Category: Physicians Practice

The Obama administration announced July 3, 2013, that it is giving large employers another year before it will try to enforce an Affordable Care Act (ACA) provision requiring large employers to offer medical coverage to their workers or pay a fine.

The large-employer mandate is intended to force larger employers to do their part to reduce the number of uninsured Americans. The individual mandate is designed to force individuals who have some ability to pay, to pay what they can, with the balance being picked up by the federally subsidized health insurance marketplace. The Society for Human Resource Management provides a nice detailed explanation of the employer mandate.

The large-employer mandate ignores the financial reality that any large employer (who also owns a calculator) can figure out that it is actually cheaper to forego coverage and pay the $2,000 fine, than to offer health insurance to all full-time workers (defined as 30 or more hours per week). It is anticipated that the employer mandate will backfire, and will additionally burden the federal government, which likely must pay the difference between the fine and the actual cost of all these newly uninsured employees who would be added to the roles of Medicaid, or driven to the subsidized health insurance exchange/marketplace.

Understand too, that the idea of employer-provided coverage came into full vogue during WWII, when there were no workers to be found (the men, and women, were all fighting and serving overseas). In order to deter “wage inflation,” (more war dollars chasing fewer workers naturally leads to “wage inflation”) the government imposed “wage freezes,” but exempted a certain percentage of wages being paid in fringe benefits, such as healthcare. Today, we have the opposite problem. There are too many workers chasing too few jobs. This leads to wage and benefit “deflation.” Employers, particularly employers of low-skilled workers, do not need offer benefits to find workers.

The official version of why the rollout of the employer mandate has been delayed was described as “employers needed more time.” Perhaps the real reason has a bit more history behind it.

Nearly 200 years ago, on August 24, 1814, British troops sailed up the Potomac and set fire to the White House. In school we were taught that this, perhaps the worst of all national embarrassments, was unavoidable (and at least we won the war.) In the 2012 book, “White House Burning, The Founding Fathers, Our National Debt, and Why it Matters to You,” authors Simon Johnson and James Kwak offer a different perspective. In 1812, Congress voted to do something very expensive, then went home; where members quickly learned that if they tried to use taxes to pay for the war effort, they certainly would not be returning to Congress the following term. Washington was left virtually undefended; because we didn’t raise enough money to provide a defense – and we got burned.

Johnson and Kwak observe our highly polarized political system is on the course set by the 1812 Congress: higher spending without higher taxes. Although the American people in 1812 got the message the British delivered, and raised taxes in 1813 and 1814, today, we have no such messenger. 

Raising taxes to cover the costs of Medicare and Medicaid is frustrated by the fact that many voters do not understand what the federal government actually does. According to a 2008 survey, 44 percent of people who receive Social Security retirement benefits say they “have not used a government program.” The figure is 40 percent for Medicare recipients, and 43 percent of those receiving unemployment benefits. People who do not realize they benefit from the government’s largess, naturally think the government is too big, theirtaxes should be lower, spending should be lower, but unsurprisingly feel their favorable programs should not be touched. Anyone not following this clearly understandable, albeit illogical voter mandate will be punished at election time.

Thus, in passing Obamacare, Congress and the president tried to “slip one past us” (and the Supreme Court called them on it). The individual mandate, (and the employer mandate by extension) is a really a “tax.” The delay in the employer mandate buys Democrats at least one more election term to think of something more clever – and they likely will.

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The Employee Retirement Income Security Act of 1974 (ERISA) is one of the most unusual and fascinating of all federal laws. Originally intended to protect employee benefits and pensions, ERISA was supposed to be helpful to employees.

In a twist of judicial interpretation, ERISA provides the basis for health insurance companies to deny employee benefit claims with impunity. ERISA Section 514 preempts all state laws that relate to any employee benefit plan, with certain, enumerated exceptions. The U.S. Supreme Court has created another limitation on the insurance exception, in which even a law regulating insurance will be pre-empted if it purports to add a remedy to a participant or beneficiary in an employee benefit plan that ERISA did not explicitly provide. This means state laws providing a penalty against bad faith insurance claims practices, deceptive trade practices, fraud, misrepresentation, and even attorney’s fees are preempted.

