UNFINISHED BUSINESS: first, the boards, MOC, and rapacious financial conduct

Under Unfinished business we wryly observe that MOC (Maintenance of Ceritification) remains viable and unwell. We now know without doubt that ABMS specialty board physicians and executives are profiting from MOC fees which, allegedly, are supposed to support the not-for-profit educational mission of our traditional (since 1922) specialty boards. In fact, reasonable argument can be made that the original not-for-profit motif of the boards has been converted into one of personal gain that belies the legal enablement of the boards under 501(c)3 rules and regulations. What is called for now is an investigation by the FTC (for possible restraint of trade) and by IRS (are the boards conducting themselves in conformity with the law governing 501(c)3 organizations)? 

Here's some grist from the mill, in this case, from the 990 Form filed by the American Board of Psychiatry and Neurology (ABPN) in 2015:

The MD president was allocated $613,314 as "reportable income from the organization (W-2/1099-MISC)." In addition his "estimated amount of other compensation from the organization and related organizations" was $322,686.

Four ABPN Directors are listed as having received "reportable compensation" ranging from $175,947 to $246,012. In addition, the same four got additional "compensation from the organization and related organizations" ranging from $73,914 to $83,546.

Two managerial remunerations were reported as $111,661 (with an additional $50,351 listed as "other compensation") and $106,552 (with an additional $37,608 listed as "other compensation").

The VP of Research came in for $286,384 plus $99,668 for "other compensation"). 

Other remunerations were equally fat.

Here's the point: if a 501(c)3 organization has high enough expenses including salaries it is obvious that it can't make a profit if all of the money it takes in gets distributed to private hands inside the organization in the form of expenses. In this way, a not-for-profit organization can make more money for its officers, directors, trusteee, and others than can a true for-profit business.

Is this the way we want our ABMS boards to function?

References

"Specialty Boards Profiting from Physician MOC Fees," MEDSCAPE, 08/01/2017

"Medical Staff Votes Against Mandatory MOC," WORKCOMPCENTRAL, 01/22/2016

Form 990 (2015), Part VII, Section A. Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees, page 8.

ARE THE STAKES AT MOC (MAINTENANCE OF CERTIFICATION) TOO HIGH TO GIVE UP?

Scandalous overreach by the proponents of Maintenance of Certification (MOC) invites investigation by the Federal Trade Commission (FTC) and by Internal Revenue Service (IRS). 

FTC should determine whether or not trade is being or is likely to be restricted by the tenets of MOC doctrine and its financial operatives. IRS, meanwhile, should examine whether or not the ABIM Foundation meets IRS 501(C)3 requirements. The question is whether or not there is reliable evidence that MOC revenue is being diverted into the pockets of selected individuals.

Many observers think that is the case and that the amount of money paid out in personal remunerations seems exorbitant. This finding forces the question, namely,  to what extent the ABIM Foundation is a charitable organization or a well heeled 501(c)3 enterprise. 

Here are some facts and figures:

The president & CEO of ABMS (American Board of Medical Specialties), according to IRS Form 990, received total compensation of $779,487 for tax year 2013;

The ABPN (American Board of Psychiatry and Neurology) CEO in 2012 received total compensation of $843,591 -- according to IRS Form 990 for that year;

The ABIM (American Board of Internal Medicine), schedule J, Form 990, for 2012, reports base compensation for the president-CEO as $628,952;  

Reported base compensation for Senior VP/COO, ABIM, was $464,747;

Base compensation for the Sr. VP/CIO, ABIM, was $382,092;

Base compensation for the Senior VP/COO,  ABIM, was $326,520;

Base compensation for Senior VP/CFO,  ABIM, was $452,630.

-- not too shabby especially when one keeps in mind that these figures do not include income from what IRS refers to as "related organizations". In order to see this additional money jockeying, just go to Schedule J, IRS Form 990, and look at lines i and ii -- add 'em up and weep. Not to worry. Increased fees down the road re MOC will take care of any shortfalls. 

Readers are invited to check out this data by looking up Form 990 information. We expect to add to this report from time to time so stay tuned.  These figures show why MOC will not be easily vanquished -- the stakes are too high.

WHY DOES THE AMERICAN BOARD OF INTERNAL MEDICINE FOUNDATION SHIFT ASSETS OVERSEAS?

