A. Presenters: John Diehl, J.D., Dave Feinwachs, J.D., Bob Geist, M.D., Steve Parente, Ph.D., MPH.
Attendees: Dan Zismer, Rick Morris, Dave Racer, Darrin Rosha, John Black, Lee Beecher, Merlin Brown, Charles Silver, Wayne Liebhard, Craig Wax, Ted Fritsche, Bob Koshnick.
B. RWG Introductory remarks [Your editors’ opinions are enclosed by brackets.]
Dr. Geist outlined why we meet. It’s about eliminating the corporate practice of medicine (CPOM): The CPOM has caused damage to professional personal patient care and uncontrolled inflation. Four possible means for restoration of an affordable retail medical marketplace are to be discussed.
Uncontrolled Inflation. In 1988, the premium inflation rate was 18%, despite federal government attempts to ration care using HMOs (1973) and hospital diagnosis group (DRG) payments. (1982 The 18% inflation rate by 1993 drove American businesses to put their employees into managed care organization (MCO) corporate care. This resulted in an over 3000% increase in HMO bureaucracies and relative miniscule increase in providers of care by year 2009. HMO Draconian rationing of care drove down premium inflation to near 1% but created intense patient hostility. Many states passed patient protection legislation, and the HMOs stopped Draconian rationing. The result was that premium inflation rates increased to 15.5% by 2003. Congress reacted by creating HSA-HDHP indemnity insurance
Retail Medicine Eras. He noted that there were two eras of inflation-free retail medical markets: from 1875 to 1965 when patients were the “single payer” and prices of services and insurance well known. The second from 2004-2009. HSA-HDHP indemnity insurance almost drove out of business the more expensive HMO “Plans” comprehensive coverage. In 2009, Obama stopped the HSA-HDHP program expansion through regulation.
Dr. Geist noted that the meeting was crafted to explore means to eliminate the CPOM and its high cost, and then to speculate on the nature of a restored retail medical market; what would it look like? Would it fix uncontrolled MCO industry inflation and damage done to personalized care by corporate care?
C. The program:
1. John Diehl, JD, discussed the damage done to patients and professional care when corporations, not doctors, practice medicine.
[Editor’s note: John has given us an excellent brief on his views on the CPOM (see attached). John just received the Lifetime Achievement Award from the Minnesota Bar Association! He is about to have a book published titled: Medicine! To Make the Health System Well.]
John started the meeting with a strong argument on why the Corporate Practice of Medicine should be outlawed in the United States. Professional ethics require that physicians must act in the sole interest of their patients. Physicians employed by corporations have a duty to work for the benefit of their employers, and the employers have an obligation to work for the financial benefit of their stockholders causing irreconcilable conflicts of interest. We collectively have destroyed the U.S. healthcare system and physicians by applying a flawed public health approach to personal medical care services.
Here as some important statements in his attached brief that capture the heart of his arguments:
“To use plain language, as did the Minnesota Supreme Court when it adopted the corporate practice of medicine prohibition in 1933, “There is no place for a middleman in the doctor-patient relationship.”
“To accomplish this the most important and immediate need is to prohibit the corporate practice of medicine because the corporate practice exploits patients and it eviscerates the medical profession.”
“The solution is to amend the federal ERISA law to prohibit the corporate practice of medicine in ERISA health plans, and to allow the states to adopt complementary regulations on a state-by-state basis.”
2. David Feinwachs, JD, PhD, discussed how 1115 waiver fraud helps make the CPOM to financially prosper.
David, the former general counsel for the Minnesota Hospital Association, gave an impassioned plea that widespread fraud in Minnesota needs to be addressed and eliminated. He suggested that it was a malignancy that is destroying the practice of medicine. The goal of corporate practice of medicine is to extract as much money as rent seekers as possible from the system. His thesis is that the way to destroy the corporate practice of medicine is to cut off the flow of dollars from how the present system is set up.
