Expand search form

A Voice for Private Physicians Since 1943

AAPS News November 2019 – Waste, Fraud, Abuse, and Rights

Volume 75, no. 11  November 2019

The federal government has been declaring war on waste, fraud, and abuse in Medicare since shortly after it was enacted in 1965. In the 1970s, there was the Professional Standards Review Organization (PSRO). AAPS v. Weinberger, the first lawsuit filed by AAPS, which challenged the PSRO, was dismissed in 1975, and the U.S. Supreme Court declined to hear the case. In his motion to affirm the dismissal, then-U.S. Solicitor General Robert Bork wrote:

Patients whose medical care is provided by public funds have no constitutional right to whatever care [their physicians] using the “highest standards of medical practice” … may “judge necessary” … or to obtain that care “from a physician *** of their choice” [emphasis added].

According to this precedent, the supposed “right to healthcare” means a statutory entitlement to whatever the medical care government deems suitable to allow.

The concept of prepaid capitated care (managed care, originally as the deceptively named Health Maintenance Organization or HMO) also began in the 1970s in an effort to contain costs. About one-third of Medicare and two-thirds of Medicaid beneficiaries are now enrolled in managed care, with its inherent incentive to deny care.

A huge increase in resources to track down fraud in federal health programs, as well as more draconian punishments, came in the Health Insurance Portability and Accountability Act of 1996. The so-called Privacy Rule, with greatly expanded access to medical data, helped facilitate the criminalization of medicine, the most important part of HIPAA. At that time, it was claimed that 10% of Medicare outlays were lost to waste, fraud, or abuse. Sen. Tom Coburn (R-Okla.) alleged the amount to be 20%. As far as we can tell, both estimates were guesses. Then, the Affordable Care Act (ACA) escalated the war on doctors.

And what is the percentage of fraud now?

Still 10–20% or more, claims AARP. According to the federal government, $60 billion out of $591 billion spent in 2017 was lost to “fraud or improper billing.” Harvard professor Malcolm Sparrow states that the losses could be twice or even three times as great.

“Healthcare” Spending 25% Waste, Says JAMA

Looking at the entire $3.8 trillion “healthcare” enterprise, an article in the Oct 15 issue of JAMA states that about 25% is wasted. The biggest loss is attributed to “administrative complexity,” about $266 billion or 7%. “Fraud and abuse” was blamed for $59  billion (about 1.5%) to $84 (about 2.2%), and “overtreatment or low-value care”  for $76 billion (2%) to  $102 billion (2%).

The JAMA study’s authors had no suggestions for reducing the biggest source of waste: “No studies were identified that focused on interventions targeting administrative complexity.” They did suggest interventions calculated to reduce other sources by 25%. All these suggestions are managed-care methods; all add administrative complexity. The lead author, William Shrank, M.D., now Chief Medical Officer at Humana, has had a long career as a managed-care executive and advocate.

Shrank et al. advocate “value-based models, in particular those in which clinicians take on financial risk for the total cost of care of the populations they serve.” Capitation is the “evidence-based” policy advocated in an accompanying editorial by Karen Joynt Maddox, M.D., M.P.H., and Mark B. McClellan, M.D., Ph.D. Former CMS administrator Donald Berwick, M.D., observes that what some call “waste,” others call “income.” He calls for “shifting power to wrest it from the grip of greed.” Physicians should, he states, “champion changing payment from fee-for-service to shared risk and forms of global payment that encourage everyone to end wasteful care. In other words, more managed care.

JAMA editors Howard Bauchner, M.D., and Phil B. Fontanarosa, M.D., M.B.A., write that 25 million additional individuals  could be insured with no additional costs to the “health care system” if only we could reduce administrative costs from the 15% in the private sector to the “no more than 5%” for Medicare and Medicaid. (The low administrative cost is a myth).

