Patient Choice at Center of Battle over Medicare Law; Suit Challenges Limits

A lawsuit brought on behalf of the 600,000-member United Seniors Association (USA) and four individual Medicare recipients last December may turn the Washington, D.C., federal court where it was filed into the latest health care battleground. The issue: Does a patient's right to choose a physician outweigh the federal government's efforts to regulate health care provided to the elderly?

On Jan. 1 this year, Section 4507 of the Balanced Budget Act of 1997 (BBA) codified for the first time elderly patients' rights to privately contract for medical services outside of Medicare. In a strange twist born out of a legislative compromise, however, the new law left physicians out in the cold. What started out as an effort to give American seniors the freedom to privately contract with their doctor for some services while preserving their Medicare benefits for others, ended up excluding physicians from billing the program at all. Under provisions of Section 4507, a patient may privately contract for medical services, but only if the physician then agrees not to participate in Medicare for two years thereafter for any of their patients.

Nearly all (96.4%) of U.S. physicians participate in Medicare, according to Kent Masterson Brown, the Danville, Ky. and Washington, D.C.-based attorney who represents the plaintiffs in United Seniors of America, et al. v. Donna Shalala. Brown said it is unlikely that any physician would be willing to abandon his Medicare patients in order to privately contract with one or two.

"Fundamentally, what it amounts to is a denial across the board of contracting privately for health services," he said.

Last September, Sen. Jon L. Kyl (R-Ariz.), introduced the Medicare Beneficiary Freedom To Contract Act of 1997, a BBA amendment that would have allowed seniors to choose any physician and contract for services without regard to Medicare reimbursement restrictions. When the Clinton administration threatened to veto the entire balanced budget bill if it included the Kyl amendment, some last-minute negotiations produced Section 4507, a watered-down statute that ended up making things worse rather than better, according to Jay Cutler, special counsel and the director of the American Psychiatric Association's division of government relations.

"A good faith effort was made to achieve private contracting. They then got themselves locked into [negotiations with an] administration that all of a sudden lost its legs and in an effort to get something done they negotiated this tragedy," Cutler said. "This is certainly not what the author of the bill intended as far as I know. It's not what anyone who lobbied for the bill expected to see as the end result. It certainly doesn't achieve its desired goal, which is to protect and give the right to [elderly] patients to do what any other patient can have the right to do, which is contract with the physician of their choice."

Without private contracting, say proponents, seniors are often unable to get medical care they want and need. For instance, elderly patients are often foreclosed from receiving routine laboratory screens for diseases such as diabetes and prostate cancer. In addition, individuals often have difficulty obtaining services confidentially, a burden for those seeking to keep mental health or HIV/AIDS treatment secret.

Sandra Butler, USA president, in announcing the filing of the suit, said "senior Americans' ability to pay the doctor of their choice, for services of their choice, without the interference of the federal government, has been destroyed. Our members are outraged by these newly enacted limitations on their medical and personal freedoms."

The federal lawsuit raises a myriad of constitutional arguments against the law, according to Brown, who said that Section 4507 denies vulnerable seniors equal protection under the law, while at the same time violating their constitutionally protected rights to due process, to freely associate, to maintain their privacy and to contract with others. Ultimately, he said, all of the arguments made in the litigation simply boil down to protecting "individuals from having their liberty to generally take care of their own health invaded by the government."

This is not the first time that Brown has taken on the Health Care Financing Administration (HCFA), the division of the Department of Health and Human Services that administers Medicare, over the private contracting issue. In a 1992 case, Stewart v. Sullivan, Brown convinced a federal court that there was no government policy that prohibited Medicare beneficiaries from contracting privately for health care services and that there were no statutory prohibitions to private contracts. The court win, however, did not prevent HCFA from continuing to insist that it could administratively restrict private contracting or from threatening physicians with sanctions if they persisted in the practice.

Kyl's amendment was meant to settle the law on private contracting, but instead efforts to pass the legislation made matters more complex, Masterson said. He has now asked the court to enjoin HCFA from enforcing Section 4507 and to stop officials from interfering with patients and physicians who want to privately contract.

The American Medical Association, according to a spokesperson, supports efforts to legalize private contracting, insisting that this is a patient choice rather than an economic issue. AMA officials deny that allowing private contracting will create a two-tiered system, one for the rich, who can afford better care, and another for the poor that lacks quality.

Unless the courts step in, proponents of private contracting will have an uphill battle seeking any relief from Congress. The 33 million-strong American Association of Retired Persons (AARP) has come out against private contracting, saying it would dramatically raise the cost of medical care while creating a multi-tiered health care system. In addition, AARP, 57% of whose members are age 65 or older, said that private contracting would exacerbate critical problems with fraud and abuse, thereby increasing costs to an already financially strained program.

In a prepared statement, Nancy-Ann Min DeParle, HCFA's administrator, declined to comment on the pending litigation. Nevertheless, she said, "the important thing is that we want to ensure that all seniors who choose to enroll in Medicare have access to high quality health care at a fair cost, regardless of their ability to pay. We also must be careful not to do anything that would increase the potential for waste, fraud and abuse." She added that Medicare beneficiaries have always had the right to opt out of the system, and that the BBA "does not change that."

The problem for proponents of private contracting, according to attorney Brown, is that unlike all other Americans, if an elderly patient opts out of Medicare, "there [are] no other options."