Why is the US Health Care System Failing? – Incompetent Management at DHHS…

Opinion by Consumer Advocate  Tim Bolen

February 13th, 2007

Nobody even tries to hide the fact that the US Health Care System is broken beyond repair. 

There is a lot of finger-pointing going on, as well there should be.  The US health care system costs too much, it’s the top three killers of Americans, and Americans don’t trust it.  It simply doesn’t work.

Who’s fault is this?  Blame lies solidly with the management of the US Department of Health & Human Services (DHHS).  Current management is incapable of dealing with health care problems.  It has set up a US Health Care system that doesn’t work, and has no chance of ever working.

Why is this happening?  Because Congress gave DHHS authority over the “structure” of US Health Care and DHHS management can’t see “the big picture”.    Every day we sink deeper into the hole.

When you are incapable of identifying the problem – you cannot provide solution. DHHS management has been told, repeatedly, what the problem is.  They just don’t get it.

We can solve America’s health problems quickly if we just do a house cleaning at the top of DHHS.  It was Laurence J. Peter, in his book “The Peter Principle that pointed out to all of us that “in a hierarchy everyone rises to their level of incompetency.”  That’s clearly obvious at DHHS.

The Defective DHHS System:

Below, I’ve outlined the BIGGEST reason why US health care is out of control – DHHS management’s inability to see what’s going on.  In further articles I’ll outline other important reasons – but none as important as this.

The big picture DHHS doesn’t see – There are five million (5,000,000) legitimately operating health professionals in the United States.   Over two dozen categories of US health professions, representing over two million of the five million, are allowed by law, to bill directly for their services. But DHHS has only authorized codes used for Medicare, Medicaid, and the health insurance industry, that are developed by, and for, MDs.  And the majority of these MD codes represent THE MOST EXPENSIVE, DANGEROUS, and INVASIVE procedures available which are also frequently THE LEAST EFFECTIVE.

There are NO CODES, or inadequate billing codes, to process healthcare claims provided by the over four million health professionals who aren’t practicing conventional MD medicine.   How do these practitioners stay in business when they can’t bill?  They either work under an MD physicians, their patient’s pay cash, or their care is capped by small annual dollar or visit limits – and no data is available on the cost-effectiveness of their care.

Obviously, if we had codes available that reflected ALL billed care from ALL health professions, we could make comparisons about what is and what isn’t cost-effective.

Not only are currently available codes limited to procedures provided or directed by medical doctors, but these medical codes are further limited to services “approved” by the AMA – which does not recognize services that other qualified caregivers legally and effectively provide.  Leaving the AMA to decide what’s good in osteopathy, chiropractic, massage therapy, physical therapy mental health, etc.  –  health practices they have no knowledge of, or training in – is like putting the fox in control of the hen house.

MDs have over 8,000 codes to use for billing while the government and the AMA dole out a few token codes to osteopaths, nurses, chiropractors, acupuncturists, massage therapists, etc.  Obviously, we need a complete set of codes for all professions, written BY THOSE PROFESSIONS, so they can bill directly for their services and compare their costs and outcomes to MD outcomes.

So, let me say this again. We get very limited access to those 4,300,000 less expensive health professionals because of codes.  So, our costs go through the roof – day by day.  Worse, only those existing codes are available to track what’s happening in health care – making it appear that ONLY MD health care is of any consequence.

Get the idea?

How it works – DHHS contracts for jointly developing billing codes with the American Medical Association (AMA), which owns the rights to Current Procedural Terminology (CPT) codes.  DHHS consults with no other professional organization except the AMA.  They ONLY work with AMA staff.  Nobody else, no other health practitioner category is represented at DHHS.

The AMA doesn’t charge DHHS anything for the use of the CPT codes, but gets to charge a bundle for the use of their codes to the health care industry. Use of CPT Codes is the largest source of income for the AMA – towering above membership dues.  Everybody has to pay to use them:  Doctors, insurance companies, hospitals, etc… over 70 million dollars ($70,000,000) a year  in 2001 – probably twice that in 2007.

Those licensed and qualified practitioners who have NO CODES, or inadequate codes, and no representation at DHHS, include Behavioral Health Professionals, Osteopaths, Chiropractors, Homeopaths, Nurses, Pharmacists, Physical Therapists, Naturopaths, Acupuncturists, Nutritionists, Dieticians, Massage Therapists, Midwives, Occupational Therapists, Optometrists,  Alternative Medicine Practitioners, and more – over 2,300,000 of them.

Let me help you let that soak in – 2.3 million licensed, legitimate health care providers in the US have NO CODES or INADEQUATE CODES to bill Medicare, Medicaid, and/or the rest of health insurance payors.

And another two million other legitimate non-licensed health care providers (Registered and Vocational Nurses, Sports Therapists, Herbalists, Traditional Naturopaths, Spiritual Counselors, Reflexologists, Curunderas, Native American Healers, etc.) have NO CODES to effectively document what they do.

