a “drug cartel farming operation.” The Sinaloa cartel is allegedly allowed to operate while smaller ones are suppressed (tinyurl.com/kxzt3fv; tinyurl.com/yd3t7bw4). A law passed in 2016 guts the DEA’s authority to freeze shipments of opioids from U.S. manufacturers to distributors suspected of diversion (https://tinyurl.com/yc9sjuyw).
  • What Changed? The huge spike in opioid deaths began in 2013, following Obamacare’s expansion of Medicaid and Obama’s immigration policies that resulted in a flood of illegal entrants, writes Daniel Horowitz (tinyurl.com/y7pt9q4v).
  • Children Enslaved as Drug Mules: Thousands of children as young as 12 are being recruited in the UK to transport drugs, in a process likened to the grooming that rapists and child abusers used to exploit children in Rotherham and other towns (Times [London] 11/27/17, https://tinyurl.com/y8l92q5s).
  • U.S. Opinion Surveys: In recent polls, about 28% said they saw addiction to prescription pain medicine as a “national emergency.” Asked who was mainly responsible for addiction, 33% said doctors who prescribed inappropriately, and 28% said people who sold drugs illegally. Only 10% blamed the people who took the pills (NEJM 2/1/18, https://tinyurl.com/y85tm5jb).

GPOs and Hurricane Maria

The critical shortage of sterile saline intravenous bags is blamed on damage to Baxter Healthcare’s Puerto Rico plants from Hurricane Maria. Baxter is the dominant manufacturer because Premier and Vizient (formerly Novation) have for years awarded the company sole-source contracts in return for undisclosed “legalized” kickbacks, according to Philip L. Zweig, M.B.A., executive director of Physicians Against Drug Shortages, in a Mar 12 letter to DEA acting administrator Robert Patterson.

“But even getting an exclusive ‘winner take all’ contract is a double-edged sword,” he writes. Excessive “fees” demanded by group purchasing organizations (GPOs) mean there’s little money left to maintain quality control and plant and equipment. “So metal and glass shavings, mold, and other contaminants show up in the drugs. GPOs have wreaked more destruction on the global prescription drug marketplace than Hurricane Maria ever could.” He calls GPO “gatekeepers and market makers” a “throwback to the disgraced ex-Soviet economic system.” Patients are denied life-saving drugs while hospital owners of publicly held Premier rake in millions on their stock holdings.

* * *

“I have just one wish for you — the good luck to be somewhere where you are free to maintain the kind of integrity I have described, and where you do not feel forced by a need to maintain your position in the organization, or financial support, or so on, to lose your integrity. May you have that freedom.”

Richard Feynman,  1974


Limited annual meeting scholarships for medical students and residents: aapsonline.org/essaycontest. Also, registration only $75 for a student you bring: write [email protected]

Follow the Money

  • War on Poverty: If all the federal money extracted from taxpayers and spent on “fighting poverty” were simply handed to the poor, each family of four could receive $277,000 per year.  Including state and local money would raise the total to $300,000 or more. Obviously, most of the money goes to people who are not poor (Richard Maybury’s Early Warning Report, May 2018).
  • Influenza Vaccine: At 300 million doses manufactured every year, vs. 20 million for all childhood vaccines together, flu vaccine is the most profitable vaccine. The CDC spends $4 billion/yr to purchase it. It is responsible for the majority of settlements from the Vaccine Injury Compensation Program (tinyurl.com/y8xfcnzb).
  • AMA Revenues, 2008-2016: Dues $362.3 million, total royalties, $673.9 million. In 2016, dues were down $5 million (-11.3%) from 2008, and royalties up $53.5 million (+97.1%). Dues were only 14% of revenue in 2016 (Charles Kroll).
  • Show Me (the Money) State: Missouri was the last state to get a Prescription Drug Monitoring Program—by executive order of Gov. Eric Greitens. Express Scripts, which made a $10,000 donation to Greitens’s inauguration, got a $250,000 no-bid contract to administer the PDMP (https://tinyurl.com/ycrzpda6).

Anatomy of Future Budget Deficits

While progressive economists, former Democrat chairs of the White House Council of Economic Advisers (Baily et al., Wash Post 4/8/18, https://tinyurl.com/ycqw4urw), argue that entitlements are not chiefly to blame for the coming deluge of debt, Brian Riedl, senior fellow at the Manhattan Institute (https://tinyurl.com/y8983xat), makes these observations:

  • “Seniors Paid for It”: Today’s typical retiring couple paid  $140,000 into Medicare and will receive $420,000 in benefits  (both adjusted to current dollars).
  • Demographics: In the 1950s, five workers supported each retiree; in 15 years, the ratio will be only 2:1.
  • Share of the Economy: The Congressional Budget Office (CBO) projects that Social Security and Medicare will continue to collect 6% of GDP in dedicated revenues, but spending will rise from 8.1% today to 12.5% of GDP by 2047—16.4% if the interest cost of deficits is included.
  • Parts B and D: Baily et al. consider only Medicare Part A, ignoring “massive and growing taxpayer subsidies to Medicare Parts B and D, which are the main cause of Medicare’s $40 trillion cash deficit over the next 30 years…. [T]ens of trillions of dollars in general revenue subsidies to Medicare Parts B and D represent possibly the fastest growing portion of federal spending.”

