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

It's OKAY!

by Chester C. Danehower, MD
Peoria, Illinois
September, 2001

Recently while reading my local newspaper, I noticed an article captioned ANTI-FRAUD AGENCY FAKES DOCUMENTS. To say the least I was interested. The first paragraph read as follows: “The Pentagon agency charged with exposing fraud destroyed documents and replaced them with fakes to avoid embarrassment when its own operations were audited, an internal inquiry found.” The anti-fraud agency spent 983 hours creating the fake documents at a cost to the taxpayers of $63,000. Now I wonder if there will be any jail sentences and/or horrendous fines dealt out to those responsible for this abomination as have occurred to many physicians in fraud and abuse cases. I doubt it, because governmental agents will not be judged by the same standards as ordinary Americans. There will be a swat on the wrist and that will be that. Americans including doctors will yawn and forget about it. After all “it’s okay”; it didn’t happen to them. There is just one problem with this thinking. If this agency is involved in fraudulent activities, could other similar agencies be involved in similar activities? If so could the freedom and rights that our forefathers so valiantly fought to obtain and protect be at risk?

This article immediately made me think of the case of Dr. Jeffrey Rutgard. Perhaps you do not remember his story; he was the ophthalmologist who was sentenced to slightly over 11 years in prison and fined $16,000,000 for fraud and abuse. I remember thinking when I first read about his sentence that he must really be a poor excuse for a doctor. I admit I was somewhat alarmed by the severity of his punishment, but organized medicine was not supporting him; therefore, he must have deserved his sentence. But that was before I had an opportunity to meet Dr. Rutgard, and to review his case in great detail. What I have learned is beyond belief. Physicians are in much greater jeopardy than they realize, and they had better awaken.

Dr. Rutgard was awakened at 6:00 AM by armed federal agents who had swarmed around his home. They banged on his door demanding entrance based on a sealed search warrant that they would not open. Also the search warrant was based on inaccurate allegations. Dr. Rutgard was not allowed to call an attorney. He was ordered to awaken his wife and his four very young children, and to bring them into a room where they were placed under armed guard. The remaining agents then thoroughly searched his home. At the same time other agents were going through both of his medical offices in a similar manner. I can only imagine the terror and disbelief that the Rutgards felt. Dr. Rutgard felt that he had done nothing wrong. After all he had hired the best advisers in dealing with coding and the business management of his office in order to protect himself from fraud and abuse violations.

However, Dr. Rutgard’s nightmare was only beginning. A media witch-hunt followed leading to 18 malpractice lawsuits which Dr. Rutgard’s malpractice carrier attributed to unfair bad press. He lost his license to practice medicine, and was ruined financially. He then began his jail sentence where he was placed in a jail cell measuring 8 feet by 5 feet. By the way he had two burly 250-pound roommates. He was jailed with hardened criminals. He served almost four years of his sentence before the results of an appeal freed him. By the way his original sentence and fine were based on less than 0.1% of his practice. Apparently in an effort to make an example of this physician, the judge extrapolated the fine over Dr. Rutgard’s entire practice of 22,000 plus patients, not just his Medicare patients. His entire practice was inappropriately declared fraudulent by the judge in charge of the case. Allegedly he had over billed Medicare by $65,000 dollars over a period of five years. Even if everything that was alleged by the prosecutor was true, his sentence was way out of proportion to the offenses. In fact, dozens of physicians were charged with Medicare billing fraud during the same time period of Dr. Rutgard’s ordeal, and were allowed to pay a fine rather than face criminal charges and incarceration.

At this point I am sure that many who read this article are of the opinion that they are safe from this governmental persecution. Well for those of you who feel this way, let me remind you that there are over 100,000 pages of Medicare rules and regulations which I am certain that not one physician in this country has read. In addition if you have not hired a certified coder, do not conscientiously read the quarterly 100 page Medicare updates, and participate in any manner in the Medicare program then you are at great risk to be another Dr. Rutgard. Do you still think, “it’s okay?”