Simply put, ERISA somehow stepped through the looking glass where everything is backward. Employee benefit protection became a license to cheat beneficiaries. Governments and charities were excluded from ERISA, which was supposed to benefit them. Instead, governments and charities are the only employers who can be sued for punitive damages and attorneys fees for bad faith claims practices.

Many commentators observe, that judicial decisions under the ERISA have been so constrictive and anti-employee, over such a long time, that it can now be said that participants in employer-sponsored pension and health insurance plans would have been better off, on balance, if the statute had never been enacted. Given that the act’s stated purpose was to protect benefit plan participants, this is a surprising conclusion to have to reach. Nonetheless the argument is strong, and is validated in part by the thousands of cases that have accumulated in which plan participants/plaintiffs have been forced to argue ERISA does not apply to their claims, as a precondition to salvaging those claims.

More recently the battle over ERISA has moved into the area of benefit review audits, as I wrote in January. [Providers fighting back] There, I cited the case of Tri3 Enterprises v. Aetna,  where Aetna, administering an employer-provided plan authorized insertion of a DME device. After the horse had left the barn, a Special Investigations Unit (SIU) reversed the authorization and denied payment (because it determined the equipment to be “experimental,” and therefore not covered by the plan.) In order to attempt to get paid, the providers who took assignment of benefits had to argue ERISA does apply (which is usually a good thing for the health plan). Health plans paradoxically argue that ERISA applies to prevent a patient from suing for extra-contractual damages (punitive damages and attorneys fees); while arguing ERISA does not apply to claims filed by a provider who is merely suing for the face amount of the claim.

If this sounds confusing, it is. In fact, if you were to envision someone plucking petals from a daisy, while chanting “ERISA loves me, it loves me not,” you would have a far better understanding of how the law works than Congress did 1974.

The way all of this works in the real world is, however, far simpler. If a patient is covered by an employer-provided plan, and the plan denies a claim, ERISA likely applies, (unless the employer is the government or a charity.)

In the absence of ERISA, the patient could hire a lawyer without paying up front, because most states allow the recovery of attorney’s fees. But ERISA forbids the recovery of anything but the amount of the benefit. This has the practical effect of taking plaintiff’s lawyers out of the equation. While a patient has little incentive to hire a lawyer out of pocket, the provider who has accepted an assignment of benefits certainly does. ERISA provides the framework for making such a claim. Unlike the patient, if the provider wins, the provider leaves with money in its pocket.

ERISA’s claims procedure and preemption of punitive damages and attorney’s fees has stood the test of time because as a matter of policy, many people do not like the idea of tort lawyers suing for huge punitive damage awards. However, most everyone is in favor of some simple mechanism for at least recovering the amount of the charges. More recently, states have been carefully crafting slow-pay laws, which thread the needle between what is considered a “coverage dispute,” from a distinct dispute over merely the timing of payment; not whether the benefits were covered.

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A few weeks ago, I interviewed Jane Orient from the Association of American Physicians and Surgeons (AAPS) regarding a lawsuit the group filed against the American Board of Medical Specialties (ABMS) over the latter’s maintenance of certification (MOC) process.

I wanted to give equal time to Lois Margaret Nora, MD, JD, MBA, president and chief executive officer of ABMS, for her perspective on the issue. Nora said she was “happy to speak at any time about the significant value ABMS member board certification brings to patients, their families, and the medical profession.”

Martin Merritt:

Is the matter of whether or not a voluntary MOC program should continue one that needs to be decided in a court of law?

Lois Margaret Nora:

ABMS member board certification is voluntary. Patients and members of the medical profession, including physicians who choose to participate in the MOC program as well as hospital and other healthcare decision makers, rely on certification and MOC as benchmarks of quality. The patients who rely on it are in the best position to judge the value of the program. The evidence demonstrates that from the patient’s perspective, “board certification genuinely means something.” Board certification and MOC speak to, and are tools which build, “patient trust.” Patient trust is crucial in the physician-patient relationship.