AAPS Calendar

July 21. Missouri state chapter meeting, Lake Ozark, MO.
Oct. 3-6. 75th annual meeting, Indianapolis, IN.

Flashback: E&M Codes

From AAPS News, November 1998 (tinyurl.com/y9xwvavz): Evaluation and Management codes were a joint effort by HCFA (now renamed CMS) and the AMA. The guidelines published by the two were not quite the same, and a HCFA official agreed that the guidelines were unclear. AAPS had no advice except that offered by Dr. Jaggard in 1990, who told his secretary: “no more code numbers.” He objected to the statement that only the doctor could provide the correct codes, noting that auditors had the final say. “Obviously, if the auditors can change a given code number [say 12345] to some other number [say 12347], then the auditors can change a blank space…into whatever code…they want.” He noted that code changes were being made with increasing frequency and that “cooperative” doctors who helped insurers with their coding job were being forced to pay back large sums.

Recognizing that his policies caused a problem for some patients, Dr. Jaggard offered to refund any fees paid by any patient who was not happy for any reason.

In the same issue, Bernhard Heersink, M.D., observed that Medicare and insurers did not like sending checks to patients because it showed how wasteful and expensive their insurance was.


Tip of the Month: In 2013, HHS updated HIPAA regulations giving cash-paying patients greater ability to restrict the disclosure of health information. The final rule (tinyurl.com/y9s7fvtc) states:

With respect to Medicare, it is our understanding that when a physician or supplier furnishes a service that is covered by Medicare, then it is subject to the mandatory claim submission provisions of section 1848(g)(4) of the Social Security Act (the Act), which requires that if a physician or supplier charges or attempts to charge a beneficiary any remuneration for a service that is covered by Medicare, then the physician or supplier must submit a claim to Medicare. However, there is an exception to this rule where a beneficiary (or the beneficiary’s legal representative) refuses, of his/her own free will, to authorize the submission of a bill to Medicare. In such cases, a Medicare provider is not required to submit a claim to Medicare for the covered service and may accept an out of pocket payment for the service from the beneficiary. The limits on what the provider may collect from the beneficiary continue to apply to charges for the covered service, notwithstanding the absence of a claim to Medicare. See the Medicare Benefit Policy Manual, Internet only Manual pub. 100–2, ch.15, sect. 40, available at  http://www.cms.gov/manuals/Downloads/bp102c15.pdf. Thus, if a Medicare beneficiary requests a restriction on the disclosure of protected health information to Medicare for a covered service and pays out of pocket for the service (i.e., refuses to authorize the submission of a bill to Medicare for the service), the provider must restrict the disclosure of protected health information regarding the service to Medicare in accordance with § 164.522(a)(1)(vi).

This apparently demonstrates that Medicare patients can pay cash for medical care as long as the patient refuses to authorize the submission of a claim. And if the patient pays cash then the related medical information cannot be sent to CMS.
Additional details: https://tinyurl.com/y996jquw.

AAPS Files Amended Complaint against AB72

In the case now designated AAPS v. Rouillard, AAPS argues that California’s law on out-of-network billing is unconstitutional because it deprives physicians of due-process rights by imposing a mandatory, cost-prohibitive dispute-resolution process. Physicians  must first participate in a cumbersome, futile internal review process with the health plan, and then be subjected to the Independent Dispute Resolution Process (AB72 IDRP), which charges a fee that is often larger than the amount in dispute.

AB72 violates the “Takings Clause” by causing a sharp, unreasonable drop of 25% in payments to out-of-network physicians. Some reimbursements are below the cost of providing a service and thus confiscatory.

Additionally, AB72 is contrary to federal law and  preempted by it concerning the rights of physicians who have opted out or disenrolled from Medicare.

For the complete complaint see: tinyurl.com/y9m27ddy.

Class Action against PHP Can Proceed

A class action suit against the Michigan Health Professionals Recovery Program can proceed now that Federal District Court Judge Arthur J. Tarnow denied, in part, MHPRP’s motion to dismiss (https://tinyurl.com/yb7b6hql). This is groundbreaking, writes George F. Indest III of The Health Law Firm, because it is the first time that a federal judge has found that physician health program (PHP) participants are intended beneficiaries of a state physician health program’s contract.

Many PHPs are allegedly plagued with mismanagement and abuses, including conflicts of interest and being operated to make a profit.  Plaintiffs claim that MHRHP was abusing its authority and demanding medically unnecessary treatment backed up with the threat of license suspension (tinyurl.com/yd4qv96a).

Disentangle, Disengage—from the GOP Caucus

Noting the series of betrayals and the “spectacular political adultery” of the budget bill, Daniel Horowitz urges conservatives to secede from the GOP Conference, while still seeking the GOP nomination—just for ballot access. He recommends an AAPS-like nonparticipation policy for politicians, as they build a new movement: “They should not attend party meetings; they should not take any party money; they should not raise money for the party.”

