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AAPS Doctors Tell Congress: “The Doctor is In, Even If Insurance Is Out”
Joint Economic Committee Hearing
April 28, 2004

AAPS Doctors Choose Payment at Time of Service
Affordable Care for Uninsured & Low-Income Patient
Congress Must Allow Unrestricted Medicare Private Contracts, Give Patients Full Tax Benefit

Washington, D.C. -- Increasing criminalization, diminishing third-party reimbursements and the onerous assault on patient privacy under the new HIPAA privacy regulations are combining to send more doctors back to the cash-based practice of medicine, according to testimony given by members of the Association of American Physicians and Surgeons (AAPS) to the Congressional Joint Economic Committee, at a hearing called “Consumer-Directed Doctoring: The Doctor is In, Even If Insurance Is Out.”

Even the usually combative single-payer supporter, Rep. Pete Stark listened carefully, saying “he had no problem with what he had heard here today.” When Rep. Stark challenging the concept of patients as educated consumers, saying “I think patients are clueless as to what it costs for medical care and for shopping,” AAPS member Alieta Eck, M.D. of New Jersey, nimbly fielded the question. “Well sir, you shopped around for your pediatrician, didn’t you?”

In gaveling the hearing, Chairman Robert F. Bennett stated:

“….Today we’re here to explore how some doctors are finding alternatives to the traditional third-party payer health care system, and at the same time providing better care for their patients.

“Many doctors are frustrated by the state of our current health care system, and their patients are too. Doctors are continually faced with third-party entities interfering in their practice, pushing them toward a system that focuses on arcane regulations, not on patient care.

“Low reimbursement rates require physicians to increase the number of patients they see and shorten the lenth of office visits. They must also shoulder the burdens of increased practice costs, time-consuming paperwork, and rising medical liability premiums….” [emphasis added].

The single-payer supporter for balance on the panel was Dr. Robert Berenson, one of Hillary Clinton’s former advisors from the health care task force, who warned that what AAPS members and other were doing made him “….concerned about the social role of the movement as a threat to the insurance being able to spread the risk.”

Thousands of doctors across the country have chosen to go back to “Simple-Care” cash-based practices. In doing so, they have reduced administrative and compliance costs and passed those savings along to patients, such as $35 office visits and $15 laboratory testing fees, according to AAPS member, Dr. Robert Berry, director of the PATMOS EmergiClinic in Greeneville, Tennessee.

“The only way I can keep my price so low is by avoiding the crushing overhead and hassles that other physicians allow third-party payers to impose on their practices,” testified Dr. Berry, who plainly posts prices in his office, ranging from “Poison Ivy - $25” to “Simple Lacerations - $95.”

When patients buck at the concept of foregoing their insurance and $10 co-pay, Dr. Berry uses a simple analogy. “If you don’t have insurance for routine car maintenance, then why have it for routine medical care since fees at our clinic run anywhere between an oil change and a brake job.”

“The move to cash-based practices is concrete evidence of the atmosphere of fear and frustration in which doctors practice today," said Kathryn Serkes, policy and public affairs counsel for AAPS, which has provided support for cash-based practices since 1997. "Money is not the issue – control is. More doctors would rather treat uninsured patients, possibly for free, than jump through insurance and government regulatory hoops.”

Physician income is controlled by the government and health plans, but there is no control on their expenses. AAPS members, David MacDonald and Vern Cherewatanko, founders of SimpleCare, started their cash-based clinics after the managed care market squeezed them so severely by increasing overhead and hassles while cutting reimbursement to the point that they were losing money.

With five clinics and $10 million in billings, their average reimbursement was $43 per patient, while the average costs ran $50, of which $20 alone was attributed to billing.

And it’s not just the private plans that are causing the cost spiral to skyrocket. Physicians have made great changes to their practices to comply with Medicare regulations, most involving less time for patient care or additional cost, including spending more time on documentation, restricting services, hiring more compliance and billing staff, or just quitting Medicare.

A 1997 survey conducted by AAPS shows that the average cost to a physician office process a Medicare is more than $24, amounting to about $60,000 in annual costs to the average office. A 2003 survey revealed that physicians and their staff spend almost one-fourth (22%) of all of their time devoted to Medicare paperwork and compliance. Some of the other findings may also explain the movement to cash-based practices:

  • 33% do not accept new Medicare patients;
  • 40% restrict services to all Medicare patients;
  • (Reasons: “billing and regulatory requirements” ranked first, followed by “hassles and/or threats from Medicare carriers/government, “fees too low” & “fear of prosecution or civil actions”)
  • 41% have had difficulty finding a referral physician;
  • 32% say level of service is less than 5 years ago;
  • 22% is the amount of total staff & physician time spent on compliance with Medicare regulations;
  • 65% would not take part in Medicare again;
  • Medicare claims cost offices 50% more to process;
  • 63% would be more willing to serve Medicare patients with unrestricted private contracting;
  • 67% predict more doctors opting out of Medicare;
  • 58% predict severely rationed care;
  • 36% predict a complete collapse;
  • 62% plan to retire at an earlier age than expected 5 years ago;
  • (Reasons: “Increased government interference,” followed by “increased regulatory burden.” Money ranked number six.)

Of particular note is that physicians prefer uninsured to Medicare patients, turning them away 50% less frequently than Medicare patients (17% and 33% respectively).

The survey supports 6 conclusions:

1. Increasing fear of prosecution or government retaliation has had a negative impact on Medicare patients’ access to physicians, and their ability to receive referrals and certain services such as surgery.

2. Compliance with Medicare regulations is costly, takes significant time away from patient care, and is an increasing cause of reluctance to treat Medicare-eligible patients.

3. Unrestricted private contracting under Medicare would greatly increase willingness to treat Medicare-eligible patients.

4. Increased fear of retaliation and regulatory burden are causing physicians to make changes in practices that adversely affect patient access and quality.

5. The increasing role of government in medicine results in more difficulty for all patients to access care, not just those who are Medicare-eligible.

6. Physicians are becoming increasingly disheartened and negative about the future of the practice of medicine.

Dr. Eck, testified that her low-income clinic follows the example of the Good Samaritan. “When we see people in need, we are not going to demand another government program, but rather use our own time and resources…no one needs to spend valuable time asking permission of the insurance companies to do tests.” But a pending Medicare rule would prohibit doctors who accept any Medicare patients from charging LESS than the Medicare fee to any patient, making it impossible for Dr. Eck’s clinic to operate as it does since they do accept Medicare patients.

Another AAPS physician, Todd Coulter of Mississippi, is proof that critics are wrong that cash-based practices can’t survive and serve indigent or low-income communities. His walk-in clinic has provided him with a livable income and caters to his uninsured patients. “I’m practicing medicine again,” he said.

The panel emphasized that dependence on third-party payment is a recent phenomenon, rare and unimportant when many doctors started practice in the 60’s, and that it’s time we started to take a look at the “good old days.”

“I love being a physician,” said Dr. Eck. “But unless we give our physicians the respect and freedom they need to practice the compassionate medicine for which they were trained, we will watch the deterioration of the greatest health care delivered anywhere in the world.”

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