Volume 53, No. 11 November,
1997
MEDICARE SHOWSTOPPER,
Continued…
The showdown of Medicare’s lifetime could happen this year,
if Congress does not lose its nerve. Bill Clinton could face an
awesome choice: veto freedom for senior citizens-or face the
wrath of the Medicare bureaucracy, big government advocates in
Congress, and cheerleaders for corporate socialism such as the
AARP.
Starting with an August 22 Wall Street Journal
editorial called “Medicare Showstopper,” the mainstream press and
talk radio are finally telling Americans the shocking truth about
Medicare: British citizens, Helmut Kohl, and even Boris Yeltsin
have more rights than American Medicare beneficiaries.
What Bill Thomas (R-CA) and the other Republicans did in
Section 4705 of the Budget Reconciliation Act (see pp. S1-S2 and
AAPS News Oct 1997)-supposedly
to fix the problem while appeasing the Administration
-effectively allows freedom only for a very exclusive group of
senior citizens: those able to find a doctor who is completely
opted out of Medicare. This was the method used in Canada to kill
private medicine without a straightforward law forbidding
citizens to spend their own money for medical care. Few doctors
are willing to accept a dramatically lower income or able to
attract enough patients willing to forgo a government
entitlement.
Senators Kyl and Nickles and Congressman Archer have
introduced free-standing bills to correct the “correction”: H.R.
2497 and S. 1194. The text can be downloaded from
http://www.primenet.com. These bills would greatly expand the
potential of private contracting. But they too contain a poison
pill: “Nothing in this title shall prohibit a medicare
beneficiary from entering into a private contract … if … the
Secretary has been provided with the minimum information
necessary to avoid any payment under part A or part B for
services covered under the contract.” In other words, no Medicare
beneficiary may lawfully have private medical care without
telling the Secretary whatever she demands to know about it. (As
usual, the diabolical details are delegated to the
regulators.)
The reporting requirement is rationalized as a necessary
defense against fraud and abuse. Those are magic words: any
measure, no matter how ill-advised, is difficult to oppose if
someone claims it will prevent or punish fraud.
But the problem with private contracting is not
fraud.
Think about it: Suppose that an unscrupulous doctor decides
to bill both the patient and Medicare for a service.
First question: How much money does the federal treasury
lose from double-dipping compared with Medicare payment alone?
Answer: the same amount. (Assume that some member of the same
unscrupulous profession would have treated the patient under
Medicare constraints.)
Second question: How much money does the patient lose from
double-dipping compared with private contracting alone? Answer:
the same amount. In fact, if the claim is unassigned, the patient
would gain back the entitlement he gave up.
Third question: What about the taxpayer? Answer: the
taxpayer loses the same amount-because Medicare pays, not because
of private contracting.
Fourth question: What about the doctor? Answer: the doctor
would receive two payments only if he filed an assigned claim.
This would be both dishonest and extremely foolish. When
Medicare pays the claim, it is supposed to send the patient an
Explanation of Medicare Benefits form. When the patient receives
the EOMB, he will immediately know that the physician violated
his word and betrayed his trust. The patient may complain to
Medicare, and the doctor can be fined $10,000 per episode,
excluded from Medicare, and imprisoned.
The Medicare program is rife with fraud because patients
do not pay directly for services in most instances. Private
contracting makes fraud very difficult because an interested
person with first-hand knowledge of the care-the patient-is
watching every transaction.
The problem with private contracting is not
unfairness.
Since the Archer-Kyl bill would expand the availability of
private contracting, it is obviously fairer than the Budget
Reconciliation Act. Moreover, we do not hear the AARP
complaining that seniors are allowed to buy nicer housing or
better food than their Social Security allotment would permit.
The problem with private contracting is that it is a
tiny tear in the seamless web of government control over
medicine. It might be enough to keep the independent
practice of private medicine alive in an age of corporate
socialism.
Realizing this, medical groups that were mostly silent in
1992 about the case of Stewart v. Sullivan are making
themselves heard. More importantly, a broad coalition of
consumer groups, including Seniors Coalition and United Seniors,
is spreading the word.
