Volume 67, no. 9 September 2011
In 1883, the great river pilot Mark Twain warned that 10,000 river commissions could not control the mighty Mississippi.
However, after 1865, General Andrew Humphreys, who greatly enjoyed the godlike sensation of sending tens of thousands of troops to their death in the War Between the States, declared war on the river. Richard Maybury sees the effort to control the Mississippi with dikes or levees as a metaphor for futile attempts to control the economy with socialism (EWR, August 2011).
The French word “levee” means to lift. When the river is confined by dikes, the silt has no place to go except the channel. The bottom of the river rises, and the dikes have to be built higher and higher. The bed is now so high that Twain’s hometown of Hannibal, Mo., has been hit by ten floods in 25 years, including a 200-year and a 500-year flood. Engineers and planners pile mistakes on top of mistakes, and more and more people are endangered by the ultimate collapse.
Medicare: the SGR and Beyond
The enactment of Medicare in 1965 decreased seniors’ out-of-pocket expenditures for medical care by more than 40%, while utilization of care increased substantially. Yet according to a 2005 analysis by Finkelstein and McKnight (NBER Working Paper No. W11609), Medicare had no effect on mortality, which had begun to decline several years before its enactment. U.S. health expenditures have tripled since 1965, writes Greg Scandlen (http://healthblog.ncpa.org 7/27/11).
The Clinton-Gingrich attempt to decree that Medicare expenditures could rise so high and no higher, the “sustained growth rate” (SGR), which was part of the 1997 budget deal, keeps getting postponed. The AMA constantly agitates for its final repeal. The accounting legerdemain that enabled passage of the Affordable Care Act (ACA) assumed, however, that physician fee cuts (now around 29%) would actually be made.
Another automatic “trigger” is a statutory requirement for the President to submit legislation to remedy a Medicare funding shortfall within 15 days after the trustees issue a warning. This requirement kicked in on May 22, 2009, more than 800 days ago. Obama has submitted zero bills to address the problem; instead, he signed ACA, which diverts $500 billion in Medicare “savings” to a new entitlement (Chris Jacobs, Republican Policy Cmte).
With the Independent Payment Advisory Board (IPAB) in §3403 of ACA, Congress exercised “statesmanship” to “save themselves from themselves” and “reduce congressional micromanagement of Medicare policy,” writes Henry Aaron (NEJM 6/11/11). Basically, it abdicated—to an unelected board, whose decrees automatically become law unless amended by Congress on a fast track through a difficult, complex procedure. Then the policies are untouchable by courts. Congress also attempted to bind future Congresses by specifying a limited and virtually impossible repeal process.
The Goldwater Institute is challenging the constitutionality of the IPAB in Coons v. Geithner—the only lawsuit against the ACA that includes this issue.
The Budget Control Act of 2011, which creates the Joint Select Committee on Debt Reduction, also subjects Congress and hence Americans to dictatorship by an elite committee, according to an analysis by former Sen. Harrison Schmitt.
Medicaid
The ACA claims to reduce the burden of cost-shifting from uninsured patients, by getting them enrolled in “insurance”—largely Medicaid. Despite the increased burden on bankrupt state governments, the 11th Circuit Court of Appeals has ruled that the ACA’s inducements are not “unconstitutionally coercive.”
States are cutting payment rates, making it more difficult for beneficiaries to find care. Beneficiaries and providers sued the state of California, and the 9th Circuit has upheld their right to do so, in Douglas v Independent Living Center of Southern California, No. 09-958, which will be heard by the U.S. Supreme Court in October. The Obama Administration is siding with California, but congressional Democrats, including Waxman, Pelosi, Reid, and Baucus, filed an amicus brief on the other side (NYT 8/8/11).
Evidence on the costs and benefits of Medicaid is lacking, write Baicker and Finkelstein, but results of a 2008 Oregon enrollment lottery showed that coverage by Medicaid leads to a 25% increase in total annual health expenditures (NEJM 7/20/11).
