American Society of Dermatology
2721 Capital Ave.
Sacramento, CA 95816-6004
Phone: (916) 446-5054
Message: (561) 873-8335
Fax: (916) 446-0500
American Society of Dermatology, Inc.
A Voice for Private Dermatologists Since 1992



September 2001

Why Wonít They Listen

by Chester C. Danehower, MD
Peoria, Illinois

Have you ever asked yourself whether or not the American Medical Association (AMA) listens to the physicians in this country? I have certainly asked myself this question. I have also wondered if they are more interested in the survival of the AMA than the physicians whom they represent. I recently had an experience at the AMA's interim meeting in San Diego that caused me to once again ask myself these questions.

As a delegate to the AMA from the Illinois State Medical Society, I submitted a resolution for the Peoria Medical Society at the aforementioned meeting of the AMA. The resolution called on the AMA to provide CPT code books, other CPT related products, and CPT services to the physicians of this country at cost. Also the resolution called for the AMA to supply a yearly update of its CPT financial activities to its House of Delegates.

The resolution was written in response to a Council on Ethical and Judicial Affairs (CEJA) report that was approved by the AMA House of Delegates six months before the San Diego interim meeting. The approval of this report made it unethical for a physician to make a profit on the sale of health related products in his or her office. CEJA arrived at this conclusion primarily because they thought that physicians have a financial conflict of interest, and that patients are dependent and vulnerable. CEJA also felt that when physicians sold health related products that it was demeaning to our profession. Since the AMA is the ethical standard bearer for our profession, the Peoria Medical Society felt that it was in the best interest of our profession that the AMA lead by example. It appeared to the Peoria Medical Society Board of Directors that the AMA, through its public-private contract with HCFA, was forcing physicians to purchase new CPT code books and related services each year. If physicians are not absolutely up-to-date on CPT coding they run the risk of jail sentences and /or exorbitant fines. It also appeared that the AMA might be making just enough changes to necessitate the writing of a new code book each year. We wanted to point out the inconsistencies that existed in what the AMA expected of physicians and what the AMA was doing itself.

I was amazed at the response. The AMA apparently found this resolution to be very threatening and vindictive. One delegate even felt that the resolution was an attempt to destroy the AMA. This resolution was a simple request for the AMA to provide a service to the physicians of this country, a request, which in my opinion, was totally appropriate. The resolution was never intended to destroy the AMA. I presume that the response in some way might relate to the fact that I am a member of the Board of Directors of both the American Society of Dermatology (ASD) and the Association of American Physicians and Surgeons (AAPS). These societies have expressed animosity in the past toward the AMA. Neither of these organizations are members of organized medicine's federation; however, this resolution did not come from these societies, but from the Peoria Medical Society in Peoria, Illinois which is a federation member society!

My first suspicion that there might be a problem came when I read a report written by a special advisory committee to the Speaker of the House of Delegates which was included in the delegates' package that all delegates received just prior to the San Diego meeting. This advisory committee was searching for ways to enhance the efficiency of the House of Delegates. One of the recommendations by the committee was that individual delegates be strongly dissuaded from submitting resolutions, and that all resolutions should be submitted by the state or specialty societies. Of course this recommendation clearly violated the bylaws of the AMA, since all resolutions are supposed to be introduced by a delegate. In addition, individual delegates rarely submit resolutions to the AMA meetings; therefore these resolutions have little or no effect on the efficiency of the business of the House of Delegates. I suspected that this recommendation was directed at me; however, this was merely conjecture on my part at this point.

Then my next clue came when I became aware that the reference committee where this resolution was to be discussed was on the first floor of a building just outside of the main facility where all of the other reference committees were held. Unfortunately, it was my responsibility to attend another reference committee that met at the same time that was located at the far end of the third floor in the main facility. To say the least, this was a long distance. I ran back and forth between the two meeting rooms in order that I would be certain to be able to testify in both settings. Perhaps this location episode was only a chance occurrence.

Then I observed that Peoria's resolution was buried as number 26 out of 28 reports and resolutions. The reports were quite complex and took up most of the testimony time. Ordinarily when testimony is prolonged in a reference committee the committee will reconvene on the following day, but not this time. The few individuals that were still present by the time this resolution was debated had by now been advised that debate would be limited to one minute; however, after everyone had testified individuals would be allowed to come back to the microphone again for further debate. Of course this ploy rendered my originally prepared presentation useless.

During the reference committee testimony a member of the Board of Trustees testified that the AMA made no money through the sale of CPT code books and related services! Then he went on to say that the losses on other AMA ventures were subtracted from profits that were made through the CPT process. Of course the prevailing impression that was made was that the AMA made no profit through CPT activities. In addition the AMA had stated at the bottom of the Peoria resolution that they would provide a fiscal note concerning the cost to the AMA of providing CPT code books and CPT related products and services to the physicians of this country. They did provide, in a separate report, information regarding the profits that were made in the sale of all books, etc, but not the specific amount made through CPT activities.

