Other than one's relationship with a member of the
clergy, no professional relationship is as sacred as the
relationship between doctor and patient, the terms of which are
nobody else's business. Congress and the Clinton Administration,
however, have made a confusing mess of the Medicare law governing
this relationship. Members of Congress soon will have an
opportunity to end this confusion.
CONGRESSIONAL
CONFUSION
AND FEDERAL MISINFORMATION
In
proceedings before the U.S. District Court for the District of
Columbia in the case of United Seniors Association Inc. v.
Donna Shalala, Kent Masterson Brown, consulting attorney
for the United Seniors Association and a prominent expert on
Medicare law, has characterized Section 4507 as
a
clear statute. It says if a doctor wants to privately contract,
that's fine, but he will have to get out of Medicare for two years.
No matter what they say would be the legislative history. And I
must say this was one of those items where I think everyone here
agrees, it was inserted at the last minute. There were no hearings
on this thing. What we have from the floor of the House and Senate
are just totally conflicting things.
Other experts are less charitable. The
American Psychiatric Association describes the provision as
"regrettably ill crafted," and the two-year opt-out as "ludicrous
public policy on its face."
John Hoff, an attorney and author of a new monograph on Section
4507, argues that "Although
the real world effect of Section 4507 is clear, the provision is
genuinely confusing, both in concept and in detail; and it provides
little meaningful guidance to doctors, patients, or even officials
at HCFA."
Even
Members of Congress seem to be confused over its meaning. The debate on the
Balanced Budget Act of 1997 includes no coherent explanation of why
Congress adopted Section 4507. Various Members and congressional
staff employees have released contradictory and erroneous
information not only regarding the previous status of the law and
the right of doctors and patients to engage in private contracts,
but also over the current status of the Medicare law and how it is
to be enforced and applied. And far too many Members, including
those who want to reverse the current policy, persist in telling
their constituents--erroneously--that Medicare law previously
prohibited private contracts between doctors and Medicare
patients.
Nor
is this confusion limited to Members of Congress and their staffs.
As noted by the American Psychiatric Association, "statements by
senior HCFA staff and successive Administrators have been rife with
contradictions, with the unacceptable result that physicians--even
when seeking to respond to the directives of their own
patients--are left completely vulnerable to the whims of individual
Medicare carriers."
Some
recent official communications on Section 4507 are nothing short of
bizarre. For example, according to HCFA's January 1998 Program
Memorandum on Medicare private contracts:
If
an "opt out" physician/practitioner violates his or her agreement
to not file claims to Medicare (except for emergency claims or
urgent care services furnished to a beneficiary with whom the
physician/practitioner has not entered into a private contract)
he/she must thereafter submit claims for all services to Medicare
beneficiaries (for which no Medicare payment may be made) and must
abide by limiting charge rules and regulations (which the carrier
must enforce) for the duration of the "opt out" period.
In
other words, the scofflaw physician henceforth would be required to
file Medicare claims the admitted purpose of which is to secure
absolutely no Medicare payment, and Medicare's price
controls are to be applied and enforced on a price that does not
even exist.
Since passage of the Balanced Budget Act
of 1997, disputes have arisen over a variety of questions,
including the limitations on payments to physicians who treat
emergency cases, even if they have withdrawn from Medicare; the
status of Medicare patient privacy and its reach and applicability
beyond certain politically sensitive conditions explicitly noted by
HCFA, such as AIDS or mental illness; the use of "advanced
beneficiary notices" for services that may not be covered by
Medicare; the impact of Section 4507 on the status of
Medicare-eligible persons who have withdrawn voluntarily from
Medicare Part B; and the legal status of private contracts for
"otherwise covered" Medicare services distinct from categorically
"non-covered services," such as eyeglasses or custodial care.
The
need to resolve these ambiguities has led to congressional action.
