My wife is an internist. My brother is a pediatrician at a major academic institution. So was my father. My best friend is a surgeon. I regularly see an internist for my medical care, and I like her very much. I also should mention that this article is an opinion column.
And it is my opinion that the American Board of Internal Medicine (ABIM) has hidden managerial incompetence for years while its officers showered themselves with cash despite their financial ineptitude and the untold damage they have inflicted on the health care system.
That unnecessary first paragraph is necessary because ABIM apparently considers itself the enemy of doctors, since it believes a journalist with ties to physicians (me) must be biased against the organization. I found that out when I recently wrote about a group of nationally renowned physicians who revolted against the ABIM, which certifies doctors as meeting certain medical standards. The roots of the uprising trace to January 2014, when ABIM attempted to expand its program for recertifying doctors, adding boatloads of requirements and fees to be paid by physicians. As a result, the prominent group of doctors formed a competing certification organization, while condemning ABIM’s recertification program as an expensive waste of time that hasn’t been shown to improve medical knowledge or the quality of health care.
In response, ABIM attacked me—claiming that since my wife is a doctor, I have a conflict of interest in reporting about an uprising by physicians—then defended itself with a series of misrepresentations and absurdities. Topping it off, they condemned Newsweek for allowing me to express an opinion in an opinion column.
That told me either ABIM uses the same public relations firm employed by Scientology, or its officials have a lot more to hide. So I decided to dig deeper.
The answer? Whoo-boy, does ABIM have a lot to hide.
First, one clarifying preamble: While ABIM certifies about one out of every four doctors in America, it is not alone. Doctors with specialties unrelated to internal medicine are certified by other organizations—most of which are part of a larger body called the American Board of Medical Specialties (ABMS). While there is anger brewing among these specialists, who also feel abused and cheated, they aren’t fomenting a revolt like the one playing out with ABIM. So while there is plenty to say about the other certification boards, let’s stick with the group that has doctors attempting to organize a coup and why they are so unhappy.
What I found suggests that the primary reason ABIM attempted to expand its recertification process—which set off the uprising—is that the organization has been crippled by accounting games and needs a lot more revenue, fast, to avoid a fiscal train wreck. I also found misleading or false statements in government filings, attempts to withhold public information, damage inflicted on federal science programs and more. ABIM now even appears to be trying to trick Congress into passing laws that would force doctors to cough up cash to cover the organization’s financial follies. It even benefited from something slipped into Obamacare that seems to have been written by ABIM or its lobbyists.
The last sentence says “seems” because, other than saying it complied with the rules on filings with the government, ABIM ignored every question I asked it before writing this column. It wouldn’t even say “no comment.” Even though it’s supposed to be public information, ABIM also refused to provide the 2014 salary it paid ABIM President and CEO Rich Baron, perhaps the most Dickensian name since Dickens. (By the way, from what I’ve learned, Baron received $568,000 plus $135,000 in deferred compensation last year. ABIM will have to officially reveal those numbers in a filing to the government sometime in May.)
Start with ABIM’s Form 990. This is the document a nonprofit organization has to file with the Internal Revenue Service to disclose its activities and prove it deserves tax-free status. In Part IV, which appears on Page 3 of the document, the government asks a simple question on line 4: “Did the organization engage in lobbying activities?” And year after year, ABIM has answered “no.”
Unfortunately, the real world answer is “yes.” According to the Center for Responsive Politics, from 2009 through 2014, ABIM paid $390,000 to Mehlman Vogel Castagnetti, a lobbying firm. Asked about this, an ABIM representative says it complied with all rules governing IRS filings. Maybe. Yet according to Independent Sector, a prominent organization for nonprofits, the words “lobbying activities” in line 4 includes elements as miniscule as holding strategy meetings to coordinate lobbying with others and time spent preparing arguments to be advanced to government officials. Unless ABIM just wrote a check and never spoke to its lobbyists, it’s hard to see how it complied with those standards. (Side note: A random check of seven 501(c)(3)s that paid less than ABIM to lobbying firms showed all of them answered with a “yes” on line 4.)
So what did ABIM spend all this lobbying money on? According to Mehlman Vogel’s filings with the government, ABIM’s lobbyists provided “strategic advice” on issues related to Obamacare, including “physician quality reporting requirements.” And if you haven’t guessed yet, what does the ABIM consider “physician quality reporting requirements”? Maintenance of certification (MOC), the program that so many doctors say is worthless—and that ABIM refuses to show has any impact on “physician quality” with independent research or other science-y stuff.
Did the lobbying work? Yup. Under Obamacare, physicians who participated in MOC through 2014 qualified for an incentive payment. The description of MOC is so specific in the law that ABIM and similar groups in ABMS were the only organizations that met the definitions. In other words, in the first few years of Obamacare, the government was paying doctors to pay ABIM and related certification organizations to participate in a program that has never been proven to do squat.
