The Regulatory Speed Trap

Posted on July 9, 2007
Filed Under Wonkonian Rationing |

In their efforts to control the behavior of physicians for the purpose of covertly rationing healthcare, regulators have developed a particularly effective technique that DrRich calls the Regulatory Speed Trap. The first readily recognizable application of this technique occurred during the Reagan administration, in its crackdown on fraud in the defense industry.

When the Reagan Justice Department began its attack, the defense industry was slow to realize what was happening to it. They did not understand for a year or two that the government had suddenly become deadly serious about regulation, or that “business as usual” had become felonious behavior. Federal prosecutors pursued activities that had formerly been tolerated. They applied federal statutes—such as mail fraud and money laundering statutes—that were originally aimed at stopping racketeers and drug pushers. By the time the defense industry awoke to the danger—and began to protect itself by instituting expensive compliance programs and spending millions on lawyers, consultants, and accountants—the government had won criminal convictions against more than sixty firms and individuals.

The government recovered a lot of money that it said had been misused. But the defense industry simultaneously began spending huge amounts of new money on regulatory compliance, and that cost was passed back to their customer, the same government they had paid fines to. How much money the government actually saved is open to question.

There was fraud in the defense industry, and it needed to be investigated and prosecuted. Is there less corruption now? Probably. But the famous $450 hammer incident that set the whole thing off resulted from a silly accounting practice rather than graft. The Army paid only $5 for that hammer. The other $445 was a standard unit charge for administrative overhead that Army bookkeepers routinely added to many items they purchased.

Likewise, a good bit of the fraud and abuse that was uncovered during the government’s crackdown on the defense industry was not fraud in any real sense; it was more accurately the misinterpretation or ignorance of regulations that didn’t make much sense in the first place.

The methods used in the crackdown on fraud in the defense industry establish an easily recognizable five-step pattern that is being repeated in the vigorous campaign against healthcare fraud: the Regulatory Speed Trap.

1. Over a long period of time, regulators promulgate a confusing array of vague, disparate, poorly worded, obscure, and mutually incompatible rules, regulations, and guidelines.

2. Individuals or companies, having to provide a service despite hard-to-interpret regulations, render their own interpretations (usually with assistance from attorneys, consultants, and the regulators themselves), and act according to those interpretations.

3. By their apparent concurrence with (or at least by their failure to object to) the providers’ interpretation of the rules, over time regulators allow de facto standards of behavior to become established.

4. After substantial time passes, regulators reinterpret (or “clarify”) the ambiguous regulations in such a way that the de facto standards now constitute grievous violations.

5. Regulators aggressively prosecute the newly felonious service providers.

This Regulatory Speed Trap is an easily recognized modus operandi for Wonkonians (whatever their political party). It is one of the chief methods by which they are attempting to gain control of the healthcare system.

Basic to the Regulatory Speed Trap is an underlying set of complicated and contradictory rules and regulations. Government regulations tend to evolve away from clarity and toward complexity, so this is a given. Societies have survived despite complex regulations only because bureaucrats have traditionally allowed de facto standards to form under their purview, thus preventing paralysis and allowing society to function within reasonable bounds.

What Wonkonians have discovered is that the tangle of vague regulations underlying this normal way of doing business gives them the means to an end that otherwise might be unachievable. Under a system of complex and contradictory regulations, everyone is always guilty of something. By enforcing strict new interpretations of inherently confusing and traditionally ignored rules (“Here is what we meant all along, and you should have known it”), they can press their own agenda.

Under most circumstances one would expect the regulators to show some forbearance in applying a scheme as draconian as the Regulatory Speed Trap. But Wonkonians have learned that their pursuit of healthcare “fraud” gives them nearly as much leeway as the pursuit of terrorists, and methods that in more normal times might be considered excessive are tolerated and even applauded. The Wonkonians, it turns out, have much latitude in applying the Regulatory Speed Trap.

Federal regulators (and prosecutors) have learned to intimidate American physicians into doing their bidding quite effectively by the creative application of the Regulatory Speed Trap. In every encounter with patients, the wise physician today will consider: Could what I’m about to advise for this patient get me in trouble with the feds?

In later posts we will see examples.

Comments

5 Responses to “The Regulatory Speed Trap”

  1. Trusted.MD Network on September 5th, 2007 8:46 am

    Efficient claims payments is the last thing Medical insurers want…

    Everyone who has ever been stooged by Insurance carriers regarding medical claims, patients and physicians alike, has to read this entry in the Covert Rationing Blog and , of course, everyone has been stooged. DrRich has this great comment describing…

  2. The Covert Rationing Blog » Blog Archive » Wonkonians Send Gekkonians a Message on October 12th, 2007 7:36 am

    [...] of federal agencies, they couldn’t. The health plans are inherently caught up in the great Regulatory Speed Trap. If you’re working in the healthcare arena today, then each and every day, no matter how [...]

  3. The Covert Rationing Blog » Blog Archive » E&M Guidelines and Patient Care on November 28th, 2007 12:45 pm

    [...] nearly as DrRich can tell, all the government’s anti-fraud initiatives actually create new regulatory speed traps for unwary [...]

  4. The Covert Rationing Blog » Blog Archive » Another Way to Run Afoul of E&M Coding on December 4th, 2007 10:24 pm

    [...] coding guidelines amount to just another iteration of the Wonkonians’ favorite gambit, the Regulatory Speed Trap. Nothing particularly new [...]

  5. The Covert Rationing Blog » Blog Archive » Covert Rationing Even Wrecks Socialism on December 11th, 2007 5:50 pm

    [...] traps for “fraud;” and in general, making every patient encounter subject to a web of regulatory speed traps that force doctors to concentrate on keeping the OIG at bay rather than on what the patient needs. [...]

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