MM:

Critics charge that board certification has recently begun to replace the “license to practice medicine” as the standard of competence in a way which harms competition.

LMN:

Board certification and medical licensure are different and I never expect that certification will replace licensure. Board certification is an important way of providing information to a patient, but it is not the only way of establishing that a physician is worthy of patient trust. Board certification is a voluntary program that supplements other means of evaluating quality. The fact that many hospitals rely upon board certification as a standard of excellence speaks favorably of the program’s value.

MM:

Can you cite an example where the absence of a system of board certification might negatively affect patient choice?

LMN:

Yes. Board certification is a system that provides professionals, hospitals, and patients with information about physicians’ qualifications. Without board certification, there would be less information available for decision making. We believe hospitals and patients appreciate the fact that a voluntary system is in place which provides relevant information about a physician’s adherence to the highest standards of excellence.

MM:

What about the situation alleged by the AAPS regarding certain highly qualified physicians? I believe the example was a physician who runs a charity clinic caring for thousands of patients, but who lacks the time or resources to devote to maintenance of certification?

LMN:

I really can’t comment on the specific allegations in the lawsuit. However, what I can say is that ABMS and its member boards work very hard to make board certification both relevant and valuable. Physicians are very busy and need to balance all of the demands of today’s medical practice; we believe that ongoing learning and assessment are important elements of continuous professional development for all physicians, even in our very complex practice environments.

Editor’s Note: ABMS Maintenance of Certification is a registered trademark.

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This morning, I awoke to find that my cat “Peppy” had become ill on top of the papers in a notebook I keep at home covering Stark Law. Although I have left work papers open many times over the years, Stark Law is apparently the only thing which makes even my cat “throw up.” Recognizing nearly every physician despises Stark Law, (and ever the “contrarian”) I decided to devote this week’s column toward an explanation of the rationale behind Stark Law. According to Stephen Covey (The “7 Habits” guy), a person can more easily live with any “thing,” provided he is given a “why.” 

Stark Law is a “conflict of interest” statute which does not prohibit a physician from earning a “fee- for- service” (FFS) which is to be directly performed by the prescribing physician (or by someone in his office or group practice. ) When a patient simply presents for treatment, (and there is no illegality in the referral) acting alone a physician (or those within his office or group) simply cannot violate Stark Law through the in-house treatment of a patient, because there is no “outside referral” to someone else.

A Stark Law violation then, must necessarily involve a medical referral of a patient between physician and at least one other “outside” entity; such as a physician and a hospital, or two physicians not in the same group practice, where a prohibited financial, or compensation arrangement exists between them. Under Stark Law, the referral must be by a physician involving one of the enumerated Designated Health Services  (DHS) which is covered by Medicare or Medicaid. Stark Law is based almost entirely upon the AMA Code of Medical Ethics Opinion on “Conflicts of Interest” which is now Opinion 8.0321.

The concept of a financial gain from “outside referral” (and only an “outside referral”) was singled out as inherently “bad” by drafters of the AMA Code of Ethics. Why then, is so much focus placed upon “outside” referrals between at least two separate entities, while internal referrals within a group are plainly not restricted at all? The answer has to do with ethical concerns over “patient trust,” and the very practical need that a physician should do nothing to give the outward appearance that he or she might be interested in anything other than providing the patient the best possible care.

The accepted ethics model originally held that a patient should come to a physician by word of mouth (advertising was forbidden.) A diagnosis was reached from listening to the patient history, and observing the symptoms, and in some cases, in-house testing. All the physician need do was “listen,” and the patient together with a few necessary tests, would “reveal” the diagnosis. Even though a physician would naturally earn a living wage for himself,  plus expenses of facilities and staff, (and this could be said to provide a “perverse incentive” in any patient encounter) these financial concerns were to be expected (and largely unavoidable.) Then too, it would be impossible to draw a line between necessary in-house ancillary testing, labs and diagnostics, from those which could, or should be outsourced through outside referral.

