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December 18, 1998
The federal government has backed down from its plan to change the rules controlling the terms and requirements of private payment contracts in the Medicare program.
The decision is a victory for APA, which vigorously and repeatedly urged the government to abide by the regulations it originally announced for physicians whose patients choose to sign private pay agreements for their medical care.
On November 2, the Health Care Financing Administration (HCFA), the federal agency that administers the Medicare system, announced that it would grandfather physicians who had signed private contracts that were to go into effect before January 1, 1999.
Early this year, HCFA indicated that it was planning to modify the initial regulations governing Medicare private pay agreements, but was unclear about how it would resolve the problem of physicians and patients who had already signed such contracts under the original standards (Psychiatric News, September 18).
By midyear, 229 psychiatrists had taken advantage of the private contract option, far more than had any other physicians. Those psychiatrists accounted for 47.6 percent of physicians who have submitted private payment affidavits to HCFA; next on the list are family practitioners, of whom 49 have opted out of Medicare, 10.2 percent of the total.
While APA objects to aspects of the private contracting law, it has maintained that changing the rules in midstream would weaken the significant benefits the law does offer for patients and psychiatrists. In August, APA Medical Director Steven Mirin, M.D., told HCFA Administrator Nancy-Ann Min DeParle that APA was especially troubled by the agency's proposal to add the words "or his or her legal representative" after references to the patient in the standard contract's wording.
Physicians and patients would, under this change, have to confront questions about determining who should act as legal representative, whether Medicare insurance carriers would then gain access to records whose confidentiality the new law was supposed to guarantee, and how complicated a process would be required before a legal representative was named and the contract could go forward. APA was also alarmed about a HCFA proposal to require physicians and other providers to include multiple provider identifiers on the affidavit that must be sent to HCFA before a private payment contract can be implemented, which could serve to further erode privacy protections. None of these provisions was included in the 1997 legislation.
In addition to the grandfathering arrangement, HCFA has reacted to the protests by agreeing to consult with physicians and other practitioners who treat Medicare patients before it develops new language that will have to be included in future private payment contracts.
In the June 5 issue, Psychiatric News published templates of a Medicare private payment contract developed by APA that members can cut out and use when a patient wants such an agreement. APA's Director of Government Relations, Jay Cutler, J.D., said that APA plans "to reassess the existing APA templates in light of the regulations and forthcoming HCFA-developed 'boilerplate' terms and will advise APA members of any new developments." Until that time, he added, "APA members may continue to use the template affidavit and private contract forms, which are available on the APA Web site APA and much of the rest of the medical establishment, while applauding the long-sought enactment of a private payment option for Medicare-eligible patients, remain troubled, however, by one critical proviso contained in the 1997 law.
The law states that if a physician enters into a private payment agreement with even one patient who is a Medicare beneficiary, that physician is barred from receiving Medicare reimbursement for any patient for a two-year period beginning with the implementation date of the contract (Psychiatric News, May 1, 1998; November 7, 1997).
Congress added the stipulation as a compromise with the Clinton Administration. The White House was concerned that an unfettered system of private contracting would lead to a two-tiered health care system in which older patients who are not affluent would be shortchanged in terms of treatment options.
The law, which was enacted as part of the Balanced Budget Act of 1997, requires physicians and others who treat Medicare patients to file an affidavit with HCFA that indicates the start date of the contract and identifies the patient to prevent instances of double billing.
The American Medical Association and several other medical organizations immediately protested the mandatory two-year opt-out provision and have advocated relaxing it.
APA's objections to the requirement stem from its insistence that confidentiality and privacy are the bedrock on which treatment is built. Since few psychiatrists and other physicians will be willing to sign contracts that force them to sacrifice access to the Medicare system for two years, older patients will be denied the opportunity to take advantage of an option that will ensure that the details of their treatment remain between them and their doctor, APA maintains.
APA has also highlighted for HCFA the problem that will arise when a physician who has had to opt out of Medicare in one office location is also barred from Medicare participation at other sites, such as a community mental health center. This denies the psychiatrist the opportunity to provide residency supervision, for example, and to maintain responsibility for overall patient care management, APA has emphasized to HCFA without much success.
The U.S. Senate signaled in April that it was having second thoughts about the two-year opt out. By a four-vote margin, it passed a "sense-of-the-Senate" resolution stating that physicians should not be forced out of Medicare participation just because they signed a private payment agreement with one Medicare patient. It decried "the imposition of unreasonable conditions on providers who are willing to treat seniors on a private basis. . . ."
This type of resolution, however, states the Senate's opinion and is not the equivalent of a formal vote. It is not binding and thus did not change the Medicare private contracting law.
Troubling Proviso