[Congressional Record Volume 143, Number 156 (Saturday, November 8, 1997)]
[Senate]
[Pages S12080-S12082]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              MEDICARE BENEFICIARY FREEDOM TO CONTRACT ACT

  Mr. KYL. Mr. President, I wanted to give a report to my colleagues on 
the status of the Medicare Beneficiary Freedom To Contract Act, the so-
called Medicare private contracting issue, which has been before both 
the Senate and House for several weeks now following the adoption of 
the Balanced Budget Act, which contained in it a provision which makes 
it much more difficult for physicians to serve patients who want to 
contract outside of Medicare.
  Let me briefly tell you what the problem is, the legislative status, 
and the resolution--at least as of now--that we have been able to 
accomplish.
  The issue is whether or not physicians can serve both Medicare 
patients and people under private contracts who are 65 years of age. 
Once a person turns 65, of course, they are eligible for Medicare, and 
most of the services they can obtain are paid for by Medicare. But 
occasionally, either there is a service that is not covered by 
Medicare, or even sometimes services that are covered by Medicare that 
a patient would prefer to obtain from a physician outside of the 
Medicare Program.
  For example, a constituent of mine had a condition that required the 
aid of a specialist in her small community. There were none available, 
except one person who was no longer taking Medicare patients. By the 
way, Mr. President, this is a common situation, because Medicare, 
especially for specialists, does not reimburse even up to their level 
of costs. So while many physicians don't want to dump their existing 
Medicare patient load and they want to continue to serve those patients 
they have been serving for a long time, they are not anxious to take on 
new Medicare patients. In this case, she went to the physician. He said 
he would be happy to take care of her, but he wasn't taking anymore 
Medicare patients. Her response was, ``Well, I will just pay you 
directly. You bill me, and I will pay you. That way Medicare will save 
some money, and I will get the treatment I need, and you won't have to 
take new Medicare patients.'' He found that the Federal Government 
would have deemed that to be a violation of law and, therefore, he 
would have been precluded from providing the services.

  It was in response to that kind of a problem that we created a piece 
of legislation that would allow patients who are 65 years of age to 
have the right to go to the physician of their choice and to be treated 
outside of the Medicare Program, if that is their choice. We passed 
that legislation here in the Senate. It became part of the Balanced 
Budget Act. And, before the act was finalized, the President indicated 
his desire to veto that legislation if that provision were retained. As 
a result, some changes were made, the most important of which was to 
add a provision to the act which makes it virtually impossible for 
patients to actually have the benefit of that freedom of choice. The 
provision was that a physician providing such services had to opt out 
of all Medicare treatment 2 years in advance.
  In other words, patients still had the right to go to a physician. 
But any physician that provided those services could not provide any 
Medicare services for a period of 2 years. That meant that it was 
virtually impossible then for physicians to serve these particular 
patients.

[[Page S12081]]

  In an effort to try to resolve that, we introduced the Medicare 
Beneficiary Freedom of Contract Act. It has almost 50 cosponsors in the 
Senate, well over 100 cosponsors in the House version sponsored by the 
chairman of the House Ways and Means Committee, Bill Archer. We hoped 
that we would have the opportunity to get that passed before the end of 
this legislative session this year. It was not to be. People in the 
House of Representatives did not feel that they wanted to go forward 
with it under the constraints of time. There were some other issues. As 
a result, we did not push it as an amendment to one of the 
appropriations bills or other vehicles by which we could have done that 
here in the Senate.
  Instead, I sought to proceed in a way that would enable us to ensure 
that we would make progress early next year on getting this issue 
resolved. Yesterday, I met with the President's nominee to head HCFA, 
Nancy-Ann Minn Deparle. She gave me a series of assurances of ways that 
they want to continue to work on this problem. I also received a phone 
call from Secretary Shalala providing the same assurances that we will 
be able to sit down and work with the administration to try to resolve 
this issue so that early next year we will be able to pass legislation 
that will solve this problem of Medicare-private contracting.
  In addition to that, I received some assurances from Nancy-Ann Minn 
Deparle that the law that goes into effect on January 1 would not 
affect the provision of services not covered by Medicare. It would not 
affect the provision of service only partially covered by Medicare--on 
Medicare, for example, a second mammography beyond the annual 
mammography covered by Medicare. It would not affect the provision of 
care under the Medicare Plus Choice Plan, the Medical Savings Account 
option, and it would not affect the ability of other physicians in a 
group practice to treat Medicare beneficiaries when a patient makes a 
private contract with one of the group practitioners.
  We worked on some of the other problems relating to this in addition 
to try to develop legislation next year that will be approved by the 
House and Senate and the administration. I will report more on the 
progress of this after a while.
  I would like to introduce into the Record two items that came to my 
attention this morning. One, a copy of three letters that were 
published.
  Mr. SPECTER. Mr. President, if my colleague will yield, I inquire: 
How much time does the Senator intend to use?
  Mr. KYL. I am finishing right now.
  I ask unanimous consent to have printed in the Record the text of 
three letters carried in the New York Times on Friday, November 7, and 
a copy of an editorial in the San Francisco Chronicle, and the date is 
November 6, 1997.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Nov. 7, 1997]

