Who's Afraid of Patient Choice?

Commentary by Pete du Pont

There is a growing debate in Washington over private contracting in Medicare. What the debate boils down to is this: should seniors be allowed to go to any physician and pay for that service out of their own pockets? Or must bureaucrats protect these seniors from themselves and their doctors?

Medicare is the federal health insurance program that covers about 35 million seniors by reimbursing those seniors' doctor and hospital expenses. While the vast majority of seniors' health care transactions take place in this manner, in certain instances a senior might want to pay out of pocket rather than to rely on Medicare. Why? Well, how about:

Privacy. A senior might want to visit a physician without having the results of that visit, test or procedure ending up in a widely accessible government data base. While it may be reasonable to assert that if Medicare pays for a procedure, a record should be filed with the Health Care Financing Administration (HCFA), it is unreasonable to require similar reporting when people spend their own money instead of the government's.

Peace of mind. Consider a senior who is experiencing headaches and wants an MRI to relieve him of the fear that he might have a brain tumor. But the headaches are always gone by the time the patient sees his doctor, and so he has no obvious symptoms. In this situation, a doctor may refuse to prescribe an MRI paid for by Medicare because the patient presents no symptoms. Shouldn't that patient have the option of paying out of pocket for the MRI?

Choice of physician. To the majority of seniors, having a choice of physicians is an important right. Private contracting assures them the opportunity to see any physician they choose.

Rationing avoidance. Medicare's low reimbursement rates mean that seniors often do not get the best available care. For example, Medicare's reimbursement rate for a hip replacement might cover only the lowest-cost prosthesis. Since a senior cannot pay extra to upgrade, he or she must settle for lower quality. Private contracting would allow the ability to avoid rationing and opt for quality.

Now, it is probably fair to say that relatively few seniors would choose to pay out of pocket for health care normally covered by Medicare. But that's not the issue. The issue is whether or not they should have the freedom to do so.

Who would oppose such a freedom? The Health Care Financing Administration, the Department of Health and Human Services (HHS) agency that administers the Medicare program. An HHS letter from January 1992 asserted, "thus, 'private patient' agreements between Medicare patients and physicians, whereby the patient and physician agree not to bill Medicare, are not recognized by Medicare."

To resolve the issue, a group of patients filed suit against HCFA. In a 1992 decision, Stewart v. Sullivan, Federal Judge Nicholas Politan found no law or regulation that prevented Medicare patients from privately contracting with physicians.

Nonetheless, HCFA has never conceded the point and frequently resorts to intimidating physicians who try to privately contract. For example, an HHS letter from the director of the Bureau of Policy Development concedes "...there is nothing in the Medicare law that prevents a beneficiary from entering into an agreement of this kind [private contract]." But the letter then warns, "the very existence of an agreement between the beneficiary and a physician of the kind described will be viewed as prima facie evidence that any violations of Medicare requirements by the physician with respect to the beneficiary were intentional." (Emphases added.)

Doctor "mistakes" that are judged intentional can result in civil sanctions, such as the doctor's being removed from the Medicare program, or even in criminal prosecution.

To settle the issue, Senator Jon Kyl (R-AZ) introduced to the recent budget legislation a provision allowing physicians to privately contract with seniors on Medicare. President Clinton threatened to veto the whole budget bill if seniors were granted this freedom. At the last minute, opponents of patient choice introduced a provision prohibiting physicians who privately contract with Medicare-eligible patients from accepting Medicare patients for two years. The provision passed, ultimately destroying the Kyl amendment, since few physicians are likely to forgo the reimbursements.

To rectify this situation, Senator Kyl and House Ways and Means Chairman Bill Archer (R-TX) have introduced legislation reestablishing Medicare private contracting. Its fate is uncertain.

If seniors regain the freedom to privately contract, will they always make the right choice? No. They, like the rest of us, will make mistakes. But in a country whose founding principle is individual liberty, they ought to have the right to make those choices for themselves. That's what freedom - and responsibility - are all about.