Government Procurement for All

So what would happen with consolidation of all health plans into Medicare for All? Super economies of scale? Margalit Gur-Arie, M.Sc., explains how the current super monopoly, defense, works. The navy does not build ships; contractors do. The HHS healthcare Heptagon would be no less wasteful than the Pentagon. When politicians say private health insurance will be banned, they are lying. “What will be banned under a Medicare for All law is your ability or your employer’s ability to purchase health insurance directly from a private company. Instead, the government will procure contracts in bulk as it sees fit.

What happens with entities like Medicare contractors that are “too big to fail”—or to replace? The late Theresa Burr, a whistleblower who exposed malfeasance at Blue Cross Blue Shield of Florida, explained the outcome of her efforts in our Journal (www.jpands.org, fall and winter 2003). Information provided to attorneys was used to promote seminars on protecting the company, and all the guilty executives remained or got promoted.

Perspective: the Impeachment of Andrew Johnson

In 1868, the Republican House impeached Democrat Andrew Johnson, Abraham Lincoln’s vice president. One article accused Johnson of sometimes speaking “intemperately”; another wildly accused him of seeking a coup d’état. The chief prosecutor was Massachusetts Rep. Benjamin Butler, who had amassed a fortune by secretly trading with the enemy during the Civil War. The prosecution’s conduct was a cesspool of unethical conduct and constitutional abrogation. Gradually, six Republican senators concluded the trial was merely a political trap that would forever cripple the executive office. Kansas Republican Sen. Edmund Ross remained uncommitted until the judgment day, when the chamber voted 35-to-19 for conviction. Ross voted with the minority, thereby blocking, by a single vote, the two-thirds majority required for conviction.

The true objective of Johnson’s impeachment may have been to ensure that the Southern carpetbag regimes would be readmitted to the Union in time to vote the Republican ticket in the autumn of 1868 and prevent  the 10-year-old party from being strangled in its cradle, writes Philip Leigh.

Flashback: AMA Meeting, 1970

“[At a Reference Committee meeting], the Medical Committee for Human Rights…led a mob of trained agitators in disrupting the meeting giving the communist salute and displaying revolutionary signs….. The AMA Chairman, Dr. Malcolm Todd, was in charge for five minutes…. Quentin Young, past chairman of the Medical Committee for Human Rights [formerly of the Young Communist League, later national coordinator, Physicians for a National Health Program], took over the microphone, charged the [AMA] with contributing to the ‘criminal health care in America today’ and then indicted it for opposing…Medicare and National Health Insurance…. The anti-free choice agitators that declare ‘health care is a human right’…made it clear that they plan to destroy all human rights through a dictatorship of the ‘proletariat’ and mob action…. Signs for abortion saturated the corridors.”

Dr. Young reportedly said that the MCHR, which had initially planned to storm the stage, decided to wait to see “whether AMA is willing to change its basic philosophy endorsing the fee-for-service private practitioner as the base for medical care.”

On peer review: “AMA agrees that peer review can be an effective method of controlling the costs of medical care and…[it should] continue to give this project the highest priority…. Peer Review is to be conducted by medical societies under contract with the Secretary of HEW [Health, Education, and Welfare]…. This amendment was added to the AMA’s ‘Medicredit Bill’ for universal health insurance.”

“Troughmanship—Whole Hog for Federal Subsidies: … It is permissible for ANY sector of organized medicine to…accept government funds…. The trap is baited, the naïve and gullible are taking the bait and the results are predictable—practicing doctors lose control of their medical organization.”

AAPS News Letter, July 1970

“People are innocent, you know, until alleged to be involved in some kind of criminal activity.”

John Brennan, former CIA Director, https://www.wnd.com/2019/10/john-brennan-rewrites-foundation-american-justice/

High Cost Does Not Mean High Quality

The variance in cost for medical procedures can be enormous. Analyzing claims data from a client in Tennessee with $2.7 billion in claims, Ralph Weber of Route Three Insurance and Financial Services looked at charges for a colonoscopy (median $1,212; maximum > $17,000), repair of the knee joint (median, $4,730; maximum $75,000), and CT scan of the abdomen (median, $635; maximum, nearly $20,000). CMS quality ratings for mortality, safety, readmission rates, effectiveness, and patient experience were available for colonoscopy and CT scans. There was a strong inverse correlation between cost and quality. See https://vimeo.com/366385547.