             Health Care Is Too Important for Partisanship

     To the Editor:
       ``Move Under Way to Try to Block Health Care Bills'' (front 
     page, Nov. 4) points up that health care reform is again 
     being treated as a partisan issue rather than the bipartisan 
     issue it should be. The health care system is in critical 
     condition.
       Costs are rising at twice the rate of inflation and will 
     double in the next 10 years. The number of uninsured--
     estimated to be between 41 million and 44 million--is 
     increasing by a million a year, and the quality of care 
     continues to erode.
       Competition and managed care have been promoted as 
     solutions, yet the marketplace has done little to stem long-
     term cost, quality and coverage problems, which show no sign 
     of abating.
       Opponents of reform being considered in Congress contend 
     that the proposals would increase costs even more and drive 
     more people out of health coverage.
       Yet without change in the way we deliver and pay for health 
     care, costs will rise more rapidly and the number of 
     uninsured will grow larger.
       Partisan posturing only aggravates the problems for all 
     Americans.
                                           Henry E. Simmons, M.D.,
     Pres., Natl. Coalition on Health Care.
                                  ____


                         Kyl Proposal Isn't New

     To the Editor:
       ``Republican Health-Care Mistakes'' (editorial, Nov. 5) 
     overlooks that the wording of the bill sponsored by Senator 
     Jon Kyl, which would allow Medicare patients to pay doctors 
     more than Government-set rates, would only preserve and 
     codify the status quo.
       The Medicare law and its amendments never forbade 
     contracting between physicians and beneficiaries outside of 
     Medicare. It was the heavy hand of the Health Care Financing 
     Administration that articulated the draconian regulations 
     forbidding outside contracting. A 1992 court decision 
     (Stewart v. Sullivan) was moot on the subject of outside 
     contracting, effectively allowing it.
       Consequently, we have already had Medicare outside 
     contracting without all of the hazards you predict: illegal 
     double billing of both the patient and Medicare, a two-tier 
     system of care and unequal bargaining between physician and 
     patient. You propose to fix the functional status quo with 
     one that decrees loss of individual freedom of choice at a 
     moment when life and death decisions may be crucial.
     Robert L. Soley, M.D.
                                  ____


                            Competent at 65

     To the Editor:
       Re ``Republican Health-Care Mistakes'' (editorial, Nov. 5): 
     You miss the point of the Kyl amendment. There are 65-year-
     olds more than able to negotiate on their own behalf and who 
     feel demeaned when the Government robs them of the right. Why 
     deny them the same rights that they had the year before they 
     turned 65?
       The low regard for the integrity of physicians your 
     editorial expresses is offensive. In spite of all the chaos 
     in the health care sector, the primary reward of the 
     physicians I speak with comes from helping patients.
       Do you really think the typical physician is bent on 
     defrauding people?

                                       Herbert S. Gross, M.D.,

                                 Clinical Professor of Psychiatry,
     University of Maryland.
                                  ____


            [From the San Francisco Chronicle, Nov. 6, 1997]

                   Freedom of Choice On Medical Care

       The Balanced Budget Act of 1997 was supposed to give 
     elderly patients greater freedom of choice on medical care. 
     But it stopped short of offering genuine choice. Here's the 
     situation.
       Under current rules, doctors are prohibited--criminally 
     prohibited--from charging Medicare patients more than the 
     amounts permitted by the government, even if the patients are 
     willing to pay the money out of their own pocket. These 
     restrictions have kept Medicare patients from being able to 
     use their own money to see doctors--even specialists--as they 
     choose.
       This restriction is all the more onerous for patients 
     because so many doctors have become disenchanted with 
     Medicare, which reimburses at about 70 percent of the rate of 
     private insurers. As a result, some senior citizens have 
     trouble finding a doctor willing to take them.
       Recognizing the problems with the restrictions, Congress 
     recently voted to allow Medicare beneficiaries the option to 
     privately contract with doctors for any service at any 
     price--with one caveat.
       And that caveat, insisted upon by the Clinton 
     administration, is a whopper that effectively undermines the 
     patient's freedom of choice. The Clinton-pushed amendment to 
     the bill provides that any physician who enters into such a 
     private contract cannot receive any Medicare reimbursement 
     for two years. Those new rules go into effect January 1.
       Senator Jon Kyl, R-Ariz., has introduced legislation (S. 
     1194) that would get rid of the two-year restriction on 
     doctors who enter into the private contracts. His plan to 
     open up choices for Medicare patients has encountered intense 
     opposition from powerful groups, notably the American 
     Association of Retired Persons.
       Defenders of the status quo argue that Medicare patients 
     have no shortage of choices. ``The idea that doctors don't 
     take Medicare patients is fallacious,'' said Representative 
     Pete Stark, D-Hayward, a longtime advocate of universal 
     health care. Stark maintains that a private-payment option 
     would create a two-tiered system--``boutique health care'' 
     for the wealthy, while Medicare would be left to tend to the 
     poorest and the sickest.
       There is a little problem with the all-is-well premise of 
     those who oppose the Kyl bill. If Medicare really did offer 
     satisfactory choice and service for beneficiaries, then none 
     of them would want or need to dig any deeper into their 
     pockets for medical care.
       This issue also involves a matter of privacy--which is why 
     the American Psychiatric Association strongly supports the 
     Kyl bill. Medicare covers 50 percent of the cost of 
     psychotherapy, but some patients would rather pay the full 
     freight in order to avoid the government's ability to review 
     their claims, said the APA's Jay Butler.
       Medicare patients deserve a chance to decide for themselves 
     what kind of care they want, and whether they are willing to 
     pay for it.

  Mr. KYL. With that, Mr. President, I will complete this at another 
time since I know Senator Specter wants to move forward.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Mr. President, I thank my distinguished colleague from 
Arizona. I had sought a time determination because we have 90 minutes

[[Page S12082]]

on the bill and are scheduled to vote at 2:30. The way our colleagues 
work, people will be ready to depart for trains and planes at 2:29.
  So if the clerk will report now, I know that there are other Senators 
who wish to speak and there will be time to speak during the 90-minute 
time. Then by unanimous consent we can go into morning business. But I 
request that we proceed at this time to the consideration of the 
conference report on Labor-HHS and Education.

                          ____________________