Here is the “tricky part.” “Outside referrals” were forbidden for much the same reason as the prohibition against a physician paying another person a fee for a referral (“fee splitting.) In either case, it is thought to be impossible to avoid the “outward” appearance that the physician might in fact, be looking at the referral as a money-making opportunity.

While internal referrals are discreet, if not “covert,” outside referrals are decidedly plainly visible and “overt.” Simply put, regulation of in-house treatment decisions would require a regulator standing between the physician and patient in the examining room, a condition which was simply anathema to the old-guard AMA. Regulation of “conflicts of interest” in “outside” referrals, conversely, did not require standing between the patient and the physician in the office examining room.

To the cynic, this might imply “hypocrisy,” but the rationale is far more entrenched. “Professionalism” required doctors to comport themselves with equanimity in the face of all manner of human concern, not simply financial. Just as doctors are often permitted to freely come and go by the “bad guys” into any police standoff to treat any gunshot victim, criminal or civilian; so too, uniformed military personnel wearing a red cross arm band were not expected to attack the enemy, even if the opportunity presented itself. “Trust” then, was not only for the patient’s benefit, it often meant the difference between a doctor walking out alive, or getting shot.

Thus, in passing Stark Law, Congress not only codified the AMA Code of Ethics, it adopted a higher ethical principle to save money. Stark Law does not forbid internal referrals within an office or group. Stark Law actually punishes the outward manifestation of a referral as a money-making opportunity.

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Last week’s article began with a joke involving two cows, and the differences between capitalism, socialism, fascism and communism. The joke illustrated a once “unthinkable” problem: What to do when the right of a physician to control his medical practice has been arrogated by someone else? It is bad enough government and private insurance have literally have taken over your cows, and don’t want to pay for the milk. Worse, they are busy as we speak, dreaming up ever more elaborate ways of making it seem that you have done something wrong to justify skipping out on the tab.

Every day, in every physician’s practice I visit, I see the same thing, a “war on doctors and patients”:

1. In the relative blink of an eye, government and now private plans dictate when, where, why, and how much time you are permitted to see a patient. You are told how much treatment the patient should require, and in cases of psychotherapy, that you should pronounce him “cured” after precisely so many sessions. With government insurance, you are told with whom you may (and may not) form relationships with under Stark Law and similar state and federal laws. You are threatened with felony prosecution, and imprisonment, for the slightest violation of these rules. All of this, despite the promise of federal non-interference (it is against the law for the federal government to interfere with your practice).

2. You are being cheated at a systemic level by government and private plans, following a similar pattern as the financially devastating, “post-claims underwriting,” which has been used for years against patients. It works this way: After the services are rendered, an army of auditors scour documents looking for a pretext to deny payment (which was often pre-authorized.)  This is accomplished through Medicare Recovery Audit Contractor (RAC) audits, or in the case of private insurance plans, a “benefits review audit,” which I described in this column. Sometimes, the claim is that you didn’t document the file correctly. Other times, the alleged fault is based purely on statistics.

I used the term “unthinkable” earlier with purpose. There was a time when these oppressive forces would never have dared to presume to tell a physician what to do. (They were literally terrified of you, more particularly, the political power once wielded by the AMA.) Nothing spoils, however, like success. When Medicare and Medicaid turned out to be a financial godsend to doctors, the AMA’s staunch conservative ideology seemed out of touch. Recall, it is precisely what the AMA objected to in 1965 that is causing most of the trouble today. The AMA warned what would happen if the government or corporations started telling doctors what to do. That’s why 42 U.S.C. 1395 was included in the Medicare and Medicaid statute.

Driving this is a simple fact: Congress and corporations cannot afford to keep the promises they have made to beneficiaries (and they don’t want to tell policyholders and Medicare beneficiaries “no.”) Instead, they have “declared war” on you under the banner, “fraud, waste, and abuse.” No amount of AMA power can squeeze money from turnips.  But what you can (and must) do in my opinion, is once again concentrate your forces. The public will side with you, but you have to blow the whistle to make the public aware of what is really going on.