Much of the fraud is being done through 15 Minnesota 1115 waiver programs which are designed to bring in inflated federal funds that can then be defrauded. 1115 waivers allow programs to not be fee-for-services but rather can be provided in a prepaid or alternative fashion. Medicaid in Minnesota is essentially a cost-plus program, where the funds spent one year are reimbursed the next year, with a guaranteed yearly increase built into their contracts.
Managed care organizations claim they are building up risk-based capital that is supposed to be held in reserve. Instead of 150 to 200 percent risk-based capital some of the managed care entities are demanding 1000 percent levels. The oversight or supervision should be provided by the Minnesota Department of Human Services, but there are no audits. What seems to be happening is that these funds are in part being split fifty-fifty with the state of Minnesota. This has been going on since 2005 to an estimated tune of twenty billion dollars diverted.
This fraud could be stopped with the stroke of a pen, if President Trump cancelled all Minnesota’s 1115 waivers. Cutting off the massively inflated Medicaid funding would kill some of these CPOM entities and winnow down others through natural selection. Fourteen of fifteen programs have recently been halted by Governor Walz, but PMAP Plus continues to be funded. Stopping this along with the others could result in severe political repercussions for the Democratic party that has overseen these fraudulent programs.
Minnesota forces Medicaid recipients into one of four medical entities. These entities and the associated hospitals that depend on these clients depend on the 1990 Ryan White CARE Act 340B Drug Pricing Programs for their survival. These entities receive drugs at steep discounts of fifty to ninety percent off, which they then resell at retail prices to people with insurance. A bill (SF 404) was proposed that would give Medicaid patients the ability to choose fee-for-service. It had a fiscal note that the state would save $24 million if ten percent of the Medicaid recipients chose fee for service instead of the four mandated entities. Hennepin County Medical Center among other hospitals demanded that the bill be killed because they would lose $200 million a year. It was killed in the omnibus bill committee after overwhelming bipartisan passage of SF 404. There is no requirement to report or monitor 340B funded drugs.
David also noted that we need to eliminate Certificate of Need (CON) laws.
[Editor’s note: I (Bob Koshnick) was the physician representative of fourteen northwestern Minnesota counties for the Min-Dak Health Systems Agency set up by the National Health Planning and Resources Development Act of 1974. Essentially this act made it impossible for small clinics such as the one I was in to expand because we couldn’t afford going through the CON process, which ultimately allowed two medical systems (now called Essentia and Sanford) to dominate as a duopoly in the entire Northwestern and Western part of Minnesota. North Dakota dropped CON laws. Minnesota replaced it with an even more draconian corrupt Minnesota Department of Health process.]
Dave also promoted the concept of allowing private (physician or otherwise) health care entities. Not doing so allows domination of “non-profit,” entities that allow enormous administrative salaries because they call their “profits” reserves, but do not have to pay property or state taxes. But we do allow private equity enterprises put together by non-physicians whose sole purpose is to extract money as rent seekers from medical care. Both CON and restrictions on ownership reduce competition and increase prices by allowing regional monopolies to develop. It was also mentioned that since the 18 pages of Medicare legislation passed there were only 18 pages of federal regulation. Now there are over 100,000 pages of regulations for physicians to negotiate.
John Diehl reminded us that the Health Maintenance Act (HMO) of 1973 overruled all state laws that identified HMO as the Corporate Practice of Medicine. This opened the floodgates for corporations to take over the provision of medical care in the U.S.
John identified Miles Lord as the Minnesota Attorney General who wrote the opinion that nonprofits did not violate the CPOM laws in Minnesota. Although this pertained to Group Health of Minnesota, the result of the opinion has been the massive consolidation of medical care into nonprofit entities who by buying up most of the private clinics now have very little competition and are free to charge whatever their CFOs suggest they charge for their provision of medical care services. This is a recipe for fleecing the public since there is no medical care price transparency and ninety percent of medical care services are paid by third party payers, so people do not care about costs.