If you think that federal prosecutors are your friends, then think again. If you think that the goal of federal prosecutors is to be fair and to search for the truth, think again. All too frequently their goal is to win at all costs. If you are involved in a fraud and abuse lawsuit, realize that the prosecutor will very likely drain your finances so that you can not afford to defend yourself. In addition you will have to find a competent attorney at the cost of at least several hundred thousand dollars. In short an attack by a federal prosecutor is a disaster for any physician. I am personally aware of far too many instances where federal prosecutors have applied questionable tactics in gaining a conviction or a settlement. I am also aware of two suicides that have occurred because of these fraud and abuse persecutions of physicians. Unfortunately this situation is only going to get worse. And the doctors will continue to say, “it’s okay.” After all it’s not going to happen to them!

The plight of physicians will continue to worsen until it becomes intolerable for them to practice medicine. Unfortunately many leftists in our federal government either through utter incompetence or design are working toward this end. I personally feel that it is by design. Their goal is to overburden physicians to the point that physicians will beg for a single payer system that is run by our federal government. Also I think that these same leftists in our government have a goal to price health insurance out of the reach of ordinary citizens. These citizens will then also cry out for their savior, the federal government.

And whom do we have to blame? We have ourselves to blame. For too long we have said, “it’s okay.” We have not come to the aid of our beleaguered colleagues. We have looked the other way when they were persecuted. After all it was not happening to us. We have great power, and we must begin to use it. We are in a war and we are losing. Leftist elements in this country will not be satisfied until we have a single payer system. However, if physicians and their patients can shake off their lethargy, we do not have to take the socialist bait. The lure of socialism is very enticing; however, we have only to look at the Soviet Union and Nazi Germany to see the end results. It is not okay! We must awaken and work diligently to save our heritage and our profession.

We must actively support medical organizations, such as the American Society of Dermatology (ASD) and the Association of American Physicians and Surgeons (AAPS), that stand on principle in their efforts to re-institute traditional fee-for-service medicine in this country. I do not mean just by paying dues. I mean by active participation. We must also become involved in organized medicine at all levels; that is we should be actively involved in our county, state, and national medical societies; not just our specialty societies but especially the American Medical Association (AMA). I realize that many physicians harbor significant animosity toward the AMA, and these physicians’ solution has been to get out of the AMA. However, this activity is short sighted. The AMA already embraces a leftward leaning philosophy; a philosophy that unfortunately reflects our American society. Physicians who believe in traditional fee-for-service medicine must be involved in the AMA so that our voice can be heard. This voice can not be a voice of hatred, because hatred begets hatred. We must work to change the leftist philosophy of those in leadership positions in organized medicine. We can only change their thinking by being actively involved. The ASD and AAPS are like a locomotive traveling in one direction, and the AMA and the rest of organized medicine like another locomotive traveling in the opposite direction. Unfortunately these locomotives are attached to one another. Guess what; we’re going nowhere until we pull in the same direction. There are many fine physicians who mean well and who are involved in the leadership of organized medicine. We must change their thinking, and we must do it quickly. If we do not, a single payer system will be a certainty. Organized medicine is a democratic organization; therefore, it can be changed. I personally feel that they only need a push in the right direction. Then it truly will be okay, and we can begin to take back our profession. Perhaps we will even muster up the common decency to support the Dr. Rutgards in our profession.

ASD 2001 Annual Meeting

You are invited to join us at the annual meetings of both the American Society of Dermatology (ASD) and the Association of American Physicians and Surgeons (AAPS) in Cincinnati this October!

AAPS was instrumental in delaying, exposing, and ultimately defeating the Clinton Healthcare Plan by means of their lawsuit AAPS v. Clinton. AAPS was the watchdog organization that found parts of the Clinton Healthcare Plan attached verbatim at the last moment to the Kennedy-Kassebaum Bill (HIPAA). This fraud section of HIPAA launched inquiries into the everyday practice of medicine, including disputes over the E&M codes. The administrative simplification section drives the privacy regulations and new electronic billing format. This heroic physician organization continues to work to defeat adverse legislation and regulations. You have an opportunity to visit and interact with colleagues that continue to make a positive impact on your practice.

Contact AAPS at 800/635-1196 or their website at for more information on their portion of the meeting. A registration fee is required for the AAPS program.

Is a 3 Day Meeting Impossible?

