The Economics of All-You-Can-Eat Buffets

What do health insurance and all-you-can-eat buffets have in common? The economic theory of adverse selection tells us that neither should exist.

Consider the case of Bill Wisth. Bill is six-and-a-half feet tall, 350 pounds, and as you can see in the amusing news story below, he’s been kicked out of an all-you-can-eat fried fish buffet. What’s surprising is not that this happened, but that it doesn’t happen more often (ok, it’s also a little surprising that Bill has decided to picket the restaurant). I will explain, but first, watch the video:

So why should this happen more often? When someone offers all-you-can-eat to any customers, those that show up should be ones for whom the amount that they can eat is worth more than the price they expect to pay. After all, if the buffet costs $10 no matter how much you eat then those who eat the most will get the most value out of it. But the average amount consumed can’t exceed the price, otherwise the restaurant will lose money and go out of business. So if the average amount consumed is $16 worth of food, then the restaurant will have to raise the price to above $16. But this means those who more than $10 but less than $16 worth of food will no longer find it worthwhile to eat there, so they will stop going, and the average customer left will be those who eat more than $16 worth.

This process continues, until there is only one guy left going to the buffet, and he eats $300 worth of fish and is charged exactly $300 for it. In effect, this theory says that all-you-can-eat buffets should not exist. And yet they do, and for the most part the adverse selection problem does not cause problems. Except, it seems, for Bill Witsh.

The theory of adverse selection was first applied by George Ackerlof to the market for used cars in the 1970s. The real issue is that buyers and sellers have asymmetrical information. In the buffet example the asymmetric information is that the restaurant can’t tell who is going to eat a ton of fried fish and who isn’t. Which means they can’t screen out guys like Bill Wisth in advance. Perhaps the most famous and common application of adverse selection theory is in health insurance. Here you have insurers who can’t observe how risky their customers are, and thus everyone is charged the same. Just as in the buffet case, those who will buy the insurance are those with the greatest expected health care costs and in particular those for whom the expected costs of health care exceed the cost of the insurance. Left unable to charge risky customers for high expected costs of insuring, or screen them out all together, the insurer is flooded with costly customers and so must raise prices. This sets off a similar process as in the buffet case. In the end the model predicts that insurance markets shouldn’t exist.

So insurance shouldn’t exist and neither should buffets. And yet both do. So why is this? In the case of insurance, one common explanation (describedhere by this year’s John Bates Clark winner Amy Finkelstein) is risk aversion is sometimes correlated with low risk. This means that people differ in how much they value being insured against bad outcomes, and those who value insurance the most also happen to be those who have low expected costs. You know this kind of person: very safe people who take few risks, are very responsible, and also very healthy. You also know risk takers who are likely to be crippled in a hangliding accident or mauled by a bear (because they were taunting it as part of some extreme sport) but are more likely than most to be uninsured even though healthcare companies would likely undercharge them for insurance since they don’t know what ridiculous risk takers they are (unless they’ve been injured in high risk accidents before; “tell me again how you lost your foot?” “shark surfing, sir”).

But why is it that buffets can exist? They are subject to the same adverse selection problems, and even if they could tell who is going to overeat, the PR of turning away people who “look like they’ll eat too much” isn’t going to be worth it. Clearly the risk premium explanation does not apply here, since consumers have a good idea how much they are going to eat in advance, they aren’t insuring against the probability they will be way more hungry than they thought in any meaningful sense. So tell me, dear reader, why is it that buffets do not succumb to the adverse selection problem and cease to exist? Why aren’t there more Bill Wisths?

So why should this happen more often? When someone offers all-you-can-eat to any customers, those that show up should be ones for whom the amount that they can eat is worth more than the price they expect to pay. After all, if the buffet costs $10 no matter how much you eat then those who eat the most will get the most value out of it. But the average amount consumed can’t exceed the price, otherwise the restaurant will lose money and go out of business. So if the average amount consumed is $16 worth of food, then the restaurant will have to raise the price to above $16. But this means those who more than $10 but less than $16 worth of food will no longer find it worthwhile to eat there, so they will stop going, and the average customer left will be those who eat more than $16 worth.

This process continues, until there is only one guy left going to the buffet, and he eats $300 worth of fish and is charged exactly $300 for it. In effect, this theory says that all-you-can-eat buffets should not exist. And yet they do, and for the most part the adverse selection problem does not cause problems. Except, it seems, for Bill Witsh.

The theory of adverse selection was first applied by George Ackerlof to the market for used cars in the 1970s. The real issue is that buyers and sellers have asymmetrical information. In the buffet example the asymmetric information is that the restaurant can’t tell who is going to eat a ton of fried fish and who isn’t. Which means they can’t screen out guys like Bill Wisth in advance. Perhaps the most famous and common application of adverse selection theory is in health insurance. Here you have insurers who can’t observe how risky their customers are, and thus everyone is charged the same. Just as in the buffet case, those who will buy the insurance are those with the greatest expected health care costs and in particular those for whom the expected costs of health care exceed the cost of the insurance. Left unable to charge risky customers for high expected costs of insuring, or screen them out all together, the insurer is flooded with costly customers and so must raise prices. This sets off a similar process as in the buffet case. In the end the model predicts that insurance markets shouldn’t exist.

So insurance shouldn’t exist and neither should buffets. And yet both do. So why is this? In the case of insurance, one common explanation (describedhere by this year’s John Bates Clark winner Amy Finkelstein) is risk aversion is sometimes correlated with low risk. This means that people differ in how much they value being insured against bad outcomes, and those who value insurance the most also happen to be those who have low expected costs. You know this kind of person: very safe people who take few risks, are very responsible, and also very healthy. You also know risk takers who are likely to be crippled in a hangliding accident or mauled by a bear (because they were taunting it as part of some extreme sport) but are more likely than most to be uninsured even though healthcare companies would likely undercharge them for insurance since they don’t know what ridiculous risk takers they are (unless they’ve been injured in high risk accidents before; “tell me again how you lost your foot?” “shark surfing, sir”).

But why is it that buffets can exist? They are subject to the same adverse selection problems, and even if they could tell who is going to overeat, the PR of turning away people who “look like they’ll eat too much” isn’t going to be worth it. Clearly the risk premium explanation does not apply here, since consumers have a good idea how much they are going to eat in advance, they aren’t insuring against the probability they will be way more hungry than they thought in any meaningful sense. So tell me, dear reader, why is it that buffets do not succumb to the adverse selection problem and cease to exist? Why aren’t there more Bill Wisths?

More “bait and switch” acupuncture studies

Acupuncture has been a frequent topic on this blog because, of all the “complementary and alternative medicine” (CAM) modalities out there, it’s arguably the one that most people accept as potentially having some validity. The rationale behind acupuncture is, as we have explained many times before, little different than the rationale behind any “energy healing” method (like reiki, for example) in that it claims to redirect the flow of “life energy” (the ever-invoked qi). The only difference is that acupuncturists claim to bring this therapeutic qi rearrangement about by sticking thin needles into the pathways in the body through which this qi is fantasized to flow. These pathways, called meridians, are just as much a fantasy as qi itself or the “universal source” that reiki masters claim to be able to channel through themselves and into believers. Contributing to the popularity of acupuncture is its mythology as having been routinely practiced for over two thousand years, a myth that was the creation of Chairman Mao, who elevated what was a marginal practice at the time to a modality that the state supported and promoted (1,2,3,4).

In addition, because acupuncture involves sticking actual metal objects into the skin rather than simply laying on hands or making magical gestures over the patient, it retains some credibility, even among doctors. It doesn’t matter that, reviewing the totality of the research, one finds that it doesn’t matter where you stick the needles or even if you stick the needles in the skin. The results are the same and indistinguishable from placebo. The inescapable conclusion is that acupuncture is placebo medicine with needles. Personally, I’d prefer my placebo medicine without needles, but that’s just me.

Yet, the studies keep rolling in, trying desperately to demonstrate that acupuncture works or assuming that acupuncture works . Two more popped up within the last couple of weeks, and one of them, if you read the press releases, sounds really convincing. As is frequently the case, for this latter study, there is less to it than meets the eye. I’ll start, however, with a study that is a followup to a study I blogged about a couple of years ago that I characterized as another overhyped acupuncture study misinterpreted. This one, thankfully, is not nearly as hyped as the study from two years ago—or as the second study I will discussed, but it is very instructive how the original misinterpreted story is leading to a classic CAM “bait and switch” applied to acupuncture.

Adenosine. It had to be adenosine.

