U.S. Refund-Due Letters Outrage Doctors

A seemingly small change in the Medicare program that may entitle thousands of elderly people to refunds from their doctors has prompted a wave of physician outrage unprecedented in the history of the nation’s largest health insurance program.

Under the new system, tens of thousands of elderly people nationwide have received letters in recent weeks informing them that they received services found to have been “medically unnecessary” and that they may be entitled to be reimbursed by their doctors.

The letters have prompted a vociferous objection to the federal government by the American Medical Assn., some of whose members contend that the policy constitutes bureaucratic strong-arming and ill-conceived meddling in the doctor-patient relationship.

“This has stirred up a storm of protest that is greater than any I’ve seen in 20 years with Medicare,” said Dr. Alan R. Nelson, chairman of the AMA Board of Trustees.

“I think there are people in the government that would love for us all to be salaried,” grumbled Dr. Laurens White, president-elect of the California Medical Assn. “And you’d get the same wonderful service you get with your mail delivery.”

The letters are the result of a recent legislative change intended to protect one group of Medicare patients: those who pay their doctor directly and then file a claim with the program for reimbursement.

About 7.5 million such claims are filed each month. About 300,000 of those are denied by the program for lack of medical necessity, federal officials say. In the past, if such a claim was denied, the patient had no clearly defined right to a refund from the doctor.

“If the government has made a determination that the care was unnecessary, the beneficiary should have the same recourse,” said Jack Christy of the American Assn. of Retired Persons. “If the government shouldn’t pay, why should I?”

The dispute comes at a time of increasing federal attempts to control the cost and quality of medical care. Congress has sought to use the $76.2-billion Medicare program for the elderly to slow the steady rise in payments to private physicians.

“I understand that we’re in a cost-cutting economy,” said Louis Goodman, director of medical economics for the Texas Medical Assn. “But I wish there would be some way to deal with the economics without harming the doctor-patient relationship.”

Some consumer activists attribute the doctors’ complaints at least in part to an unwillingness to be accountable to the public. They point out that the AMA has opposed other regulatory efforts aimed at controlling the cost and quality of medical care.

But the federal Health Care Finance Administration has acknowledged that there are flaws in the new system. Last week, officials agreed that in future, the program will consult with physicians before telling their patients that services were unnecessary.

That compromise, to go into effect April 1, is likely to answer many of the doctors’ complaints. But AMA officials say other concerns remain, and they have asked for a moratorium on the letters until they can be handled in a way that physicians find acceptable.

Under the new policy that went into effect Oct. 1 but has been implemented state by state only in recent weeks, letters go out simultaneously to doctor and patient stating that services were unnecessary and the patient is entitled to be repaid.

The average value of a claim is $120, officials say.

Unnecessary services include those that appear duplicative or excessive, such as injections or office visits in excess of a generally accepted rate. They are identified through computer screening of all claims by the insurance companies that administer Medicare.

“The implementation has been appalling,” said Nelson of the AMA. “This has been done without contacting the physician ahead of time or making any effort to determine the circumstances (of the service).

“Our opposition is not to calling physicians to task if they are billing for more than they should. . . . But the way for it to be addressed is through peer review and due process, giving the physician the right to explain.”

Doctors say letters have been sent concerning services they insist were necessary, such as concurrent care by a family physician and a specialist. Although doctors may appeal the denials, the letters include neither a phone number nor a name of a person to contact.

In addition, they say insurers have branded as unnecessary services that simply are not covered by Medicare, such as flu shots or other preventive measures. Finally, they want all denials reviewed by a doctor or nurse before letters are sent.

“It would be like an IRS return saying you owe money without anyone ever looking at it,” said Goodman of Texas.

He and others suggested that such letters have a corrosive effect on the relationship between doctors and patients.

“There’s an awful lot of magic in medicine,” said Dr. Robert Butler, a professor at Mt. Sinai School of Medicine in New York City and a member of a congressional commission on physician payment. “The patient has some trust, and that trust has a healing quality to it.”

But what also irks physicians is the new policy’s other purpose--to encourage them to become so-called participating physicians.

Such physicians agree to accept Medicare’s reimbursement rate and to charge Medicare patients nothing more. In return, they are reimbursed directly by the program and at a slightly higher rate than non-participating doctors.

“What this is is an effort . . . to drive all the doctors into being participating physicians,” White of the California Medical Assn. said of the new policy. “It’s their feeling that participating physicians are good people, and anyone who is not is a bad person.”

White called the new policy just one more example of “government edicts issued by people who don’t know anything about practice.”

Last week, the Health Care Finance Administration notified the AMA that in the future, the program will contact doctors before deciding to deny a claim on grounds of medical necessity, said Louis Hays, associate administrator for operations.

In addition, Dr. William Roper, the agency’s administrator, has vowed to provide physicians with more information about coverage, improve the wording of the letters and ensure that no letters are sent on services, such as flu shots, that Medicare never covers.

“I think it’s just a lot of misunderstanding,” Hays said in a telephone interview. “I think they think it’s just another example of the bureaucracy run amok. They don’t really understand that we’re trying to carry out a legislative requirement imposed on us.”