3. Dr. Robert Geist presented pending MN Medicaid Reform legislation (SF 1261). It would eliminate MN Medicaid HMOs practicing medicine and insurance without a state license. The bill is an HSA-like (Family Medical Account—FMA) program. It would create an outpatient retail market for enrollees.
Follow The Money. An adult enrollee would have $2500 on a debit card for onsite clinic payment of goods and services. In case of serious ill health, the card never runs out of money—the state pays all catastrophic expenses. Program enrollees would for the first time have equality at the clinic door with their richer cousins. Onsite payment eliminates clinic accounts receivable and eliminates the need for any 3rd party managed care organization (MCO). With prudence and good luck in health an enrollee at the end of a year would have unspent savings banked, creating a potential financial bridge out of Medical assistance. The savings would be available for buying services or medical insurance as independent workers. Budget neutrality, since in the past any money saved at the end of the year would end up in the HMO’s pocket.
The Look of a Retail Market sans HMOs? Geist speculated that when American families controlled their own medical budget, the then irrelevant HMO/MCO industry titans would quickly evolve into lean companies selling indemnity insurance contracts and into renting office space to staff clinicians.
For example, hospital ACO corporate staff could evolve into large multispecialty professional practices, or into small groups of independent multi-specialty clinics of various sizes. Alternatively, specialty clinics may evolve into independent practices, primary care, surgical clinics, internists, pediatricians, and so forth. Geist predicted that specialty surgeon clinics would thrive, they already do. Similarly, there would be an increased demand for monthly direct primary care contracts and for annual concierge contracts.
Millions of American families would be king in the retail medical marketplaces controlling their own medical budget compared to now when a few politically enabled self-interested management barons arbitrarily budget distribution of patient care and its rationing. American families would again be the “single payer” with the ability to choose a physician, hospital, and insurance policy of their choice.
He also predicted that private sector employers out of financial necessity would return at some time to funding worker fringe benefits with affordable HSA-HDHP-like insurance as happened between 2004 and 2009.
Inflation Question. When somebody like me pontificates about controlling medical premium inflation rates, always ask this question: Why in 2024 did MN av family medical insurance cost $25,572 and Family av auto insurance cost $2,581? The usual assumption, not mine, is that the culprits driving up costs are the big mac snacking, smoking, beer drinking self-indulgent patients and their greedy enabling doctors.
My answer is that the $20,000 gap is mainly the high cost of 3rd party pre-paid cartel-like corporate bureaucracies profiteering from rationing care and other scams or the result of corporate incompetence Why? The lack of consumer prices in pre-paid plans means there is no price feedback, something present in all ordinary retail marketplaces except medicine as it is now a government-like macroeconomic sector with fixed budgets, cartel-like price fixing and production of services (the CPOM) . Elimination of the CPOM creates the opportunity for developing into the evolutionary nature of all no-inflation retail markets. Medicine now is the exception. It is the victim of grandiose government social engineering (for “cost control”) causing internal inflation while also victim of external inflation as are all others. Today, medicine suffers both forms of inflation.
Discussion. The question was asked as to what would motivate politicians to vote for the MN FMA bill. One reason is that the fiscal note for a pure FFS Medicaid system (old SF 404) had a very favorable fiscal note in 2023 and overwhelming bipartisan support.
The other reason is that it would engender cultural change; poor families would have money at the clinic door similar to their richer cousins. The Connecticut (CT) Medicaid experience without HMOs was that overhead decreased from 12% to 5.2%.
Large CT program savings occurred when patients shifted ordinary care visits from costly ostial ERs to newly opened local clinics when fee rates were increased to Medicare levels. In about 2010, CT managed care organizations had dropped out of Medicaid rather than open their books for public audit. Bob wondered if the Connecticut approach to forcing managed care organizations to open their books is a way to begin eliminating MN Medicaid HMO hegemony.
4. Prof. Stephen Parente, PhD., MPH, MS, Associate Dean, Carlson Global Institute, Professor and Minnesota Insurance Industry Chair of Health Finance at Carlson.