Two years ago, I came across a study that claimed to have found the mechanism by which acupuncture “works.” It made quite the splash, having been published, as it was, in a high profile journal, Nature Neuroscience. It was an animal study using mice in which acupuncture was tested in a model of inflammation that involves injecting complete Freund’s adjuvant into the mice’s paws. As a result, the mice’s paws become inflamed by the irritant properties of the CFA and thus more sensitive to innocuous stimuli. This results in a measurably decreased latency period for withdrawal to painful or innocuous stimuli. To boil the test down to its essence, after CFA injection, the mice’s paws would be more sensitive, and the mice would react more strongly and rapidly to stimuli of heat or touching. The complete discussion by yours truly can be found here, but the CliffsNotes version is that the authors noticed a peak of adenosine after acupuncture and did some work that suggested that adenosine mediated the “effects” of acupuncture. As I put it at the time, I doubt this paper would have gotten into Nature Neuroscience if all the investigators did was to show that a bit of local inflammation (i.e., sticking acupuncture needles into the mouse’s limb at one of the “correct” acupuncture points) resulted in the secretion of adenosine into the extracellular fluid and then showed that that adenosine blunted the pain response in nearby nerve endings. That would have been much less interesting, because there is already a fair amount of literature implicating the adenosine A1 receptor as a target for the relief of neuropathic pain. Acupuncture sexed up the findings.

Fast forward two years.

Now we’re faced with the offspring of an interesting, but largely irrelevant, observation about the adenosine A1 receptor in acupuncture. This comes from a different research group than those who published the original A1 paper, a group at the University of North Carolina. Its authors, Julie Hurt and Mark Zylka, have made what I consider to be a rather…interesting decision with regards to how they spin their results. Let me just put it this way, even though this new paper didn’t appear in Nature Neuroscience but rather in an open-access journal called Molecular Pain, what Hurt and Zylka did is the same as what was done in the previous group, but on steroids. It is a classic bait and switch. Think of it this way. When I wrote about the previous results, which showed that locally released adenosine appears to block pain transmission through local nerves, I pointed out that that might well turn into a useful strategy to alleviate pain, if a way could be found to generate adenosine where you want it and when you want it. The problem with adenosine is that its half life is pretty short; so just injecting adenosine into the local area would not be nearly as useful as just injecting local anesthetic into the area. No acupuncture is necessary. Indeed, I rather suspected that the only reason acupuncture “worked” in the original study to generate measurable quantities of adenosine locally is because thin needles stuck into a mouse limb are like sticking a spear through a human leg, proportionally speaking. Unlike the case in humans, the needle is never far from a major nerve bundle, and the local trauma is much more as a fraction of the limb area.

So what do Hurt and Zylka do with this previous result? Do they propose a strategy for generating adenosine near local nerves? Yes, indeed, they do, and it appears, for the most part, to work, at least in this model. What do they call this proposed therapy? The title of their article says it all: PAPupuncture has localized and long-lasting antinociceptive effects in mouse models of acute and chronic pain. Why PAPupuncture? Here’s why, as described in the introduction:

We previously found that the transmembrane isoform of prostatic acid phosphatase (PAP) functions as an ectonucleotidase and hydrolyzes extracellular AMP to adenosine in nociceptive dorsal root ganglia neurons [10,11]. PAP is expressed in several other tissues, including skeletal muscle that surrounds the Zusanli acupuncture point, and could be the rate limiting ectonucleotidase at this location [9,12]. PAP is a very stable enzyme when administered in vivo, with an 11.7 d half-life in blood [13]. Likewise, we found that intrathecal injection of a secretory version of human PAP (hPAP) had long-lasting (3 days), A1R-dependent antinociceptive effects in pre-clinical models of inflammatory pain and neuropathic pain [10,14]. These long-lasting antinociceptive effects could be transiently blocked with a short-acting A1R antagonist, providing strong evidence that hPAP remains in tissue for days [10,15]. In contrast, adenosine has a very short half-life in blood (a few seconds) [16]. hPAP injections thus provide a novel way to generate a short-acting compound over a sustained time period [17].

So, basically, what PAPupuncture is, according to Hurt and Zylka, is injecting an enzyme near the nerves that breaks down AMP in the extracellular fluid into…drumroll, please…adenosine! To see the the blatantness of this bait-and-switch going on here, I can’t resist pointing out that the authors themselves write:

Essentially all acupuncture points are located in muscle and are in close proximity to peripheral nerves [2]. The axons of nociceptive (“pain-sensing”) neurons course through peripheral nerves [3-5]. This proximity of acupuncture points to nociceptive afferents could explain why acupuncture is modestly effective at treating pain in humans [1,6-8].

So, let me see. If Hurt and Zylka are correct, acupuncture is a very inefficient method of “generating local inflammation” near peripheral nerves (i.e., sticking tiny needles into points not related to peripheral nerves by anatomy other than by sheer coincidence). In other words, it’s useless, even by their criteria. So what do they do? They turn it into regional anesthesia but still call it a variant of “acupuncture.” In fact, all Hurt and Zylka have done is to inject an enzyme that turns a substrate into adenosine in the local area. They even injected it into the popliteal fossa (in humans, the area right behind the knee), noting blithely that “clinicians inject local anesthetics into this same location for regional anesthesia.” No kidding. Anesthesiologists and surgeons do inject local anesthetic right there. It’s called a popliteal block or sciatic nerve block. A popliteal block can anesthetize the leg from the knee down without the need for a spinal or epidural anesthetic, making it useful for procedures involving the foot and ankle.

So what did this study find? Basically, it found that injecting PAP into the popliteal fossa relieved pain for up to three days in different models of pain; that there was a dose-response effect in which injecting more PAP resulted in more pain relief; and that adding more substrate (i.e., AMP, the starting material that PAP converts to adenosine) also increases the response and duration of the pain relief. It’s all fairly straightforward, and there’s nothing really glaringly wrong with the experimental design, which is basically all designed to determine the parameters under which this technique works. It’s also a potentially useful technique in that adenosine doesn’t affect motor nerve function (blocks targeted at nerves with motor and sensory components can result in temporary paralysis distal to the injection site) and that the enzyme can generate adenosine for a prolonged period of time. This latter aspect of the technique would be useful because prolonged analgesia from nerve blocks can require catheters to keep injecting local anesthetic.

None of this is surprising, and it all might actually be useful, but acupuncture it ain’t, not by any stretch of the imagination, which makes the authors’ insistence on calling this technique “PAPupuncture” puzzling indeed. A far better name would be something like a “PAP block” or just a nerve block using PAP. Similarly the insistence on using acupuncture point nomenclature is not justified either. Why not simply call it a different form of popliteal fossa block instead of “PAPupuncture”?

The discussion might give us a clue:

Clinicians inject local anesthetics into the popliteal fossa to treat pain following foot and ankle surgery. However, this regional anesthesia procedure requires catheterization to block pain for more than a day [21,30]. Local nerve blocks are administered at many other locations of the body to regionally treat pain. While our work was focused on the popliteal fossa, PAPupuncture could in principle be performed in any body region where acupuncture and nerve blocks are performed and has the potential to reduce pain for a significantly longer period of time. Given that PAP works via an A1R-dependent mechanism, PAPupuncture would also bypass side-effects associated with opioid-based analgesics, and hence could provide a novel abuse-resistant way to treat pain. Ultimately, our study reveals that key mechanisms associated with Eastern and Western medicine can be merged and exploited to locally inhibit acute and chronic pain for an extended period of time.

This is all, of course, utter nonsense. What Zylka has done is interesting from a scientific standpoint. It might turn out to be useful in humans. It might even turn out to be better than existing strategies for peripheral nerve blocks when long-lasting analgesia is needed. It is not, however, acupuncture, which makes Zylka’s insistence on calling it “PAPupuncture” the purest form of bait-and switch. His experiment was a good example of scientific medicine, a preclinical “proof-of-principle” animal experiment that could just as easily have been done without a single mention of acupuncture because acupuncture has nothing to do with it. It is not a merging of “key mechanisms associated with Eastern and Western medicine.” In fact, the reviewers who approved this paper need to be taken to task for falling for the false CAM meme that there is “Western” medicine, which is always portrayed as scientific medicine, and “Eastern” medicine, which is always portrayed as more mystical and “wholistic.” Personally, I find the whole construct not-so-subtly racist, and if I were Asian I’d be offended by having “Eastern” medicine associated with quackery based on mystical pre-scientific ideas. Everything else Zylka does appears to be rigidly science-based. So why does he muddy it up by associating it with woo like acupuncture, which is based on prescientific, vitalistic beliefs?

In fact, so little does this have to do with acupuncture that pharma is interested. According to the press release from UNC:

The next step for PAP will be refining the protein for use in human trials. UNC has licensed the use of PAP for pain treatment to Aerial BioPharma, a Morrisville, N.C.-based biopharmaceutical company.

Finally, what makes this more of a bait-and-switch is that acupuncturists don’t just claim that acupuncture can be used as a form of local or regional anesthesia. They claim it is good for nearly everything that ails you, be it infertility, asthma, chronic back pain, and any of a whole host of aches, pains, conditions, diseases and maladies. Calling regional anesthesia with PAP “PAPupuncture” is nothing more than a ploy to suggest that acupuncture works, when PAPupuncture is not acupuncture. It’s all about marketing, not science.

