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Last month, I reported on expected passage by the U. S. Congress of a new Medicare law which had been described as a "doctor fix" law because its primary purpose was to block scheduled cuts in payments to doctors.

The law did, in fact, pass after intense lobbying from the American Medical Association, the AARP and many others. But, it was necessary for the Senate to overturn a veto by President Bush, which was accomplished with the help of Tennessee's two Republican Senators, Lamar Alexander and Bob Corker.

Both Corker and Alexander, who joined seven other Senate Republicans to give the bill a 69-30 majority, said their votes were given in exchange for a promise to help the Regional Medical Center in Memphis. Time will tell whether that help is forthcoming.

While the major goal of the new law was to block cuts in payments to doctors, it contained many other provisions important to Medicare beneficiaries, including the following:

1. Lower out-of-pocket costs for mental health services and payment for some anti-anxiety and sleep drugs not previously paid for by Medicare.

2. Cutbacks on some private plans sold under Medicare Advantage. These include more restrictions on what doctors a patient may see and strong encouragement of doctors to begin sending prescriptions to pharmacies electronically.

Under current law, the co-pay for mental health treatment is 50%, while it is only 20% for other treatment. The new law equalizes the out-of-pocket provision, although it does so under a phase in that does not end until 2014.

Obviously, the new law is costly, estimated to be $20 million spread over five years. Much of the cost will come from reductions in private Medicare Advantage plans, and that is why there was such an intense battle with the White House by Senate Democrats.

In 2003, Congress passed, at the urging of President Bush, the Medicare Modernization Act which gives subsidies to private Medicare plans (Medicare Advantage) rather than paying directly for care.

Theoretically, it was argued, private industry would be so much more efficient than the government that the subsidies would allow seniors to get broader, less expensive coverage than patients under traditional Medicare. The subsidies were supposed to be used to either improve benefits or reduce costs.

The new law cut subsidies to certain of the Medicare Advantage plans to avoid cuts in payments to doctors, which had been scheduled to be automatically reduced by 10.6 percent on July 1 of this year. In 2011, fee-for-service plans will no longer permit patients to choose any doctor. Instead, doctors will have to be part of a network.

Passage of the new Medicare law has been deemed by many commentators to be a firm stand against President Bush's ideas about privatization. It also demonstrated, by the intensity of the lobbying pressure on both sides, how high health care is on the public's priority list.

There is, of course, substantial complexity in the Medicare laws. Hospitals spend hundreds of thousands of dollars in compliance efforts. And, numerous lawsuits, of both a civil and criminal nature, are filed each year, involving fraud in reporting, billing for unnecessary medical services, and billing for services never rendered.

Tennessee is one of 24 states which have laws allowing suits in behalf of the state against companies submitting false health care claims. As a result, significant amounts of fraud that would have otherwise gone undiscovered have been uncovered, allowing Tennessee to receive more than $16 million.

Our state's laws are called the Tennessee False Claims Act and the Tennessee Medicaid False Claims Act. Those laws provide an opportunity for so-called "whistle blowers" to be important watch dogs for the citizens when they spot and report suspected fraud.

Briefly, here's what you can't do, according the Medicaid False Claims Act:
1. Knowingly submit a false claim.

2. Make or cause to be made a record or statement of a Medicaid claim to the state for payment which you know to be false.

3. Conspire to defraud the state by getting a claim allowed or paid which you know to be false.

4. Make, use or cause to be made or used a record or statement to conceal, avoid or decrease a payment to the state which you know to be false.

Violators of the Act are liable to the state for a civil penalty of not less than $5,000 nor more than $10,000 plus three times the damage sustained by the state, a sum that can be millions of dollars.

The overwhelming evidence of Medicare fraud has been a major counterpoint to the privatization arguments that paying doctors and hospitals would be cheaper than traditional Medicare.

About 20 percent of Medicare patients are now covered under the private plans. But, Medicare pays the private plans, on average, 13 percent more than the same services would cost through traditional Medicare.

As predicted last month, passage of the new law and the circumstances of its passage, including the effectiveness of the public's apparent opinion weighing more heavily than usual on senators' decisions, set the stage for more intense efforts at health care reform.

On that issue, Senator Obama seems to have the upper hand. As one more inclined to favor private plans, Senator McCain does not.



Charles Farmer
Spragins, Barnett & Cobb, PLC
731-424-0461
cfarmer@
spraginslaw.com


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August 2008

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