More and more, healthcare is joining the industrial complex, read industrial-medical complex, similar to military-industrial complex, or, by way of abbreviation, MFF (Money First and Foremost).  Here's part of the inside story about ABIM: 

1) The ABIM founded the ABIM Foundation;
2) The ABIM Foundation shares its home address in Philadelphia with ABIM;
3) The ABIM Foundation's assets are recently reported to be $81,831,953;
4) The ABIM Foundation was initially funded by $55 million reportedly derived from examination and testing fees -- the $55 million came from the original ABIM which touted re-certification as though it were a public service or an effort to promote the public good by upgrading medical practice.
5) In effect, however, much of the money has been diverted into the waiting pockets of CEOs, board presidents, and other key officers and employees. By way of example, last year Dr. Richard Baron's remuneration was $812,000.  Meanwhile, countless physicians around the country were struggling to come up with enough money to "re-certify." To this extent, physicians with bona fide credentials were being squeezed out of practice in a form of trade restraint evidently not appreciated by the Federal Trade Commission (FTC). Organizations operating under the 501(c)(3) banner such as ABIM now appear to be working for goals not distinguishable from for-profit entities.

That's not all: A CONDO HERE, AN OFFSHORE ACCOUNT THERE ... 

6) The ABIM Foundation owns and/or operates a $2,356,267 condominium in downtown Philadelphia. The money to buy same was derived entirely or in part from the fees charged to hapless physicians who believed they had to recertify to stay in practice.

7) Now as the heat gets hotter, we're advised that the ABIM Foundation has transferred about $6.5 million into offshore accounts in the Cayman Islands and Dublin.

8) At a symposium in California about one year ago a document was distributed showing how one former ABIM physician officer was awarded stock options.

What's needed? HAS FTC AND IRS GIVEN PASSES TO ABMS ORGANIZATIONS? 

The Federal Trade Commission (FTC) should determine whether or not trade is being restricted; IRS, meanwhile, should examine whether or not the ABIM Foundation meets IRS 501(c)(3) requirements. Are its earnings lining the pockets of private shareholders or individuals?

For many observers the answer is yes. The amount of money paid out in personal remuneration appears exorbitant if the ABIM Foundation is a non-profit or charitable organization. It appears to many observers, this one among them, that IRS needs to review the tax classification of the ABMS boards and their associated organizations. At the same time, FTC needs to assess to what extent the covenants of MOC (Maintenance of Certification) are trade restrictive. 

References

Dr. Wes: "Standing up for the practicing physician"

ABIM Foundation Moves Assets Offshore, 5/20/16 

Change Board Recertification

Anti-MOC

Op-eds, The Weinmann Report, since 2012

Maintenance of Certification (MOC) and the IRS: where money and power meet

We've heard a lot lately about MOC and its finances: in 2012 the president and CEO of the American Board of Internal Medicine (ABIM) pulled down $628,952 and of that amount $465,687 was "base compensation" while $44,742 was "bonus and incentive compensation" These figures come from line (i) of Part II,  Schedule J, re "officers, directors, trustees, key employees and highest compensated cmployees" as listed in ABIM's IRS 990 report, 2012. 

On the same line in Schedule J the president and CEO is listed as having received $83,654 in "retirement and other deferred compensation." We aren't told what type of compensation format comprised this prize, e.g., was it "defined benefit," 401-K, or something else?

To that was added $34,869 in "non-taxable benefits."

The total for Line (i) for 2012 was $628,952.

Then comes Line (ii): base compensation was $155,229. "Bonus and incentive compensation" was $14,914. "Retirement and other deferred compensation" was $27,885. "Non-taxable benefits" was $11,623. The total for line (ii) was $209,651.

The total for lines (i) and (ii) is $838,603. Not bad, not bad at all for an internist!

Plus there are 15 others at or near or above the $200,000 level. 

Where does this money come from?

One answer is possibly from donors, e.g., in 2012 the ABIM Foundation contributed $245,000. The Joshiah Macy Jr. Foundation contributed $151,632 while the Medical University of South Carolina contributed $62,789.

Another answer is that the majority of the money comes from MOC, testing, courses, and programs put on by non-board independent but nonetheless contingent organizations that charge for course attendance that in many cases contributes to MOC recertification. The point is that MOC in its current format cannot be sustained without MOC fees paid by doctors who submit to the programs as though they were necessary to maintain certification in a country where CME (Continuing Medical Education) is available in all 50 states.