Speaking of other diseases and conditions, let’s look at our second study.

Acupuncture for COPD

The second acupuncture study being touted in the press recently was a lot more highly touted. I suspect that the reason for this is that it claims to provide relief for a condition that, given the number of people who smoke, is very, very common, namely chronic obstructive pulmonary disease (COPD). More importantly, the story doesn’t involve explaining things like an adenosine receptor, using an enzyme to generate adenosine in the tissues, and other scientific details that bog down the story. This other study is much simpler to explain, and try to explain it several journalists did, with a distinct lack of skepticism:

These news stories refer to a study from Japan by Suzuki et al published online a week ago in the Archives of Internal Medicine entitled A Randomized, Placebo-Controlled Trial of Acupuncture in Patients With Chronic Obstructive Pulmonary Disease (COPD): The COPD-Acupuncture Trial (CAT). It is just what it sounds like: A test of acupuncture on COPD. First, let’s see what these news stories say about it, beginning with U.S. News and World Report:

For patients with chronic obstructive pulmonary disease (COPD), acupuncture may help relieve shortness of breath during activity, Japanese researchers suggest.

COPD is a progressive lung condition that makes it hard to breathe; it is commonly caused by smoking or exposure to other toxins.

“The effects of acupuncture are large,” said Dr. George Lewith, from the University of Southampton in Hampshire, England, co-author of an editorial accompanying the study. “This is particularly remarkable in a condition that seems largely unresponsive to more conventional treatments.”

And WebMD, whose writers should know better but apparently do not:

Exactly how acupuncture improves symptoms of COPD is not fully understood. Researchers speculate that needling the acupuncture points on the rib cage area may help relax muscles involved in breathing.

This makes perfect sense to Tong-Joo Gan, MD. He is a professor of anesthesiology at Duke University Medical Center in Durham, N.C. It also may help reduce anxiety levels, he says. “When you become breathless, your anxiety goes up, so relaxation is another possible explanation for the benefit.”

Acupuncture has been shown to release chemicals that relax the lungs and dilate the airways, he says.

“Clearly it looks like a viable alternative to treat chronic COPD,” Gan says. “The downside is so little and the upside is so huge that acupuncture is well worth a try for those who find it difficult to control their COPD despite medications.”

Wow! If this study is any indication, acupuncture is the greatest thing since sliced bread, at least for COPD. I’d also be interested in seeing the studies that claim that acupuncture “releases chemicals that relax the lungs and dilate the airways.” I wonder if she meant this study, which looked at acupuncture with electrical stimulation (which is not acupuncture but TENS) and appeared to find an elevation in endorphin levels. Be that as it may, if you believe the hype machine that revved up to promote this study, just as it does for any seemingly “positive” acupuncture study, you’d think acupuncture is the greatest thing since sliced bread for COPD. But is it right this time? Is this study really good evidence that acupuncture “works” for COPD? Not so fast, there, pardner. The study, despite the breathless descriptions of it popping up in the press yesterday, is—shall we say?—underwhelming.

The study itself is fairly straightforward in that it is a randomized study of patients with chronic obstructive pulmonary disease (i.e., COPD) treated with standard therapy plus either “real” acupuncture or sham acupuncture. In this case, the sham acupuncture consisted of needles that didn’t puncture the skin rather than needling the “wrong” acupuncture points. The device used was a Park sham device, which comprises a needle (real or blunt-tipped placebo) with a guide tube. The blunt needles appear to penetrate the skin but actually telescope back into the tube. The primary endpoint measured was breathlessness as measured by an instrument called the modified Borg scale after a test known as the six-minute walk test. The modified Borg scale measures from 0 (no breathlessness) to 10 (maximal). They also measured lung functions. Acupuncture treatments (sham or “real”) were administered once a week for twelve weeks, and the acupuncture points chosen were as shown below:

After twelve weeks of sham acupuncture or “real” acupuncture, the placebo acupuncture group (PAG) and real acupuncture group (RAG) were compared for various measurements after the six minute walk test. Again, the primary outcome measured was the modified Borg scale, which is a subjective measurement of breathlessness, with a whole bunch of other secondary endpoints. Whenever I see such a large number of endpoints, I wonder about whether any control was made for multiple comparisons, and, as far as I can tell from reading the methodology, there wasn’t. So what did Suzuki et al find? After randomizing 68 patients, the found a significant improvement in the Borg scale after the six minute walk test. They also reported a small improvement in oxygen saturation (86% to 89%) while FEV1 didn’t change. (The significance of FEV1 was discussed in a previous post about acupuncture and asthma.)

Many of the usual caveats with a study of this type apply. First of all, it’s a small study, and it’s very easy to have a false positive in a small study like this. I have a hard time making much of this study without replication or a larger study. Second of all—and this is the biggest flaw in the study, a flaw so large that in my mind it pretty much invalidates the study—the study was only single-blinded. The subjects were blinded to experimental group, but the researchers and acupuncturists were not. There is no good excuse for this lapse, given how many other investigators have successfully carried out double-blinded acupuncture studies. The authors simply state that “we were unable to mask the acupuncture therapists.” Again, other groups have managed to blind the acupuncturists using specially constructed needles; why couldn’t Suzuki et al?

Another thing that drove me crazy about this article was that the authors piled endpoint after endpoint into tables. About half the endpoints appeared to be statistically significantly different, but with wide confidence intervals. For example, adjusted differences between PAG and RAG in three of eight biomedical measures listed in one table (Table 5) and six of eleven physiological measures (Table 6) were not statistically significant. Others that were “statistically significant” appeared not to be particularly impressive. A lot of these measurements, such as pulmonary function tests and the like, can also be influenced by patient effort, which could easily be affected, either intentionally or unintentionally, by how much the investigators measuring ventilatory function encouraged them. In other words, what we have here is a bunch of outcome measures, subjective and objective but potentially influenced by investigators, that are not particularly impressive in a trial that is not double-blind.

Another thing that one has to remember. For a treatment that does absolutely nothing to the outcome measures being examined, at a statistical significance level of p < 0.05 (like homeopathy, for example), by random chance alone we would expect about 5% of studies to find an apparent “statistically significant” difference between treatment group and control. That’s the random noise inherent in doing research, and long ago it was somehow decided that we could tolerate a one in twenty chance in a perfectly designed study of a false positive even in the case where the treatment does nothing. Of course, it’s worse than that, as I’ve written about many times before. As John Ioannidis has taught us, because no clinical trial is designed and executed flawlessly and because there are always biases and imperfections in any clinical trial, the number of false positive trials for something like homeopathy (which, being water, does absolutely nothing) will actually be considerably higher than 5%. That’s why one has to fall back on the totality of the scientific literature filtered through the lens of plausibility as estimated by basic science considerations.

For COPD, the plausibility that acupuncture would be expected to have a physiological effect is slim to none. Perhaps it’s not as close to “none” as homeopathy is (acupuncture does, after all, involve sticking needles into the body and it’s just barely plausible that that might do something), but it’s pretty darned low, particularly considering the vitalistic ideas that underlie acupuncture. Thus, filtering this study through the considerations of prior probability, the lack of double blinding, and the lack of controlling for multiple comparisons, and I am profoundly underwhelmed. That doesn’t even take into account the fact that I don’t see any evidence that the data were analyzed in a strict intent-to-treat analysis, in which all the endpoints were chosen before the study was undertaken and included in its design from the beginning. There were drop-outs in both groups, but in the RAG group three dropped out because they suffered acute exacerbation due to a respiratory infection. In such a small study, that could easily have skewed the results if a strict intent-to-treat analysis weren’t used.

None of this stops the authors from speculating wildly about a “mechanism” by which acupuncture can allegedly improve lung function in COPD:

We therefore speculate that a similar phenomenon is evoked in the accessory respiratory muscles by needling on the acupuncture points on the rib cage. Decreased muscle tone consequently caused the recovery of the muscle strength in the rib cage, resulting in the increased mobility in the rib cage. Relaxation of accessory respiratory muscles may also contribute to rib cage motion. In fact, the present study showed increases in maximum inspiratory mouth pressure, maximum expiratory mouth pressure, and range of motion in the rib cage at the end of acupuncture treatment.

In this study, vital capacity, FVC, percentage of FEV1, and percentage of DLCO significantly increased after acupuncture treatment. These findings suggest that acupuncture treatment might improve DOE and exercise endurance, at least to some extent, through the improvement of pulmonary function. It is not clear why acupuncture improves pulmonary function; however, we speculate that the relaxation of hyperactivated respiratory muscles and the correction of the autonomic tone might cause the beneficial effect on pulmonary function.22 Further investigations are needed to clarify this.