In the fall of 1997, Senator Kyl put a "hold" on the nomination of
Nancy-Ann Min DeParle as HCFA Administrator and sought specific
assurances from the Clinton Administration that the statutory
language would be interpreted and applied by HCFA in ways less
damaging to the interests of doctors and patients. Representative Benjamin
Cardin (D-MD), responding to claims that the new restriction
exceeded covered services in Medicare, introduced the Medicare
Private Contracting Clarification Act of 1998 (H.R. 3259) to make
it clear that no private contract, as specified in Section 4507,
would be required for services Medicare does not cover.
In
response to inquiries raised by Senator Daniel Patrick Moynihan
(D-NY), the U.S. General Accounting Office (GAO) issued a report on
the contentious issues raised by both proponents and opponents of
the enactment of Section 4507.
Curiously, however, on certain crucial policy issues the GAO simply
repeats the official views of HCFA--precisely the views that are at
issue in the current controversy.
Harming
Patients
While Section 4507 has generated more
questions than answers among taxpayers and senior citizens, certain
things are clear.
-
Patients lose the services of
certain doctors. If a doctor chooses to contract privately
with a Medicare patient and opts out of the system, he will, in
effect, be required to abandon Medicare reimbursement from all of
his other Medicare patients for at least two years. Thus, Section
4507 not only restrains doctors who wish to contract privately, but
also harms Medicare patients who are denied that doctor's
services.
-
Doctors are placed in an
invidious position. Under the restrictive terms of Section
4507, the decision over whether to engage in a private contract
with a Medicare patient is not, and cannot be, the patient's. The
entire burden of the decision, and thus the onus of refusing to
enter into such an agreement if the patient should wish it, is
imposed on the doctor. Thus, Members of Congress and officials of
the Clinton Administration have cleverly shifted responsibility
from themselves to the medical profession for the execution of this
restrictive policy.
-
The legislation has virtually
ended private contracting. Contrary to the widely
publicized claims of leading Members of Congress, Section 4507 is
not designed to "liberalize" private contracting between doctors
and Medicare patients. HCFA reports that during the first quarter
of 1998, of 691,000 physicians and other practitioners enrolled in
the Medicare program, only 300 physicians signed affidavits to
pursue private contracting with Medicare patients and to withdraw
from the Medicare program for two years.
The provision thus effectively nullifies the ability of most
persons enrolled in Medicare to enter a private contractual
relationship with their personal physicians for whatever reason
seems good to them. Because many doctors reside in communities
where it is financially impossible for them to give up their
Medicare practice for two full years, the provision guarantees that
private contracting will be virtually impossible for all but a tiny
minority of physicians.
WHAT THE FEDERAL
JUDICIARY
SAYS SECTION 4507 MEANS
If
the Constitution includes, as the U.S. Supreme Court says it
does, a basic right to
privacy, ordinary Americans would doubtless find it hard to imagine
a more serious invasion of that privacy than Section 4507's
limitation on private agreements between doctors and patients who
make transactions outside of Medicare.
In
1997, Medicare patients and members of the United Seniors
Association filed suit asking the U.S. District Court for the
District of Columbia to strike down the provision as a violation of
basic rights to liberty and privacy under the Constitution. In his
decision in United Seniors Association Inc. v. Donna
Shalala (1998), U.S. District Court Judge Thomas F. Hogan
stated:
The
Court does not pass judgment on Congress's wisdom in passing
Section 4507. The Court's role here is solely to determine whether
the United States Constitution confers a fundamental right on
individuals to contract privately with their physicians. The Court
finds that it does not.
In
defense of Section 4507, lawyers for the Clinton Administration
insisted that senior citizens did not have a fundamental right to
"autonomous decision-making" (the term of legal art used by lawyers
concerning matters of personal liberty and privacy) in choosing a
private contractual relationship with their doctors. The U.S.
District Court for the District of Columbia thus agreed with the
Clinton Administration's interpretation of the law, leaving senior
citizens with no constitutional right to enter into private
agreements with their doctors outside of the Medicare
system.