Important – Eighty percent of health care costs, nationwide are “non-critical care” issues not requiring medical (MD) intervention, but the current system forces those patients to seek care from the highest price health care providers (MDs) first, and makes MDs gatekeepers for all other health care providers – even though those health providers are allowed, and encouraged, by Federal law, to operate independently (and more cost-effectively).

So, because of a “sweet deal” between the AMA and current DHHS management, in defiance of the US Congress, only 14% of US health care providers have codes to report services to Medicare, Medicaid, or other insurance. 

Eighty-six percent (86%) cannot.

It gets worse…

The medical system monopoly (the 14% of total health care offered), governed by DHHS, itself is a deadly rip-off of gigantic proportion.  A recent study, a compilation of other recent studies, called “Death by Medicine,” says:

It is evident that the American medical system is the leading cause of death and injury in the United States. The total number of iatrogenic deaths shown … is 783,936. The 2001 heart disease annual death rate is 699,697; the annual cancer death rate, 553,251.

2,036,884 Americans die each year, unnecessarily, simply because the system OFFICIALLY bars eighty-six percent (86%) of US health professionals from participating in it – offering services that work.   And no one running the system cares.  No one.

The Truth is – Effective and inexpensive cures for heart disease and cancer in the US are being suppressed – and of course there are no billing codes for these treatments.  There are so many different options available, I couldn’t take the space to name them all and there are volumes written on these cures.  The point is, Americans are being cheated.  Greed and stupidity reign.

Congress tried to fix this billing code problem before…

Congress is VERY aware of this problem.  Senator Trent Lott wrote, in 2001, to then DHHS Secretary Tommy Thompson, the following:

Dear Tommy:

Before the Senate Finance Committee considers modernizing and reforming Medicare and adding a prescription drug benefit as a feature of the program, I have several factual and policy related questions concerning the relationship between the former Health Care Financing Administration (HCFA) – now called the Centers for Medicare and Medicaid Services (CMS) – and the American Medical Association (AMA) concerning the use of the Current Procedural Terminology (CPT) coding system and the impact of that agreement on the future of our nation’s health information system.

It is my understanding that HCFA in1983 granted the AMA what has been characterized as a “statutory monopoly” by agreeing to exclusively use and promote the AMA’s copyrighted CPT code for the purposes of reimbursing Medicare and Medicaid bills from doctors for outpatient services. As a result of HCFA’s and the federal government’s endorsement of the AMA’s copyrighted outpatient code — to the exclusion of all competitors — private insurance companies and others were also forced to adopt the CPT as their billing standard as well. The CPT code has thus become a fixture in doctor offices around the country. This predictably led to a financial windfall for the AMA in the form of CPT-related book sales and royalties approaching $71 million a year according to a report by the Wall Street Journal.

By using its CPT copyright aggressively in court, the AMA has also been able to control who uses the codes and who knows what about the cost of doctor services. For instance, the AMA has been able to impose on the entire nation the AMA’s obviously self-interested policy against consumers comparison shopping for medical care based on price by suing web sites and others to prohibit them from posting comparisons of doctor and other medical fees on the Internet using the CPT code. Without this ubiquitous code, such comparisons are impossible even though they are important to uninsured Americans and will become increasingly important in the future as more employers explore defined benefit plans — such as Medical Savings Accounts — where workers get to keep any savings they achieve in their health insurance or medical costs. The AMA’s proprietary interest in the CPT has also reportedly hampered efforts to educate doctors about proper practices in billing Medicaid, Medicare, and insurance companies. Of course, comparison shopping and proper billing to avoid mistakes and fraud are two of the most potent weapons we have to combat the routine double digit increases in health care costs that help keep millions of Americans uninsured.

For public policy purposes, it is noteworthy that the Ninth U.S. Circuit Court of Appeals held in 1997 that the AMA’s exclusivity agreement with HCFA for using CPT “gave the AMA a substantial and unfair advantage over its competitors” and “constituted a misuse of the copyright by the AMA.” Since the Court found against the AMA on these grounds, it did not feel it necessary to go on to address whether or not the AMA’s conditions and high prices for a licensee’s use of the CPT code constituted violations of anti-trust law as well. I have been informed that subsequent to this case the AMA and HCFA eliminated the exclusivity clause in their agreement — thereby providing the AMA a legal defense in similar lawsuits in the future. Obviously, the change in the agreement came far too late to prevent the AMA’s code from becoming a de facto public law monopoly owned by the AMA.

The costs, controversy, and legal pitfalls surrounding the CPT’s exclusive use by HCFA for outpatient service bills stand in stark contrast to the code controlled and owned by HCFA itself which is used by hospitals and others to bill Medicare and Medicaid for inpatient services. Since that code is copyrighted by the government, it is free to everyone. As a result, web sites and others are currently able to post hospital comparison prices and publishers can write books educating doctors and the general public on the proper use and meaning of the inpatient codes. And no one is being hauled into court for doing so.