 If you are concerned about this, a good place to start is the AAPS, which held a summit on May 17 entitled, “The War on Doctors and Patients.” Full versions of the presentations are available for free here.

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Ebby Halliday, who celebrated her 102nd birthday on March 5, 2013, is a national treasure.  She founded Dallas-based Ebby Halliday Realtors, which now sells more homes than any other broker in Texas, with over $5 billion in annual sales. My favorite “Ebbyism,” comes from the 1950s as repeated in her 2009 biography:

“Socialism,” is when you have two cows, and you share the milk with everyone else. “Communism,” is when you have two cows, the government takes them, and gives you the milk. “Fascism,” is where you have two cows, the government takes your cows, and sells you the milk. “Nazism,” is when the government takes your cows and shoots you.  “Capitalism,” is where you have two cows, sell one, and buy a bull.”

From, Poss, Micael: “Ebby Halliday, The First Lady of Real Estate,” (Brown Books, Dallas 2009.)

As physicians, until recently, there is a good chance you have never spent much time thinking about yourselves as members of a workforce operating somewhere between socialism, communism, and capitalism, and for good reason. Until recently, America has been hugely successful as a capitalistic country, augmented by social programs to aid the elderly and the poor. In times of prosperity, pointing out the distinctions between social, economic, and political needs of the workforce seems a useful tool primarily to entertain, or to gain political advantage. If everyone is making money, everyone is happy. There was a time, however, before the government took measures to soften the harsh effects of pure capitalism, when these distinctions for the workforce were much more serious. Capitalism was enforced upon workers at the end of a length of lumber, and leftist organized labor responded in equally violent fashion. At its core, theory had its benefits and each had its counter-balance.

Modern conservative television talk show hosts have made names for themselves, largely though a cartoonish depiction of capitalism as purely “virtuous,” and socialism as purely “evil.” Neither is true, and both are necessary. The original rhetoric forming the foundation for much of the modern name calling, was fomented in an era when both camps had genuine needs, and both were capable of tremendous barbarity. But for much of the modern era, we have had the luxury to knock the rough edges off. It is simply a fact that Karl Marx probably would not have written works elaborating on “The Communist Manifesto,” had he not lived in Dickensian London from 1848 until his death in 1883. There, he observed first-hand the disregard of the suffering of poor “street urchins.”

In healthcare, the government attempted to remove the chief argument of socialists against capitalism by subsidizing medical care for the poor and elderly. This plan only worked while times were good and the government could afford it. As it now stands, government policy could be described, with a nod to Ebby Halliday: “Medicare and Medicaid,” is a system in which the government takes your two cows, but in a fumbling attempt to distribute the milk, kills the cows.

Physicians are leaving the profession early, candidates are choosing alternate careers, and those who remain are in short supply and wondering how they will survive. Many physicians who write comments in response to these blogs lament that it is illegal for physicians to adopt many of the lawful techniques available to others in the workforce. Physicians cannot form unions, collectively bargain for better wages, or conspire to set rate “floors” below which they will offer their services.

At least as far as governmentally funded programs are concerned, physicians have no say at all in how much the government will reimburse, or through what hoops they must jump to win a fair ration. When physicians seek to resort to capitalism’s “sell one of the cows and buy a bull,” they are informed that Stark Law forbids forming these relationships. A sense of despair, reminiscent of the defunct communist bloc, pervades.

Next week, I will discuss some of the things which can be done, at a local and grass roots level, and why physicians must do something, while acting within the bounds of the law.

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The United States healthcare system was described by Maggie Mahar in her book “Money Driven Medicine,” as a “war of all, against all,” turning physicians, hospitals, insurers, drug makers, and device makers into blood rivals.