At
the same time, Judge Hogan noted that, contrary to the misleading
claims of Section 4507's congressional supporters, the application
of Medicare law by HCFA will further restrain patient choice of
doctors: "The Court is concerned, however, that the regulations and
interpretations of HCFA further limit patients' access to
physicians of their own choosing."
Judge Hogan also noted that, under
existing circumstances, current congressional and Administration
policy ensures that senior citizens have no practical alternative
to the Medicare system: "Medicare is, in effect, the only primary
health insurance available to people over age 65. No private health
insurance companies offer `first dollar' insurance to this group;
they offer only supplemental insurance."
In other words, as Senator Kyl has argued, for today's senior
citizens, "it's either Medicare or no care."
The
United Seniors Association, a conservative senior citizens group,
joined by the American Civil Liberties Union of the National
Capital Area and a number of medical and patient groups, has
appealed the case to the U.S. District Court of Appeals for the
District of Columbia Circuit.
In their amicus brief, the appellants state:
The
right of personal autonomy involved in this case--the right of a
competent individual, in consultation with a licensed physician, to
obtain desired medical services at his or her own expense--is
fundamental. It has been recognized historically and without
dissent, as Appellants' brief amply demonstrates. And it is
recognized in all current law (with the sole exception of the
statute at issue) and contemporary morals.
Shortly before the U.S. District Court
decision, the Senate adopted a resolution that in principle
supports the right of doctors and Medicare patients to make private
agreements. Offered by Senator Kyl during consideration of the 1999
budget resolution, this legally non-binding resolution specifies
that "It is the sense of the Congress that seniors have the right
to see the physician of their choice, and not be limited in such a
right by the imposition of unreasonable conditions on providers who
are willing to treat seniors on a private basis."
After a heated floor debate on March 31,
1998, the Kyl resolution passed the Senate by a vote of 51 to 47.
So far, the House of Representatives has not adopted a similar
resolution.
PROPOSITIONS
WASHINGTON
WANTS RETIREES TO ACCEPT
The
rationales for the new Medicare restrictions advanced by official
Washington since the enactment of Section 4507 involve a number of
questionable, and at times seemingly contradictory, propositions.
For example:
PROPOSITION #1: Americans 65 and
over who are enrolled in Medicare have no constitutional right to
privacy in their relations with their physicians unless they are
getting an abortion or securing birth control
services.
Lawyers for the Clinton Administration
argue that seniors represented by the United Seniors Association
are wrong, both in asserting that private agreements with doctors
constitute a liberty protected by the Constitution and in asserting
a privacy right in such agreements that is protected by the
Constitution.
The Administration's lawyers argue that
the privacy right concerns two kinds of personal interests:
avoidance of the "disclosure of personal matters" and "independence
in making certain kinds of important decisions"; but "Neither interest
is implicated here.... The right to autonomous decision-making
applies only in certain limited contexts involving marriage,
contraception and abortion, family relationships, child rearing and
education." The U.S. District Court
agreed.
The upshot, then, is that constitutionally
protected transactions between doctors and patients for health care
services are restricted to politically correct conditions like
abortion and contraception, but not cancer screenings or urological
consultations.
PROPOSITION #2: Medicare patients
are now told that they have always had the right to withhold
authorization for the submission of Medicare claims, invoking
confidentiality or privacy as a reason for doing so, but the
Medicare bureaucracy has no obligation to notify them of this
right.
As noted by the American College of
Physicians, "There is no official, systematic method for educating
physicians and patients on Medicare payment and other
rules." Worse, the record shows
that the Medicare bureaucracy and its allies say different things
at different times and, in some crucial circumstances, say nothing
at all.
In 1997 briefs filed with the U.S.
District Court in Washington, Clinton Administration lawyers denied
that seniors had a constitutional right to liberty or privacy in
their relationships with their physicians and repeated the view
that physicians treating Medicare patients must submit a claim to
Medicare for every service rendered to a patient, without
exception. Then, toward the close
of 1997, the Administration's policy team started to carve out a
"privacy exception" for certain stated conditions, notably AIDS and
mental illness.