One wonders if the AARP wants American physicians to be in
the same plight as “the Old Doctor” in Chapter 30 of
Solzhenitsyn’s Cancer Ward:
The most persistent and oppressive persecution had been
due to his stubborn insistence on his right to maintain
a private medical practice in the face of stricter and
stricter prohibitions. What he did was a forbidden
source of private enterprise….There were years when
he had to take down his copper plate and turn away
every patient, no matter how much they implored him or
how ill they were. This was because the neighborhood
was full of spies from the tax office, paid or
voluntary, and because the patients themselves could
never refrain from talking. As a result, the doctor was
threatened with the loss of all work, even with the
loss of his house.
Resolution on the Oath of Hippocrates
At the 54th annual meeting, held September 17-20 in Chicago,
the AAPS assembly passed the following resolution:
WHEREAS: Physicians are entrusted with the sacred duty of
protecting the lives and well-being of their patients; and
WHEREAS: In the practice of the art and science of medicine,
physicians should adhere to the highest ethical standards for the
protection and care of their patients in order to fulfill that
sacred trust; and
WHEREAS: The Oath of Hippocrates is the centuries-old, time-
tested standard of ethics for physicians; and
WHEREAS: All physicians should swear adherence to the Oath
of Hippocrates as the common set of principles for physicians;
BE IT THEREFORE RESOLVED THAT:
the Association of American Physicians and Surgeons urges
all medical schools to administer the Oath of Hippocrates at
graduation. To that end, the Association of American Physicians
and Surgeons will send a formal request to all medical schools in
the United States to that effect.
Shalala Wants Your Medical Record
On September 11, HHS Secretary Donna Shalala released
recommendations to Congress concerning medical privacy, as
required by the Health Insurance Portability and Accountability
Act of 1996 (Kassebaum-Kennedy). The report is available at Department of HHS.
Shalala professed concern for the “dangerous” lack of
protection of medical records and “our most sacred family
secrets,” but in her view, privacy is not a right:
“Individuals’ claims to privacy must be balanced by their
public responsibility to contribute to the common good,
through use of their information for important, socially useful
purposes.”
“National priority activities,” justifying the requirement
of personally identifiable information, include in her view
“public health, oversight of the health care system, research,
and law enforcement.” Specifically, “Federal law should
permit use of information for research without consent.”
Moreover, “oversight agencies can see health records, or use
them against patients, providers, and others for wrongdoing in
health or related programs“-and without the knowledge of the
patient, because notification might be “reasonably likely to
impede those activities.” Law enforcement agencies would not
even need to obtain permission of a court to view records.
Senator Patrick Leahy (D-VT) said the proposal would allow wider
use of health records than Congress has permitted for bank,
cable, and video rental records (BNA’s HCPR 9/15/97).
Federal agencies do now have expansive authority to seize
records from private offices. However, the search capabilities
offered by computerization open unprecedented areas to
investigators. While recognizing that there are “arguments in
favor of new restrictions to address these possibilities,”
Shalala specifically refuses to consider them: “Until more
experience is gained with the uses of computerization of these
records, and the types and frequency of requested searches, it is
premature to change existing law in this area.”
One suggested use of patient records is for investigating
providers’ compliance with tax laws or safety regulations.
The report states that a Federal [lack of] privacy law
should apply uniformly, regardless of setting. Presumably, this
means that the Federal government, like the Maryland State
government, could demand disclosure of information about all
patient visits, even if no third-party payment is claimed.
Dr. Denise Nagel of the Coalition for Patients’ Rights
observes: “Dr. Shalala did not support restricting access to
personally identified medical information by HMOs, managed care
entities, employers, auditors, … cost-containment managers, and
others.”
The only absolute protection against abusive disclosures is
to keep all personally identifiable information out of a
networked computer in the first place. But on the heels of
passage of the national health identification number, the
Administration, on July 31, announced its opposition to allowing
citizens to opt out of having information entered into the
computer.
Private data management companies, with an abysmal record of
protecting privacy, are waiting for a green light, reports Dr.
Nagel. A recent ad reads: “Strike it rich! Turn nuggets of
[medical] data into valuable information.”
Action Plan for the Month
Copy and distribute the enclosed premier issue of
Patient Power to your patients. Let us know
what you think-and send suggestions for future issues.