By now I was beginning to feel like Don Quixote on an impossible quest. I was certain that the reference committee would not recommend this resolution for adoption. I was correct. I then decided that I would give the AMA another chance to do the right thing. I moved for referral to the Board of Trustees for their decision. I gave a brief but courteous presentation to the House of Delegates in favor of referral. During this presentation I advised the delegates of the limitation of debate that was imposed at the reference committee and of the failure of the AMA to provide the fiscal note as was promised by the AMA at the bottom of the Peoria resolution. After my testimony I left the microphone to return to my seat only to be called back to the microphone by the Speaker. He then proceeded to engage me in debate. He advised me that he was at the reference committee, and that debate had really not been limited to one minute. He then stated that the AMA made millions of dollars each year through CPT activities. Of course the actual amount was never divulged. In parliamentary procedure a Speaker is never to engage in debate; he or she is always to be impartial.

Was the process fair? I suppose the answer depends on one's point of view. However, as the meeting continued to unfold it became clear to me that the AMA had just sustained a serious setback in AMAP. Perhaps the failure of this program was the real reason why they had such a strong reaction to such a simple resolution.

It is of interest that I had warned the AMA repeatedly that AMAP was a bad venture; however, they did not listen. Also two months prior to the Sunbeam fiasco, I advised the AMA at its annual meeting that they had apparently endorsed another business' program that was selling negative information regarding physicians. Would you believe that not anyone at the AMA was aware of this program? It should have been a red flag, but again they did not listen. A simple internal investigation could have avoided the entire Sunbeam affair. With regard to CPT coding, I pointed out in my testimony that our government was using CPT coding to convict physicians of fraud and abuse, and that the AMA was also being blamed by physicians. In addition, every physician is aware of the frequent changes in the CPT codes making it necessary for them to purchase CPT code books and ancillary services every year. Again it appears that the AMA is not listening. I think they should lead by example or I am afraid that they will pay the consequences once again. They should either reverse their CEJA report or provide CPT code books at cost to physicians. Perhaps it would be even better for everyone concerned if the AMA would just terminate its public-private contract with HCFA; a contract in which they provide the CPT codes free of charge to HCFA, and in return the AMA makes huge profits through the sale of CPT goods and services to a captive audience.

Presidentís Message

by Melissa Kline Clements, MD
Oklahoma City, OK

The annual meetings of the ASD always provide opportunity to examine my commitment to the practice of Hippocratic medicine. I came away from the eighth annual meeting of the ASD, held in Newport, Rhode Island, October 1-3, 1999 in the knowledge that issues had been carefully examined, our fund of knowledge expanded and my "batteries" were recharged. I have been greatly enriched for the fellowship of all of the attendees.

Overviews of topics presented and discussed at the annual meeting will be presented in this and subsequent issues of the FrontLine. For those who joined us in Newport it was wonderful to see you. I hope that you found the program to be educational, affirming, and helpful in your daily practices. For those who were unable to attend we hope to convey meeting highlights so that you may know what we as a society endorse and seek to accomplish.

It is with great pleasure and anticipation of a full and rewarding year that I begin my presidency year with the ASD. My specific goals for the year are threefold.

First, we need to "grow" our membership. Every member of the ASD counts; and every member is heard. The wealth of ideas and experiences that each member brings to the Society spurs us on to building a stronger, more creative, responsive, and resilient organization. Every board member is available to speak with any Society member at any time. We encourage member attendance at board meetings.

The second goal is to increase the size of our operating budget. Membership dues are vital to our day to day survival. We are also in the process of trying to secure support from pharmaceutical companies. Increased funds will allow us to continue to support and promote our fight for the preservation of fee-for-service Hippocratic medicine.

Finally, as a Society we need to explore new issues that we can endorse and use as rallying points in support of our membership and goal of supporting the continuation of the private practice of dermatology. We heartily welcome your input and ideas!

It is an honor and a privilege to assume the presidency of the ASD. I look forward to serving you and expect a year with growth and verve for the causes we endorse. Likewise, I look forward to and anticipate your active participation in the Society. I remain committed in my belief that together we can make a BIG difference. Please join us at our next annual meeting in St. Louis.

Medicare: Are You In When You Should Be Out?

By: John Kasch, M.D.
Sacramento, CA

NOW IS THE TIME! There will never be a better one. . .as yesterday has already passed!

I have just recently celebrated the one year anniversary of my "opting out" of Medicare (October 1,1998). I can report that I am alive, well and feeling ever more invigorated for having made and carried out this momentous decision. It is undeniable that I have experienced significant changes in my practice and life style but I am successfully rebuilding my practice and am far happier. Shortly, I will describe in detail exactly how to go about separating from Medicare.