If a meeting of three days duration is not feasible, join the ASD membership for two hours on Thursday, October 25, 2001, 2 to 4 pm at the Hyatt Regency in Cincinnati. It's absolutely FREE and you will have the opportunity to hear Thomas Dawson, Esq. discuss what you should do if the federal government arrives with a subpoena at your door. This presentation includes how to pick your legal team—and it’s not to choose the trial attorney first!

The second speaker is Dr. Jeffrey Rutgard, a distinguished ophthalmologist with first-hand experience of being investigated, charged, tried, and incarcerated for Medicare fraud. His courage and lessons-to-be- learned will leave a lasting impression.

If you are able to join us for the ASD portion of the meeting, please contact:

John Kasch, M.D.
2721 Capitol Avenue
Sacramento, CA 95816

We would also encourage you to join the American Society of Dermatology. If you attend the ASD portion of the meeting, $200 will initiate or reinstate your membership. Your membership supports ASD’s efforts to protect the freedom of dermatologists to practice private medicine without third party interference and is also an opportunity for you to support your practice both offensively and defensively.

Again, we hope you will join us for a break and some cheerful camaraderie!

Single Payer System is NOT the Answer

by Chester C. Danehower, MD
Peoria, Illinois
September, 2001

Recently a prominent Illinois physician stated that a single payer system is the solution for our cur- rent medical dilemma. I was dismayed by his conclusion that a single payer system is appropriate for this country. A single payer system is just another way of saying socialized medicine, since the single payer will be none other than our federal government with all of its alleged benevolence and thrift. He actually expressed the opinion that a single payer system could be somewhat insulated from political influence. There is no way that a single payer system will not be under total political domination!

Many other physicians across our country are also mistakenly beginning to believe that a single payer system run by our federal government will be the solution for our health care problems. I personally believe that our country would have been better served if our federal government had never even introduced Medicare. Medicare has been a disaster for our country. It has grossly overrun projected costs, and now is being micro-managed to the point that many physicians and hospitals are finding it very difficult to provide the best possible care. The practice of medicine has been so criminalized by our government that many physicians feel that it is becoming too dangerous to practice medicine. If they inadvertently code too high or even if they code too low, they are guilty of fraud and abuse. With over 100,000 pages of Medicare rules and regulations and with frequently changing codes and regulations, it is almost impossible for even the most conscientious physicians to be in compliance. Physicians unfortunately are focusing so much attention on their documentation that this practice is interfering with patient care. If they do not code correctly, exorbitant fines and/or jail sentences are likely to be forthcoming. As far as hospitals are concerned, they are having to hire far too many office personnel to deal with the mountains of administrative work that have been created by our benevolent federal government. Guess what jobs go begging, those directly related to patient care. Who suffers? It is the patient.

Any system that survives through threats of fines and jail sentences toward those who provide an honest and valuable service to the citizens of this country is doomed to failure. A single payer system will be Medicare for all but with even more micro-management. Unquestionably this system will be run like the Vietnam War with ever increasing micro-management being the order of the day. Of course you remember how that war ended.

If our country implements a single payer system of health care, we will undoubtedly have rationing of healthcare and “shared misery” for all. A patient’s medical record will certainly not be protected if the protection afforded our nuclear and aerospace secrets is any example. Rational and realistic thinking can assure each of us that taxes to underwrite this single payer system will most certainly be astronomical. This is a utopian scheme that can not work in a free society.

Make no mistake about it; the push to socialize medicine is in full bloom. The groundwork has been laid, and now it is full steam ahead by the leftists in this country. By now I am certain that the leftists in our government know all they need to know about each and every physician. After all we have been submitting CPT and ICD-9 codes to our government for years. Do you doubt for a moment that our government is using a massive computer system to track each and every physician? I fear that our AMA has unwittingly helped to provide the rope to hang us through its CPT and related initiatives. If you have not read IBM and the Holocaust by Edwin Black, I strongly recommend it to you. You draw your own conclusions; just substitute the AMA for IBM, our government for Nazi Germany, and the physicians of America for the Jewish people. And if you think my thinking is in error, think again. Look back just a short ten years ago. Did you believe then that physicians would be fined horrendous sums of money and/or incarcerated for alleged fraud and abuse? Did you believe they would be put in jail for allegedly giving too much pain medication to pain ridden dying patients? On the other hand did you believe physicians would be subject to and lose lawsuits for not giving enough pain medication to similar patients? Did you believe then that the practice of medicine could have become as complex as it has? What has happened in just a short ten years is unbelievable. In my opinion what is to come will probably be far worse.