The FBI Wants Your Key
The government aims to expand law-enforcement authority
further still, seeking guaranteed access to every communication
and every stored record of every American user of encryption,
without the required Fourth Amendment notice or consent. Under
the proposed Oxley-Manton Amendment to the Security and Freedom
through Encryption (SAFE) Act, H.R. 695, which was written by the
Department of Justice, strong encryption would be outlawed unless
the private key is on file with the government.
“This is not one step toward the surveillance society-it is
the surveillance society,” said Jerry Berman of the Center for
Democracy and Technology (NY Times:, 9/7/97).
For further information, check < href =
“http://www.atr.org”>http://www.atr.org and
HHS Trains Senior Spies and Informers
The Dept. of HHS has awarded grants totalling $2 million to
12 advocacy groups to train seniors to detect waste, fraud, and
abuse in Medicare and Medicaid programs. “Deceptive health
practices” include overbilling or providing unnecessary or
inappropriate services.
“In order for our anti-fraud efforts to really pay off, we
need to … help older volunteers across the country become the
eyes and ears of our communities … and assist us in saving
precious taxpayer dollars,” stated Secretary Shalala (BNA’s
Health Care Policy Report 6/3/97).
HHS is also working with the AARP to improve its public
hotline for reporting health care fraud. The “TIPS” hotline has
generated 13,000 calls since its inception nearly two years ago
(BNA’s HCPR 5/26/97).
Administrative Civil Rights
At the 54th annual meeting, AAPS Past President John H.
Boyles, Jr., M.D., explained the devastating losses that could be
inflicted on physicians and Americans through Star Chamber
proceedings in which the accused has few if any rights. This is
called administrative law; it is rendered by Administrative Law
Judges, who are hired by the agency that is making the
accusation. Dr. Boyles reminded members of the Administrative
Civil Rights Act, which was endorsed by the AAPS assembly at the
49th annual meeting in 1992:
The constitutionally guaranteed civil rights of American
citizens shall be protected in administrative proceedings.
Any agency acting under color of federal or state law shall
have the right to impose only limited penalties through
administrative proceedings, even when these penalties are called
“deterrents” or “means of protecting program integrity” rather
than “punishments.” Allowed forfeitures include only:
(1) Withholding of future direct payments from the public
treasury (except that Social Security benefits up to the
amount funded by actual contributions by an individual,
including amounts paid by employers in the individual’s
name, plus interest, may not be withheld);
(2) Fines or civil monetary penalties not to exceed one week’s
after-tax income to an individual or one week’s net profit
to a corporation.
Before larger economic penalties or loss of liberty may be
imposed, the defendant shall have the right to demand a trial in
a court of law and in which the defendant has all the rights
accorded to criminal defendants. These include but are not
restricted to: trial by jury, representation by counsel,
protection against self incrimination and double jeopardy, a
presumption of innocence, and protection against unlawful
searches and seizures. Personnel of the court shall be
independent of the agency bringing the complaint against the
citizen and shall receive no direct or indirect remuneration from
that agency.
Citizens who are under investigation for violation of any
law or regulation by an administrative agency shall be informed
of their rights and shall not be penalized for exercising or
refusing to waive these rights.
No person shall be permitted to make an anonymous complaint
about a condition that carries an administrative sanction, and no
monetary rewards shall be given to informants.
This law shall supersede all federal laws that mandate or
permit larger administrative penalties to be enforced without
proper judicial procedure.
No individual agency shall be exempted from these guarantees
of citizens’ rights. The law shall apply equally to the Food and
Drug Administration, the Environmental Protection Agency, the
Health Care Financing Administration, the Internal Revenue
Service, the Occupational Health and Safety Administration, and
any other agency acting under color of federal or state law.
To assure adequate consideration of the serious consequences
of abridging the rights of citizens, this Act may be amended only
in legislation specifically directed to that purpose, not as part
of the budget reconciliation process or as an amendment to
unrelated legislation.
All agreements between a citizen and a governmental agency,
in which a citizen has waived his rights, shall be held invalid
and unenforceable if signed under duress, such as a demonstrable
or perceived threat of seizure of assets, loss of licensure, loss
of liberty, loss of property value, criminal prosecution, or
other adverse consequence imposed upon a citizen under color of
federal or state law or regulation.
