Bad Solution For Problem That Isn’t

As a member of the American Medical Association for almost 50 years, I am outraged by the AMA’s support for a change in Medicare (proposed by Sen. John Kyl, R-Ariz.) that would allow physicians to charge Medicare beneficiaries more than the amount that Medicare allows.

Proponents, including columnist James Glassman, Steve Forbes and Rush Limbaugh, claim that this proposal would enhance beneficiaries’ ability to choose their physicians.

But its real impact would be to enhance physicians’ ability to choose how much to charge - undermining valuable protections for beneficiaries the AMA explicitly endorsed not even a decade ago.

Since 1992, Medicare has used a “fee schedule” to determine what the program pays physicians and has prohibited physicians from charging beneficiaries more than 15 percent above program rates. The goal behind that policy was to enable Medicare to limit program payments without shifting costs to beneficiaries, many of whom were recognized as paying too much.

Achieving that goal required a deal: The AMA agreed to limits on physicians’ ability to charge extra in return for certain rules in determining how much Medicare would pay.

As chair of the congressional Physician Payment Review Commission, I helped get that agreement in 1989. And I believe it continues to represent an effective way to control Medicare physician spending, reasonably (even generously) rewarding physicians while protecting beneficiaries.

At the time Medicare adopted this policy, there was concern that limiting physicians’ ability to charge would lead them to refuse service to Medicare beneficiaries. Numerous studies have shown that this hasn’t happened. In 1994, the Physician Payment Review Commission found physicians just as likely (96 percent) to be taking new Medicare patients as to be taking new private fee-for-service patients (97 percent).

In practice, Medicare’s limits substantially reduced extra charges by physicians without limiting beneficiaries’ access to care.

Now the AMA is trying to turn back the clock. The effort began in the Balanced Budget Act, in which Sen. Kyl successfully sought an explicit provision allowing physicians who do not participate in Medicare in any way (in his estimate, about 9,000 of the nation’s 700,000 physicians) to treat beneficiaries outside the program and to charge beneficiaries whatever they wish.

Not satisfied, the senator and the AMA are now seeking to extend that “opportunity” to every physician for every service.

What’s really at stake in the Kyl amendment is whether Medicare is going to return to a policy of letting physicians choose what beneficiaries will have to pay or whether the program will continue to guarantee its beneficiaries access to care at predictable costs.

If the AMA thinks that the program doesn’t pay physicians adequately, it should argue that case directly to Congress and the public. Personally, I think that’s a tough case to make. But to try would be more honest than to seek extra payments by the back door at beneficiaries’ expense.

What would happen if the Kyl amendment were enacted?

Proponents of the policy argue that physicians reluctant to see Medicare patients would become more willing to serve them.

But since we don’t see an access problem to begin with, it is far more likely that physicians who have been perfectly willing to serve Medicare patients would charge them more.

Further, higher charges would not be limited to beneficiaries with higher incomes. Studies of physicians’ charges in the 1980s showed that physicians did not limit extra charges to people with higher incomes; for specialty services, physicians charged more, regardless of people’s ability to pay.

The result, then, would be higher costs or reduced access to care for middle- and low-income Medicare beneficiaries who already face very high health care cost burdens.

Proponents of the Kyl amendment argue that their proposal doesn’t force beneficiaries to pay more; it gives them a choice. They can go outside the Medicare program and pay more if they want to.

As a physician with 49 years of experience, I find this argument disingenuous, at best. Patients who are sick and in need of care are hardly in a negotiating position. I’ve never met a Medicare beneficiary itching to pay physicians higher prices, and none of the elderly who testified before the Physician Payment Review Commission while I was chairman (1986-1993) sought a policy change to make that possible.

Support for the Kyl amendment is not the first case in which the AMA has put physicians’ economic interests above professional obligations to patients. If Congress enacts the Kyl amendment, it will be doing precisely the same thing.

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