As available funds decrease, providers are seeking new ways to secure reimbursements, and health insurance carriers seek new and more clever ways to deny, delay, and frustrate physicians. This is no more pronounced than the war between Blue Cross and Blue Shield of Texas (the Blues) and medical providers – and things have been getting nasty of late, particularly in the area of “out-of-network” claims.

Last year, two hospital groups sued 30 out-of-state “Blues” who do business in Texas alleging the insurers authorized payment then either denied payment, or offered payments so low that the hospitals could not stay in business. “It’s basically a claim that the insurance companies are not paying their healthcare providers,” said Dallas attorney Larry Friedman of Friedman & Feiger LLP, who represented the hospitals, in the Dallas Business Journal.

Emily Wey, an attorney with Polsinelli Shughart PC who specializes in payment disagreements between hospitals and payers of medical claims, told the Journal that disputes of this type are becoming increasingly common.

“Out-of-network” claims used to pay more than “in-network,” because the provider did not have a contract with the insurer.  Thus, physicians and hospitals were supposed to receive a “fair and reasonable” reimbursement payment. This was also the understood justification for the low levels paid by Medicare and Medicaid; the providers could make up the difference elsewhere. Then, the Blues started paying at rates near the Medicare level. “This has been a significant change in the last four or five years,” according to Wey.

Upping the ante, private and public plans have demonstrated a willingness to resort to complaints in front of state medical boards.

Referrals to the state medical board may also have an unintended negative consequence for patients. In a recent address to a group of healthcare professionals, James Patterson, managing partner with Agape Healthcare Partners, said the results of a complaint before the medical board over simple charting and billing may adversely affect the ability of the physician to obtain malpractice insurance, especially where the physician has agreed to some type of administrative remedy. This means much needed medical malpractice coverage may be unavailable when a patient needs it most.

In the current environment, what once was considered an unthinkable “dirty trick,” is becoming commonplace. This “war of all against all” shows no sign of abating in the near future.

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One of the primary differences between the food stamp program and government run healthcare programs, lies in the fact that utilization of the food stamp program can be controlled (a person can eat only so much food in a month.)

In fact, no one blinks at the idea of “rationing” food with coupons. On the other hand, there is no practical way to limit how much healthcare a person might consume, short of a coupon book. Naturally, if you want to start a “silver riot,” try broaching the subject of rationing Medicare to seniors.

So, the government and private contractors approach the problem of rationing healthcare in a back-handed, often sneaky game of “gotcha,” aimed directly at physicians and dentists who provide Medicaid benefits. Long after the money has been paid and the matter closed, even small physicians’ practices are receiving letters with the seemingly innocent request to review “five files,” just to make sure the chart is accurate. In reality, the auditors are looking for any way to demand repayment, even if the patient genuinely needed the care provided.

I recently spoke with Angela Miller, CHC, CMC, president of Dallas-based Medical Auditing Solutions LLC, on ways practices can survive a benefit review audit.

Martin Merritt: The audit process calls to mind the famous quote from Cardinal Richelieu: “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”

Angela Miller: If they read the “lines” at all. Auditors are typically looking for any excuse to demand a refund.  Physician’s handwriting is typically not legible. Often, an auditor will just ignore unreadable documentation. If the records are not legible, have them dictated and have the physician review and approve with an attestation statement for the records. Any amendments need to be done prior to submission of first level audit for best results. They could be done later but why go through multiple levels of appeals if you can win at level one.
If the records are not organized, the payer will not look for information. If the records are not legible, the payer will not try to read them. [Note: Never alter a record. You must identify any changes after the fact clearly with physician signature and date as of January 1, 2013.]

MM: Why not just pay the several-hundred dollar demand after an audit of the five files? It is cheaper than hiring a lawyer.

AM: Many clients just capitulate, and refund an overpayment request of a few hundred dollars because it costs less than hiring an attorney to fight the payer.  That’s the “trap.” The client refunds the few hundred dollars, and then 14 months later learns the few hundred dollars have been “extrapolated” over the entire universe of files, and the bill is now, $75,000 or $100,000. Medicare is restricted to extrapolation 12 months from date of initial finding/overpayment request. There seem to be no rules for Medicaid, Medicaid contractors, or private insurance. This can be catastrophic to a small solo practice physician.

