Under a new law passed by Congress, seniors on Medicare who want to "privately contract" with a physician – that is, pay out of pocket for some service that Medicare pays for – must find a doctor who is willing to forgo all Medicare reimbursements from any patient for two years. That's no easy task considering 96 percent of all physicians take some form of Medicare reimbursement.
Senator Jon Kyl (R-AZ) and House Ways and Means Chairman Bill Archer (R-TX) both believe that such a restriction in a free country is an abomination. People under 65 have the right to bypass their insurance company and pay for health care out of pocket if they choose to do so, and no one seems to mind. In fact, most insurers would be glad to let someone pay out of pocket for something that the insurance company would normally have to cover.
So why should people lose that freedom just because they turn 65 and join Medicare? Kyl and Archer don't think they should and have introduced legislation to restore this freedom. But it has its critics, mostly supporters of big government who don't want people doing things without the government monitoring their actions, and they have raised a number of criticisms of Medicare private contracting.
The first of the criticisms has to do with the notion that seniors are too meek or too stupid to privately contract with doctors, who would take advantage of them at every opportunity. To protect seniors from doctors and themselves, Rep. Pete Stark (D-CA) – who once described patients as "absolutely irrational, brain dead, sniveling, begging and fantasizing ills and pains" – introduced a bill last year (I am not making this up) entitled "Private Contracts to Be Negotiated When the Patient Is Buck Naked Act of 1997."
Having done their best to convince people that seniors can not be trusted to make decisions for themselves, opponents of private contracting finally came to the conclusion that they had taken the wrong approach. So they switched to a new argument: Kyl-Archer is unnecessary because seniors can already privately contract.
For example, opponents of private contracting contend that seniors are free to pay out of pocket for anything Medicare doesn't cover, such as routine physicals or cosmetic surgery. However, that argument is misleading. Seniors can privately contract for medical services or procedures that are categorically excluded from Medicare (i.e., specifically mentioned in legislation as not being covered by Medicare), but the vast majority of health care services for seniors are not categorically excluded and thus come under the government's jurisdiction. For these services, Medicare may pay for a treatment or it may not.
According to a recently released "Reminder" from the federal government to physicians: "If a physician believes that Medicare will not pay for a test, the patient should be informed of that fact. The patient should then be asked to sign an Advanced Beneficiary Notice (ABN) to indicate that he or she is aware of this and realizes they may be responsible for the cost of the test if Medicare denies payment." (Emphasis added.) Notice that the patient is not required to pay for the service.
Now consider what the Reminder says next. "The Office of Inspector General (OIG) which governs Medicare Policy has taken the position that a physician who orders medically unnecessary tests may be subject to civil penalties."
Of course, if Medicare refuses to pay for a test, there is a strong chance it's because it considers the test unnecessary. And unnecessary tests could lead to a civil penalty being imposed service on the doctor – up to a $10,000 fine.
So a physician who wants to order a test but is unsure whether Medicare will pay for it may be able to get the patient to cover the cost, or the physician may end up having to pay for the test himself. On top of that, he may be subject to harassment from Medicare, fines or civil penalties and being expelled from the Medicare program.
Private contracting, anyone?
So no physician is likely to risk privately contracting under such burdens and risks – leaving patients with no ability to privately contract or get the tests they want.
Opponents of private contracting ought to be ashamed for treating seniors and physicians so poorly. No opponents of private contracting under the age of 65 would be willing to give up their personal right to step outside of the health insurance system if they wanted to, and it is shameful for them to make it so hard for seniors to do so.