Go back and take a look at the acupuncture points used. Look at how few of them are actually over the ribcage. Is it the least bit plausible that a mere six needles in the ribcage could accomplish this result? I think not. In fact, I think the acupuncture apologists are doing some major contortions reaching for this “explanation.”

Finally, there is another issue to consider. This study came from Japan, and the corresponding author Dr. Masao Suzuki is listed as being affiliated with the Department of Clinical Acupuncture and Moxibustion, Meiji University of Integrative Medicine, Kyoto, Japan. As both Kimball Atwood and Steve Novella have pointed out in the past, good evidence has been reported that acupuncture studies from certain countries are significantly more likely to produce positive results, and Japan is one of those countries. True, its published studies are not as uniformly positive as those from China or Taiwan, but they appear to be significantly more likely to be positive than European studies. R. Barker Bausell discussed this very problem in his excellent book Snake Oil Science.

Given the inherent implausibility of acupuncture, combined with the large body of evidence that shows that it doesn’t matter where you stick the needles or even if you stick the needles in the skin. You get the same result, which is indistinguishable from placebo effects. For a study to overcome that large body of evidence, it has to be far more compelling than Suzuki et al. In the end, Suzuki et al is not nearly as rigorous as it has been represented and, as a result, not nearly as persuasive as acupuncture apologists would like you to think.

Conclusion

Acupuncture is a CAM modality that is considered part of traditional Chinese medicine (TCM), although acupuncture in its current form appears to be a phenomenon that is much more recent than it is portrayed by its supporters. In particular, it was popularized, along with the rest of TCM, by Mao as a means of giving the appearance of providing adequate health care to his people when he did not have the resources to provide them scientific medicine. Despite its roots in bloodletting, mysticism, and vitalism, acupuncture remains popular, so much so that even apparently conventional neuroscientists like Dr. Zylka take the claims of its practitioners at face value and somehow find reasons to “rebrand” acupuncture. Because acupuncture appears not to work as anything other than an elaborate placebo, it is not surprising that using PAP injections is far more effective than actual acupuncture. That is why there is no reason to “brand” PAP anesthesia as “PAPupuncture.” Yet Zylka did it anyway. Meanwhile, true believers like Suzuki (who is an acupuncturist, which is why I refer to him as a “true believer”) produce studies that on the surface appear sound but are riddled with problems when examined more closely.

No wonder, of all the CAM modalities other than supplements, people tend to think that acupuncture “works” more than any others. It is, after all, sticking needles into the skin. That’s one reason why acupuncture also makes a most excellent Trojan horse. After all, doctors stick needles into people, don’t they? So it’s easy enough for a scientist curious about acupuncture and perhaps not so well-versed in placebo effects to allow his curiosity to lead him to stick some needles into some mice, measure some adenosine levels, and then rebrand a science-based mechanism of analgesia that could be turned into a new technique of anesthesia as somehow being based on acupuncture, and the message is that acupuncture works. As that message, as unjustified as it is, spreads, by extension the idea spreads that there might just be something to all this CAM stuff.

That is how and why quackademic medicine is on the rise.

Women Jailed for U.S.$1.9 Million Medicare Fraud

Nigeria: Women Jailed for U.S.$1.9 Million Medicare Fraud

BY ABIODUN OLUWAROTIMI, 20 MAY 2012

Fatima Hassan, a 44 year old Nigerian woman who was also the co-owner of a Detroit-area physical therapy company has been sentenced to 48 months in prison for her leading role in a more than $1.9 million Medicare fraud scheme, the Department of Justice, the FBI, and the Department of Health and Human Services (HHS) announced at the weekend.

Fatima Hassan who was sentenced by U.S. District Judge Avern Cohn in the Eastern District of Michigan was also sentenced to three years of supervised release and ordered to pay $855,484 in restitution in addition to her prison term.

The accused person pleaded guilty on September 15, 2011 to one count of conspiracy to commit health care fraud.

According to the plea documents, in 2005, Hassan incorporated a company known as Jos Campau Physical Therapy, which she owned with a co-defendant. Jos Campau Physical Therapy did not have a Medicare provider number and was not entitled to bill Medicare for therapy services.

According to court documents, Hassan paid kickbacks to recruiters who obtained Medicare beneficiary information and signatures needed to create fictitious physical and occupational therapy files. The Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate that they received therapy services that were never provided.

The accused and the co-owner of Jos Campau Physical Therapy hired and paid an occupational therapist and an uncertified occupational therapy assistant to falsify medical files. The occupational therapist created patient evaluation forms for beneficiaries whom she had never met, seen, or evaluated.

The uncertified therapy assistant fabricated and signed patient notes for occupational therapy visits. The uncertified therapy assistant did not provide the services reflected in the fictitious patient notes. Additionally, Hassan's co-owner, a physical therapist, falsified patient evaluation forms and fictitious patient notes for physical therapy services that were never rendered.

Hassan and the co-owner of Jos Campau Physical Therapy sold the fictitious physical and occupational therapy files to multiple fraudulent therapy companies that had obtained Medicare provider numbers. Those companies billed the fictitious files created by Jos Campau Physical Therapy to Medicare and paid kickbacks to Jos Campau Physical Therapy based on these billings. Hassan and her co-owner split the profits from the sale of the falsified files.

She admitted that, between approximately June 2005 and May 2007, she and her co-conspirators at Jos Campau Physical Therapy submitted or caused the submission of approximately $1.9 million in fraudulent claims to the Medicare program for physical and occupational therapy services that were never rendered.

Hassan's co-owner, Victor Jayasundera, pleaded guilty on January 18, 2012 for his role in the scheme and is scheduled to be sentenced on May 31, 2012.

Tariq Mahmud, the owner of a Medicare provider company that bought and billed Jos Campau Physical Therapy's fake files, was convicted at trial on February 2, 2012 for his role in the scheme and is scheduled to be sentenced on June 11, 2012.

The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI's Detroit Field Office; and Special Agent in Charge Lamont Pugh, III of the HHS Office of Inspector General's (OIG) Chicago Regional Office.

This case was prosecuted by Trial Attorney Catherine K. Dick and Assistant Chief Benjamin D. Singer of the Criminal Division's Fraud Section, with assistance from Trial Attorney Niall M. O'Donnell. It was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of Michigan.

Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine districts have charged more than 1,330 individuals who collectively have falsely billed the Medicare program for more than $4 billion. In addition, HHS's Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

The regulation of nonsense

The most meticulous regulation of nonsense must still result in nonsense.

– Edzard Ernst, M.D., PhD., professor, Complementary Medicine, Peninsula Medical School, University of Exeter, UK

One necessity of licensing so-called “complementary and alternative,” or “CAM,” practitioners is to spell out exactly what is encompassed in the CAM scope of practice. This is unfortunate for the practitioners because it forces an exposé of the nonsensical precepts underlying their claims. For example,

‘Acupuncture’ refers to a form of health care, based on a theory of energetic physiology that describes and explains the interrelationship of the body organs or functions with an associated acupuncture point or combination of points located on ‘channels’ or ‘meridians’. . . Acupuncture points are stimulated in order to restore the normal function of the aforementioned organs or sets of functions.

(Delaware acupuncture practice act.)

[Chiropractic is] the science of adjusting the cause of the disease by realigning the spine, releasing pressure on nerves radiating from the spine to all parts of the body, and allowing the nerves to carry their full quota of health current (nerve energy) from the brain to all parts of the body.

(North Carolina chiropractic practice act.)

The practice of naturopathic medicine includes, but is not limited to, the following services:. . . ordering, administering, prescribing, or dispensing for preventive and therapeutic purposes: food, extracts of food, nutraceuticals, vitamins, minerals, amino acids, enzymes, botanicals and their extracts, botanical medicines, herbal remedies, homeopathic medicines, dietary supplements and nonprescription drugs as defined by the federal Food, Drug, and Cosmetic Act, glandulars, protomorphogens, lifestyle counseling, hypnotherapy, biofeedback, dietary therapy, electrotherapy, galvanic therapy, oxygen, therapeutic devices, barrier devices for contraception, and minor office procedures, including otaining specimens to assess and treat disease. . .

(Minnesota naturopathic practic act.)

Licensing also brings into sharp focus exactly how broad those claims are.

‘Acupuncture’ means a form of primary health care, based on traditional Chinese medical concepts and modern oriental medical techniques, that employs acupuncture diagnosis and treatment, as well as adjunctive therapies and diagnostic techniques, for the promotion, maintenance, and restoration of health and the prevention of disease.

(Florida acupuncture practice act, emphasis added.)

Any chiropractic physician who has complied with the provisions of this chapter may examine, analyze, and diagnose the human living body and its diseases by the use of any physical, chemical, electrical, or thermal method; use the X ray for diagnosing; phlebotomize; and use any other general method of examination for diagnosis and analysis taught in any school of chiropractic.

