[Congressional Record Volume 144, Number 26 (Thursday, March 12, 1998)]
[Extensions of Remarks]
[Pages E368-E369]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 BILLIONS OF DOLLARS: THE COST OF KYL-ARCHER TO MEDICARE BENEFICIARIES

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, March 12, 1998

  Mr. STARK. Mr. Speaker, the Kyl-Archer Private Contracting 
legislation will cost the nation's seniors and disabled billions of 
dollars.
  Kyl-Archer will let any doctor charge any Medicare patient any amount 
the doctor wants at any time. Medicare will pay no part of the bill--
zero, zip, zilch.
  How much will this cost Medicare beneficiaries?
  It is hard to provide an exact estimate, but it will clearly be in 
the billions.
  Some doctors do not accept Medicare's fee schedule and ``balance 
bill'' by increasing their charges to beneficiaries by 15% above 95% of 
the Medicare fee schedule. In 1995 the bills these doctors submitted 
amounted to $1.236 billion. I think it is safe to assume that this is 
the minimum number of doctors (and level of billings) who will use Kyl-
Archer.
  But balance billing is a virus. Once some doctors start charging 
more, you can bet it will spread. Over the past 12 years, one of 
Medicare's greatest success stories has been to encourage doctors to 
accept the Medicare fee-schedule and to discourage balance billing. 
Before we started encouraging doctors to accept ``assignment'' 34.5% of 
bills were submitted by nonparticipating doctors who charged extra. If 
Kyl-Archer passes, I believe it will be a major signal to doctors to 
return to the days of unassigned, balance-billed claims. If we were to 
return to the pattern of billings that existed before 1985, the cost to 
Medicare beneficiaries would be about $15.23 billion. I doubt that we 
will see a return to that level of extra charges: with 73% of seniors 
living on less than $25,000 a year, and with 4% actually trying to live 
on less than $5,000 a year, it would be nearly impossible for doctors 
to shift that much cost onto the backs of seniors and the disabled. But 
I predict there will be some increase in private contracting above the 
current level of doctors who balance bill. If one assumed that we 
returned just one-third of the way toward the pattern of practice in 
1985, to then the cost Medicare beneficiaries would be about $5 billion 
per year.
  Kyl-Archer gives doctors the freedom to charge more. For the rest of 
the nation, it will be one of the biggest consumer rip-offs in history. 
Don't worry about your cable tv rates, people, worry about being held 
hostage in your hour of sickness.
  The following staff memo provides background on the estimates of the 
$1,000,000,000 plus cost of Kyl-Archer. I've also included a chart 
prepared from data provided by the Health Care Financing Administration 
estimating some of the impact of the Kyl-Archer amendment.
  For the calendar year 1996 participation period, the physician 
participation rate (including limited licensed practitioners) had risen 
to 77.5 percent, accounting for 94.3 percent of allowed charges for 
physician services during that period. The physician participation rate 
rose to 80.2 percent in 1997. In contrast, 30.4 percent of physicians 
participated in FY 85, and they accounted for 36.0 percent of allowed 
charges.


                billings by nonparticipating physicians

  As the physician participation rate has increased over the years, 
total allowed charges billed by nonparticipating physicians have 
declined. For example, total allowed charges billed by nonparticipating 
physicians in FY 85 totaled 64.0 percent, as compared to 5.7 percent in 
1996.


            unassigned claims by nonparticipating physicians

  In addition, the number of unassigned claims submitted by 
nonparticipating physicians has declined. Total covered charges 
represented by unassigned claims declined from 34.5 to 2.0 percent over 
the 1984-96 period.


                participating physicians' claims in 1995

  For the calendar year 1995 participation period, the physician 
participation rate (including limited licensed practitioners) was 72.3 
percent, accounting for 92.6 percent of all covered charges for 
physician services during that period. 2.8 percent of allowed charges 
were unassigned claims submitted by nonparticipating physicians. In 
1995, 76.7 percent of allowed charges under the fee schedule were for 
physicians' services, and another 3.2 percent were for the services of 
limited license practitioners. During that time period, the allowed 
amounts for claims by physicians totaled $42.369 billion, and for 
limited license

[[Page E369]]

practitioners the total allowed amounts were $1.784 billion. Allowed 
amounts for claims by both physicians and limited license practitioners 
totaled $44.153 billion. The 92.6 percent of covered charges for 
physician services submitted by participating physicians (and limited 
license practitioners) during 1995 totaled $40.886 billion.


            unassigned claims by nonparticipating physicians

  For the calendar year 1995 participation period, 2.8 percent of 
allowed charges represented unassigned claims, totaling $1.236 billion. 
This represents total Medicare billings by physicians who do not accept 
assignment, and could be assumed to be costs that would be directly 
shifted to seniors if private contracting is allowed. If one were to 
assume that physicians would revert to their practices and behavior in 
1985 with respect to billings for unassigned claims, it is estimated 
that charges totaling $15.233 billion would be shifted to seniors. 
(2.8% : $1.236 billion=34.5% : $15.233 billion).