Although the IPAB is likely to slash payment to Medicare Advantage Plans, Medicaid is a “significant long-term growth opportunity for us,” states UnitedHealth—which anticipates $40 billion in expanded revenues (WSJ 12/29/10).
An Exponential Increase
In his dissenting opinion to the 11th Circuit’s holding that the individual mandate to purchase insurance is unconstitutional, Judge Marcus writes that the majority “has ignored the undeniable fact that Congress’s commerce power has grown exponentially over the past two centuries.” The mandate is needed to regulate “quintessentially economic conduct” to ameliorate cost shifting from the uninsured, he states.
Levees can’t be built to the sky. And exponential growth curves have a stopping point: say at totalitarian power. CMS terminology—the “Three-Part Aim”—resembles that of Chinese Communism. Can this stand in these United States?
Berwick’s Three-Part Aim
The seemingly inexorable rise of healthcare costs will “force the issue” of the accountable care organization (ACO), “the concept that is too vitally important to fail,” writes Francis Crosson (Health Affairs, July 2011). Integrative delivery systems may have failed in the 1990s, but now we have the needed supportive conditions, he writes. Successful ACOs would make the Three-Part Aim espoused by CMS director Donald Berwick feasible: “improved population health; high-quality care experiences; and moderation of per capita health care cost increases” [emphasis added].
The strategy is to “manage care on the front end” by controlling doctors. UnitedHealth Group, a $100 billion behemoth, is quietly buying physician practices and building management companies to organize them; its subsidiaries will be leading ACOs. “The very people [managed care firms] who were the demons in all of this, that the public can’t stand, are the big winners” (Kaiser Health News 7/1/11). Medicaid increasingly relies on managed care; in 25 states, more than 50% of Medicaid beneficiaries are enrolled in such plans (NEJM 4/6/11).
A new payment method: global capitation. A recruitment method: the incentive of debt repayment through the National Health Service Corps (NEJM 6/1/11). The Oregon Health Authority will work on recommendations for the newly passed Health System Transformation, including global budgeting and “a process for resolving a health care entity’s refusal to contract with a CCO [Coordinated Care Organization]” (OMA STAT 7/1/11).
“Efficiency” is often taken to mean low administrative costs, which are a matter of definition. Almost any payment an insurer makes to a doctor or hospital will count as medical care. So the key is to contract with an HMO, give it a fixed fee per enrollee, and let it shift most administrative responsibilities to providers.
“If you thought managed care in the 1990s was abusive, you haven’t seen anything yet,” writes John Goodman (http://healthblog.ncpa.org 8/10/11). And if you thought cost-shifting from the uninsured was a problem, think about Medicaid.
A Three-Part Aim, and one god: central control, often through private entities unconstrained by the U.S. Constitution.
The Rising Flood of Spending
There are two ways to constrain expenditures: cost-sharing and rationing, including the stealth rationing of price controls. Medicare and Medicaid eschew the former, with predictable results (Am Spectator, July 2011). A new RAND study has shown that families who have a high deductible and a health savings account spend 30% less, in all areas: out-patient, in-patient, and prescription drugs. It also found that low-income and/or high-risk families are not disadvantaged by such plans, reports John Goodman (http://healthblog.ncpa.org 6/17/11).
According to Medicare actuary Richard Foster, the ACA will triple the rate of increase of health insurance costs, from about 3.5% per year to 14% by 2014 (Health Affairs, July 2011). Ralph Weber explains that this is by doubling down on a failed system of mandates, subsidies, and controls. More mud in the channel.
Complaints that the U.S. spends a higher percentage of GDP on healthcare than any other country omit the fact that the percentage paid out of pocket (13%) is less here than almost anywhere else (Scandlen, healthblog.ncpa.org 6/13/11).