In this edition of FrontLine there is additional essential reading on the subject of Medicare in the article by Melissa K. Clements M.D. on what is in store for all physicians who remain part of the Medicare debacle. The information from the presentation she attended and so accurately summarizes for you, I have also encountered several thousand miles away and in a completely different setting. Make no mistake, all of what she describes is currently taking place. Dr. Clements does not offer you a window to the future, but, rather, to your own back yard.

I know the idea of leaving the Medicare program seems absolutely irresponsible and radical, but, in fact it is the first of several steps required in order to put true Hippocratic medicine back on its feet. In the strongest possible terms, I would urge each of you to join me, Dr. Clements and the increasing number of physicians who are "opting out."

When it comes up in conversation that I have left the Medicare program, the most common immediate response I hear goes something like this, "I cannot possibly opt out of Medicare. I have too many Medicare patients. It would ruin me financially. I wouldn't be able to maintain my current lifestyle..." and so on. I submit that, although there are very significant realities to the changes in practice income, "going along to get along," in short order, will become a death march. For those physicians who have over 70% (mine was close to 50%) of their practices comprised of Medicare beneficiaries, such a change would be profound, but for the physician who wishes to remain first and foremost his or her patient's advocate, there is no other pathway. Not all patients will transfer their care. This will depend entirely upon how much they value their physician's care and what actual arrangements the physician is willing to make with them about fees.

The second most frequent response reads, "Opting out of Medicare is abandoning my patients and I will not do that to our senior citizens... I'm sure this can all be straightened out by working within the system. The leaders of organized medicine should be able to fix these problems if they just put their minds to it..." I would certainly agree that at first glance leaving the Medicare program appears to be "abandoning" one's patients.

However, if I may be permitted to use a medical analogy, leaving the Medicare program sounds as outrageous as it did to the first few physicians who said, as they stood over the massively hemorrhaging patient with DIC (Disseminated Intravascular Coagulopathy), "the patient must be treated with anticoagulants?" I submit that a significant number of physicians leaving Medicare will have a dramatic and beneficial effect on the return of quality medical care in the Hippocratic tradition.

For all the reasons with which you are so familiar (expanding government created entitlements, profound media bias, the capitulation of so called "organized medicine" and it's leaders as they have raced to embrace the "public-private partnerships that have coerced almost all of medical care into its current state, etc., you should give strong consideration to opting out. Medicare beneficiaries have little or no understanding about the dire straights their medical care has been crushed into. In my part of the country, the overall level of quality of medical care for all patients has declined dramatically in the last 10 years! By refusing to participate any longer in Medicare, the physician actually will be joining his or her patients on the "battlefield?" We must have the courage to do that. Paradoxically, staying in the Medicare program is the truest form of patient abandonment!

Here's How to Go About OPTING OUT OF MEDICARE:

1. ____ Letter Notifying Your Patients: Send this out as soon as you make the decision. Include in the letter the fact that, except in an emergency situation, the government will not permit you to see Medicare beneficiaries unless they sign a contract with you.

2.____ Medicare Affidavit: For "Medicare Participating Physicians (those physicians who have signed an agreement with HCFA to accept assignment 100% of the time), this must be mailed to your local Medicare Carrier 30 days before your official government allowed Opt Out Date, i.e. 30 days before January 1, April 1, July 1, and October 1. For "Medicare Non-Participating Physicians" (those who accept assignment either not at all or on an occasional basis) you may mail the affidavit at any time. A Medicare Opt Out Affidavit must be sent to ALL carriers to whom you submit claims. Normally this will include your "local" carrier (in my area of Northern California it is National Heritage Insurance Company), and "Railroad Medicare." There is only one national carrier for all patients with "Railroad Medicare" benefits: Untied Healthcare in Atlanta. If you have to send claims to any other carriers, e.g. Champus, they must also receive an affidavit. The affidavits all read exactly the same except for the carrier's name.


Medicare Provider Certification Section
[Name of Your Local Medicare Carrier]
P.O. Box 1234 (or Street address as appropriate)
City, State, Zip

To: Medicare Provider Certification Section
United Healthcare
Railroad Medicare
P.O. Box 548
Atlanta, GA 30903-0548

3._____Prepare Private Contract: Each patient must sign one before being seen. This document must be stored in a secure location so as to be available to HCFA on demand. Current regulations require patients to sign a new contract every time the physician renews the two-year "Opt Out Period."

4.____Opting Out confirmation letter from Local Medicare Carrier: You should receive a letter from your local Medicare carrier confirming your "Opt Out" status. According to the most recent information I have from the Railroad Medicare carrier (United Healthcare, Atlanta) they are requiring a copy of this confirmation be mailed to them or they will not officially designate you as "opted out" of Railroad Medicare (more bureaucratic garbage). Also send this Certified, Return Receipt.