MM: Why do you encourage using a consultant and/or attorney, depending on the circumstances, to respond to audits?  

AM: Attorneys and consultants know what is going on in the industry with various payers which can be beneficial to helping the provider in the audit process. The payers are becoming very tenacious, so hoping for the best in an audit is “naive.” Also fresh eyes can play devil’s advocate with questions as well as ideas for corrective action that would benefit the provider that could be implemented prior to submitting the first level audit.

MM: You emphasize the importance of winning as many as possible at the first level, why?

AM: If you respond to the initial audit/overpayment request within the first 20 days to 30 days that will prevent the requirement for payments on extrapolation until the appeal process is complete. This is critical, especially for small providers. The more you win in first level appeals, the more the error rate improves and the overpayment and extrapolation go down.  

MM: In closing, what point would you like to leave physicians with?

AM: Providers must be proactive. It is much less expensive and it will protect them from prepayment audits, extrapolations, and worse.  Payers are sneaky and relentless, because they have everything to gain and nothing to lose.

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The shop-worn metaphor of a frog in boiling water appeared frequently in the 1950s to justify capitalism’s “red scare” paranoia. While I personally deplore the practice of attaching labels (it only encourages name-calling,) there are times when I must simply scratch my head and say, “well, I’ll be darned.” This often occurs when I realize something which sounded crazy, actually wasn’t too far off the mark. The metaphor holds that a frog placed in boiling water will jump out, while a frog placed in cold water gradually heated to boiling, won’t notice the subtle change, until he is cooked.

 In 1965, when Congress debated the passage of Medicare and Medicaid, the AMA warned of “socialist” medicine and the eventual government takeover of the free-enterprise system which led to the greatest healthcare delivery system in the world. In 1961, the AMA even hired Ronald Reagan to record a 10-minute phonograph entitled Ronald Reagan Speaks Out Against Socialized Medicine. When I first heard this in the 1980s, I thought the AMA was out of touch. Turns out, they weren’t paranoid after all. It simply took 50 years for the water to boil.

In 1965, if the AMA hadn’t objected, government could have nationalized Medicare and Medicaid as a government-operated program, similar to the U.S. Department of Veterans Affairs (VA). The VA is the nation’s largest integrated healthcare system, with a reported $150 billion budget, more than 1,700 hospitals, 280,000 employees, clinics, community living centers, domiciliaries, readjustment counseling centers, and other facilities.

Hypothetically, had the government delivered Medicare and Medicaid directly to the elderly and disabled, the budgeted costs could have been plotted on a pie chart. There would be a place on the chart for the actual cost of the buildings which house the clinics or hospitals, utilities, supplies, a portion for the modest salaries of doctors, physician’s assistants, nurses and staff. What would not be on the chart is any slice for “profit.” In other words, the government would pay only the actual “cost” of the delivery of Medicare and Medicaid services.

But the AMA did object. The government chose not to attempt to own and operate hospitals and clinics which provide Medicare and Medicaid. Instead, securing the necessary support and votes for passage forced Congress to promise two things: 1.) to pay 80 percent of the usual and customary fee (including profits) for services; and 2.) the government must “stay out of the examining room.” As a result, the very first section of the Medicare Act states: “Nothing in this subchapter shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided.”

Things went really, really well for doctors and hospitals through the 1980s. So much so, the AMA and its “pro-capitalistic” stance seemed to belong to another time. Membership declined to startling levels. Then, the water temperature in the pot began to slowly rise. Reimbursement rates for services declined, almost imperceptibly at first.

Eventually, Medicare and Medicaid reimbursements have dropped to levels which resemble what we might expect to see if the government had taken over the delivery of healthcare. Why takeover, if it costs the same to get somebody else to do it? Unlike true socialism, the government isn’t seeking to own the buildings, nor employ the staff directly. The goal isn’t to take over healthcare. The goal seems to be to pay the same “costs,” as if the government actually had taken over. The promise of “non-interference” under 42 U.S.C. 1395, likewise has given way to RAC audits and “fraud, waste, and abuse” prosecutions (which can frequently be defined as “failing to do what the government tells you”).