What should we do? We should insist that the American Medical Association (AMA) void its public- private contract with the Health Care Financing Administration (HCFA) in which the AMA provides CPT codes free of charge to HCFA. In return the AMA generates income through the sale of CPT code books and related materials and services. In my opinion this is a tragic alliance. Then every physician in this country should give strong consideration to opting out of Medicare. We should also give strong consideration to opting out of all managed care entanglements. All contracts should be between physicians and patients and not between physicians and third party payers. We should work for full implementation of Medical Savings Accounts paid for with tax exempt funds, and then let a free market reign. We should empower patients and re-establish the doctor-patient relationship and Hippocratic medicine. The doctor and his or her patient should decide what is appropriate medical care and not some governmental or managed care bureaucrat. In short we should take back our profession. There is only one question. Do we have the courage to do it?

First Hand Experience with Universal Health Care

by Holly Fritch Kirby, MD
reprinted with permission as published in the
Summer, 2001 issue of Medical Society of Johnson and Wyandotte Counties, Proceedings

What is it really like to break a hip in Spain and experience national health care firsthand? Would the treatment meet your standards? A few weeks ago, one of my Johnson County patients shared the following encounter with the Spanish health care system. The question is whether there is a lesson to be learned for our community’s hospitals.

My Mother, who lives in Spain, fell and broke her hip. This is an account of her encounter with the Spanish health care system, which is nationalized and free.

Paramedics arrived at the scene of the accident, loaded Mother onto a stretcher, and placed her in an ambulance. An EMT sat with her in the rear of the ambulance, and I sat up front with the driver.

We reached a hospital, and the EMT left the ambulance. A doctor jumped into the ambulance, asked a few questions, and determined that Mother could not be treated there, and told the driver to take her to another hospital. Because the EMT could not leave the area, I had to care for Mother in the ambulance. By this time, no one had checked her blood pressure, started an IV, or even held a stethoscope to her chest.

Upon arrival at the second hospital, I had to register Mother before anyone would take her out of the ambulance. After I registered her, hospital staff took Mother to a room, dressed her in a hospital gown, and wheeled her into a “holding room.” She still had not been checked or seen by a doctor or nurse.

In the “holding room” were patients with all sorts of emergency problems. An old man with a seriously burned foot started to pass out. An older woman was clutching her chest and in obvious distress. A young car accident victim with a neck collar and an air splint was wheeled in and abandoned. We waited an hour without seeing any medical personnel check on a single patient.

The holding room had dirty floors and walls, and mold on the ceiling. One bathroom served everyone, male and female.

When we finally went to X-ray, we passed an “observation unit,” where two nurses monitored 20 patients suspected of having coronary problems. Once Mother had her X-ray, we returned to the holding room for more waiting. We asked for pain medication for Mother and were told to wait.

We finally saw the doctor, who said Mother should have surgery on the following Monday. After three hours of waiting, we were finally on our way to Mother’s room. The room was filthy. We found used Kleenex, and a dirty, sticky bed table. No nurse did an assessment, or even greeted my Mother.

After six hours of aiding Mother with a bedpan, the nurse inserted a catheter. During the night, Mother pulled out the catheter and tried to go to the bathroom. The nurses reinserted the catheter, bloodying the sheets as they did, and didn’t change the bed. We had to ask for clean sheets.

Meals at the hospital never varied; eventually Mother couldn’t stand the monotonous menu and had an IV inserted.

Saturday night, Mother pulled out the IV and catheter and tried to get out of bed to clean herself. The nurse tied her to the bed with a bandage, which rubbed her skin into large, red bruised patches.

Two weeks later, Mother was sent home. There were no health home visits, physical therapy, or follow-up treatment. Her husband had to administer daily injections of Coumadin. Two weeks after her discharge, Mother went to a local doctor for a check-up. Since she couldn’t walk up the stairs in his building, her husband had to explain her condition to the doctor. Based on Mother’s husband’s description, the doctor declared her discharged and ordered physical therapy in six weeks. We are now trying to find a physical therapist immediately, so Mother doesn’t have to wait six weeks to start therapy.

