Course Authors
Maxwell J. Mehlman, J.D.
Mr. Mehlman reports no commercial conflict of interest.
Estimated course time: 1 hour(s).
Albert Einstein College of Medicine – Montefiore Medical Center designates this enduring material activity for a maximum of 1.0 AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
In support of improving patient care, this activity has been planned and implemented by Albert Einstein College of Medicine-Montefiore Medical Center and InterMDnet. Albert Einstein College of Medicine – Montefiore Medical Center is jointly accredited by the Accreditation Council for Continuing Medical Education (ACCME), the Accreditation Council for Pharmacy Education (ACPE), and the American Nurses Credentialing Center (ANCC), to provide continuing education for the healthcare team.
Upon completion of this Cyberounds®, you should be able to:
Discuss the Kyl Amendment to the Medicare laws
Place the Kyl Amendment in historical and legal context
Analyze the import of the Kyl Amendment for the future of the Medicare program.
The Balanced Budget Act passed this past summer by Congress contains a provision that permits physicians to charge Medicare patients whatever fee the physician and patient agree to, regardless of fee limits set by Medicare (Pub. Law No. 105-33, §4507). The provision is known as the Kyl Amendment because it was inserted in the budget bill at the instigation of Rep. Jon Kyl (R-Ariz.). (It also is called "Section 4507" after its section number in the act.) As modified in negotiations with the White House, this provision imposes on physicians who take advantage of it a two-year moratorium on billing Medicare for any patient care, not just for the care provided to the patient who agrees to pay the higher fee.
The Kyl Amendment is generating a lot of controversy. The American Medical Association supports the idea behind the law but opposes the two-year moratorium, urging that physicians be allowed to enter into a private contract on a case-by-case basis without this affecting the physician's ability to bill Medicare for the care of other patients.(1) The association's president stated that the ability to charge more than the Medicare fee limits was "a safeguard for the elderly and a barometer of the rationality and reasonableness of Medicare's rules and payment rates," and argued that the provision would enable physicians to shift the costs of caring for low-income seniors onto wealthier patients.(2) The American College of Physicians, on the other hand, opposed the original provision, as well as any effort to remove the two-year moratorium, stating that they are "legislative incentives that encourage the upper middle class, the wealthy and physicians to shun the program" that will deprive the Medicare program of its financial and political support.(3) Representative Gerald Kleczka (D-Wis.) has introduced a bill to repeal the provision (HR 3126), while Republican legislators have introduced bills to delete the two-year moratorium.(4) In December of 1997, a group claiming to represent 60,000 seniors filed suit in federal court, asserting that the two-year moratorium was unconstitutional.(5)
In November 1997, the Health Care Financing Administration released a document that clarifies some of the implications of the law. First, the law only applies to services covered by Medicare. In other words, a physician can contract with a Medicare beneficiary to provide non-covered services, such as cosmetic surgery, at whatever price they agree on, without affecting the physician's ability to bill Medicare for other services or for other patients. This always has been the law and the Kyl Amendment didn't change it.(6) On the other hand, if the physician opts out of Medicare by contracting privately with any patient for any covered service, the physician may not bill Medicare for any patient for any other covered service during the two-year moratorium. There is an exception for emergency or urgent care; the physician can still receive reimbursement (according to the program limits) for these services. At the same time, the law prohibits private contracting when the patient is in an emergency or urgent situation.(7)
It helps to place the Kyl Amendment in context. Under Medicare, physicians can accept assignment or "participate," in which case they agree to accept the Medicare fee limits (set according to the Resource-Based Relative Value Scale) for their services. Physicians who decline to accept assignment or to participate cannot charge whatever they wish; they are limited to a "limiting charge" which is 115% above the amount that a non-participating physician can receive on an assigned claim. Moreover, several states prohibit physicians from charging more than the Medicare reimbursement rate regardless of whether the physician participates or not.(8)
President Clinton's Health Security Act contained a provision that would have prohibited balance billing across the board; physicians would have had to accept a set fee for providing mandated services to patients under a fee-for-service system, regardless of whether or not the patients were Medicare beneficiaries. This is similar to the Canadian health insurance system, although there have been reports that some Canadian provinces, notably British Columbia and Alberta, have permitted physicians to opt out from the federal-provincial system and contract privately with patients. Under the British National Health System, some hospital beds are set aside for "private" patients and physicians can maintain "Harley Street" practices in which they are free to charge patients whatever they can. There is at least a perception that private patients in Britain, comprising approximately ten percent of the population, get faster services with more amenities.(9)
The Kyl Amendment raises fundamental questions. One is philosophical: To what extent should we curtail the freedom of individual patients and physicians to contract with one another in order to maintain a single-tired, egalitarian Medicare program? A second question is empirical: What impact would private contracting have on the quality of Medicare services? Lacking data to answer the second question, the first question might be recast as: Is private contracting worth the risk that the quality of Medicare services may decline?
From a legal standpoint, however, one thing is clear -- we repeatedly have restricted the freedom to contract for medical services to achieve social goals, and these efforts have been upheld virtually without exception by the courts. One need only consider the restrictions on individual liberty entailed by FDA regulation of drugs and medical devices. So let's be clear about what is at issue here: Not a fundamental assault on our individual liberties, but dismantling a key egalitarian feature of the Medicare system in order to allow wealthy patients to buy health care just like they can buy luxury goods. The question is: Is this a step in the right direction?