He gives the same advice to conservatives that Moses gave to the Israelites: “Please get away from the tents of these wicked men, and do not touch anything of theirs, lest you perish because of all their sins” (Numbers 16:26).

“The time to declare independence is now…. One thing is certain: The status quo is worthless ….”

He suggests the following guiding principles:

  • No taxpayer-funded program conceived to help the poor should be used to create monopolies for private entities and hurt consumers who are not subsidized.
  • No government mandate or intervention should be used to benefit one particular product or service at the expense of consumers.
  • Return power to states and local communities.
  • Put the patient and doctor back in control of medicine, not government and the insurance cartel (tinyurl.com/yafjhucs).


Coerced Treatment for “Burnout.” In concert with boards and Physician Health Programs (PHPs), the National Academy of Medicine (NAM) is now trying to make burnout a mental illness and/or a “potential for impairment” condition (https://tinyurl.com/y6v5mwmd). We anticipate that the same lucrative and self-proclaimed centers for treating “disruptive” physicians will get into the “burned out” business. We also note that many of the physicians who are forced to go to one of these “centers for treating disruptive physicians” often end up being coerced to take antidepressant medication. Typically they are under an Agreement stating that if they are not compliant with treatment recommendations (including medications), then they agree that their medical staff privileges will be automatically terminated. Many of them also have to agree to submit to periodic drug testing, even though there is no history or evidence of any drug or alcohol abuse.

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

No More Unpaid Consultations. I decided about 5 years ago not to serve as the unpaid consultant to insurers. I do still accept insurance and as a pediatrician in solo practice this works right now. However, like a lawyer, I charge for everything else. It’s $35 for every prior authorization; a letter is $25-$200 depending on time; no shows are $50; after hours calls are $40; etc. My patients happily pay this and respect my time and expertise.

Niran Al-Agba, M.D., Silverdale, WA

The Tumor That Needs Excision. I understand that insurance dominates the market and physicians may feel it necessary to participate. Government has long subsidized, and now mandates, third-party, usually employer-based payment schemes.  That is the central problem that caused every other bad thing that followed.

But individual doctors have a lot of power to fix the system. We can post transparent prices. We can fire administrators who set up dishonorably hyperinflated prices or who sign insurance contracts that encourage price hyperinflation or agree to unpaid cooperation in pre-auths. We put our income at risk to do this, and that is exactly the boldness we need to see from a noble profession. The physician’s unwillingness to sacrifice an insurance contract underlies the decline in the profession. There is no chance that politicians will fix any of this. I see the future of medicine as the sheep doctors who provide services for the collective under collective auspices, and the good doctors who will not participate in the collectivism and will provide a kernel of liberty that will possibly flourish in the future.

 John Hunt, M.D., Trusted Angels Foundation

Real Insurance. ACA has perverted the concept of insurance. Insurance transfers financial risk of an uncertain event to a pooled group in return for a certain payment. Guaranteed renewable major medical/catastrophic insurance is the appropriate type of health insurance: Day-to-day health needs are not uncertain. With real insurance, most people do not file claims. To draw new customers, insurers have many products for home, auto, life, and disability with interesting terms. (For example, I had a disability policy with a rider that paid me 80% of premiums back if I didn’t use it within a 10-year period.)  If health insurance were truly insurance, insurers would try to differentiate themselves.

Marilyn Singleton, M.D., J.D., Redondo Beach, CA

Before ObamaCare—and After. In states that kept the Medicaid expansion wolf from the door, people are not dying in the streets. Before ACA, underwriting was permitted, and 87% of applicants for private policies received one. Those with high-risk conditions at application who were declined coverage were sent to the high-risk pool. They had a choice of four or five plans. Most states capped premiums at about 50% more than private plans.

In Kansas, funding in 2013 for the high-risk pool was $11.9 million in net member premiums, $20 million in carrier assessments, and $1.4 million in federal grants. If subject to state but not federal mandates, carriers would re-enter the market, and we could drop premiums substantially without the need for federal subsidies. We would re-open our high-risk pool, which historically had only 1,300 to 1,400 members at any given time. We know how to allow a market to work. Kansas and other states like us just want an exit from ACA.

Beverly Gossage, HSA Benefits Consulting, Eudora, KS

Responsibility. The drug abuser is never to blame. He is a victim. Under Marxist determinism, everyone is a victim, and only the oppressor class (e.g. drug companies) has any culpability. In his excellent book, Romancing Opiates, Theodore Dalrymple (Anthony Daniels) explains how the concept of addiction as a disease is another example of the medicalization of everything.

John Dale Dunn, M.D., J.D., Brownwood, TX

Where the Money Goes. Pharmaceutical benefits managers (PBMs), a once-obscure feature of the financial landscape, have become industrial behemoths. In 2017, the top PBMs had revenues exceeding those of the top pharmaceutical manufacturers, e.g. Express Scripts took in $100 billion; Pfizer, $52 billion (tinyurl.com/yc7dcmdk). Middlemen who do no R&D and produce no product are more profitable than Big Pharma!

Marion Mass, M.D.,  Sellersville, PA