Although insurers may try to create the illusion that such information is  proprietary, any self-insured group can get it. Mr. Weber got a state representative to request it. “Every self-insured group appoints a HIPAA Compliance officer, and that person can get the UP [facility charges] and HCFA [professional charges]  claims runs as well as large claims reports,” writes Mr. Weber.

ACO Model “Saves” $10.46/Beneficiary/Month

The Accountable Care Organization Investment Model (AIM) was designed to encourage the growth of Medicare Shared Savings Program (MSSP) ACOs in rural and underserved areas by prepayment of shared savings. After accounting for the $82.4 million in payments, AIM achieved an aggregate net reduction of $48.6 million in spending—$10.46 per beneficiary/month—compared with spending on beneficiaries primarily served by non-ACO “providers.” AIM reduced acute-care admissions by 2.6%, emergency-room visits not resulting in admission by 1.5%, stays in a skilled nursing facility by 5.8%, and readmissions by 4%. It is not known what will happen when prepayments cease after the second year (NEJM 8/8/19). No patient outcomes were reported.

Transformational $11 Trillion Tax Cut Proposal

The tax exclusion for employer-paid health premiums allows employers to control roughly $15,000 of the earnings of workers if they have family coverage ($6,000 if they have self-coverage). That amounted to $828 billion in 2019 alone, or nearly 25% of total U.S. health spending—adding up to nearly $11 trillion over the next decade. The Republican Study Committee proposes a “sleeping giant” that would deliver the largest effective tax cut any living American has ever seen, by allowing workers to put their earnings into expanded tax-free health savings accounts (HSAs), to purchase medical care or the health plan of their choice, or to save for future medical expenses. https://www.cato.org/blog/house-conservatives-health-plan-includes-828-billion-effective-tax-cut

AAPS Calendar

Nov 9. Missouri chapter meeting, St. Louis, MO

Sep 30-Oct 3, 2020. 77th Annual Meeting, San Antonio, TX


Do you have a managed-care Provider Agreement we could review? Please remove any personally identifying information and mail a copy to AAPS, 1601 N Tucson #9, Tucson, AZ 85716.

Progress in Physician-Assisted Death

Netherlands: In 2017, 83 mentally ill Dutch patients were euthanized, according to government statistics. Some had their organs harvested.

Switzerland: The Supreme Court ruled that the mentally ill have a constitutional right to access death. There are many verified cases of the non-physically ill being assisted to kill themselves —including an elderly woman who wanted to die because she had lost her looks (ibid.).

Canada: A court has declared that the foreseeable death requirement for lethal injection is unconstitutionally restrictive and discriminatory. The Trudeau government will not appeal (ibid.).

California: The Dept. of State Hospitals has promulgated a  regulation requiring that involuntarily committed patients who become terminally ill be given access to assisted suicide despite their legal incompetence (ibid.).

Nevada: A first-of-its-kind law allows dementia patients to instruct caregivers to withhold food and water once they reach incapacity. A future court might hold patients to be incompetent to revoke this instruction after it is being implemented (ibid.).

What’s Next for Vaccine Mandates?

More than 100 bills are being pushed in 30 states that would mandate vaccines by stripping out religious, philosophical, and medical exemptions. Those bills are being hotly debated in statehouses and courts of law across the country. Meanwhile, the Global Alliance for Vaccines and Immunisation (Gavi), founded in 2000 by the Bill & Melinda Gates Foundation, sponsored new “pop-up” activist groups, co-opting mothers and fathers into becoming the new face of the international movement. Opposition groups, apparently well-organized and well-financed, were launched, with a focus on infiltrating and discrediting activist groups that have for years successfully countered vaccine messaging by pharmaceutical companies and the CDC.