AMA Cashing In
The AMA’s 2010 annual report is entitled “Mo>ing Medicine Forward”—toward greater (>) revenue and influence for the AMA. The AMA-convened Physician Consortium for Performance Improvement (PCPIT) authored 56% of the measures adopted by CMS in its 2010 PQRS program. The AMA “empowers prevention” by creating CPT® codes for that purpose. It is helping physicians achieve “meaningful use” of electronic records through its AMAGINET web-based portal.
In 2010, the AMA achieved its 11th consecutive year of operating profit. Though dues income was down $4.2 million (9.9%), royalties and credentialing product revenues increased $5.2 million. According to the complaint filed in Fischer et al. v Berwick and Sebelius (see p 3), the AMA receives about $52 million in annual profits from copyright royalties and extensive other moneys as a result of its exploitation of the intellectual property in coding sets.
AAPS Director Plans Run for Congress
Wayne Iverson, M.D., an AAPS director and California chapter coordinator, has formed an exploratory committee to determine the feasibility of running for Congress in a new district covering Tierrasanta, Poway, and La Jolla. Dr. Iverson, an internist, has practiced in the area for 20 years. He is active in the San Diego Republican Party, Eagle Forum, and Tea Party groups. (See http://www.wayneiverson2012.com.)
States May Decline to Form Exchanges
At the annual meeting of the American Legislative Exchange Council (ALEC) in New Orleans Aug 4, the Health and Human Services Task Force passed a resolution recommending that state officials not participate in planning or establishing the state health insurance exchanges as provided for in the ACA, and that state legislatures urge Congress to defund planning grants.
Representatives from the Goldwater Institute argued that exchanges were a “silver dagger in the heart of ObamaCare lawsuits.” Once hundreds of millions of dollars are spent implementing the law, courts will be increasingly reluctant to overturn it.
Federal planning grants are seductive, but they expire after 2014, and costs are then likely to escalate rapidly. All the rules must comport with federal rules, and plans must be approved by the Secretary of HHS. Any state control was called a “mirage.” When ACA’s price controls reward insurers for dumping the sick, states will be left with the responsibility.
In 28 states, legislation has been defeated or not proposed.
Kansas returned a $31.5 million “innovator grant” for exchange infrastructure. Oklahoma was the first state to opt out.
AAPS Calendar
August 24 Sick and Sicker Screening, Poway, CA
September 17 ObamaCare Constitution Day Educational Workshop.
Sep 28-Oct 1. 68th annual meeting, Atlanta, GA.
Oct 4-6, 2012. 69th annual meeting, San Diego, CA.
11th Circuit Holds Mandate Unconstitutional
In a 304-page decision, a 2:1 majority on the 11th Circuit Court of Appeals affirmed Judge Vinson’s decision in the case brought against ACA by Florida and 25 other states (No. 3:10-cv-00091-RV-EMT) that the individual mandate to buy government-approved health insurance is unconstitutional, writing that:
This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives. We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers. “Uniqueness” is not a constitutional principle in any antecedent Supreme Court decision.
It did not void the whole Act. Now that there is a circuit split, the U.S. Supreme Court is virtually certain to rule on the ACA.
Primary Care Physicians Sue over AMA’s RUC
Six physicians at the Center for Primary Care in Evans, Ga., have sued the Centers for Medicare and Medicaid Services (CMS) and the U.S. Dept. of Health and Human Services (HHS) over the cozy relationship between CMS and the AMA’s Specialty Society Relative Value Update Committee (RUC). The suit, Fischer et al. v Berwick and Sebelius was filed in the U.S. District Court for the District of Maryland. It seems to borrow significantly from the approach taken in AAPS v. Clinton in asserting that the RUC needs to follow the Federal Advisory Committee Act (FACA).
Plaintiffs argue that federal agencies “cannot lawfully sub-delegate their entire authority to administer statutes.” But since 1991, CMS has virtually rubber-stamped the RUC’s payment recommendations for the Resource-Based Relative Value Scale (RBRVS)—even though defendants admit that this causes “distortions” in the payment system that greatly favor specialists.