The continuing clamor to set MOC aside in favor of alternative programs such as NBPAS (National Board of Physicians and Surgeons) is growing. It won't be the first time that lust for power and money brought down a financial empire, this time possibly the American Board of Medical Specialties (ABMS) where, not incidentally, the president and CEO took down annual compensation of $779,487 in 2013 (Form 990, Schedule 3, Part II -- Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees). 

In the ABMS case the declared "base compensation" was $681,188 to which was added $12,500 in "bonus and incentive compensation," $71,000 in "deferred compensation," and $14,799 in "non-taxable benefits." The 990 Form doesn't state if the "deferred compensation" is in the form of "defined benefits" or 401-K or other. 

Finally, our observation that some Form 990s don't include all of the officers, directors, trustees, key employees, and highest compensated employees is quizzical. Why not? 

MAINTENANCE OF CERTIFICATION (MOC): a rising business opportunity!

Continuation of our Money and Medicine Series

Maintenance of Certification (MOC) has become the latest repository of profitability for physicians and others with an ear to current business practices in America. The idea put forth is that MOC is useful for making sure that physicians keep up to date -- never mind that all 50 states have already imposed mandatory Continuing Medical Education (CME) that requires physicians to take post-graduate courses to maintain licensure. These courses are expensive and often require travel. These programs have generated money for the entrepreneurs who run them. Now the specialty boards want in on the loot. The American Board of Internal Medicine (ABIM) is an example of the extravagance to which these programs may go.

If we study the IRS Form 990 for ABIM for Tax Year 2012, we see that the ABIM president and CEO received base pay of $465,687 to which was added $44,742 in "bonus and incentive compensation ." One may ask with reasonable curiosity why a base pay of nearly one-half million dollars would need another forty-four grand for "incentive compensation." We'll have to put that question to the ABIM board. We may presume with reasonable medical probability that it was not to avoid a "consolation" stipend.

However, that's not all. In addition to the $465,687 for base pay and the $44,742 for "bonus and incentive compensation," the president and CEO was also awarded $83,654 in retirement and other deferred compensation, plus "non-taxable benefits" of $34,869.

The total for this compensation package was $628,952. not bad for not even having to lift a scalpel or a stethoscope! And, yes, we have similar information for other boards, more on the other boards in future issues. In the meantime, know that there were 15 or more persons at ABIM who were compensated $190,000 or more. Impatient scanners of this information may on their own look up Form 990 for each of the specialty boards and for the ABMS itself (American Board of Medical Specialties). In short, ABIM has itself become a rising business prospect.

As for the purported usefulness of MOC, one respondent to this unproved assertion wrote  (viz., blog of Dr. Wes, 5/14/15) that "there is no evidence MOC improves performance ... this is just poor marketing and another ABIM/ABMS fabrication."  The Florida Medical Association (FMA) voted that MOC should not be used as part of the criteria that hospitals use to designate medical staff. More  state medical associations should follow this example. In the meantime, MOC appears overrated as an educational tool and underrated as a money-making machine.

References

"Maintenance of Certification Controversy," Dr. Wes, drwes.blogspot.com, 05/14/15

"Do We Really Need Physician Re-Certification Testing? There has to be a  better way," Manisha Juthani-Mehta, MD, www.psmag.com/health-and-behavior, 4/24/15 (this doctor describes having had to spend $1,720 in 2010 for MOC and $775 for the infectious disease exam, a total of $2,495. She states that the current internal medicine exam costs $1,940. This testing is clearly beyond what is necessary and reasonable; however, it makes doctors jump through hoops while enriching the board and its paid personnel including officers, trustees, and directors). 

"When does a $681,000 salary require additional incentive compensation," The Weinmann Report, www.politicsofhealthcare.com, 04/17/15

"Florida Doctors Fight Back," The Weinmann Report, www.politicsofhealthcare.com, 09/18/14

"Do Doctors Expire in 10 years?" The Weinmannn Report, www.politicsofhealthcare.com, 05/12/14

"Maintenance of Certification," JAPS, V. 18, # 3, Fall 2013, by Christman, K.

"Board certification - a malignant growth," JAPS, V. 16, # 2, by Dubravic, M.

"Disillusionment invades medical practice," The Weinmann Report, www.politicsofhealthcare.com, 02/22/14

"How physicians eat their young," The Weinmann Report, www.politicsofhealthcare.com, 02/12/14

"Money and Medicine," The Weinmann Report, www.politicsofhealthcare.com, 07/21/12

WHEN DOES A $681,000 SALARY REQUIRE "ADDITIONAL INCENTIVE COMPENSATION?" Is there a reasonable argument that ABMS and other board salaries are tied into MOC (Maintenance of Certification)?