 The European Commission’s Roadmap on Vaccination contains a timeline of deliverables, such as a “common vaccine card/passport for EU citizens.” In the U.S. the Dept. of Homeland Security already has the full authority to update, change, or add to the Real ID program any provision the government sees fit. It could  conceivably prohibit unvaccinated individuals from entering any federal government property. https://vaxxter.com/vaccine-hesitancy/

Tip of the Month:  Beware the domino effect from having multiple state licenses. Euphemistically called “reciprocity,” state medical boards insist on imposing their own discipline on physicians whenever they are disciplined by another state board. The more state licenses that a physician has, the worse the domino effect. In some states, such as New York and Florida, the boards will impose discipline even though the physician left long ago. But this can violate due process for a state to penalize a physician who no longer has any contact with the state. Also, automatic discipline without the ability to contest it can infringe on due-process rights. Licensure through the Interstate Medical Licensure Compact, to which about 30 states and territories belong, waives due-process protections and requires automatic discipline by other states against a physician.

State Law on Medical Licensure

Here is relevant Florida law [emphasis added]. Check your own states—preferably before applying for a license.

64B8-8.018 Voluntary Relinquishment of License.

(1) If a licensee wishes to voluntarily relinquish a license at a time when no investigation has been initiated against the licensee, no investigation against the licensee is anticipated, and no disciplinary action is pending, and the licensee is not under any current restrictions or obligations by the Board of this state or any other jurisdiction, then the licensee’s request for voluntary relinquishment may be acted upon by staff without further action by the Board. In such a case, the voluntary relinquishment shall not be considered action against the license as that term is used in Section 458.331(1)(b), F.S.

(2) If a licensee wishes to voluntarily relinquish a license, but the licensee or the license is currently under any of the constraints set forth in subsection (1), above, then the licensee may relinquish the license only with the approval of the Board. If the voluntary relinquishment is accepted by the Board at the time an investigation is underway, or is anticipated, or when a disciplinary action is in progress, then the acceptance of the voluntary relinquishment of the license shall be considered action against the license as that term is used in Section 458.331(1)(b), F.S., and shall be reported as such by the Board.

Rulemaking Authority 456.072, 458.309 FS. Law Implemented 458.331 FS. History–New 2-21-93, Formerly 21M-20.018, 61F6-20.018, 59R-8.018, Amended 1-4-11.

Trump Orders Restraints on Bureaucracy

In an effort to “protect Americans from out-of-control bureaucracy and stop regulators from imposing secret rules and hidden penalties on the American people,” President Trump signed two executive orders on Oct 9. One bars federal agencies from skipping the cost-benefit analysis and avoiding public comment when issuing legally binding requirements, and requires that “guidance documents” be treated as “non-binding both in law and in practice.” The second aims to protect people from secretive interpretations and unexpected penalties by requiring that no person be subjected to regulatory enforcement “absent prior public notice of both the enforcing agency’s jurisdiction over particular conduct and the legal standards applicable to that conduct.”

“Many Americans learn of the rules only when federal agents come knocking on the door,” Trump said. “A permanent federal bureaucracy cannot become a fourth branch of government, unanswerable to American voters.

Seek Help; Get Excluded from Medicare

A rule buried in Medicare’s proposed 2020 fee schedule would revoke billing privileges when physicians are involved in state medical board actions, especially in cases of alleged harm to patients, e.g. because of seeking help for addiction or mental-health issues. This proposed rule greatly expands reasons for revoking or denying enrollment, with no concern for due process, notes AAPS past president Marilyn Singleton, M.D, J.D. This means termination from all federal payer programs. Under single payer, the physician could not work at all. https://www.medscape.com/viewarticle/919262


Physician Self Defense. More and more physicians are using covert recorders where it is legal to do so, to protect themselves against false accusations. There is equipment that allows you to monitor your home, inside and out, and to have video sent to your cell phone. A cellular trail cam put out by spypoint.com (mini-live-4GV) allows you to do both photos and videos and to change the settings on the camera via your cellphone.  It sends an alert to your cell phone if someone tampers with or moves the camera, and it has GPS tracking, which allows you to pinpoint the exact location of the camera if it is stolen. It has night-time capture mode and time/date stamps on pictures and videos.