Attached are two papers by Professor Parente
“Health Savings Empowerment Act. A Market Based Alternative to Medicare for All.”
“Expansion of HSA Eligibility Under the OBBB Act to Improve Marketplace Coverage, Affordability, and Access.”
Professor Parente has been involved in a government initiative to require medical care entities as of July 1, 2022, to have price transparency updated monthly. One reason for monthly reports being required is it could identify collusion between health plans that could then be prosecuted by the DOJ antitrust division.
He used United Health Care as an example of a corporation that put out 63,000 pages of one month’s price codes where every provider had a full listing of CPT codes whether they did them or not. He used the example of social workers having a code for coronary artery bypass grafts (CABG) procedures. This by intent made the price files useless. There seemed to be coordination between insurers to do this. Steve is in Washington, D.C. to formulate another regulation to require annual utilization reporting to counter this ploy. He expects that it will bring the files down to half a percent of their present size.
Steve has also been working with the Trump campaign to design a plan to use the roughly $120 billion of ACA premium tax credits in the individual market to create a catastrophic plan for anything over $25,000. There are concerns among some conservatives that this would create a prelude to national health insurance that he thinks that concern could be countered by properly written regulations. The rest of this considerable amount of money could then be used to create health savings accounts (HSA) for the rest of the uninsured population that would include catastrophic coverage. See the attached Health Savings Empowerment Act article for more details. The biggest obstacle in Washington D.C. to this is the Pro-Life movement which is concerned that people would use this money to pay for abortions.
Steve also pointed out that the One Big Beautiful Bill Act (OBBBA) moved the age that people were allowed to buy catastrophic health care plans from age 30 to age 64 as of 2026. See the attached article on the Expansion of HSA Eligibility Under the OBBBA to Improve Marketplace Coverage, Affordability, and Access. These catastrophic plans are being modified to provide free primary care and under certain conditions (for example diabetes) secondary care and medicines.
The net effect of the catastrophic plans pulling high medical care users out would be to lower the cost of insurance to people without major chronic conditions or catastrophic events. It may well provide better care for high risk, high utilizers who are seen in the Emergency Rooms by putting them into a catastrophic plan that would pay for further care of their conditions. This, he suggests, is better than the Emergency Medical Treatment & Labor Act (EMTALA) that simply requires hospitals to cover individuals regardless of their insurance coverage or ability to pay.
The budgetary impact is neutral in that it simply uses the ACA tax credits. There are also plenty of monies as noted above by David Feinwachs that could be extracted from the fraud, waste, and abuse of Medicaid. Illegal aliens would have to be handled differently. Steve also noted that our own Peter Nelson from the Center for the American Experiment is Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare & Medicaid Services (CMS). As the Deputy Administrator he oversees the Affordable Care Act (ACA).
The president’s shot across the bow tweet on Truth Social suggesting the ACA monies should go directly to the people rather than to the health plans may have stopped the government shutdown. The health plans, afraid the ACA gravy train might end, wanted the Senators they financially support to stop the shutdown before the president’s idea gained further traction.
Steve also pointed out that everyone could have a catastrophic health plan if the ACA money went to subsidize their purchase. The money left over could be used to help people set up and then fund HSAs. HSA money in turn could be used to purchase direct primary care (DPC) or direct specialty care. This could open the door to people questioning why they are spending all that money on health care insurance when they could be simply buying catastrophic plans with the triple tax advantage of owning HSAs.
Steve also mentioned his myMedVita © app that he has developed for iPhones that put medical care prices out there for free. He notes that the price variation is enormous between providers. People should be encouraged to shop. Unfortunately, we have three generations of people who have no idea how to shop for medical care at all since the passage of Medicare and Medicaid. That needs to change if we do not want health care to blow our economy apart.
Steve opened it up for questions.
If prolife is the main opposition to funding individual catastrophic coverage and HSAs, the prolife movement should want transparency on 1115 waivers given states because the state may be using those dollars to fund abortions.
Steve asked Dave Feinwachs to send the 1115 waiver information to him so that it could be sent to a different level.