This privacy exception had not been
mentioned in previous Administration legal presentations. It first
surfaced in a December 1997 circular to Medicare carriers, listing
22 questions on the meaning of Section 4507. In response to
Question 21, HCFA says that there are "some circumstances" when a
physician who remains in Medicare may refrain from sending a bill
to the Medicare program if the patient does not want his illness or
medical condition exposed.
More formally, HCFA Administrator Nancy-Ann DeParle stated in
February 1998 Senate testimony that
A
beneficiary may, in some situations, refuse to authorize the
release of medical information needed to submit a claim. On this
case, a physician who remains in Medicare does not have to submit a
claim for a covered service provided to a Medicare beneficiary.
Examples would be when the beneficiary does not want information
about mental illness or HIV/AIDS to be disclosed to anyone. I want
to clarify that a physician will not be subject to penalties for
failing to submit the claim. The Balanced Budget Act did not change
this aspect of Medicare. It was the law a year ago and it is still
the law today.
Needless to say, nothing in Section
4507--the law controlling Medicare private contracting--provides
any exception for patient privacy or confidentiality for AIDS,
mental illness, or any other medical condition. Moreover, if a
privacy or confidentiality exception did exist somewhere in the
Medicare law before the enactment of Section 4507, HCFA has been
conspicuously silent about it.
The GAO, for its part, simply repeats
HCFA's position on this question
without even noting that HCFA has changed its position that a
doctor is legally required to submit a Medicare claim for every
instance involving treatment of a Medicare patient. The GAO,
moreover, does not cite any statutory basis for such an
exception.
The newly discovered privacy exception
must have been a surprise even to the most vocal political
supporters of the new Medicare restrictions. In fact, the record of
many years, including previous litigation on the subject, shows
that different ranks of HCFA officials affirmed repeatedly that
doctors, without exception, were required to submit claims to the
Medicare bureaucracy every time they treated a Medicare
patient.
The list is impressive. For example, on January
7, 1992, John Delaney, Chief of the Policy and Technical Assistance
Branch of Medicare, insisted:
There is no federal requirement that a
physician must treat Medicare patients. However, if a physician
does treat a Medicare patient, all Medicare rules, regulations and
laws are applicable. For example, the Omnibus Reconciliation Act of
1989 requires physicians to file Medicare claims on all services
provided to Medicare beneficiaries. This requirement applies to
physicians who do not accept assignment as well as to those who do
accept assignment.
If a privacy exception to claims
submission for Medicare beneficiaries always existed in Medicare
law, then HCFA officials might have been expected to publicize such
an important exception before the controversy erupted on Section
4507. But they did no such thing. There was no regulation; there
was no guideline. Nor is there any evidence that HCFA ever notified
Medicare patients of their long-standing right to pay a doctor with
their own money and refrain from submitting a claim because of
privacy or confidentiality concerns. Over the years, in federal
courts and in communications with carriers, HCFA insisted on the
usual submission of claims.
Section 4507, as noted, contains no
privacy exception. From that standpoint, therefore, it makes the
situation worse. In fact, given the breadth of the reporting
requirement imposed on the Secretary of Health and Human Services
under Section 4507, the American Psychiatric Association observes
that "the specifics of the reporting requirement are so sweeping
that we believe the requirement would require extensive violations
of patient confidentiality."
Moreover, even if one assumed that
Congress at some point had enacted a privacy exception to Medicare
claims submission, one would have to wonder why it has shown such
indifference to HCFA's failure to publicize and enforce so crucial
a patient protection. This indifference is all the more curious
when one considers the official threats of sanctions made against
doctors who wanted to contract privately with patients, especially
since the Stewart v. Sullivan case in
1992.
HCFA's newly discovered privacy exception
to the submission of Medicare claims is good public policy, but it
would be even better if Congress were to ground it solidly in
statute rather than leave it as a desperate assertion by an
embattled bureaucracy responding to angry senior citizens. Even so,
however, the right of private contracting is a fundamental liberty,
and its justification should not be limited narrowly to privacy
concerns.