This news should nevertheless be fairly good, for a simple reason. Even if the government pays only enough to break even, the overhead is nevertheless paid. Physicians should have all they need toward earning a profit from everyone else. It’s called “cost-shifting,” and this is the justification for asking physicians to work for “cost.” The government pays your basic overhead and you ignore you are working for free, because you can still earn a free-market profit from everyone else.

Two problems arise, however: 1.) we are running out of “other people” who can afford to pay anything close to cost, plus a profit – private insurers are following the government’s lead, which jeopardizes the whole system; and 2.) physicians are spending so much time jumping through insurance reimbursement hoops, no one has time or energy to develop a practice.

Increasingly, the “frog in a pan” metaphor appears to be a valid one. It didn’t happen all at once, but sadly, the end result seems to be the same. As the Soviet model revealed, when physicians are made to realize “it doesn’t matter” how hard they work, or how many patients they see, a kind of “darkness” falls. It may be a long time before we all see daylight.

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The Association of American Physicians & Surgeons (AAPS) filed suit April 23, 2013, against the American Board of Medical Specialties (ABMS) over their maintenance of certification program. The suit, filed in a New Jersey federal court, alleges that the ABMS is restraining trade and causing a reduction in patient access due to burdensome recertification processes.

Jane Orient, MD, the AAPS’ executive director, graciously agreed to discuss the issues with me.

Martin Merritt: I understand maintenance of certification (MOC) is one of the hottest topics in the field of medicine today?

Jane Orient: Yes. Many physicians are outraged, not only by the cost an expense which must be incurred to maintain certification, but also by the fear that MOC  is being advanced as a requirement for hospital privileges, and perhaps even maintenance of licensure (MOL).

MM: The public might think the ABMS is a government entity?

JO: The ABMS is a not-for-profit corporation. According to the lawsuit filed by AAPS, the ABMS seems to exist to enrich its own executives, with little appreciable evidence that the MOC program has an effect on the quality of care.

MM: How does the ABMS MOC program actually work?

JO: I can mostly speak about what the lawsuit contains. ABMS and 24 separate corporations, which make up the 24 recognized board-certified specialties have agreed to impose on physicians a recertification program called the ABMS Maintenance of Certification. At one time, a physician could voluntarily choose to become board certified, and upon completion of the process, he or she was board certified for life. Now, the ABMS has decided to force board certified physicians to purchase its products every 10 years. If a physician cannot afford the time or the expense of recertification, he or she may be designated as “not meeting” the requirements of the ABMS, which tends to imply that a physician is less than qualified to care for patients.

MM: What is the AAPS seeking in the suit?

JO: AAPS’ lawsuit, seeks declaratory and injunctive relief to enjoin ABMS’s continuing violations of antitrust law and misrepresentations about the medical skills of physicians who decline to purchase and spend time on its program. AAPS also seeks a refund of fees paid by its members to ABMS and its 24 other corporations as a result of ABMS’ conduct.

Again, the lawsuit itself is the best source for information about the relief requested, but in a nutshell, what we are worried about is the fact that perfectly capable physicians are being black-balled, or locked out of the ability to treat patients, because they do not have the time, or inclination to purchase a product from a private corporation, which has nothing to do with the physician’s ability to treat patients.

MM. You cite an example in the lawsuit, I believe.

JO: In a case cited in this lawsuit, a first-rate physician in New Jersey was excluded from the medical staff at a hospital in his state simply because he had not paid for and spent time on recertification with one of these private corporations. He runs a charity clinic that has logged more than 30,000 visits, but now none of those patients can see him at the local hospital because of the money-making scheme of recertification.

MM: I would like to thank Dr. Orient for speaking with us. You can follow this lawsuit and other issues of concern at the AAPS website.

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