Citizens deprived of economic or other rights by
governmental agents acting in violation of this Act shall not be
denied access to federal court or to damages at law.
Case Dismissed
On September 29, the case of United States of America
and Revenue Officer Douglas Stelmach of the Internal Revenue
Service v. Jacob Lapp was dismissed pursuant to Rule
41(a)(1)(i) of the Federal Rules of Civil Procedure. This rule
provides for voluntary dismissal by the plaintiff. Jacob Lapp
faced imprisonment for contempt of court and confiscation of his
farm for refusing to file forms that he said could not be
completed honestly (see AAPS News Aug and Sept 1997).
AAPS Director Lawrence Huntoon, M.D., asks whether the
dismissal has anything to do with Senate Finance Committee
hearings in which six IRS agents testified behind special screens
with black hoods over their heads and electronically altered
voices. According to Michael Hirsh (“Behind the IRS Curtain,”
Newsweek 10/6/97), IRS Acting Commissioner Michael Dolan
placed a nationwide conference call to IRS managers, telling them
to “crack down on [IRS] abuse” [of innocent taxpayers].
“Apparently, government trying to force a hard-working
farmer to lie on a public document just became politically
incorrect,” writes Dr. Huntoon. Similar hearings are needed for
the behavior of HCFA, he suggested.
Regulatory Violation May Be a “False Claim”
Government agencies are no longer focusing on areas of
obvious false claims, such as billing for services not rendered,
stated Los Angeles attorney Patric Hooper at a May 2 conference
sponsored by the American Bar Association and the National
Association of Medicaid Fraud Control Units. In a growing number
of cases, the government states that a patient received poor
care-or care not meeting government specifications-and that the
bills submitted were therefore false claims.
Hooper noted that very few, if any, statutes involving
government health programs cover how to submit a bill. Given the
lack of formal guidance, Hooper questioned the legal validity of
the requirements that originate from intermediary or carrier
guidelines, fraud alerts, or soon-to-be-released advisory
opinions, none of which are subject to the rule-making procedures
in the Administrative Procedure Act.
“We have a whole host of informal rules, and I can assure
you that in most cases…you can come up with a rule that can
contradict the rule that the government is relying on,” he said
(BNA’s Health Care Fraud Report 5/21/97).
In his presentation at the AAPS annual meeting on how to
respond to a federal probe, Philadelphia attorney Frank Rapoport
stated: “Other than no longer providing health care services, it
may now seem as if there are few ways to protect yourself from
the government….Special Fraud Alerts purport to inform the
community what conduct is illegal…, [but] they are vague and
difficult to apply in many circumstances.”
The response of Congress has been to increase funding for
prosecutors and increase penalties. “Daunted by expensive
investigations and onerous penalties for mere mistakes,
[physicians] may simply exit the market.”
Members’ Page
If I Had a Computer. Back in the 60s there was a popular
folk song called “If I Had a Hammer.” When we all had hammers,
the thing to do was to look for something to pound. Now that we
all have computers, we have to look for something to compute.
The problem with creating a tool and then looking for something
to use it for is that inevitably something will be broken with
all the indiscriminate pounding. In the case of computers,
patient confidentiality is being broken beyond repair. Employers
can now get lists of the drugs that their employees are taking
and figure out what diseases they have. At a hospital
demonstration of digital EEG equipment, a salesman boasted that
he could get vital signs and EKG data, by name, from any patient
in the ICU of a local hospital. He said, “This is the way things
are going and neither you nor I can do anything to stop it.”
In the early 1940s, Hitler convinced many people that he was
going to take over the world and nobody could stop him. I submit
that the little Hitlers are around us every day and that they can
be stopped. We need to tell our patients and the public the truth
about the plans to computerize everyone’s medical records. Ask
not what others will do to protect your privacy; ask, if I don’t
do it, who will?
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
Goal 2001. In little-noticed comments last week to the
Service Employees International Union Labor Convention, Clinton
said, “What I tried to do before won’t work. Maybe we can do it
another way. That’s what we tried to do, a step at a time until
we finish this.” He drew cheers from the audience when he said
his health plan could all be in effect before the end of his
second term in 2001.
Ernest J. White, Alexandria, VA
Strings. I worry that the suggestions in the “Kid Care
Update” in the October legislative supplement will take us in the
wrong direction. Vouchers and tax credits are a Trojan horse.