PROPOSITION #3: Section 4507 of
the Balanced Budget Act of 1997 is a "liberalization," not a
restriction, of private contracting in Medicare.
When Section 4507 was passed, various
Members of Congress defended their handiwork as a "liberalization"
of personal choice and professional freedom in Medicare. For
example, the House Republican Conference, in a set of talking
points on Section 4507, declared that "The Balanced Budget Act
loosens federal red tape on private contracts. The
Balanced Budget Act gives seniors more choices and physicians more
freedom. Our bill allows physicians to opt out of the Medicare
system and set their own fees and rates if they choose to do
that."
Similarly, in oral argument before the
U.S. District Court for the District of Columbia, lawyers for the
Clinton Administration initially described Section 4507 as a
"liberalization" of Medicare law.
John Rother, legislative Director of the American Association of
Retired Persons (AARP), argues that Section 4507, rather than
weakening Medicare beneficiaries' right to contract privately with
their physicians, actually expands that right.
In fact, however, the notion that Section
4507 liberalizes the right of private contracting in Medicare is
nonsense. Judge Thomas Hogan's decision in United Seniors
Association Inc. v. Shalala certainly did not portray
Section 4507 as an expansion of the right of contract. Moreover,
during oral argument in the case, when Judge Hogan noted that the
provision was so narrowly drawn as to be "meaningless," the Clinton
Administration's trial attorney, Anthony J. Coppolino, responded,
"I concede that the provision was gutted in conference to make it
probably not very useful...."
As Judge Hogan remarked in his ruling, "Both parties also
substantially agree that the two year restriction on physicians who
enter such contracts represents a substantial barrier to the
receipt of contracted services."
HCFA's preliminary 1998 report on the
infinitesimal number of doctors willing to contract privately under
Section 4507 confirms the true intent of Section 4507: to make
private contracting between doctors and patients in Medicare all
but impossible.
PROPOSITION #4: Private contracts
between doctors and Medicare patients were always illegal even if
they were not against the law.
Americans think that they live in a free
society under a system of limited, constitutional government. In
practice, this should mean that Americans, being a free people,
enjoy the liberty to engage in private activity and otherwise
pursue happiness for themselves and their children unless there is
a law prohibiting such activity.
But official Washington and its allies
have a different standard when it comes to private agreements
between doctors and Medicare patients. "As an initial matter,"
argue lawyers for the Clinton Administration, "the fact that the
Medicare Act did not expressly `prohibit' private contracts is
of no significance. Congress need not add a provision to every
statute it passes stating that its requirements may not be
circumvented by private agreement."
In the sphere of Medicare policy, the
tacit assumption is that one may engage in private transactions
outside of the program only if federal officials permit one to do
so. According to the staff of the House Ways and Means Committee,
"Prior to the Balanced Budget Act of 1997, private physician
contracting was not allowed."
Likewise, John Rother and the AARP have emphasized in
communications to AARP members that until the passage of Section
4507, senior citizens had never been permitted to contract
privately for services covered by Medicare.
The truth, however, is that before the
enactment of Section 4507, there was nothing to forbid private
contracting between doctors and Medicare beneficiaries: "Before the
enactment of the BBA," observes the GAO, "Medicare law did not
expressly prohibit private contracting between physicians and
beneficiaries." HCFA simply took the
position that they were illegal.
HCFA's attempt to outlaw private
agreements in Medicare was a creative effort to twist the technical
statute governing Medicare claims submission requirements into a
far-reaching federal policy forbidding private transactions between
doctors and patients outside of Medicare.
But, as Senator Kyl argued in the summer of 1997, Congress never
intended that senior citizens be prevented from spending their own
money on medical services provided by physicians of their
choice.
This, in substance, was also the view of
the federal judiciary. In Stewart v. Sullivan,
the first major federal court proceeding on the subject, Judge
Nicholas Politan dismissed the case brought by Dr. Lois Copeland
and five of her elderly patients, not because their concerns or
interests were trivial, but because the alleged policy forbidding
them to contract privately did not exist either in law or in
regulation.