------------------------------------------------------------------------
                                 1997    1996         1995         1985 
------------------------------------------------------------------------
Percent of physicians \1\         80.2    77.5  72.3............    30.4
 participating.                                                         
Percent of physicians \1\ not     19.8    22.5  27.7............    69.6
 participating.                                                         
Allowed amounts for claims by   ......  ......  $44.153 \2\.....  ......
 physicians \1\.                                                        
Percent of allowed charges for     n/a    94.3  92.6............    36.0
 physician services billed by                                           
 participating physicians \1\.                                          
Percent of unassigned claims       n/a     2.0  2.8.............    34.5
 by nonparticipating                                                    
 physicians \1\.                                                        
Total amount billed by          ......  ......  $1.236 \3\......  ......
 nonparticipating physicians                                            
 \1\ on a non-assignment basis.                                         
Estimated annual charges that   ......  ......  $15.233 \4\.....  ......
 would be shifted to seniors.                                           
------------------------------------------------------------------------
\1\ Including limited licensed practitioners                            
\2\ In 1995 a total of $55.217 billion in claims were allowed for all   
  providers. This total included $42.369 billion for physicians and     
  $1.784 for limited license practitioners, or $44.153 billion.         
\3\ This figure represents the 2.8 percent of allowed charges by        
  physicians and limited license practitioners that represented         
  unassigned claims in 1995, multiplied by the $44.153 billion in       
  allowed amounts for claims by both physicians and limited license     
  practitioners.                                                        
\4\ Assumes that physicians would revert to practices and behavior in   
  1985 with respect to billings for unassigned claims--that the total   
  amount of unassigned claims from nonparticipating physicians would    
  increase from 2.8 percent to 34.5 percent. That factor (2.8 percent : 
  34.5 percent) is multiplied by the dollar value of allowed unassigned 
  claims by nonparticipating physicians and limited license             
  practitioners in 1995.                                                


               Impact of Kyl/Archer in Dollars and Cents


 prepared from data provided by the health care finaning administration

       The Kyl/Archer bill allows doctors to require private 
     contracts for Medicare-covered benefits, service by service 
     and patient by patient, effectively removing Medicare's cost 
     protections. Doctors would be able to charge more, while 
     seniors would be left with outrageous bills to pay totally 
     out of pocket.
       Here's what the Kyl/Archer bill means in dollars and cents.
       Today, under Medicare's rules, doctors can charge between 
     $2,514 and $2,747 for heart by-pass surgery. The beneficiary 
     pays between $503 and $736, and Medicare picks up the rest. 
     For many seniors, that's already at lot of money.
       Under the Kyl/Archer so called ``freedom of choice,'' a 
     doctor can charge more than $2,747 for a by-pass, but it's 
     the Medicare patient who picks up the full tab.
       Can seniors afford this? Almost 75% of Medicare 
     beneficiaries have incomes less than $25,000, so extra bills 
     can be a disaster. By contrast, the average MEDIAN NET income 
     is $160,740.
       Today, doctors can charge $711 for prostate surgery, $903 
     for cataract removal, $77 for an office visit, $32 for an 
     electrocardiogram; and $30 for a chest x-ray. All these 
     services are covered by Medicare.
       Under Kyl/Archer there are no limits to what doctors can 
     charge, and seniors will pay every penny even after paying 
     into Medicare through their lives.

------------------------------------------------------------------------
                                    Under Medicare          If Doctor   
                              --------------------------     Requires   
  Procedure and Total Charge     Medicare     Maximum        Private    
                                   fee       Doctor can      Contract   
                                 schedule      charge      Patient Pays 
------------------------------------------------------------------------
Cataract Removal, Total               $827         $903                 
 Charge.                                                                
Medicare Pays................         $662         $662  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............         $165         $241  Patients Pays  
                                                          Total Charge--
                                                          At Least $903 
By-Pass Surgery, Total Charge       $2,514       $2,747                 
Medicare Pays................       $2,011       $2,011  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............         $503         $736  Patients Pays  
                                                          Total Charge--
                                                          At Least      
                                                          $2,747        
Prostate Surgery, Total               $625         $711                 
 Charge.                                                                
Medicare Pays................         $522         $522  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............         $130         $189  Patients Pays  
                                                          Total Charge--
                                                          At Least $711 
Office Visit, New Patient,             $70          $77                 
 Total Charge.                                                          
Medicare Pays................          $46          $46  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............          $14          $21  Patients Pays  
                                                          Total Charge--
                                                          At Least $77  
Office Visit, Established              $40          $43                 
 Patient, Total Charge.                                                 
Medicare Pays................          $32          $32  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............           $8          $11  Patients Pays  
                                                          Total Charge--
                                                          At Least $43  
Electrocardiogram, (EKG),              $29          $32                 
 Total Charge.                                                          
Medicare Pays................          $23          $23  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............           $6           $9  Patients Pays  
                                                          Total Charge--
                                                          At Least $32  
Chest X-Ray, Total Charge....          $28          $30                 
Medicare Pays................          $22          $22  Medicare Pays  
                                                          Nothing       
Beneficiary Pays.............           $6           $8  Patients Pays  
                                                          Total Charge--
                                                          At Least $30  
------------------------------------------------------------------------


                                                          

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