(Florida chiropractic practice act, emphasis added.)

In addition to prescribing a scope of practice, licensing imposes basic education requirements, testing, board oversight, continuing education requirements, and other measures supposedly designed to protect the public health and welfare.

Perhaps this is why there is no movement by other CAM therapists, such as reiki practitioners, crystal therapists, iridologists, and the like, to seek licensing. While having one’s own licensed health care practice act conveys a huge advantage in terms of protecting one from unlicensed practice of medicine prosecutions, it also means that one must set out one’s gibberish in a form that state legislators can be persuaded to pass into law. That this is not hard to do is evidenced by the above examples of naturopath, acupuncturist and chiropractic licensing. Still, having to take tests to demonstrate one’s command of the gibberish and having to attend continuing education classes to remain abreast of advancements in practices that never advance is burdensome. Besides, the medical boards don’t seem to be particularly interested in stopping the spread of CAM practices through prosecution for the unlicensed practice of medicine, so why bother? In fact, M.D.s themselves are joining in the fun via “integrative medicine.”

Nevertheless, it is interesting to contemplate what enlarging the pantheon of licensed CAM health care practices might look like. Just how far might the state legislatures willing to go in their Legislative Alchemy? After all, practices such as reiki, crystal therapy and iridology are no more implausible and have no less a claim to effectiveness than subluxation-based chiropractic, homeopathy and acupuncture.

May the force be with you

Let’s take reiki for example. Here’s an explanation of reiki (so to speak) from The International Center for Reiki Training:

We are alive because life force is flowing through us. Life force flows within the physical body though pathways called chakras, meridians and nadis. It also flows around us in a field of energy called the aura. Life force nourishes the organs and cells of the body, supporting them in their vital functions. When this flow of life force is disrupted, it causes diminished function in one or more of the organs and tissues of the physical body.

The life force . . . becomes disrupted when we accept, either consciously or unconsciously, negative thoughts or feelings about ourselves. These negative thoughts and feelings attach themselves to the energy field and cause a disruption in the flow of life force. This diminishes the vital function of the organs and cells of the physical body.

Reiki heals by flowing through the affected parts of the energy field and charging them with positive energy. It raises the vibratory level of the energy field in and around the physical body where the negative thoughts and feelings are attached. This causes the negative energy to break apart and fall away. In so doing, Reiki clears, straightens and heals the energy pathways, thus allowing the life force to flow in a healthy and natural way.

(I apologize for the lengthy quotes throughout this post. However, I find it very difficult to summarize nonsense. Besides, the actual language is so entertaining.)

As Steve Novella pointed out, reiki is simply another form of vitalism, a long-discredited, pre-scientific notion that a spiritual energy animates all living things. As he says, “[t]he notion of vitalism was always an intellectual place-holder, responsible for whatever aspects of biology were not currently understood.” It is the same concept that underlies subluxation-based chiropractic, where it is known as “Innate Intelligence,”or, more recently “nerve flow.” In acupuncture, this “life force” is called “qi.” In therapeutic touch, it is “energy,” as it is sometimes referred to in reiki. In craniosacral therapy, this force is the craniosacral rhythm. Like those practices, there is no good evidence that reiki has any effect beyond placebo, nor is there any evidence that such a “life force” exists.

The practice of reiki, as does chiropractic, therapeutic touch, acupuncture and other CAM methods, depends on the practitioner convincing the patient that he (or she) can influence this “life force” via some action on his part. In reiki,

. . . energy flows from the practitioners hands into the client. . . The practitioner places her/his hands on or near the client’s body in a series of hand positions.

Treatment sessions last between 30 and 90 minutes. According to one website, it costs about a dollar a minute, which is a lot to pay for anything and especially a lot for nothing.

As might be expected from a treatment that purports to affect all organs and tissues of the body, the advertised benefits of reiki appear to be virtually limitless. Here are some I found on the internet:

Stress relief, improves well being, minimizes discomfort from acute or chronic pain conditions, reduces recovery time from injuries, sets new habits, promotes emotional healing, reduces side effects of medical treatment including chemotherapy, post operative pain and depression, improves the rate of healing, reduces time in hospital, relaxation, improves sleep, accelerates the body’s self-healing abilities, reduces blood pressure, breaks addictions, adjusts the energy flow of the endocrine system, reduces side effects of drugs, postpones the aging process, aids spiritual growth, increases the vibrational frequency of the body, accelerates healing from bruises, aids mental/emotional imbalance, benefits pregnant women and their unborn children, relieves back problems, PMT, menstrual problems, sinus problems, head or stomach aches, bee stings, colds, flu, tension and anxiety, heart disease, cancer, leukemia, asthma and eczema. And, of course, it cleanses the body of toxins. As an added bonus, it can benefit both animals and plants. All in all, “reiki always helps and in some cases people have experienced complete healings . . .”

Oddly, though, the reiki practitioner “will not offer any diagnosis or prognosis.” Hmmm. If the practitioner doesn’t diagnose or prognose, then how does he know what the patient is suffering from and how can he tell that there has been an improvement in the patient’s condition? After all, reiki practitioners claim that reiki is always beneficial. One puzzles at this contradiction.

Are there side effects? As it turns out, yes.

. . . sometimes a person will have what is called a healing crisis. As a person’s vibration goes up, toxins that have been stored in the body will be released into the blood stream to be filtered by the liver and kidneys and removed from the system. When this happens, sometimes a person can get a headache or stomach ache or feel weak. If this happens, it is a good idea to drink more water, eat lighter meals and get more rest. The body is cleansing as part of the healing process so this is a good sign.

Despite its magnificent success rate, reiki is pretty easy to learn. In fact, even children can be taught reiki.

A beginning Reiki class is taught on a weekend. The class can be one or two days long. I recommend that the minimum time necessary be at least six to seven hours. Along with the attunement, it is necessary that the student be shown how to give treatments and also to practice giving treatments in class.

For the uninitiated, an “attunement”

. . . is the process by which a person receives the ability to give Reiki treatments. The attunement is administered by the Reiki Master during the Reiki class. During the attunement, the Reiki Master will touch the students head, shoulders, and hands and use one or more special breathing techniques. The attunement energies will flow through the Reiki Master and into the student. These special energies are guided by the Higher Power and make adjustments in the student’s energy pathways and connect the student to the source of Reiki. Because the energetic aspect of the attunement is guided by the Higher Power, it adjusts itself to be exactly right for each student.

Licensed Reiki Masters?

Assuming, arguendo, that the claims of reiki practitioners are true, then we can fairly state that:

Reiki improves, and in some cases fully resolves, a wide, perhaps unlimited, range of human and animal (and plant) illnesses and conditions.
Reiki requires training which includes establishing a minimum proficiency in giving treatments.
Reiki can have side effects.
Reiki practitioners say that they do not make diagnoses or prognoses. However, they necessarily employ some type of diagnosis in the form of measuring improvement in the patient’s condition. (Otherwise they could not claim effectiveness.)
Reiki is essentially based on the same principles (vitalism) as two other licensed health care practitioner types, chiropractors and acupuncturists.

States have the inherent power to regulate the practice of medicine, as well as other health care practices, to protect the public’s health, safety and welfare (called the “police power”). Based on the characteristics of reiki shared with other licensed health care providers, I conclude, by analogy, that the state could constitutionally regulate the practice of reiki by enactment of a reiki practice act, defining a scope of practice, authorizing oversight by a Board of Reiki, and instituting minimum requirements for training and continuing education requirements, whether the reiki practitioners desired such regulation or not.

We could go through the same exercise for any number of CAM practices, such as craniosacral therapy, Kirlian photography, iridology, crystal therapy, aroma therapy, angel therapy, Matrix Energetics®, reflexology and polarity therapy, to name a few. Just imagine – a Board of Polarity Therapy! A licensed and regulated Iridologist! Crystal Therapy continuing education! A Matrix Energetics® scope of practice act! Given the fact that all that is necessary to create a new CAM practice is to make something up, state legislatures would be working year-round just to draft and pass practice act legislation accommodating the seemingly endless varieties of CAM.

If all of this seems silly – and it most certainly is – it raises an important question: why do the states license any form of CAM practice? Homeopathy is no more plausible or effective than Matrix Energetics®. Subluxation-based chiropractic is no more plausible or effective than crystal therapy. Acupuncture is no more plausible or effective than iridology. If the prospect of licensing Matrix Energetics® practitioners, crystal therapists and iridologists is ridiculous, then why isn’t licensing homeopaths (or naturopaths who practice homeopathy), subluxation-based chiropractors, and acupuncturists equally ridiculous? What’s the difference?

In fact, the next time you find yourself in a discussion with an acupuncture proponent, heartily agree with him (or her) that of course acupuncture should be a licensed health care profession, available to everyone, as should angel therapy. When he demurs on the ground that angel therapy is totally absurd, ask him to explain exactly how acupuncture is any different.