Had HCFA truly believed that there was an
existing privacy or confidentiality exception to the submission of
claims, it could simply have notified the plaintiffs and saved the
taxpayers the expense of unnecessary litigation. Instead, it
continued to threaten doctors with sanctions and tried to seize
upon any legislative reed, no matter how thin, to make a case
against private contracting.
However, it always stopped short of issuing formal regulations,
subject to formal notice and comment under the Administrative
Procedures Act as well as a renewed legal challenge by the
plaintiffs in the original Stewart v. Sullivan
case. Then, with the enactment of Section 4507, HCFA's previously
nonexistent "policy" became law.
PROPOSITION #5: The freedom to
spend one's own money on medical services outside of Medicare
depends not on federal law or regulation associated with that law,
but on what HCFA bureaucrats say in Carrier Manuals.
"In 1993," according to the staff of the
House Ways and Means Health Subcommittee, "HCFA issued Carrier
Manual instructions prohibiting private contracting." Similarly, both the
House Republican Conference and the Clinton Administration's
lawyers have cited Section 3044 of the 1993 Carrier Manual to
demonstrate HCFA's intent to prevent private agreements in
Medicare. (The widely cited
section, incidentally, contains no exceptions for Medicare claims
submission for reasons of privacy or confidentiality in treatment
of AIDS or mental illness or any other condition.)
In Stewart v. Sullivan,
Judge Politan stated that the alleged federal policy forbidding
private contracts between doctors and Medicare patients existed
neither in law nor in regulation. In the wake of that decision,
HCFA did not recommend any legislation to restrict private
contracting and did not promulgate any regulations to enforce such
a restriction. Instead--in a process that avoids the public notice
and comments on regulatory initiatives required by the
Administrative Procedures Act--it amended its carrier manual
(instructions to Medicare carriers) to communicate its
institutional opposition to private contracting.
Carrier Manual instructions, however, are
not legally binding. In other words, before 1992, there was no
policy forbidding private doctor-patient arrangements. Then, after 1992,
doctors and patients in the Medicare program were subject to HCFA
"policies" that were of no legal force or effect.
On October 15, 1991, two years before the
issuance of Carrier Manual Section 3044 and one year before
Stewart v. Sullivan, HCFA Administrator Gail
Wilensky stated: "In the rare event, however, that a patient, for
his or her own reasons, and entirely independently, chooses not to
use Part B coverage, the law does not require the submission of a
claim by the physician."
Wilensky's reading of the law was compatible with Judge Politan's
finding that there was no existing federal policy against private
contracting between doctors and Medicare patients.
Again, on August 4, 1995, two years after
the issuance of Carrier Manual Section 3044, Thomas A. Ault,
Director of HCFA's Bureau of Policy Development, stated that "if
the beneficiary chooses to withhold a claims authorization for his
own reasons, entirely free of any pressure from the physician, the
Medicare program recognizes that the physician has no right or duty
to submit the claim on the beneficiary's behalf."
Despite repeated requests to HCFA by
Heritage research staff for any official notices to beneficiaries
or physicians describing such options, however, no such documents
have been forthcoming.
PROPOSITION #6: HCFA has authority
to impose rules and regulations not only on transactions between
doctors and patients within Medicare, but also on transactions that
take place outside of Medicare.
Americans might disagree with specific
Medicare policies, but they would not challenge the right of
Congress and the federal bureaucracy to make rules and regulations
governing the financing and delivery of medical services within the
Medicare system, including the statutory denial of outpatient
prescription drug coverage and catastrophic coverage, the
limitation of medical services, or the outright denial of a growing
number of medical claims that bureaucrats think are "unnecessary or
inappropriate."
