AAPS hears from increasing numbers of physicians who are renouncing government payment. At the annual meeting, Dr. Tad Lonergan told about his pure free-enterprise clinic (tapes still available), which he opened after being excluded from government programs. Most physicians known to us who work outside the government system have excluded themselves voluntarily.

Physicians have taken a number of approaches.

A few physicians refuse to consider themselves Medicare "providers." They argue that Medicare Part B is voluntary for both patients and physicians. They have never signed any agreement with the government, nor have they implicitly accepted governmental oversight by taking assignment. Their relationship with their patients is based on mutual trust, not signed papers. If their theory is correct, Medicare regulations are simply irrelevant to them. As far as we know, the theory has never been subjected to a court test. We know of one family physician in rural Iowa who was eventually excluded from Medicare, a fact that he proudly advertised in the newspaper, continuing on with his low-cost family practice just as before. This was long before Draconian civil and criminal penalties were enacted. If physicians had followed the lead of Dr. Henry Wolf, our situation would be very different today.

A few physicians are Medicare non-"providers" because they have written to HCFA and asked that their provider number be retired or inactivated. They continue to care for Medicare-eligible patients who pay privately but file no Medicare claims. Some use a written disclaimer such as the Medicare Acknowledgement Form published in AAPS News July 1996. The main hazard is that patients or family members will violate their oral or written agreement and demand to collect their "entitlement." If the physician has not supplied paperwork and codes, it is not possible to file a claim without the physician's knowledge. Learning of the patient's betrayal of trust, the physician has the option of refunding payment.

Some physicians are non-"providers" either because they refuse to treat Medicare-eligible patients (except possibly under emergency conditions, when they simply work without pay) or because they provide only non-covered services.

Some physicians try to be both Medicare "providers" and private physicians. Some make a clear distinction between services that are legally not covered (such as cosmetic surgery) and perform only those services by private arrangement, filing claims for covered services that may also be provided. This practice may face a court test. At least one physician has been threatened with criminal indictment, although to the best of our information and belief his practice has been scrupulously honest. Other physicians perform "covered" services on a private-contract basis from time to time, electing this option in consultation with their patients on a case-by-case basis.

The effect of Section 4507 is not altogether clear in our view and may not ever be determined without litigation. Enforcers may not be guided by the plain meaning of the Law.

It seems clear to us that the law applies only to physicians who are Medicare "providers." There is no law that requires a physician to be a "provider." (In Massachusetts, to be sure, one must sign a Medicare Participation Agreement to be licensed, but one is not required by law to accept Medicare-eligible patients in one's practice). Furthermore, §4507 does not say that all physicians who treat Medicare-eligible persons on a private basis must file an affidavit. It simply provides a form of safe harbor for those who do file the affidavit. How safe is the harbor? For a clue, ask a physician who filed for a waiver under the Clinical Laboratory Improvement Act. Such physicians are open to expensive, intrusive inspections to prove that they do not perform any non-waivered services.

Does §4507 make the murky situation regarding private contracting better, worse, or about the same? Some have said that AAPS is the only group in the country that thinks the situation might be better, because Congress has finally acknowledged that it is lawful to perform possibly covered services for Medicare-eligible persons for private payment, at least under certain circumstances. Whether it truly is better (or worse) depends on what the situation was before, both inside and outside the District of New Jersey where Stewart v. Sullivan was decided. AAPS is attempting to clarify the situation with the open letter to Secretary Shalala.

From a moral and legal standpoint, AAPS continues to recommend the Non-Participation Policy of rejecting all taxpayer funds and declining to participate in all voluntary activities that help to support socialized programs.

Dear Secretary Shalala:

Congress recently passed Section 4507 of the Budget Reconciliation Act of 1997, entitled "Use of Private Contracts by Medicare Beneficiaries." This new Section raises more concerns than it answers, and HHS has not yet published any clarification even though the effective date of the Section is January 1, 1998. On behalf of our thousands of physician members, we request clarifications to the following:

Medicare beneficiaries, and their physicians, have a constitutional due process right to obtain plain and clear notice of applicable law. We look forward to obtaining a prompt response from HHS to these narrow and important questions.

[Physicians may want to take certain actions pending a response--Ed.]

From Small Beginnings. Having just read the AAPS pamphlet by James Maccaro on the Road to Genocide, I am astounded by the current parallels to the practice of medicine in the National Socialist era. Take a look at the Chautauqua Integrated Delivery System...and its "ledger like accounting which tracks credits (Enrollee Allowances) and debits (claim costs) for each physician." A "subtle shift" in physician attitude seems already to have occurred such that people are now judged on their debits and credits (worth) to the Plan.

Given the widespread abuse of euthanasia in the Netherlands today, it's almost as if the Nazi concept of killing those deemed to possess "a life not worthy to be lived" lay dormant for half a century and has now re-emerged. Whole societies, having abandoned their absolute moral immunization to such things, in favor of moral relativism, are now completely vulnerable to the spread of this disease.

Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

A Chain Letter on Capitation. Dear Friend and Colleague:

Most of us, as physicians, are concerned about the obstacles in the path of physicians as they attempt to deliver care...As a first step, this letter is to encourage you not to sign any contract that leads to or involves capitation. When your name appears on the insurance companies' list, your patients think you are condoning capitations....This letter has been reviewed by an attorney and does not violate antitrust concerns, as the intent is not to boycott any individual plan but to voice one's...right to freedom of speech against an idea.

sent to us by Holly Fritch Kirby, M.D., Leawood, KS

[A full copy of the chain letter is available on request from AAPS.]

Private Doctors Do Exist. From a letter to Forbes:

Senator Jon Kyl (R-AZ), chief Senate sponsor of the Medicare Beneficiary Freedom To Contract Act (S. 1194), has garnered 43 cosponsors for the Senate bill. Congressman Bill Archer (R-TX), Chairman of the House Ways and Means Committee, has introduced a companion bill (HR 2497) in the House of Representatives. It has attracted a stunning 157 cosponsors. The Archer-Kyl bill would repeal the onerous requirement that doctors sign an affidavit and exclude themselves from treating any patients under Medicare for a period of two years to take advantage of the Balanced Budget Act provisions concerning private contracts.

The strong growth in Senate support testifies to the political potency of the issue. Kyl is making the rounds of his Senate colleagues convinced that the issue of patient choice is not only good public policy, but is also great politics. To the extent that senior citizens start finding out what is in that Balanced Budget Bill, Kyl could soon be proven very right-and politically a lot more savvy than so many of his colleagues. Senate Democrats are watching this issue carefully, weighing the growing public response. When the parade gets big enough, you can never tell how many politicians are prepared to jump out in front of it and pretend that they were marching to the tune of the vox populi all along. It is instructive that only Senator Ernest Hollings of North Carolina-a senior Democrat wise in the ways of the world’s most exclusive deliberating body-has sponsored the Kyl bill.

In the House, even though President Clinton is threatening to veto any liberalization-a good old word when used correctly-of private contracting in Medicare, "liberal" Democrats (if that adjective is appropriate any more) are getting progressively nervous. Why? You can always be sure when you are scoring politically when the opposition resorts to name calling over reasoned argument. We are starting to get a lot of name calling, and remarkable defenses of the Medicare status quo. As reported previously, Congressman Pete Stark (D-CA), Ranking Member of the House Ways and Means Subcommittee on Health, warns that the drive for private contracting in Medicare is nothing more than a scheme hatched by a few greedy doctors to get more money out of hapless seniors. Indeed, the central response of Stark and his allies has been an ad hominem attack on doctors.

The liberal leadership of the American Association of Retired Persons (AARP), which claims to represent 30 million people over the age of 50, has never been shy about venturing onto health care policy battlegrounds and occasionally outruns its supply lines. Recall their support of the calamitous Medicare Catastrophic Act of 1988 and their carefully worded "pussy footin roun" with Miss Hillary’s health care plan, which was opposed by 80% of seniors in one prominent poll. Not to be outsmarted again, AARP has come out officially swinging against the Kyl bill. Spokesman Martin Corry recently told American Medical News (10/6/97) that the Kyl effort reflects the belief of some physicians that "one Mercedes isn’t enough; I want two."

The second part of the liberal strategy-after trashing doctors-is to issue a stirring defense of the Status Quo. Nothing’s wrong with Medicare that another ream of regulation won’t cure. Congressman Stark has laid out the statistics with a drum-roll: 96% of doctors "accept the Medicare fee schedule"; in 1995, 393 doctors received more than $1 million each from Medicare and 3125 received between $500,000 and $1 million; and the Physician Payment Review Commission (PPRC) "reports no problems of access because Medicare underpays doctors."

To show anybody who doubts it that he means business, Kyl has put a Senate "hold" on the President Clinton’s nomination of Nancy-Ann Min DeParle as Administrator of the Health Care Financing Administration (HCFA). The effect of a Senate hold is to stall and possibly derail the nomination. It traditionally has been a way that Senators have bargained with the President and the Administration.

Remarkably, Congressman William Thomas (R-CA), Chairman of the House Ways and Means Subcommittee on Health, told the New York Times (10/26/97) that while he supports the Kyl bill, he opposes using the DeParle nomination as a bargaining chip with the Clinton Administration. Thus Thomas tells The Times: "That whole approach drives me up a wall. It’s so petty to think that you can stop the world until your little issue gets addressed. To hold up a nominee over one specific issue-that’s in the category of bribery and blackmail, not policy. It’s like assault and battery on a government nominee." The future HCFA Administrator, appointed by the Clinton Administration, is an innocent who must be spared Senatorial angst over a "petty" or "little issue".

Funny, President Clinton didn’t think private contracting in Medicare was a "little issue"; in fact, as Congressman Thomas and his colleagues have revealed in various communications to the press and the public, well after the fact, President Clinton was prepared to veto the entire Balanced Budget Bill over this specific dispute-tax cuts, budget targets, the goal of reaching a fiscal balance, the bloody political and public relations battles of the past two years with Gingrich, everything-over section 4507. And it didn’t seem a "little issue" to Thomas and his House Republican colleagues when they caved into the veto threat of the President during the negotiations on the Balanced Budget Act of 1997. In fact, it seemed so big that they had to make-according to them-a gut-wrenching decision to establish federal intrusion into private contracting between doctors and patients. So, that’s not blackmail and bribery on the part of Bill Clinton? No, he’s just being "Presidential." But when Kyl holds up a nomination-not the entire Balanced Budget process, mind you, but a single nomination-then that’s "blackmail and bribery." And Democratic savaging of various Republican nominees such as Clarence Thomas was merely normal political behavior.