According to Form 990 from the IRS for 2013 for the American Board of Medical Specialties (ABMS), Lois Margaret Nora, MD, JD, MBA, president & CEO of the ABMS,  got base compensation of $681,188 plus "bonus and incentive compensation" of $12,500 plus "deferred compensation" of $71,000 plus "nontaxable benefits" of $14,799 for a total of $779,487.

Net assets by contrast, pages 1 and 12 of Form 990 are listed as minus $1,238,805.

Of interest is that Dr. Huntoon in AAPS reported $330,000 in remuneration for Dr. Nora for 2012 (see references below) whereas our copy of Form 990 shows remuneration for 2013 of $779,000 -- if we have actually documented a raise, kudos for Dr. Nora.  All ABMS specialists should look over their organizations' Form 990s as a matter of ordinary due diligence. 

According to Form 990 for the American Board of Pyschiatry and Neurology (ABPN) for 2012, Larry R. Faulkner, MD, president and CEO, was compensated at $560,522 for base compensation plus $260,713 for "retirement and other deferred compensation," $22,356 for "nontaxable benefits" for a total of $ 843,591.

Total revenue for 2012 is listed on page 4 of the form in the amount of $17,122,985 (expenses were $12,389,987). Page 10 of the ABPN document, under "Statement of Functional Expenses," shows "assessments of ABMS" in the amount of $687,884. Page 11 shows end-of-year net assets of $65,083,864.

MAINTENANCE OF CERTIFICATION (MOC)

MOC has become one of the most controversial programs within medical practice with a myriad of organizations willing to take it on and offer their own Continued Medical Education (CME) at prices ranging from bargain-level to exorbitant. The point is that the selling of education has become its own business with ABMS boards devouring their own members as fast as greed allows digestion.

When the American Academy of Neurology (AAN) filed a timid letter in protest to ABPN and asked that MOC Part IV be repealed, that organization got the response of feckless organizations everywhere. Doctor Lois Nora, quoted in NEUROLOGY TODAY, 04/02/15, said with pithy candor, "I don't see us moving on that."

Current AAN president, Tim Pedley, MD, is quoted on page one of AAN News, April 2015, as stating that the MOC Part IV "process is unnecessarily cumbersome" as though a less cumbersome inconvenience would not distress AAN. Meanwhile, in NEUROLOGY TODAY, 04/02/15, Pedley practically apologizes for his support of several hundred disgruntled AAN members and seeks to dissociate AAN from ABPN ("AAN is an independent association with no control over ABPN, the American Board of Medical Specialties, or the MOC rationale and process"). It may eventually turn out that the members no longer need AAN and reconsider paying dues.

Meanwhile,  ABPN's $843,591 salaried president and CEO, Larry Faulkner, MD,  timorously stated in NEUROLOGY TODAY, " ... wiping out part of the requirements (he means MOC Part IV) is not something we at ABPN believe we have the authority to do. The American Board of Medical Specialties sets the standards, and unless they decide to change them, we don't have a choice but to follow them." We disagree. ABPN is not supposed to be anybody's subject or hand-maiden.

MORE TO THE POINT: MONEY

As we pointed out above, the ABPN form 990 IRS document from 2012 lists $687,884 as "assessments of ABMS" which itself showed negative net assets for 2013 in the amount of $1,238,805. Under these circumstances it is reasonable to inquire further to what extent fiscal issues between the specialty boards and ABMS may be inextricably intertwined.

References

"Money and Medicine," The Weinmann Report (www.politicsofhealthcare.com), 7/21/12

"How Physicians Eat their Young," The Weinmann Report (www.politicsofhealthcare.com), 2/12/14

"AAN Calls for Elimination of MOC Part IV," AAN News

"Do Doctors Expire in 10 Years?" Workcompcentral, Robert Weinmann, MD, 5/15/14 (In the original AAPS article Larry Huntoon, MD, PhD, pointed out that AAN had scheduled an MOC symposium and that Dr. Nora was to be a speaker but did not feel obliged at the time to disclose as a possible conflict of interest that her 2012 salary at ABMS was about $330,000. AAN then is reported to have told AAPS that no such disclaimer was needed since AAN wasn't giving CME credits to participants)

"Do Doctors Expire in 10 Years?" American Association of Physicians and Surgeons (AAPS News), May 2014 (V. 70, #5)