Prof. Charles Silver noted that there is no federal system that can be set up that will not be gamed. He was delighted to hear the proposals on giving money to consumers, which scared the hell out of insurers. He states that first party payment is the least open to gaming. Government involvement could be shut down by giving people tax credits or money into their HSAs. Consumers through the markets would then determine how medical care dollars would be spent. The mentality that needs to be overcome is that elites tend to feel they know what is best for consumers even though these decisions are highly individualized and one size does not fit all. Putting consumers in charge is the way to let markets work. He suggested that catastrophic coverage of at least $25,000 should instead be replaced with a menu of levels of coverage.
Steve was asked how far Senators Scott, Graham, and Cassidy are on their health care reform bills. He suggested that it is unclear how far they are from legislation. He notes that it is also being discussed in the house. There are ways to transfer money directly to individuals. This was done with the COVID paycheck protection plan, but it is also done with social security and earned income credits.
Steve suggested that there needs to be a lower floor on the required level of catastrophic coverage in response to the concern about an arbitrary catastrophic limit of $25,000. He feels that this is a limited market of maybe 30,000,000 people, so the opposition from the insurance companies may not be all that aggressive. The Medicare Advantage plans are money makers for insurance companies. Medicaid markets are profit centers but only a limited number of companies make money in that space, although it would be a good idea to reform Medicaid. Employer-sponsored insurance is a big market of 170,000 million people. Time for reform in those markets will come.
The way to make progress is for the president to come out and say that we will eliminate the uninsurance problem. The catastrophic plans are ready for the 2026 market. All that needs to be done is setting up legislation to transfer the ACA premium monies to individuals.
Steve also feels that reform of Medicare is some way off because of the ease of transferring from employment sponsored insurance to Medicare Advantage plans that look the same and are very popular.
It was noted that lifestyle has an influence on eight of the ten most common ailments. Plan options could vary depending on specific needs, e.g. maternity benefits.
It was also noted that redirecting monies to individuals would bring fee-for-service back in. The major benefit of prepaid plans is unquantifiable, so managed care would have difficulty in justifying their involvement.
Steve can be reached at stephen.parente@gmail.com.
Steve mentioned the app that he has been working on for price transparency, Mymedvita.com ©, a nationwide price transparency tool. Steve explained the difficulties in setting the app up and the difficulties with making a business out of it. At this point he considers it a public service to promote price transparency and consumerism in healthcare.
Prof. Charles Silver suggested that the system is badly designed if one must force people to provide prices. Mr. Silver expressed the belief that direct payment price transparency would take care of itself.
Prof. Silver suggested we redesign medical financing along the lines of social security, the child tax credit, and aide to families with dependent children by giving money directly to people. That could be used as arguments against the prolife concerns of directly given money to people. He also questioned why people accepted these other programs but not one for health care, suggesting that if people paid money into a health care fund redistribution would then be viewed as social security is.
Dave Feinwachs suggested that lack of transparency should offend everyone. Direct payments for medical care that would require price transparency would solve this concern.
Darrin Rosha had not heard of prolife impact but suggested that it was probably limited. Darrin also commented on many cultural changes such as physicians no longer wanting the autonomy of independent practices, the acceptance of nonphysician “providers,” and people’s acceptance of corporate provider systems for their medical care. He noted how premed students at Carleton went from most expecting to go into independent practice to all expecting to being employed. Darrin went on to point out that change is hard because the entities invested in the present system will usually be able to prevent the system from changing particularly in view of our acceptance of indefinite deficit spending that keeps the present system afloat. Darris suggests the big issue is how to bring about change. A brief discussion followed related to why change will be difficult.
D. [RWG] Meeting Summary:
[We addressed Eliminating the Corporate Practice of Medicine (CPOM) and considered various paths to achieve affordable replacement. The goal: restoration of an affordable Retail Medical Marketplace of which there were two past eras.