The RBRVS has been called a “regulatory capture system” in which supposedly independent regulators side with the industry they are charged with regulating.
The RUC’s survey methodology has been attacked as “inherently biased and arbitrary and capricious.”
Out of 26 voting members, 23 are appointed by national specialty societies; 11 have served 8 years or more. Up to 300 persons have been known to attend RUC meetings, generally in exclusive resorts. Attendees must sign confidentiality agreements; the public has no way to access the proceedings. Significant financial ties are alleged to exist between RUC members and insurers, pharmaceutical manufacturers, and medical device companies, but conflicts of interest need not be disclosed.
CMS allegedly delegates full responsibility for determining relative value units (RVUs) to the RUC “with the full knowledge that the AMA RUC regularly provides RVUs that are improperly valued.” In its recent proposed fee schedule, CMS, instead of distancing itself from the AMA, has further invested itself. It has directed the AMA RUC to investigate the disparities in specialist and primary care fees that the AMA RUC itself created.
Risks of Ordering Services for Medicare Patients
Physicians who are not enrolled in Medicare, and receive no payment from Medicare themselves, may wish to refer a Medicare patient for a consultation, a diagnostic test, or other service. Under §6405 of the ACA, durable medical equipment or home health services may only be ordered for a Medicare patient by a practitioner who is enrolled in Medicare. The Secretary of HHS may extend—and apparently has extended—this requirement to “all other categories of items or services.” Thus patients cannot circumvent Medicare restrictions by seeing a non-enrolled physician, unless they are willing to pay cash and the supplier is willing and able under Medicare rules to accept cash payment.
Penalties to an individual enrolled physician who falsifies or conceals a material fact, or makes any false statement or representation, include a fine of $250,000 and imprisonment for up to five years. A person who attempts or executes a “scheme to defraud…any health care benefit program” can be imprisoned for life, “if the violation results in death.”
“I have seen this wording before,” states AAPS executive director Jane Orient, M.D. “Since no one believed that such draconian wording could be in the Clinton plan, I had to carry a copy of it around with me.”
Revalidation Required
Because of new criteria for screening providers for their risk to the Medicare program (§6401a of the ACA), all who enrolled before Mar 25, 2011 will be required to revalidate. The Medicare Administrative Contractor (MAC) will be sending notifications between now and March 2013.
We notice that CMS form 855I, the enrollment form for physicians, has a box for “voluntarily terminating enrollment.” This is not the same thing as opting out. Voluntary termination should preserve your privilege to re-enroll as soon as requirements for participation are met. In contrast, if your billing privileges are revoked, say for not reporting a change on time, you cannot reapply for one year or more. Physicians have had their billing number revoked when a MAC called to verify a location, and a receptionist answered the phone “ABC Clinic,” rather than “Dr. Jones’s office” (MPCA 7/11/11).
Medicare providers are evidently viewed as a potentially greater risk than the 40-some czars, who have tremendous power over enormous parts of the American economy. No Senate approval is needed, and some may not even have had a basic FBI background check (www.judicialwatch.org/czar-investigations).
AAPS Files Amicus in Stem-cell Case
AAPS filed an amicus brief in U.S.A. v Regenerative Sciences et al., U.S. District Court for the District of Columbia (No. 1:10-cv-01327-RMC), supporting the position that “the autologous use of bodily fluids, cells, and tissue (i.e., the use of a patient’s body to support that patient) falls within the practice of medicine and outside the FFDCA’s [Federal Food, Drug, and Cosmetics Act] jurisdiction.” The use of the patient’s own mesenchymal stem cells as cellular repair agents in cartilage and joint injuries, and the regulatory issues, are described by Centeno and Faulkner in the summer 2011 issue of the Journal of American Physicians and Surgeons.