What can we take away from this experience? Obviously, there is a severe nursing shortage. But the real question is: What are the forces causing it and what can be done to alleviate the problems?

In a nationalized system, the government insists on accountability for funding. The end result, of course, is a lot of governmental rules, regulations, and red tape, i.e. immense amounts of paperwork distracting the efforts of the health care providers. The real objective, namely, taking care of patients, leaves the nurses stretched and stressed.

Physicians who have trained and practiced in the 1980s and 1990s are frustrated by the declining ratios of nurses to patients. Hospital medical staff meetings discuss not only nursing staffing problems brought about by reimbursement cutbacks from Medicare and managed care, but also the difficulties of retaining nurses.

Of course, much of the problem is inherent in the economics of socialized medicine. Clearly, the problems of excess paperwork resulting from the micromanagement by Medicare, managed care, and accreditation institutions such as the Joint Commission for the Accreditation of Hospitals, should be more addressed. Most of us would prefer more nursing staff caring for patients, rather than doing paperwork.

Conventional Wisdom

by Robert T. Carson, MD
Oxnard, California

Editor’s introductory remarks: For a recent meeting of the California Medical Association (CMA), Dr. Robert T. Carson, Jr. provided some very enlightened thoughts. He began by expressing a belief that I share. He stated that over a significant period of time “organized medicine has been trying to fix a system of central planning and coercive collectivism that has failed.” He went on to endorse a free market system in which insurance would only protect against true medical catastrophes. Private charitable organizations and physicians would provide charity care for the indigent. Government involvement would only be a last resort, and coercive third party involvement would no longer exist. Patients and physicians would once again control the financing of medical care. In short he is for taking back our profession. I completely agree.

Unlike most physicians he is involved. He is submitting resolutions to his state medical society, and is vigorously defending them. He is not waiting for someone else to do what needs to be done. Are you? He knows we are in a battle that we must win if we are to save our profession. He is not afraid of rejection by organized medicine, even though he knows that most physicians in organized medicine will consider his views politically incorrect. The fact is his views reflect traditional American values. In contrast to Dr. Carson most physicians in organized medicine think they can best serve the physicians in this country by collaborating with the federal government. In other words they go along to get along. This method has not worked, and will not work. Dr. Carson knows that we must approach those with opposing views with respect, and that we must convince them that we are right. He also knows that we will not convince them without persistence.

FrontLine appreciates Dr. Carson’s allowing the printing of his observations regarding faulty “Conventional Wisdom” (CW). His observations are as follows:

CW: Managed care is well established in economic theory as a technique to control costs and increase productivity. It is so firmly entrenched “we can never go back”.

Reality: The managed care model exists in no other sector of our economy. Comparable attempts by United Airlines and Sears, tried 20 years ago, promptly failed, and both companies “went back”. CW: The best system would be a pluralistic mixture of collectivism and private financing of medical care.

Reality: Collectivism demands government coercion for survival because it cannot compete in a free economy.

CW: Insurance companies and the government are treating us unfairly. By sending our leadership to the seats of power to explain our victimhood we can regain control of our profession.

Reality: As long as politicians and insurance companies control the gold, they will make the rules. Politicians will give up their power only if persuaded by hideous supernatural monsters. Such monsters exist and we have great influence over them. We call them patients. Politicians call them voters.

CW: Most patients are committed to managed care.

Reality: Patients are not committed to HMOs, PPOs, PDQs, XYZs or anything else. They are not satisfied with the present situation. They are looking for a better plan and leadership, and we have a golden opportunity. We need only agree to and vigorously support a coherent plan, and they will listen.

CW:Cost of medical care” and “cost of insurance” is synonymous.

Reality: We will never escape third party dominance as long as we accept this identity.

CW: Managed care brings efficiency and has reduced the cost of medical care.

Reality: Managed care has not provided cost control, only payment and service control. Interjecting third parties between patient and physician does not reduce the true cost of medical care it adds a cost of compliance.

CW: All medical care must be financed through insurance because we spend too much on medical care.

Reality: Medical care, as a percentage of gross domestic product, falls between national defense and recreation. In a consumer driven medical economy, medical care could be made affordable if planned for, just as is recreation. Drop by the gaming rooms and notice “all of the elderly on fixed incomes” who planned for recreation.