Most people take for granted the
fundamental distinction between what is public and what is private,
but this commonsense distinction does not apply to Medicare. As
noted, HCFA's traditional view is that all claims must be submitted
for all medical services in all instances. Even if one were to
accept in good faith the agency's privacy exception for someone who
does not wish to submit a claim and wants to pay the doctor outside
of Medicare, official Washington says the system's price control
regime would still apply. It would apply even if the doctor wanted
to charge the patient less than the Medicare charge, or even if the
doctor wanted to charge the patient nothing at all as an act of
charity or personal friendship. As the GAO reports:
Without the patient's authorization, the
physician cannot submit the claim. Medicare's limiting charge
amounts still apply, however, and cap the amount the physician may
charge. Because Medicare pays no part of the charges, the
beneficiary is fully responsible for paying for the treatment up to
the limiting charge.
Private transactions in health care, in
other words, are legally permitted only for Americans below age 65
who are not disabled. Thus, Congress has created a unique program,
run by an arbitrary bureaucracy, that regulates not only
transactions that take place within it, but also transactions that
take place outside of it.
Nevertheless, the fact remains that the
Medicare law contains no explicit requirement that Medicare's price
controls be applied to transactions between doctors and patients
outside of the Medicare system. This is merely one more creative
HCFA interpretation designed to expand the agency's power.
PROPOSITION #7: The rules
governing doctors in Medicare should be just as restrictive as the
rules governing doctors in employer-based HMOs or managed care
networks.
Americans might think that the
professional independence and integrity of the medical profession,
just like patient choice of doctors, health plans, or medical
treatments, is a positive good that federal policymakers would wish
to preserve and promote.
Not so. Some of the very Members of
Congress who condemn existing restrictions on employer-based health
insurance, undercutting the professional freedom of doctors and the
choice of patients, will go so far as to cite the practices of
employer-based insurance as a justification--or even a model--for
restrictions on doctors and patients in Medicare. During the March
31, 1998, Senate debate on the Kyl resolution, Senator Paul
Wellstone (D-MN) drew exactly such an analogy:
Take the Kaiser Plan. It is a well known,
managed care plan. You join the Kaiser Plan and you are going to
pay a given fee, the enrollees pay a given fee. Can you imagine
what it would be like if all of a sudden doctors in the Kaiser plan
could decide on their own, based upon what particular symptom they
were seeing, that they would charge more for service? You join the
plan just like people join Medicare.
Officials of the American College of
Physicians claim that private contracting between doctors and
patients is incompatible with what they see as a desirable policy
of promoting managed care in Medicare:
The ACP is also concerned that private
contracting runs counter to the incentives of the Balanced Budget
Act to encourage use of managed care and to use health resources
economically. Under the Kyl bill, any managed care enrollee could
pay an outside physician separately for a service under a private
contract, a service which already has been actuarially factored
into the managed care capitated payment.
Spokesmen for the AARP worry that if
Medicare patients have the right to engage in private contracts,
they will be able to get out of the new HMO plans for specific
medical services and undermine HCFA's existing payment system for
HMOs:
The capitated payments Medicare makes to
HMOs and the new Medicare Choice plans include funds to cover
physicians services. Yet if physicians are allowed to privately
contract with beneficiaries in these plans, the plans would be able
to keep the funds for services not provided by the plans, but which
beneficiaries paid for under private contracts.
Moreover, notes the AARP, a senior citizen
allowed to go outside of HMOs most likely will pay a doctor a
different amount for a medical service than the amount dictated by
the HMO plan or the government: "This practice essentially would
deny Medicare beneficiaries a protection enjoyed by millions of
workers and their families."
Of course, as the national media report, a
great many Americans would be quite happy to be free of HMO
"protections," now so widespread in restrictive employer-based
health insurance. But if senior citizens feel it necessary to get
out of HMOs to purchase the services they want, and if HMO use
declines, there is no reason why Congress cannot simply adjust HMO
payments accordingly, recoup any "windfalls," and save the
taxpayers even more money. In any case, good HMOs in Medicare
should not have to worry about serious inroads from patient choice
through private contracting.