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

MIPS. Nearly 20% of small/solo practices took a pay cut in the first year they participated in the Merit-based Incentive Payment System. How many government workers took a 20% cut? How many insurance company CEOs took a 20% cut? The truth is that they want to kill the solo physician. If you are one and want saving then you want direct primary care (DPC).

Douglas Farrago, M.D., https://tinyurl.com/y4mrjbjv

Transparency: Just Do It. Doctors should take actions that are under our control now, instead of trying to convince others, such as sociopathic politicians, to do the right thing. Many of us can set our own fair, transparent prices. Admittedly we would have to do our best to guess what a free-market price would be, for we have no price signals now, but we’ve got to start somewhere by sticking some prices up. Make them cheap for the cash payers, for our overhead is less. Employed and academic docs should pressure administrators to set fair and reasonable prices for their patients instead of predatory chargemaster prices—with discounts for cash payers. The price tag was invented by John Wannamaker in 1861. It was broadly adopted because people demanded it.

Caring about our patients’ finances will get physicians back on the moral high ground. Disconnect from insurance contracts, starting with the worst ones.

John Hunt, M.D., https://tinyurl.com/y4wpyn88

The Difference Is Huge. Prices must not only be available;  they must show the glaring difference between the “cash price” and the “insured price.” Patients must be dumbstruck by the delta. The ship will begin to turn only when we combine physicians bold enough to jettison insurance contracts with patients asking informed questions.

Kelly Victory, M.D., Steamboat Springs, CO

Free-Market Surgery. CBS News reported how a man drove 5 hours to get his hernia surgery for $3,000 at Surgery Center of Oklahoma, rather than the $30,000 he was quoted at home (https://tinyurl.com/y6mzxb7l). Harvard-trained health economist Sherry Glied objected because “not everyone can pay cash and this won’t solve the system’s larger problems.” Maybe economists should admit a good solution when they see one. Health economists haven’t done well solving the larger problems themselves. If we had more surgery centers like Dr. Smith’s, we could provide better access to care and lower costs.

Russell Kamer, M.D., https://tinyurl.com/y3t5gfhw

Government Guidelines. The British National Institute for Health and Care Excellence (NICE), which determines what will be covered by the NHS, makes absolutely predictable decisions about everything, based on the opinions of the Key Opinion Leaders in the area. People become key opinion leaders by working closely with the pharmaceutical industry, and they are not going to rock that boat. You cannot question decisions made by NICE; there is no body that oversees them. Only the court of public opinion has a chance of penetrating the armor.

Malcolm Kendrick, Macclesfield, Scotland

Interstate Medical Licensure Compact. More than 5,000 physicians have now received licenses under the IMLC, July 2019). Based on the IMLCC’s 2018 numbers, the Compact is becoming a cash cow for member boards and the Interstate Commission. Nearly $1.3 million in licensing revenue was passed along to the states, and the Commission hauled in $509,000 in separate fees. This revenue was generated from approximately 1,200 applicants, more than $1,000 per physician.

Jeremy Snavely, Tucson, AZ

Euthanasia for the Mentally Ill and Demented. The “death with dignity” reminds me of the Bushido honor suicide ritual, Seppuku, which requires an assistant. But it is worse: people killing themselves to relieve friends and family of the problem of a disabled dependent person. If a life is precious, why do we
we promote euthanasia? Is socialism/statism the source of this  movement to eliminate the useless eaters? Of course—it is for the good of the collective. Physicians have asked why I don’t kill (“put down”) my demented old Australian shepherd Ted. When I go into another room, he bumps and spins to position himself to see and smell me better. The main reason to kill old dogs and horses that require a lot of attention is to benefit the owner.

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

Previous Article

Medical Costs Transparency: As Clear as Peanut Butter

Next Article

Would You Rather Save $10.46 or $500 on Healthcare?