OTHER SOURCES OF INFORMATION: Currently, the most authoritative document defining all the regulation regarding Opting Out of Medicare is:

Transmittal No. 1639
MAY 1999
Sections 3044-3044.40

This may be obtained under the Freedom of Information Act from your local Carrier. It is very useful reading and is surprisingly clear reading. I will be glad to send a copy to whomever wishes to contact me. Virtually all the questions you might have will probably be able to be answered in this document! (I was shocked to find it so complete.)

An Excellent "How To Opt Out of Medicare" section is available at the web site of the Association of American Physicians & Surgeons: The Medicare Affidavit and patient contract examples are clear and accurate. The Medicare Carriers Manual Transmission -639 does provide a few refinements which are probably worth including.

Copies of my patient letter, Medicare Affidavit and Private Contract which include the most current language are available by contacting me by mail (272l CapitoI Avenue, Sacramento, CA 95816-6004) or e-mail: In the next edition of FrontLine, I will go into detail about how my patients reacted and the specifics of how my practice has changed over the first year of being out of Medicare.

And You Thought You Were Safe

by Melissa Kline Clements, MD
Oklahoma City, OK

Funding has been made available for private firms and agencies working for the federal government to have access to records and to serve as fraud hunters. The "feds" get leads from insurance companies who carry out their own fraud and abuse hunts. Qui Tam or whistle blower actions where private citizens call tips to a hot line in the office of the Inspector General or the FBI can be an enormous threat.

At a Medicare compliance seminar recently held in Oklahoma City, a lawyer with expertise in Medicare fraud and abuse who formerly served with the FBI and the investigations office of the Inspector General of the US Department of Health and Human Services stated that "physicians should make no mistake. The goal of the fraud and abuse hunters is to put each of you in jail. If that is not possible they are there to retrieve monies.'' Figures that are bandied about as ''average" amounts sought from each physician begin in the range of $200,000.

According to those better positioned to know than I, every physician in the U.S. enrolled in Medicare and/or Medicaid programs should expect to be audited within the next two to five years. The current focus of audit is managed care plans and institutions such as skilled nursing facilities and home health companies. Once these agencies have been scrutinized and shaken down, the focus of investigation will shift to physicians. The purpose of these audits, which will be of both patient and billing records, is specifically to retrieve money; it has nothing to do with quality control.

Audits of managed care programs are undertaken after the physician to be audited has been contacted and a "convenient" time for in-house audit or on-site inspection made. A visit from a governmental agency will not be so cordial. You won't know that you are under criminal investigation until agents knock on your door and/or your employees' doors and exercise their "rights" to inspect office and billing records. You will be guilty until proven innocent. When the knock comes you will not know who is coming after you. If you are lucky you will be given a demand letter for tens to hundreds of thousands of dollars and will be given thirty days to pay the fines; interest accrues if fines are not paid in thirty days even if you appeal and are ultimately exonerated. The Balanced Budget Act of 1998 provided $720 million dollars for the investigation and prosecution of health care fraud; all monies received in penalties go into a fund to promote additional prosecution. Thus we see the creation of a behemoth prosecutorial governmental monster, devouring the energies of virtually all practitioners, fueled by the souls and earnings of the prosecuted.

The fervor of hunting for Medicare and Medicaid fraud and abuse has spawned the development of a new industry focused on developing services designed to help practitioners feel less threatened by this mania; these services include fraud and abuse seminars and guidelines for establishing Medicare and Medicaid compliance policies in offices. Seminars and printed materials contain advice on how you and your office staff should behave when "the knock comes." Admittedly, the steps that are advocated will not protect anyone from prosecution but are designed to show various investigating agencies the presence of "good intent" in attempting to follow rules, regulations, and coding manuals at the time the crimes were committed.

It is not unreasonable for physicians to consider opting out of Medicare altogether. Medicare eligible patients may be seen by physicians employing private contracts with individual patients. This insures the practice of Hippocratic medicine, where, in the absence of any third party intervention, the doctor-patient relationship is wholly honored and kept confidential. To paraphrase Sir Winston Churchill, when one accepts the King's sovereign he becomes the king's man; in the practice of Medicine when the physician accepts only the patient's sovereign he/she honors and restores the completely professional, personal bond of a traditional doctor-patient relationship. The threat of audit and retaliation from any third party is eliminated.

Also included in this issue of the FrontLine is an article written by John A. Kasch, M.D. detailing the mechanics of opting out of Medicare. Dr. Kasch and I are available if you have questions regarding how to and why to file as a contracting physician. Dr. Kasch can be reached at 916-446-5053 or at I can be reached at 405-272-7492 or We have found our opted out status of professional life to be immensely invigorating and personally rewarding. We look forward to hearing from you!