CW: The medical marketplace has failed.

Reality: The “medical marketplace” is really a marketplace of portfolios indulged by insurance companies. The third party system has insulated patients and physicians from a true marketplace.

CW: Physicians accept our system of centrally planned medical financing because they believe in it.

Reality: Most of us know the system is failing but are uncomfortable expressing ideas deemed politically incorrect.

CW: Civilized society equates to collectivist society and government control is necessary to assure an abundance of compassionate medical care, especially for the indigent.

Reality: Without exception, the 20th century’s brutal totalitarian governments started as collectivist governments. Charity increases as abundance increases and abundance comes from market economies, not central planning. Adam Smith pointed this out 250 years ago.

CW: Collectivism is noble because we are able to control great resources by electing benevolent leaders.

Reality: Free exchange between millions of individuals is the most powerful economic force on earth for creating abundance and the most efficient means of distributing goods and services.

CW: Physicians and benefactors will not furnish charity adequate to serve all the indigent.

Reality: I believe individual physicians can and will provide needed charity if government gets out of the way. Do you trust your fellow physicians? Do you trust yourself? Pick a recent day of your practice and examine it for charity given. You will be surprised how much you have given in spite of our present abusive system.

CW: Patients should not be punished by having to provide for their own medical care.

Reality: This may be true for those that believe liberty is punishment.

CW: Central planning is the most efficient way to provide medical care.

Reality: 140,000 pages of Medicare code put the lie to any notion central planning can efficiently direct the care of millions of individual patients by thousands of physicians. For over 250 years economists have demonstrated that the most efficient way to provide and distribute goods and services is by individual transactions between millions of free individuals. Medicare code, at 140,000 pages, is one order of magnitude larger than the federal income tax code.

CW: The cost of medical care continues to go up and must be controlled by central planning.

Reality: The real cost of medical care is unknown, obfuscated by the cost of compliance. Personal experience suggests that at least 30% of my practice expenses go to non-productive compliance with government and insurance companies. I would rather devote my efforts to charity than manage a billing system monstrosity.

CW: Medical insurance as a defined benefit in lieu of wages resulted from pressure by employees.

Reality: Medical insurance as an employment benefit came from economic distortions caused by wage and price control during WW II. Special interests drove tax amenities and ERISA, creating the present inequities. It is long past time to undo the damage.

CW: Reducing participation by specialists under managed care lowers the cost of medical care.

Reality: Adam Smith demonstrated 250 years ago and Plato before him that increased productivity flows from division of labor.

CW: Medical Savings Accounts are a proven failure because, when briefly legalized, they did not catch on.

Reality: It was as if the government had allowed a new breakfast cereal, “WhoopiOats”, to be manufactured and marketed, but with a stipulation. Only 1,000 boxes could be sold the first year and no sugar could be added. MSA’s with tax equity are one means by which individuals could regain control of their own medical care. No wonder MSA’s frightened the politicians.

CW: We can regain control of the practice of medicine while leaving control of medical financing to the oligarchs of government and Insurance industry.

Reality: Economists from Adam Smith to Milton Friedman have demonstrated the folly of this belief.

CW: The government is always necessary for the really big things such as the human genome project.

Reality: Celera Genomics Group produced a better product in 1/3 the time taken by the giant Department of Energy.

CW: Physicians readily accepted Medicare legislation because so many elderly could not afford medical care.

Reality: I can easily afford 15% charity when the burden of compliance is gone.

CW: Physicians accepted Medicare legislation because “usual and customary fee” seemed fair.

Reality: “When government sets prices [payment schedules], no one knows what anything is worth.” (Solzhenitsyn)

CW: If CMA offers enough gimmicks and goodies, the membership will grow again.

Reality: Unless CMA demonstrates a credible effort to wrest control of medical economics from oligarchs of government and insurance, non-members will continue to stay away in droves. CMA will become simply a very weak labor negotiator.