And now it looks like the government may have been lobbied to create more pressure on physicians to shell out cash to ABIM and its brethren. This time, it’s through a bill just passed by the House called the Medicare Access and CHIP Reauthorization Act. Among its provisions is one where doctors would qualify for a new incentive pay system in Medicare by meeting quality standards established by the government in consultation with certification boards like ABIM. Unless these groups finally acknowledge that MOC programs have not been independently demonstrated to improve patient care, doctors could be subjected to federal coercion to participate in them—and pay the boards more fees—whether they want to or not.
Unfortunately, there are bigger problems with MOC programs than forcing doctors to spend time and money on something that has never been proven to have any value. Instead, they are harming medicine. A recent report by the National Institutes of Health concluded that, with subspecialty board recertifications becoming more time-consuming, many physician-scientists are refusing to go through the process, choosing instead to drop their hospital privileges and end their work in clinics. The report concluded that this “can have a profound effect on the quality of care delivered by large numbers of more general subspecialty physicians who seek their advice and refer patients for consultation.” In other words, not only have certification organizations failed to prove MOC provides any benefit, but scientific experts also say it is damaging the quality of care.
To understand why ABIM is pushing so hard on the MOC you need only look at its accounting. Those numbers say ABIM is in danger of becoming a financial corpse.
“It is just shocking,’’ Charles P. Kroll, a certified public accountant who specializes in health care, says of the consolidated financial statements of ABIM and a related entity, the American Board of Internal Medicine Foundation. “I have never seen anything like it in my 35 years of accounting and auditing experience.”
Kroll says he has no vested interest in his ongoing investigation of ABIM’s finances and has taken on the organization largely out of outrage at what he considers to be its accounting abuses. ABIM made it quite difficult to obtain its audited financials, he says, but the group eventually posted one year’s version on its website. By then, however, Kroll had obtained copies elsewhere and found that ABIM, in that posting, left out many pages without revealing it had done so, a move that hid plenty of its expenses—including salaries—from prying eyes. Kroll disclosed the ruse online, and ABIM quietly reposted the document, this time in full.
What it showed were accounting techniques that would make the illusionists at Enron blush. ABIM and the ABIM Foundation lost $39.8 million on program services in the five years ending in 2013—a nonprofit indeed. Yet during that same time, the organizations paid $125.7 million to its senior officers and staff.
How does any organization with year after year of massive losses continue paying huge salaries? By relying on an accounting maneuver called “deferred revenue.” Until January 2014, ABIM maintained a 10-year MOC program in which doctors coughed up a series of fees. But the payments came before the doctors went through the decade-long process of recertifying, so ABIM counted the money as a liability—revenue it had received for services not yet provided. In other words, in extremely simplistic terms, ABIM was taking advances from doctors for a board recertification owed sometime in the future. And that deferred revenue grew to the point where it reached $94 million as of June 30, 2014. The huge sums of cash were only recognized as revenue when the various services—like a test—were provided.
And there is the bookkeeping magic trick. ABIM is collecting a lot of money up front that it is not recognizing on its income statement and then using the cash to fund the massive losses from the program itself. “Deferred revenue has kept them afloat,’’ Kroll says. “They are in a financial free fall. I have never seen anything so reckless.”
What throws the financial train off the track, unsurprisingly, is lavish spending. Millions have been paid out to senior officers of ABIM, with additional amounts stuffed away in an obscure line in its 990s for “deferred compensation.” Meanwhile, ABIM’s net assets minus liabilities were negative $47.9 million on June 30, 2014; staff expenses for the fiscal year ended that same day climbed 13 percent, or $3.5 million, to $30.7 million. There were forehead-slapping losses too: ABIM purchased $3.6 million in computer equipment in fiscal 2013, then wrote it all off in 2014, proclaiming in a footnote in its financials that the technologies were “no longer suitable for their intended use.”
Which brings us back to the beginning: ABIM’s announcement in January 2014 that it was changing the MOC process into something so onerous and expensive that it set off a doctor rebellion. Footnotes in the audited financials make one thing clear: The MOC revision, which ABIM says it will abandon and revise in the face of the uproar, had nothing to do with improving medical education. It was all about trying to fix the fiscal mess at ABIM by compelling doctors to deliver more cash faster.
Rather than a 10-year program, the January 2014 plan declared that MOC would be ongoing, with doctors required to complete new requirements every two, five and 10 years. Doctors could pay their new fees annually, and ABIM would recognize the money as revenue when it was paid. Money from doctors who prepaid would be counted as revenue evenly, year after year. In other words, if a physician prepaid for 10 years, rather than booking revenue when ABIM provided the certification services, the group would count one tenth of the payment each year.
Had ABIM not been forced to back down on this idea, it was an approach that might have cleaned up the disaster caused by ABIM’s accounting practices—that is, if the group can accomplish that without first falling into bankruptcy. Not even the most secretive organization can keep piling up losses forever while carrying negative asset values on its books. Of course, no one will know what accounting changes ABIM is using to get out of its self-created crisis until next year, when it files its new audited financials, or whether it will continue to rely on deferred revenue.
But there are bigger questions ABIM and ABMS have to consider. Why should doctors be forced to keep ladling out cash and spending time away from their practices studying useless information simply because the ABIM is managerially incompetent? And when will ABIM finally start telling the truth to the doctors it supposedly represents?