The Meeting Consensus: The consensus was that the Corporate Practice of Medicine (CPOM) ought to be eliminated because inflation was uncontrolled and quality of personal patient care dubious. It was also evident that there is more than one path to a fix, namely implementation of a retail marketplace advocated by Professors Charles Silver and David Hyman.[1][2]
All retail marketplaces are where American families are king, not as in medicine today where powerful massive costly crony corporate cartel bureaucracies profiteering from ratioing prepaid goods and services while setting the price and producing services. That’s what monopoly cartels do. That’s why monopolies are outlawed. American cartels happen when regulators wink at monopoly formation.
Absent corporate cartels practicing medicine, is an affordable retail medical marketplace replacement attainable? Why not?
Eliminating the CPOM. Four means of eliminating corporations practicing medicine were discussed. John Diehl’s ERISA law reform. Dave Feinwachs’ repeal of 1115 Medicaid waivers that have empowered the CPOM. Bob Geist favors pending MN Medicaid reform legislation (SF 1261) that would eliminate managed care corporations by creating an outpatient retail medical marketplace for enrollees empowered with money on a debit card for onsite payments. Steve Parente’s idea is for empowerment of American families through legislation that favors free choice of HDHP-like insurance and HSA subsidies. Please review the details in the minutes and attachments.
Implementation. If implementation to replace corporations practicing medicine is successful by some or all of these 4 compatible ideas, an affordable retail medical marketplace could be achieved. Two past eras of retail no-inflation medicine (1875-1965 and 2004-2009) document that medicine, like all other retail market sectors, is affordable absent external market inflation.
Eliminating corporations practicing medicine sounds like a simple goal and attainable. All present tonight noted that the fight will be arduous. It will also be good to remember that grandiose complex reforms are the enemy of political viability. Keep it simple….
Again, the Inflation Question. When somebody like me gets up and pontificates about controlling medical premium inflation rates, always ask this question: Why in 2024 did MN av family medical insurance cost $25,572 and Family av auto insurance cost $2,581?
The conventional assumption, not mine, is that the culprits driving up costs are the big mac snacking, smoking, beer-drinking self-indulgent patients and their greedy enabling docs. The managed care industry mantra is that culprits must be disciplined by wise corporate managers.
My answer is that the $20,000 gap is mainly the exorbitant cost of huge 3rd party pre-paid cartel-like corporate bureaucracies profiteering from rationing care and other scams. If American families control the money and pay directly for services (FFS), the consensus was that fraud could then be all but eliminated and the system affordable.
My Conclusion. Medicine becomes affordable when the CPOM is replaced by a retail medical marketplace where American families are king. RW Geist MD.]
Our thanks are to all participants in this meeting. Each is capable of action to eliminate the CPOM and to restore a retail medical marketplace of empowered American families. This was proven in the past to be affordable.
The meeting recording by Koshnick and slides of presentation by Geist are available on request; the latter include meeting introduction, review of pending MN Medicaid Reform legislation, and speculations about the look of a retail medical marketplace. See how to get them below.
Respectfully submitted.
Robert W. Geist MD
763-276-8092; rgeistmd@comcast.net
and Robert Koshnick, M.D.
218-849-2426; bob.koshnick@gmail.com
P.S. Several people have requested the video of the meeting. If interested, let me know at bob.koshnick@gmail.com
P.S. Several people have also requested copies of my 3 sets of slides. Let me know if you want copies at rgeistmd@comcast.net
MN Physician-Patient Alliance Diehl ERISA amendment. Eliminating the Corporate Practice of Medicine (CPOM); A Path to an Affordable Retail Medical Marketplace?
- Silver C, Hyman DA. Overcharged: why Americans pay too much for health care. Cato institute, 2018.
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Silver C, Hyman D. You Aren’t as Sick as Government Claims Give Medicare money directly to patients to solve ‘upcoding.’ WSJ. Sept. 4, 2024
https://www.wsj.com/opinion/you-arent-as-sick-as-government-claims-medicare-upcoding-fraud-6c08eb35