CW: Medical care is a right

Reality: What is the source of the right to medical care? Rights to "Life, liberty and pursuit of happiness”, presumed given to us by our Creator, are protected by our constitution. The genius of our constitution is the unspoken presumption that government does not bestow “rights”. Government has nothing to give that it does not take from others. Physicians must take responsibility to assure that indigent patients are cared for. Organized medicine is the most appropriate vehicle to accomplish this. Efforts now squandered on compliance with demands by oligarchs of government and insurance companies must be redirected to the provision of charity.

”Opted Out” of Medicare: Where I am 34 Months Later

John Kasch, M.D.
Sacramento, CA

Currently, I am celebrating the 34 month, 4 day anniversary of my “opting out” of Medicare (October 1, 1998 – June 4, 2001). 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, but I am successfully rebuilding my practice and am far happier. Let me tell you what has happened.

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 join me and the now over 1,400 physicians who have already “opted out.” Each month more physicians opt out of Medicare.

When it comes up in conversation that I have left the Medicare program, the 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 life style…” And so on. I submit that, although there are very significant realities to the changes in practice income, “going along to get along” has no future.

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. Paradoxically, staying in the Medicare program is the truest form of patient abandonment!

Currently, I have private contracts with 300 of my original Medicare patients, and the number continues to grow. Two hundred and thirty four (234) patients have transferred their care to other physicians.

In carrying out a private contract, the exact financial arrangement varies from patient to patient and is based exclusively on each patient’s special circumstances. For some, I adjust my fee to zero and for some I maintain my full, standard fee. Opting out of Medicare allows you this complete latitude and is perfectly legal (and ethical).

You can do it! You will not fail.

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

Here’s Exactly 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 emergent situation, the government will not permit you to see Medicare beneficiaries unless they sign a contract with you.

2. Medicare Affidavits: 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: United Healthcare in Augusta, GA. 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.

(The federal statute defining Opt Out procedures specifies that each “opted out physician” must send in a new affidavit every two years as they “automatically expire”. Thus, a month or more prior to the expiration of the affidavit, sign, date and send another one. )


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

Medicare Provider Certification Section
United Healthcare
Railroad Medicare
P. O. Box 548
Augusta, 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, Augusta) 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.

Accurate Sources of Information:

Currently, the most authoritative document defining all the regulations regarding Opting Out of Medicare is:

Transmittal No. 1639
MAY 1999
Sections 3044-3044.40

Click on “Part 03Claims Process” and you will be able to download the files containing sections you want. Of the files downloaded the file labeled “b3__3026_to_3045.7” contains sections 3044-3044.40.

Also, 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 & The Medicare Affidavit and Patient Contract examples are clear and accurate. The Medicare Carriers Manual Transmittal No. 1639 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 (2721 Capitol Avenue, Sacramento, California, 95816-6004) or e-mail:


Editorial Comment

by Chester C. Danehower, MD
Editor, FrontLine Newsletter

Recently, I have been asked what IS the ASD doing. The ASD is an essential organization that stands on principle in its fight for free market medicine. Its leadership leads by example. For example the ASD had the courage to challenge HCFA (CMS) in its administration and development of the CPT and the RBRVS when most of organized medicine cowered in fear at any thought of challenging our government. In fact two of our board members actually gave many thousands of dollars of their own toward the ASD v. Shalala lawsuit. They were not asking others to do what they were not willing to do themselves. Only recently did organized medicine gain the courage to challenge our government in any meaningful manner.

Within the past two to three years, the same two board members “opted out” of Medicare. These physicians are leading by example, and that is exactly what a leader should do. In my opinion they are light years ahead of most physicians. They are aware that this is a very effective way to fight governmental tyranny. They are willing to help you “opt out” if you think this action is in your best interest.

Still other members of our board are very involved in organized medicine, presenting ASD’s views regarding free market medicine and Hippocratic medicine. To say the least, they have been effective.

Finally, five members of ASD are on the board of the Association of American Physicians and Surgeons (AAPS). AAPS is the organization that stopped the Clinton Health Plan through AAPS v. Clinton. Every citizen in this country benefited from this lawsuit. AAPS is also a free market and Hippocratic medicine advocate. Be assured that ASD’s views are heard in this organization.

Yes, I am proud of the accomplishments of the ASD. The officers and members of the board receive no pay. They are doing what every physician should be doing, standing up for the rights of physicians and patients. They are not prepared to give away our profession. However, they cannot do it alone. The ASD needs your input and help!