The ACP Advocate Blog
by Bob Doherty
Monday, June 14, 2010
Is "private contracting with benefits" the answer to Medicare's woes?
My blog today is from the American Medical Association's House of Delegates meeting, where much of the discussion is over Congress' continued inability to reach agreement on the Medicare SGR physician pay cut. Many of the delegates have coalesced around the idea of private contracting as the solution.
Currently, physicians and Medicare patients are allowed to enter into private contracts for their services, provided that they mutually agree to forgo any Medicare reimbursement for a two year period. This is true private contracting in that it gets the government completely out of the picture: Medicare beneficiaries voluntarily agree to give up their Medicare physician benefits to enter into a private payment contract with their physician.
The AMA delegates, though, seem to have a different kind of contractual relationship in mind, where the Medicare patient could still receive full reimbursement from Medicare for their physician services, but their doctor would not be bound by the legal limits that Medicare places on how much their doctor could charge above Medicare's allowed amounts. Instead, there would be an agreement between the physician and the patient on how much the beneficiary would be expected to pay for services above Medicare's allowed charges. This approach might be described as "private contracting with benefits"- since it tries to have it both ways, maintaining current Medicare benefits, while allowing physicians to charge their patients more than Medicare allows, with the patient's consent.
I understand the appeal of private contracting with benefits. At a time when Congress is incapable of agreeing on legislation to ensure that Medicare will pay physicians a fair fee for their services, private contracting with benefits provides an "escape valve" to get around Medicare's price controls. The argument also goes that seniors shouldn't be penalized with a loss of benefits for entering into a private contract. Private contracting with benefits could help maintain access for seniors who are at risk of losing their doctor, and provide a lifeline to practices that are struggling financially.
I don't see private contracting with benefits, though, as the answer to the immediate 21% SGR cut, or for that matter, for most of the problems with Medicare's dysfunctional payment system. For one thing, I see no chance, nada, that the current Congress and administration would agree to allowing seniors to enter into private contracts and maintain their Medicare benefits. This will be viewed by a majority in Congress, and by the current administration, as opening the door to a massive cost-shift to seniors. At a time when seniors are already worried that they will be losing benefits under the new health reform law (they actually will get better benefits under traditional Medicare, but many don't believe it), I don't think many politicians would vote for something that would likely be viewed by many seniors as eroding their benefits by requiring them to pay more out-of-pocket. AARP, which has been allied with organized medicine in support of repealing the SGR, likely would fiercely oppose opening the door to physicians charging seniors more than Medicare’s allowed charges.
Even if the political winds change and Congress ultimately comes around to support private contracting with benefits, this won't happen in time to avert the current 21% SGR cut. Tying reversal of the current SGR cut to private contracting with benefits is not a winning formula to get 60 votes in the current U.S. Senate and majority of the House of Representatives.
The other problem with private contracting with benefits is a more substantive policy one. If Medicare patients are going to be allowed to enter into private contracts that allow their doctors to charge more without giving up their Medicare benefits, then legal safeguards would need to be included. ACP policy, first adopted in 1998 but reaffirmed by the Board of Regents in 2010, supports private contracting, but with safeguard s to protect patients:
"The American College of Physicians supports the primacy of the relationship between a patient and his/her physician, and the right of those parties to privately contract for care, without risk of penalty beyond that relationship.
Such statutes should include the following patient protections: (1) a requirement that physicians disclose their specific fee for professional services covered by the private contract in advance of rendering such services, with beneficiaries being held harmless for any subsequent charge per service in excess of the agreed upon amount; (2) a prohibition on private contracting in cases where a physician is the "sole community provider" for those professional services that would be covered by a private contract; (3) a prohibition on private contracts in other cases where the patient is not able to exercise free choice of physician; (4) a prohibition on private contracting for dual Medicare-Medicaid eligible patients; (5) a requirement that private contracts cannot reduce patient access to care in cases of emergency or life-threatening illness; and (6) a requirement that the Centers for Medicare & Medicaid Services and the Medicare Payment Advisory Commission monitor Medicare beneficiary access to health care and report to Congress and the public if access problems develop as a result of private contracting."
In other words, there is a place for "private contracting with benefits" as part of a total restructuring of Medicare payment policies, but such an option would need to be constructed in a way as to allow for true price (and quality) transparency and to protect vulnerable seniors who really would have no choice. Private contracting with benefits does not eliminate the need to restructure Medicare payments to provide better value to seniors and taxpayers or support the value of primary care. And it won't help get us the votes needed now to reverse the 21% Medicare SGR cut.
Today's question: Do you see private contracting as the solution to the SGR cut? Do you agree that the safeguards proposed by ACP should be included?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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