As you know, Congress as part of the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) charged the Department of Health and Human Services to help develop a uniform health information system. I have some questions below regarding progress in developing such a uniform system and the role, if any, that the AMA’s CPT code and other procedure codes are meant to play — and have played — in our nation’s health information system.

Former DHHS Secretary Thompson, some of you remember, began a program to solve some of the issues brought up by Senator Lott.  He, in fact, approved a two year “pilot project” activating the use of ABC Codes, a system of 4,400 new codes specifically designed for those 4,300,000 non-MD practitioners.

What ever happened to that?

Now we get to the meat of this story…

As you know, Tommy Thompson retired from public service at the end of the first Bush Administration – BEFORE the ABC Code project was completed, and evaluated.  Over eight thousand practitioners, two thousand hospitals and clinics – AND 15 Medicaid agencies, 123 insurance companies and 147 technology vendors – volunteered to be part of the pilot project.

Following Thompson’s written guidelines, AlternativeLink, ABC Coding Solutions’ parent company, focused on two Beta test-sites – Alaska Medicaid’s Behavioral Health Program and a New Mexico Medicare Advantage Plan ( an HMO Insurance Plan for Seniors.

In short, the pilot project was an amazing success, providing stunning statistics in a report showing the need for a revised billing code system – one that would include billing codes for ALL health practitioners.

In Alaska alone, the report showed a fifty percent savings was accrued the first year using ABC codes in 500,000 electronic transactions to process payments from 500 paraprofessionals providing care to 4,000 patients in bush and rural communities where there were no professionals available.

In New Mexico, the report showed a health insurance provider began offering payments for AltMed services in 1999, up to $1,500 per year, to its senior citizens if they paid an additional $5.00 per month.  Approximately 500 seniors paid this extra premium.  By the third year, the insurance company found that the seniors using the AltMed plan were costing less that those who weren’t.  The insurer dropped the $5.00 fee and now offers the AltMed option to all 21,000 seniors on its plan AND the AltMed providers all got a raise.

What did DHHS management do with this report?

They trashed it.  They said there wasn’t enough information.  And  I wasn’t surprised at all. After Tommy Thompson left DHHS, there wasn’t anyone left with a brain.

As you can imagine, the approval process is being appealed.   Members of Congress are beginning to look into the issue.

So, what is this ABC Code thing?

ABC Coding Solutions’ website describes ABC Codes as follows:

ABC Coding Solutions (formerly Alternative Link) empowers the healthcare industry to provide greater consumer access to cost-effective and quality healthcare.

ABC codes and related solutions allow more than 3 million healthcare practitioners to file electronic claims for healthcare services that are not adequately described in other national code sets. This capability allows these practitioners to establish themselves as effective health insurance industry business partners.

When implemented across the spectrum of healthcare service chains, ABC codes have reduced healthcare costs. The empirical utilization data compiled within these service chains highlights the most cost-effective and quality care options available to curb escalating healthcare costs.

But, in my view, ABC Codes are much more than described above.  They are, without any doubt, an important mechanism to permanently change US health care for the better.  Jennifer Bolen, writing for the Feb/March 2007 issue of the Townsend Letter says:

The public has need of and the right to quality care.  Practitioners have need of and the right to correctly code their care.  Until a national code set is established for meeting these needs, ABC codes can be used to properly document care, assure rational reimbursement and provide data that will show which care options will reduce health care costs.  Since state laws vary widely on who can do what (which practitioners can provide which services) the ABC coding system can validate that the care being provided is legal and based on the core competencies of licensed practitioners. How?  References to over 15 million state statutes, administrative regulations, case laws and training standards are tied to each practitioner in each state for each ABC code.  Thus, the ABC coding system helps prevent billing fraud and reduces practitioner and insurer risk of fines that can be as high as $10,000 per claim for processing payment for an illegal service.   

By filling in coding gaps, ABC codes meet the public’s demand for viable treatment options, the industry’s need to avoid treatments by untrained practitioners and billing fraud and the nation’s need to base policy on outcomes data based on actual treatments. Without ABC codes, the industry is basing health care policy on allopathic medical interventions and fewer than 20% of actual treatments.  When health care policy is defined by documenting all care and public access to care is based on quantifying safe and efficacious options in treatment, then, and only then, can we cure our ailing health care system.

So, what’s the  plan?

(1)  Getting ABC Codes approved by DHHS – whether current DHHS management likes that idea, or not.  We’ll be talking about that project in future newsletters.

(2)  Getting ABC Codes into general use RIGHT NOW, regardless of DHHS management lack of effort.  We’ll be talking about that project in my next newsletter.

Stay tuned…

Tim Bolen – Consumer Advocate