Dr. Ernst is entirely correct. The regulation of nonsense must still result in nonsense. Rather than fooling themselves into thinking they are protecting the public with CAM practitioner licensing, state legislators should concentrate on protecting the public from CAM.

Original Page: http://www.sciencebasedmedicine.org/index.php/the-regulation-of-nonsense/

Peter Kovacek, PT, MSA, DPT

313 492-4293

PKovacek@PTManager.com

Milliman: Healthcare reform in 2012: Blind curves ahead

Healthcare reform in 2012: Blind curves ahead

23 February 2012 | MICHAEL G. STURM | JOHN D. MEERSCHAERT

Two big uncertainties are at the top of everybody’s mind this year as the United States travels the bumpy road of healthcare reform—the forthcoming U.S. Supreme Court ruling on the constitutionality of the 2010 Patient Protection and Affordable Care Act (PPACA) and the November general election. It is hard for health plans, providers, and state government leaders to know whether to proceed with plans to meet the PPACA statutory deadlines or to hold back until the path ahead becomes clear.

This article takes a look at some of the main issues and their implications for the immediate future.

The Supreme Court

The Supreme Court will hear arguments on the several cases challenging the PPACA beginning on March 26, and a decision is expected by the end of the court’s current session in June or July. That decision could take any of several directions:

Upholding the law in its entirety
Upholding the law in general but striking down one or more components of Title I, specifically:
- The individual mandate
- Guaranteed issue
- Prohibition of pre-existing condition exclusions, or even
- All of Title I (including, but not necessarily limited to the individual mandate, guaranteed issue, the prohibition of pre-existing condition exclusions, the prohibition of lifetime and annual benefit limits, the extension of children’s coverage to age 26, incentives for preventive care and wellness programs, etc.)
Striking down Title II (which includes the expansion of Medicaid eligibility)
Striking the law down in its entirety

Many observers believe that the court will uphold the law, but strike down parts of it. The individual mandate, guaranteed issue, and prohibition of the use of pre-existing conditions appear particularly shaky, and it will not be surprising if they are struck down. It is unlikely that the court will overturn one of these three components but not the others, as both the administration and plaintiff states agree that these parts of the law are inseparable. It also seems unlikely that the rest of Title I, some of whose provisions have already been implemented, will be invalidated.

Similarly doubtful is the removal of Title II from the law. Here, the most important argument is over the provision that requires states to expand their Medicaid programs by raising income-eligibility levels to 133% of the federal poverty level (138% including the “disregard” factor) or else they will lose federal funding. The plaintiffs argue that this provision is unduly coercive toward the states. However, there would appear to be a precedent in a Reagan-era law (on a different subject) that also carried the threat of withdrawal of funds from noncompliant states.¹

What are the implications of these outcomes?

If the law is constitutional. If the court rules that the PPACA is wholly constitutional, all of its provisions will remain the law of the land (at least for the time being). Insurers, providers, and states will be bound by the tasks and deadlines set by the legislation and the subsequent federal regulations; however, because the current uncertainties are causing implementation delays, it may be necessary for the government to move some of the deadlines to later dates.

Given the amount of time states need to get ready for the exchanges, such delays may become all the more necessary as the nation awaits the results of the November elections, which could signal significant change to at least some of the reform legislation.

If the court strikes down the legislation. If the court decides that the law is unconstitutional in its entirety, the federally directed reform program will come to an end. However, because some insurers, healthcare plans, and providers have already taken steps toward implementation, there may arise a number of new twists in private plans that, in some way, mimic features of the PPACA model. Moreover, some state governments have already begun setting up exchanges. It is uncertain whether these changes will remain in place if the law is struck down.

If the court takes the middle ground. If the ruling is that the law stands overall but the individual mandate, guaranteed issue, and prohibition of using pre-existing conditions are unconstitutional, the result will likely be a health insurance market very similar to today’s market. Most likely, only the healthier, less wealthy populations will participate in the exchanges (because they will receive a subsidy)—and probably not in very large numbers. Those less healthy individuals who do not purchase coverage through the exchanges could turn to the high-risk pools that most states now have in place (if they continue to exist), and the states will bear the responsibility of finding funds to pay for this less-healthy population.

If the individual mandate is declared unconstitutional, but guaranteed issue and the prohibition of using pre-existing conditions when rating individuals remain, then a significant amount of adverse selection will occur in the state exchanges.²

In the unlikely event that all of Title I is overturned, there will be no state exchanges (except for those that individual states choose to run on their own), and all of the PPACA constraints on private healthcare insurers will be removed. If Title II is overturned, most states will probably continue to operate the programs that they already have, and, faced with their current budget problems, they will be looking more and more at managed-care arrangements for Medicaid.

The elections

The November 6 general election may prove to be a bigger factor than the Supreme Court decision, because the potential result could be a complete repeal of the PPACA. Assuming that the Supreme Court allows the law to stand, with or without the individual mandate, guaranteed issue, and the prohibition of pre-existing condition exclusions, here are three scenarios:

President Obama is re-elected. If the president is re-elected, a Republican-controlled Congress may try to repeal the healthcare reform legislation, but President Obama will veto the repeal. Unless Congress overrides the veto—which is doubtful because it requires a two-thirds majority in both houses—the program will move forward; the exchanges will be created, and all other provisions of the PPACA (minus any that are ruled unconstitutional) will eventually become operational. If the Democrats control either house, no repeal bill is likely to pass.

There is also some speculation that President Obama might back off of some PPACA provisions because of their political unpopularity, but this remains, at most, a remote possibility.

A Republican president is elected, but the Democrats control at least one house of Congress. No attempt at repealing the 2010 legislation is likely to pass, and PPACA will remain the law of the land. However, the real power of implementation rests with the executive branch, and it is probable that the new president’s appointees in the Department of Health and Human Services and the Centers for Medicare and Medicaid Services will delay the major provisions of the law. In particular, the exchanges will probably not be implemented by the currently scheduled date of January 1, 2014.

The Republicans capture the presidency and both houses of Congress. In this scenario, it is almost certain that the 2010 legislation will be significantly modified, if not repealed. States that have already taken steps toward setting up exchanges may or may not carry them forward in the absence of federal subsidies should the Republicans repeal the subsidies.

The Supreme Court is expected to rule by the middle of 2012, although there is also a chance that the court will postpone its decision until its 2012–2013 session. In any case, the road ahead will not be clear until after Election Day 2012 at the earliest.

And in the meantime …

Following the passage of PPACA, health plan administrators went to work figuring out what they had to do and began taking steps toward meeting the earliest deadlines. A number of deadlines loom in 2012, not the least of which is the requirement that between July 1 and October 1, states must file an operational model for their exchanges, including the Summary of Benefits and Coverage. Another big deadline this year is the payment of rebates by insurers with loss ratios below the minimums, beginning in August. Still more deadlines will occur next year, including the requirement to have the exchanges in place and to start open enrollment, as well as the adoption of the International Classification of Diseases, 10th edition (ICD-10). Meeting 2013’s deadlines will require steady progress throughout 2012.³

A number of questions revolve around the exchanges. The operational aspects of the risk-adjustment mechanisms, the question of collecting payments prospectively or retrospectively, the transfer of people out of Medicaid and into the exchanges (and vice versa)—these are complicated challenges that must be resolved if the exchanges are to function.

Given the current uncertainty, however, health plans are hesitant to proceed—although some parties have gone to work setting up private exchanges for employer brokers. Theoretically, these exchanges are a step ahead if and when the exchanges actually come into play.

Meanwhile, as we wait for a resolution of the judicial and political questions, healthcare costs continue to climb. Partnering with providers, as some insurance companies have begun to do, may be the best route to combatting high costs in the long run, whether it be through an accountable care organization (ACO) or some other arrangement. These relationships might be a natural outgrowth of the heat that the government has begun to put on insurers regarding rate increases. Regardless of the motives, engaging providers in the management of healthcare costs is a positive move.

Near-term strategies

Some states—e.g., California, Utah, and Washington—are already building their exchanges. If the court strikes down Title I or the entire law, it is very unlikely that additional state exchanges will develop—and uncertain whether those now under way will become operational. If some exchanges survive, multistate insurance companies could continue to do business as usual in states without exchanges while, for states with exchanges, insurers could build off of one or another existing exchange model for that part of their business (as they have, for example, in Massachusetts).

If the PPACA survives the judicial and political processes, there will be opportunities for insurance carriers and other payors who get a head start on preparing for the sea change to come in 2014. In the first place, plans could benefit from analyzing the best options in plan design for their customers. They could help educate employers about best employer practices—for example, wellness program credits, and maximizing government subsidies in general.