PROPOSITION #8: The Balanced
Budget Act's private "Medicare Choice Plans," including medical
savings accounts (MSAs), are private in name only.
Among the most intriguing issues to arise
during the debate on Section 4507 is the provision's likely impact
on the status of medical savings accounts, the new tax-free
accounts available to a limited number (390,000) of Medicare
enrollees. According to the House Republican Conference, for
example,
The legislation makes quite clear that the
private contracting and Medical Savings Accounts options are
separate and distinct. MSAs expand patient choice for seniors, and
allow doctors and patients to privately negotiate whatever
reimbursement rate they wish for any medical service.
In other words, the MSA is a vehicle for a
private contract: a free-market transaction. Its very purpose is to
maximize freedom of choice for doctors and patients.
But Section 4507 does not allow that
maximum freedom. If a Medicare patient wants the special services
of a physician who has signed an affidavit to contract privately
and drop out of Medicare for a period of two years, that doctor may
not treat that Medicare patient and be paid, even if that patient
is enrolled in an MSA plan. "Physicians will be able to opt out of
Medicare, set their own rates, and operate independent from HCFA,"
according to the staff of the House Ways and Means Health
Subcommittee. "However, when a physician makes this choice, he is
required to remain out of the Medicare program for two years. That
includes Medicare fee for service, HMOs, PSOs, and MSAs." HCFA is responsible for
finalizing regulations in this area.
Americans can be excused for finding the
logic of the congressional argument hard to follow: For a doctor to
contract privately with a Medicare patient is acceptable only if
the doctor willingly gives up his right to contract privately with
the Medicare patient enrolled in an MSA plan. Thus, what appears to
be an opportunity for private contracting becomes a way to restrict
private contracting. Regardless of congressional rhetoric, the
so-called private options in the Medicare Choice system appear to
be private in name only. They really are new vehicles for
congressional expansion of HCFA's already enormous regulatory
authority into the new territory of private health insurance.
PROPOSITION #9: The plain language
of the law is to be applied and obeyed except when it comes to
Section 4507.
Before the enactment of Section 4507, HCFA
said that a Medicare patient could contract privately with a doctor
if that patient were to get out of Medicare Part B and give up all
coverage under Medicare Part B. Since there is no viable private
insurance market for senior citizens outside of Medicare, however,
the effect of this penalty is draconian. As Judge Politan noted in
Stewart v. Sullivan, this "either/or" requirement constitutes a
real harm to Medicare patients, and thus gives them standing to sue
the federal government.
Once again, it should be noted that there
is not now, and there was not then, any specific requirement in the
Medicare law that forced a person to drop Medicare coverage; HCFA
simply used this notion as a weapon in its campaign against private
contracting. Needless to say, there is no evidence that HCFA ever
notified Medicare beneficiaries that giving up Medicare Part B was
the price they had to pay for engaging the services of a doctor
outside of the Medicare system.
Section 4507 is remarkably restrictive,
but HCFA is trying to interpret it in a way that makes it more
acceptable to retirees, taxpayers, and Members of Congress. For
purposes of the restrictions on private contracting, for example, a
Medicare beneficiary is defined as any person who is enrolled in
Medicare under Part A, which covers hospitalization, or Part B,
which covers payments to doctors. The language of the statute makes
it plain that the restrictions on private contracting apply even to
patients who are not enrolled in Part B.
Thus, anyone who dropped out of Part B
would still be a Medicare beneficiary and therefore could not be
treated privately by any doctor who signed the government's
affidavit and dropped out of Medicare for two years. Moreover, no
physician treating such a patient could submit a bill to Medicare
on behalf of a patient who is not enrolled in Part B and thus is no
longer eligible for Part B coverage; if a doctor did submit the
bill to Medicare, he could be in violation of the False Claims Act
or the ominous fraud statutes.
Yet HCFA says that the restrictions on
private contracting will only apply to Medicare patients enrolled
in Part B. It is hardly surprising
that even Members of Congress--the very people responsible for
passing the law in the first place--have been saying different
things to different affected constituents.