They have strings attached: Washington values. Until we replace
the income tax with a sales tax, the federal government will
continue to expand because people are dependent when Washington
takes their savings.
Bert Loftman, M.D., Atlanta, GA
Saving $1740 in Four Months. Instead of paying $585 per
month in health insurance premiums, we have been sending $150 per
month to a family in need through the Christian Brotherhood
Network and banking the rest in our own personal [non-deductible]
Medical Savings Account. This is NOT insurance, with all the
government mandates and restrictions. It’s a group of people with
a moral commitment to help each other in time of need. We
envision other such organizations arising. They will make
medical care more affordable and accessible, restore
confidentiality, promote freedom of choice, and eliminate the
profiteers.
Alieta Eck, M.D., Piscataway, NJ
AAPS Calendar
Oct 8-10, 1998. 55th annual meeting, Raleigh, NC
Counter Attack
Senior Members of Congress, particularly Congressman Bill
Archer (R-TX), Chairman of the House Ways and Means Committee,
along with Senators Jon Kyl (R-AZ) and Don Nickles (R-OK), the
Senate Majority Whip, have introduced the Medicare Beneficiary
Freedom to Contract Act of 1997. This is serious stuff,
potentially the opening of a new and raucous debate that could
reverse the current direction of America’s health care policy.
The key issue: Will you, once you turn 65, be able to spend
your own money on medical services that you want from a physician
of your choice?
The Archer-Kyl bill would repeal the restrictions on private
contracting in the Balanced Budget Act of 1997. Specifically, it
would remove the two-year exclusion from Medicare of doctors who
enter into such private contracts.
Senator Jon Kyl tried earlier to clarify the right of
doctors and patients to contract privately, introducing S. 1289
in the last (104th) Congress, and was severely “burned” by The
Process. Proving again: No good deed goes unpunished in D.C.
Kyl complains that Congress has failed to rein in the Health
Care Financing Administration (HCFA), just as it has long failed
to control the Internal Revenue Service (IRS). The ugly
revelations about the IRS, its victimization of innocent
taxpayers, have recently surfaced in three days of sensational
hearings conducted by the Senate. The Congress has yet to give
similar scrutiny to the HCFA, which threatens doctors who enter
into private agreements with civil penalties, fines, and
exclusion from Medicare. Now, with the new raft of fines and jail
terms under the Kennedy-Kassebaum bill, it is anybody’s guess how
HCFA will interpret its new authority to combat fraud. If past
performance is any guide, it will be in the most expansive
fashion imaginable.
About Face
It was Congressman Bill Thomas (R-CA), Chairman of the House
Subcommittee on Health, who agreed to the Conference language
that caused such an uproar. The House Ways and Means Committee
staff circulated a “fact sheet” on August 29, which criticized
the August 25 Wall Street Journal editorial, “Medicare
Show Stopper,” as “grossly inaccurate”. It almost looks as if
the Ways and Means staff had been plagiarizing from a HCFA-
compiled list of bullet points on “What’s Wrong With Private
Contracts.” For example, the staff document says that private
contracting is illegal under previous law because HCFA issued a
“Carrier Manual Instruction” that says so-precisely the
kind of communication that the federal Court in the case of
Stewart v. Sullivan (1992) said was an insufficient
basis for federal policy! But let us say that HCFA is right
and the rest of the world is wrong, and that the patient-
physician relationship through private contracts is illegal for
Medicare beneficiaries, simply because HCFA says so in some not-
so-exalted thing as a “Carrier Manual.” HCFA is either right or
wrong. The Congressional interpretation is, therefore, either
true or false. If HCFA is wrong, then Congress, in passing the
1997 Balanced Budget Act language imposing restrictions on
private contracting, cannot possibly be making the situation
“better” for private contracting, as members of the Mickey Mouse
Club among the staff of the House Ways and Means Committee have
been insisting all along. If HCFA is right, then Congress has
failed miserably in its responsibility to oversee and restrain
the potent federal agency, allowing it to exercise such
extraordinary power at the expense of the personal freedom of
millions of Americans and the professional integrity of America’s
doctors. With the phone calls coming into the Hill, staffers are
learning that what they assumed to be true and widely understood
is in fact surprising and shocking to most Americans. How could
their personal freedom be restricted in this fashion?