From the standpoint of states, the potential expansion of Medicaid will provide an important source of coverage for vulnerable populations, but looks like an added financial burden to their already strapped budgets. Hoping to find savings, some states have expanded or implemented new Medicaid managed-care programs. Many others are considering similar moves, both to help with their current budget problems and also to deal with the huge financial impact of expanded enrollment in 2014.⁴

States that are early movers, doing what they can in anticipation of a full PPACA implementation, would be in a much better position to make the most out of reform than those who have waited for the dust to settle. Whether or not this potential opportunity turns into an actual opportunity depends on where the road takes us over the next nine months.

Medicaid en route to 2014

There are no major deadlines for changes to Medicaid this year, but, assuming that PPACA Title II remains in place, there is much ongoing preparatory work that must done by the time the healthcare reform package as a whole is up and running.

States face a big financial and administrative challenge at a time when most are struggling to make hefty budget cuts resulting from continuing revenue shortfalls. Many are so preoccupied with immediate budget problems that they are unable to see their way to the new fiscal demands on the horizon, most importantly the expansion of Medicaid eligibility. The PPACA insurer fee will also put a financial strain on states starting in 2014 by increasing the state funding needed to operate Medicaid managed-care programs.

Many states that are plaintiffs in the court cases challenging PPACA have delayed planning for the law’s Medicaid changes, putting them further behind if the law is upheld. Even the states that have been proactively planning for the changes haven’t yet modified their administrative systems for the new requirements.

The continued expansion of managed-care programs could be the most important news about Medicaid. In fact, whatever the fate of PPACA after the Supreme Court decision and the November elections, managed care will probably play a big role in Medicaid’s future.

¹In 1984, President Ronald Reagan signed into law an act mandating that states would forfeit some of their federal road funds unless they set the legal drinking age no lower than 21.

²There is likely to be some adverse selection even if the mandate stands, because the penalty for not buying coverage is weak and many healthier uninsureds will probably choose to pay the penalty rather than purchase coverage.

³For a summary of the year-by-year deadlines, see United Healthcare’s online “Timeline of Provisions,” retrieved January 24, 2012, from http://www.uhc.com/united_for_reform_resource_center/health_reform_provisions.htm.

⁴ It is not only expanded enrollment that state governments are worried about. Beginning January 1, 2013, certain primary care payments under Medicaid rise to 100% of Medicare payments for the same services. The federal government will fund this increase for the first two years, but if states decide to continue the higher payments after 2014, the funding responsibility passes to the states.

Medicare cheaters are soaking the taxpayers

By Rebecca Nurick

Last year, the federal budget took a hit of $60 billion due to Medicare and Medicaid fraud and abuse, according to the U.S. Departments of Justice and Health and Human Services. This month, federal officials charged more than 100 health-care providers with Medicare fraud as a result of unrelated scams in seven major cities. Federal raids uncovered $452 million worth of false Medicare claims for care that was never provided, making it the biggest single Medicare bust in history.

A federal program called Senior Medicare Patrol is using senior-citizen volunteers to educate other seniors about Medicare fraud, including how to detect it and avoid becoming a target. Its mission is to encourage seniors to protect important personal information, look for fraudulent activity, and report wrongdoing. In Pennsylvania, the patrol is administered by the Philadelphia-based Center for Advocacy of the Rights and Interests of the Elderly.

So what does fraud look like? You receive a phone call out of the blue from someone asking personal questions for reasons you’re not sure are legitimate. Or a company representative shows up at your home and tells you that you can qualify for an arthritis kit if you hand over your Medicare number. Or you get a postcard from a private organization declaring that your Medicare benefits have been decreased and encouraging you to return a request for free information about new deductibles and co-pays.

These are just a few of the ploys that often result in transmission of personal information and, eventually, Medicare fraud. There are several ways that personal information can be used to commit Medicare fraud. A company may bill Medicare for equipment or services that were never provided, or it may bill for the same procedure twice. Care providers may provide 10 minutes of service but bill for an hour, or they may send a client more supplies than necessary and bill Medicare for all of them.

Take the recent indictment of five nurses from Home Care Hospice in Philadelphia, who are charged with $9.3 million in Medicare fraud. They are accused of falsifying documents to charge ineligible patients for expensive hospice care that was never provided and billing the government for it. The scheme alleged is simple, but the consequences for the state and its taxpayers are significant.

The bottom line is that Medicare and taxpayers are frequently charged for products and services that were never delivered. Stuck in the middle are elderly people who are intimidated into giving up personal information or enticed by deals that are too good to be true.

If you or a loved one is covered by Medicare or Medicaid, you can prevent fraud by safeguarding personal beneficiary information just as you would your credit card information. A stolen Medicare number is like a stolen credit card number, except taxpayers are stuck with the fraudulent charges.

Beneficiaries also should review their medical bills carefully for any errors or inconsistencies. If you think you might be a victim of health-care fraud, or if you think you may have been targeted by an unscrupulous salesman or telemarketer, you should report it to the Senior Medical Patrol immediately.

Rebecca Nurick is coordinator of the Pennsylvania Senior Medical Patrol at the Center for Advocacy of the Rights and Interests of the Elderly, which can be reached at 1-800-356-3606.

USDOJ: Doctor and Home Health Agency Owner Plead Guilty in Connection with Detroit Fraud Scheme

WASHINGTON – Detroit-area residents Zahir Yousafzai and Dr Dwight Smith pleaded guilty yesterday for their roles in a $13.8 million home health care fraud and money laundering scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Yousafzai, 42, pleaded guilty before United States District Judge Gerald E. Rosen of the Eastern District of Michigan to one count of conspiracy to commit health care fraud and one count of money laundering. Smith, 59, pleaded guilty before Judge Rosen to one count of conspiracy to commit health care fraud.

According to information contained in plea documents, in 2009, Yousafzai and his co-conspirators acquired beneficial ownership and control over two home health companies, First Care Home Health Care LLC and Moonlite Home Care Inc. Yousafzai also assisted in the operation of two home health care companies owned by co-conspirators, Physicians Choice Home Health Care LLC and Quantum Home Care Inc. Yousafzai admitted that these home health agencies billed Medicare for home health visits that never occurred. Between July 2008 and September 2011, Yousafzai and his co-conspirators submitted or caused the submission of approximately $13.8 million in fraudulent home health claims to the Medicare program by the four home health agencies. Medicare paid more than $4 million to First Care and Moonlite, the companies that Yousafzai beneficially owned in whole or in part.

Yousafzai admitted to paying and directing the payment of various medical professionals, including doctors, nurses, physical therapists and physical therapy assistants, to create fictitious patient files to document purported home health services that were never provided. Yousafzai, a physical therapy assistant, also signed fictitious patient files in which physical therapy services were documented, but never actually provided.

Yousafzai also admitted that he paid and directed the payment of kickbacks to recruiters who obtained beneficiaries’ information and used the information to submit claims for home health services that were never provided. The beneficiaries sometimes pre-signed forms and visit sheets that were later falsified to indicate that they received home health services that were never provided. Other times, the beneficiaries’ signatures were forged on forms and visit sheets.

Additionally, Yousafzai admitted that he incorporated a shell company known as A-1 Nursing and Rehab Inc. for the purpose of laundering the proceeds of health care fraud, which were obtained through the submission of false and fraudulent claims to Medicare.

According to plea documents, beginning in or around September 2009, Smith began referring Medicare beneficiaries for home health care services to Physicians Choice Home Health Care LLC and Quantum Home Care Inc. During that time, Smith owned and controlled Supreme Medical Associates PLLC, a Michigan corporation doing business in Detroit under the assumed name of Smith Medical Center. In May 2010, Smith incorporated Phoenix Visiting Physicians PLLC.

Smith Medical Center and Phoenix employed individuals who claimed to be doctors, but, in fact, were not licensed in the state of Michigan to perform any medical services. The unlicensed doctors met with and purported to examine Medicare beneficiaries for home health care services. Smith did not meet or examine these beneficiaries and they were not homebound. Many of the beneficiaries were paid to pre-sign patient visit forms and did not receive home health services from Physicians Choice, First Care and Quantum. From in or around September 2009 through in or around September 2011, Medicare paid approximately $6.5 million for fraudulent home health care claims submitted by Physicians Choice, First Care and Quantum based on Smith’s referrals.

The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; United States Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the United States Attorney’s Office for the Eastern District of Michigan.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,300 defendants who collectively have falsely billed the Medicare program for more than $4 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to:www.stopmedicarefraud.gov.

Contact: Department of Justice Main Switchboard - 202-514-2000

Pseudoscience is not Cost Effective

from Science-Based Medicine by Steven Novella

Industrialized nations are in the middle of a health care crisis (some more than others), or at least a dilemma. As our medical technology advances, people are living longer, they are living with chronic diseases, and they are consuming more health care. The cost of this health care is rising faster than economic growth, so it is becoming a greater and greater burden on society. Many countries ration health care in one way or another in order to contain costs. Otherwise there is no easy or obvious solution and it’s likely that difficult choices will have to be made.