Correspondence
New CMS Form for Ordering/Referring Physicians. CMS is developing a new form (CMS-855O) for physicians to enroll in Medicare solely for the purpose of ordering tests or referring patients; this implements §6405 of the Affordable Care Act (ACA). The form requires an NPI (national provider identifier). It is complete with 2 pages of threats of significant penalties (see p 3). Note also that item #5 under the certification statement requires that physicians agree to abide by all Medicare laws, regulations, and program rules. Thus, it is really not appropriate for opted-out physicians, who need not comply with same.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
The Debt Crisis. I’ve lost count of the people who assert that any approach to the debt crisis that doesn’t include raising more revenues is flatly irresponsible. I can’t tell you how irresponsible I think those people are. And it isn’t my debt or “our” debt. It is U.S. government debt. The U.S. government is just going to have to shrink its spending to match its revenues. People in the U.S. government do not want to see that happen. Layoffs are for the little people. If they need help shrinking, I have a few suggestions.
Linda Gorman, Ph.D., Independence Institute, Golden, CO
There Are No Liberal Solutions. Though the chattering classes are by no means silent—about conservatives—there are actually no liberal proposals for failing public schools, unfunded liabilities of Medicare or public pensions, or health insurance. As with school choice, it’s conservatives against special interests and entrenched bureaucracies (who wrote ObamaCare)—or socialists.
John Goodman, NCPA, Dallas, TX
Trapped. When Medicare was enacted, only half the elderly needed help. Now 100% are dependent on it. When liberal programs fail—they greatly exceed the budget, they make conditions worse for many, they block market-based changes that might have worked, the response is always, “Yes, but think of all the people we’ve helped. If you take the program away, they will perish.”
Greg Scandlen, Hagerstown, MD
Morality and the Mandate. It is not ethical to force patients to have their gall bladder out or to take a medicine—or to force them to buy government-approved insurance plan. People can’t trust doctors who are more concerned about forcing patients to buy something for paying doctors than with serving the medical needs of their patients.
David McKalip, M.D., St. Petersburg, FL
Hospital Safety. Two decades ago we did not have myriad committees biting off chunks of our time. It wasn’t until the hospital got a contingent of bureaucrats running surveys that medical mistakes started piling up. Doctors and nurses could concentrate on caring for the sick without constant interruptions. I will not participate in any more surveys. My answers would not be helpful to the cause of creating work to justify bureaucrats’ existence.
Michael Pryce, M.D. Kent, OH
Forced into Electronic Records. At a hospital where I provide emergency services, doctors will immediately and automatically have their staff privileges suspended if they fail to have 8 hours of training in the hospital’s electronic records system, plus an “optimization laboratory.” Another hospital threatens disciplinary action if every entry in the chart is not timed. The State Operation Manual is being “interpreted” by CMS to require this timing, although the Medicare conditions of participation do not require it. Nurses and ancillary personnel are being used to police doctors. Apparently, CMS is making this demand to pressure the hospital into buying a new computer system.
Albert L. Fisher, M.D., Oshkosh, WI
The eRx Incentive Program. This is the government’s latest gimmick for trying to force private doctors to use electronic records. I don’t think even the most intelligent accountant will understand the documents, such as those describing the complex “10% threshold test” (Fed Reg 2011;76(105):31547-31556).
John H. Boyles, Jr., M.D., Dayton, OH
Two Types of Collective Bargaining. Private-sector unions know that if they push too hard, the company goes out of business, and nobody will have a job. This does not happen in the public sector. Those negotiating with the union know that supporting its demands increases their reelection prospects.
Louis Keeler, M.D., Cherry Hill, NJ
Socialism Destroys Charity. Socialism is the opposite of freedom, and charity is the ultimate act of freedom. We must have something in order to choose freely to give. Freedom to keep the fruits of our labor allows us to have a surplus that we can give. Under the tax burden of socialism, there is no individual surplus. Under the fiat monetary system of socialism, no one can save securely for the future. All but the rulers become wards of the state, dependent on largesse distributed by its bureaucrats. Distributions from others’ assets or labor become entitlements.
Frank Polidora, M.D., Hazleton, PA