From the backtracking and backsliding and lame excuses
coming from the House Ways and Means Committee Members and Staff,
one wonders whether they read the 1992 decision, misunderstood
it, and coached their Congressional superiors on a flawed
interpretation of the current state of the law. What did the law
say? Kent Masterson Brown, the attorney for the plaintiffs who
argued the case inStewart v. Sullivan (1992)
wrote that, “Under the Medicare Act, payment for medical
services by the Medicare program-and the resulting physician
obligations-were triggered only if a claim was filed. The
Medicare beneficiaries in Stewart did not want to file
claims with Medicare” (Wall St J, 10/1/97).
A good guess: HCFA helped the Congressional staffers on Ways
and Means with their interpretation of the law. That could be a
great case study for some enterprising reporter.
Interestingly, while Congressman Thomas initially emerged as
a defender of the Congressional language in the Budget Bill, he
offered the argument that he and his colleagues were pressured by
the Clinton Administration into adopting it. Whether or not the
Congressional excuse is good enough to meet the “you did
what?” -test, it is now clear that the Clinton
Administration really was prepared to play hardball over the
private contracting issue. The Congressional leadership is now
revealing that Clinton was prepared to veto the entire
Balanced Budget Act of 1997?-tax changes, budget targets,
deficit reduction provisions, the whole thing-if the original
Kyl language was in the bill. Was this an idle threat or not?
Who knows? It depends on whom you believe. But it belies all the
subsequent claptrap about this being a minor provision.
No matter. That stage of the debate is over. And there’s new
language on the Congressional table. The House version of the
Medicare Freedom To Contract Act has garnered more than 87
cosponsors, including Speaker Newt Gingrich, and Congressional
leaders are talking as if they want to put the bill on a fast
track. There is a growing sentiment in Congress that the idea to
limit the private contracts between doctors and patients is not
only bad policy. It’s also pretty stupid. Worse than either
deficiency, it’s also a political loser. Give the idea of signed
affidavits and loss of Medicare practice for two years a
psychological road test with ordinary Americans, and they are
likely to respond with disbelief. They did that?
A Reason To Reform The Budget Process?
This all goes to show how out of the loop Washington’s
Health Care Policy Wonks really are. The HCFA wonks and
Congressional staffers who collaborate behind closed doors to
write goofy bureaucratic rules on behalf of their bosses think
they can get away with it. Well, they do-far too often. This
time, though, they miscalculated.
It’s true, too many Members of Congress don’t read the
Bills. Recall Claude Raines playing the silver-haired Senior
Senator-the best representation of The Establishment ever on the
Silver Screen-telling poor bewildered Jimmy Stewart, the na‹ve
and idealistic Freshman Senator Jefferson Smith, the awful truth
in Mr. Smith Goes to Washington. They don’t read the
bills. The Frank Capra classic should be required
viewing for taxpayers. Most Members of Congress depend, like so
many of us in other spheres of life, on the division of labor.
Certain members specialize in certain areas of public policy, and
their committee assignments reflect that specialization. They
depend on their colleagues to do a good job, reflecting both
competence and philosophical commitment to mutual goals that are
periodically articulated on the stump, in speeches, and in
fundraising letters. Sometimes, it works. But with the shell-
shocked Republican leaders in Congress, it simply doesn’t work in
health-care policy. You’re never really sure what they are going
to do, regardless of what they say. They spout now conventional
anti-Clinton rhetoric, and prattle on about their commitment to
consumer choice and competition, but you have to check and
recheck the fine print. Otherwise, they’ll be spending taxpayers’
money on some crazy scheme, dreamed up by HCFA, like paying
hospitals not to train doctors, or installing some component of
the Clinton Plan.
The Public Relations Debate
The idea of restricting the freedom of Medicare
beneficiaries to deal directly with their doctors, as in Section
4705, turned out to be political dynamite. Predictably, it has
run into a veritable storm of opposition. A series of hot-blooded
editorials appearing in high prestige journals like the Wall
Street Journal, Forbes, The Washington Post, and others are
now generating similar pieces in newspapers all across the
country. Rush Limbaugh, with an estimated listening audience of
20 million citizens, has thrown more gasoline on the political
prairie fire. And if Republicans can’t quickly fix it, they could
yet be severely burned, even more than Senator Kyl.