An interesting side effect of this dilemma is a renewed focus on the cost effectiveness of medicine. Effectiveness alone is not enough. We simply cannot afford, for example, to introduce a very expensive treatment for marginal improvement in outcome in a common disease. Different options can also be compared not only for their safety and efficacy, but for their cost effectiveness. In other words, we need to use cheaper alternatives when available rather than always reaching for the latest and greatest (and most expensive) treatment.

This situation provides an opportunity for science-based medicine. Treatments that are promoted as complementary and alternative (CAM) are often sold as cost effective because they are less expensive up front than standard medical care. We cannot, however, cede this argument to proponents of dubious therapies. Cheap does not mean cost effective. You have to be effective in order to be cost effective, and most of the dubious treatments that are marketed under the CAM umbrella are ineffective.

Regulators in Australia seem to get this. ABC news (that’s the Australian Broadcasting Corporation) recently reported:

Natural therapies found to be clinically ineffective will be cut out of government-funded private health insurance rebates.

Treatments including homeopathy, aromatherapy, ear candling, crystal therapy, flower essences, iridology, kinesiology and naturopathy could be found ineligible.

This is good news, however I think labeling this as focusing on “natural therapies” is counterproductive. Such labels are often misleading, inaccurate, meaningless, and a distraction from what really matters – the scientific evidence. What is “natural” about sticking a candle in your ear and burning it to suck out the toxins (which look suspiciously like burned candle wax)? “Natural medicine” is just a marketing term without a useful or meaningful operational definition. Proponets of these dubious methods are using the label to criticize this measure. Also from the ABC article:

However, Australian Traditional Medicine Society president Dr Sandi Rogers says the announcement came as a surprise.

“It’s a little bit of a shock when we as a profession have not been consulted,” she said.

“If this cost-cut is saying ‘we don’t want to spend taxpayer’s money on natural medicine’, I would be very concerned.”

They are spinning this as an attack on “natural medicine.” Rather, the measure is saying that taxpayer money should not be spent on therapies that are not adequately science-based, whether or not they are thought of as “natural”, “traditional”, or “conventional”. All of the modalities listed above are highly implausible and without evidence to support their efficacy.

Concerns about cost effectiveness and public funding are a great opportunity, in fact, to have a public discussion about the efficacy of such treatments. I want everyone to know exactly what homeopathy is (implausible treatments based on magical thinking diluted into non-existence), and I want them to know what the scientific evidence says – that it doesn’t work. Let us then have a frank debate about whether or not the FDA should be approving homeopathic potions, and whether our limited public health care dollars should be wasted on them.

This comes back to the notion that there should not be any double standard when it comes to medicine. CAM proponents usually try to turn this around, claiming they are not being treated fairly. Dr. Rogers, for example, is quoted as saying:

“We would just like a fair playing field.”

I don’t believe that is true. CAM proponents want a double standard with unfair advantages given to so-called CAM therapies. That is the real purpose of the existence of such labels, all created by proponents in order to argue for the double standard. Defenders of science-based medicine are arguing for a single science-based standard in evaluating medicine. We should apply this same standard when considering cost-effectiveness and public funding. CAM therapies should be held to the same standard of plausibility and scientific evidence, and not be given special consideration because they are “natural.” CAM proponents should also not be allowed tochange the rules of evidence as they go along in order to rig the game in their favor.

What is amazing is that public rebates were being given for things like iridology (a completely pseudoscientific form of diagnosis), not that they are now going to be taken away.

The cost effectiveness debate is a good opening for proponents of SBM to make the case to regulators that they should not be wasting taxpayer health care dollars on treatments that are not supported by evidence. I hope this the start of a trend. The principle is very simple – we cannot continue to waste resources on pseudoscience in medicine.

Medicare Fraud Bust Nets 107

By Emily P. Walker, Washington Correspondent, MedPage Today

Published: May 03, 2012

WASHINGTON -- More than 100 people -- including doctors, nurses, and other healthcare professionals -- have been charged with falsely billing Medicare for a total of $452 million in the biggest single fraud bust to date.

Strike teams arrested 107 healthcare workers in seven cities for alleged Medicare fraud, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced Wednesday.

Charges included submitting claims to Medicare for treatments that were medically unnecessary or never provided, violations of the anti-kickback statutes, and money laundering.

HHS also took administrative action, including suspension, against 52 other healthcare providers for suspected fraud.

Schemes involved home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.

A sampling of the busts:

In Miami, 59 people, including three nurses and two therapists, were charged with billing Medicare $137 million in false claims for home health care, mental health services, occupational and physical therapy, DME, and HIV infusion.
Seven individuals in Baton Rouge, La., were charged with a $225 million scheme that involved recruiting beneficiaries from nursing homes and homeless shelters -- including some patients who were mentally ill or drug addicted -- and either providing them medically inappropriate services or else no service at all.
Nine people in Houston, including a doctor and a nurse, were charged with billing $16.4 million in false claims for home health care and ambulance services. In that scheme, four different ambulance companies billed Medicare for rides that were medically unnecessary.

The takedown is the fourth in a series of large Medicare fraud busts in the past two years, spurred by $350 million in Affordable Care Act (ACA) funds provided for fraud prevention efforts, according to officials.

"We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain," said Holder in a press release. "As today's take-down reflects, our ongoing fight against health care fraud has never been more coordinated and effective."

In February, federal officials announced they had recovered $4.1 billion in fraudulent healthcare payments in fiscal 2011, the largest amount ever collected in a single year.

So Much for Evidence: Words of Wellness: 'The 7 Minute Back Pain Solution'

So much for evidence - this Ortho saw his patient in a gym and they wrote a book together - two totally non- experts on exercise. "But I am an orthopedic surgeon" - so I know everything. .

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Words of Wellness: 'The 7 Minute Back Pain Solution'

By Loren Grush

Published May 02, 2012

FoxNews.com

Having a bad back can be as simple as a daily nuisance or as severe as a debilitating condition. While it’s important to have a strong back, not everyone suffering from back pain needs to take drastic measures to fix the problem.

In his book The 7 Minute Back Pain Solution, Dr. Gerard Girasole, a board-certified orthopaedic spin surgeon in New York City, explains the common causes of back pain and details different exercises a person can do to strengthen the muscles in their core.

What made you want to write this book?

I’m a spinal surgeon, but there’s never been a concise go-to article about how to strengthen your back. In therapy places they had different exercises, but nothing was very to the point.

Cara, my co-author, was a patient of mine, and I thought she needed surgery. But one day I saw her in the gym, and she looked great. She told me she had designed these exercises to help her back, so we decided to both write a book about it together.

How prevalent is back pain in America?

In the work place, 93 million work days are lost every year due to back pain, resulting in $5 billion in health care costs. Plus eight out of 10 people will have back pain at some point in their lives. Not all will end up having surgery, but back pain is one of the leading causes of people losing time at work.

Back pain is the also one of the leading causes of relationship problems, medication abuse and more. If people don’t treat it, it can become a chronic problem that can significantly affect the quality of their life.

What are some suggestions in your book?

Since I’m an orthopedic spine surgeon, I’m the one that gives you concise instructions on stretching the key muscles that attribute to low back pain. The book encompasses every walk of life: How to run with back pain, play golf, have sex - everything. My job as a surgeon was to explain why you have back pain and the myths surrounding it, like that you’re doomed and need surgery. Fifty percent of the battle of back pain is understanding it.

The rest of the book contains easy routines to follow written by Cara. These are exercises you can do in your home, workspace, in the car and anywhere else. It’s designed for anybody: if you have chronic back pain, post-op back pain or people who just want to strengthen their backs in general.

What are the key muscles people should focus on?

The key to understanding your lower back is to focus on the core muscles. The core muscles encompass the abdominal muscles, pelvic muscles, hip muscles and lower back muscles. All of these muscles work together to provide all of your daily motion. So proper body movement require a strong core. The biggest misnomer is that when you work your abdomen, you work your core, but you’re really just working a third of your core. When the core is weak, meaning one of the other muscles is not working properly, it can result in pain or injury.

We coined a phrase in the book called ‘back mindfulness’ and how crucial your back is for every move you take. People have to understand that from the moment you wake up in the morning to when you go to bed at night, you’re using your back.

Any other tips?

In the seven minute stretches we outline, you’re stretching each one of these muscles for a minute per stretch. Everybody has the time to do this. We make them very simple and easy to do anywhere.

The cost of lower back pain is expensive and can greatly impact your life. You don’t need any kind of gimmicks or additive equipment, you can just use this book as a guide. It’s a great guide for your specific problems – shoveling snow, travel, how you pack your bag, etc. It’s simple to read and simple to understand.