This episode is yet another chapter-and-verse lesson in the political behavior of House Republicans in the wake of the 1995 Budget Battle.

Kyl is getting big backing from the United Seniors Association, a conservative seniors’ group which represents 540,000 elderly citizens nationwide. Sandra Butler, the president of the group, said recently that "It seems incredible that our government would deny seniors the basic freedom to use their own resources to get better health care."

The efforts of the United Seniors have been reinforced by a growing coalition of organized opposition. The American Conservative Union (ACU), Citizens for a Sound Economy, and American for Tax Reform have all staked out opposition to Section 4507. Meanwhile, spokesmen from the National Center for Policy Analysis and the Heritage Foundation have also called attention to the negative policy implications for the elderly if a restrictive policy on private contracting is imposed on Medicare.

And yet the Congressional team sponsoring the bill gets increasingly nervous about the rightness of their own position. According to the Congressional Quarterly Monitor (11/3/97), top Republicans, the same group which gave us the now infamous Section 4507 of the Balanced Budget Act of 1997- which protects private contracts only with doctors who promise to get out of Medicare for two years-is now getting another case of the shakes. According to CQ, Republicans such as Mike Bilirakis (R-FL) are so spooked over Medicare issues that they fear corrective legislation would give the Democrats "fodder" to use against them in the 1998 campaign.

Playing Softball

The Wall Street Journal first reported it. And the Washington Times followed suit. But the news is so striking, one has to sit down and absorb it. House Speaker Newt Gingrich has been considering nothing less than the nomination of Horace Deets, top honcho of the AARP, as his choice for the big Medicare Commission. The Commission, which is to report in two years on long-term Medicare reform, was created by the Balanced Budget Act of 1997-the achievement of a lifetime, according to Clinton.

It is hard to fathom why Gingrich would do such a thing. It is akin to Teddy Kennedy appointing some right-wing activist to a prominent commission on entitlement reform. If Deets and the AARP crowd get the nod, then Congressional leaders’ commitment to serious Medicare reform is, to put it charitably, pretty vague-after all the political bloodshed and the terrorization of seniors and Republicans alike by the Clinton Administration.

On the specifics of Medicare reform, there is, of course, more division. But there are some interesting findings. First, 41% of Democrats favor smaller changes, such as raising premiums or cutting benefits slightly, as long as the basic Medicare structure is retained. But 48% of Democrats and a whopping 57% of all voters favor much larger changes in the system, including "letting the marketplace determine the price and level of health care provided" rather than the government setting the price of Medicare services and the "scope of Medicare coverage." Moreover, 75% of all voters, and 74% of Democrats, favor means testing, "or raising Medicare premiums" for the wealthy. The Congressional leadership should take note.

Next year, according to the United States Office of Personnel Management (OPM), premiums in the Federal Employee Health benefits Program (FEHBP) are projected to increase on average by 8.5%. This is the largest increase in FEHBP premiums in several years. The Feds are feeling the unpleasant pressure of their own legislative handiwork: the Kennedy/Kassebaum bill and other federal mandates.

Policy analysts are worried because the FEHBP, which is more driven by consumer decision-making than private-sector, employer-based insurance, has been traditionally better at keeping costs under control. In the private sector, OPM and industry analysts project a return to double-digit premium increases in 1998 as managed care matures and the population ages. Others observe, however, that while the FEHBP news is not good, there are certain features of the federal system that are quite different from the private sector plans offered by large companies. The federal pool is aging more rapidly than either the private sector workforce or the general population. By 1995, a total of 40% of all FEHBP subscribers were retirees. And the proportion of elderly and retired workers in the pool has been growing relative to the active working population. The reduction in the federal workforce by about 200,000 workers has deepened the imbalance between retirees and active workers. Because federal retirees are sharply more expensive than members of the active workforce, this factor alone is probably the greatest single factor driving health care costs up in the program.

The "Sesquicentennial Moment" commemorated in AM News on 10/13/97 involved the creation of the Professional Standards Review Organizations (PSROs) for Medicare. Then-president-elect Malcolm C. Todd, M.D., called PSROs "a greater threat to the private practice of medicine than anything ever developed by Congress." However, because repeal was "unrealistic, politically naive and unattainable," the AMA advised doctors "to work within the program in hopes of having a significant impact on implementation."

AAPS challenged the law (in AAPS v. Weinberger) and also the AMA leadership. James Sammons, M.D., then chairman of the AMA board, called the "give me liberty or give me death" tactics of AAPS to be "among the most divisive in American medicine."

In 1980, the AMA delegates did vote for repeal, and a year later, Congress began phasing out the unsuccessful program -only to replace it with something worse, the Peer Review Organizations or PROs.