AARP Lines Up With HCFA
Liberals on and off Capitol Hill are starting to rally to
the defense of HCFA’s authority. Congressman Pete Stark (D-CA) is
arguing that private contracts in Medicare are an excuse for
greed. In the September 23 floor statement, Stark said: “In 1995,
Medicare paid 393 Doctors more than $1 million for services; 3152
doctors received between $500,000 and $1 million. Now a greedy
few want more.” He elaborates: “Strip away the rhetoric, and a
private contract is a contract between a doctor who holds his
life in your hands in which he demands that you give up your
Medicare benefits and that you promise not to file a claim with
Medicare. Instead, you agree to let him charge you anything he
wants-because you are desperate for your health. We like to think
of contracts between equals, negotiated fairly. There is no
equality, and there is no fairness in these contracts.”
Not to be outdone are the high-minded leaders and Washington
staff of the American Association of Retired Persons (AARP), the
terror of Congressmen and Senators great and small. In its formal
statement on the subject, AARP says: “AARP believes that such
attempts (as private contracting) would leave Medicare vulnerable
to greater fraud and abuse and beneficiaries at risk of higher
health care costs.” On fraud possibilities, specifically, the
AARP argues that private contracting would lead to double
billing, doctors billing their patients and also Medicare:
“Unless HCFA has complete information on each private
contract-including the doctor, the patient, and the specific
services involved-and can align it with claim filings, both
Medicare and the beneficiary could end up paying for the same
services.”
AARP also notes that the private contracting provision will
not guarantee the Medicare folks the same “protections” now
enjoyed by patients in HMOs in the private sector. Why? Get this:
“Physicians who contract with employer provided plans to provide
care for younger workers typically abide by the plan’s
reimbursement rates and the limits on enrollee’s out-of-pocket
costs.” According to AARP, the HMO-style restrictions-“private
sector” price controls that could only be imposed in a system
devoid of consumer choice and competition-are a positive
good. Under the Kyl language, doctors will be able to
circumvent similar restrictions-and that’s bad: “This
practice essentially would deny Medicare beneficiaries a
protection enjoyed by millions of workers and their families.”
Right: millions of workers are madly in love with managed care
corporations, siphoning off billions in premiums and paying
doctors more for doing less.
AARP also complains that the bill does not require doctors
to disclose the cost of services being privately contracted. The
premise of this is that people over 65 can enter into private
contracts for every other professional service imaginable and
remain sensitive to price, but not medical services when they
know-up front-that Medicare is not going to reimburse for the
service. Says AARP: “There would be no fee schedule, no
limits on what physicians may charge under private contract and
no protection from out of pocket costs under Medigap policies.
Therefore the beneficiaries would not know what their out of
pocket liability for private contract charges would be and would
have difficulty budgeting the costs for their care. While this
may be manageable for some wealthy individuals, it may not be
manageable for the average beneficiary.”
In a nutshell, the AARP rhetoric all focuses on the defense
of existing political and economic institutions: Medicare’s
price control system, HCFA’s bureaucratic authority, managed
care’s corporate restrictions.
The AMA has jumped in to support Archer and Kyl. Look for a
nasty fight in Congress over the future of the doctor-patient
relationship. If Congress can regulate this, they can regulate
anything.
Consolidating the Corporate Empire
And speaking of regulation, please note what many health
policy analysts have suspected all along: the big managed care
industry wants more, not less, government regulation. Kaiser
Permanente, HIP Health Insurance, and Group Health Cooperative of
Puget Sound, joined by the liberal interest groups Families USA
and the AARP, have recently called for national, legally
enforceable standards to ensure “quality care” for managed care
enrollees and to “restore consumer trust”] in the health
insurance industry. The coalition called for national regulation
in 18 specific areas, from soup to nuts.
Now, an economic lesson for the kids: government
regulation on any industry imposes higher costs. Big companies
with big profits can absorb higher costs; little companies with
marginal profits often can’t. So supply is restricted, and demand
remains constant or increases, and what happens to prices? Right,
class: Prices go up. Go to the head of the class and get a
gold star.
