Government News
Bill Would Make Medicare More M.D., Patient Friendly
Psychiatric News
Volume 36 Number 7 page 6-42

It sounds like David going up against Goliath, except in the 21st century version, physicians are using legislation to fight this giant—the Health Care Financing Administration (HCFA).

APA and other physician groups joined the AMA in supporting a bill introduced in Congress last month that would require HCFA, the government agency that oversees Medicare, to change the way it does business with physicians.

"Psychiatrists are floundering under Medicare’s 100,000-plus pages of regulations," said APA President Daniel Borenstein, M.D., in a press release. "Medicare’s elderly and disabled beneficiaries have a substantial and growing need for psychiatric services, but HCFA’s confusing payment rules and the all-too-adversarial attitude by Medicare bureaucrats are a huge impediment to APA members seeking to provide such care."

The Medicare Education and Regulatory Fairness Act (MERFA) of 2001 was introduced by Senators Frank Murkowski (R-Alaska), John Kerry (D-Mass.), and six other senators. The bill, S 452, had 11 cosponsors at press time. Representatives Pat Toomey (R-Pa.) and Shelley Berkley (D-Nev.) introduced a companion bill in the House (HR 868) that had 60 cosponsors at press time.

"Seniors are being told that health care professionals won’t accept Medicare, especially in rural areas. Providers can’t keep up with the seemingly endless regulations or deal with the penalties if they ever make a mistake. We simply have to reform the system for everyone’s benefit," said Murkowski at a Capitol Hill briefing last month.


To reduce the number of regulations impinging on physicians, the legislation requires that physicians must comply only with Medicare rules in final form, not those issued as proposed or interim final rules, according to Joel Gilbertson, J.D., Murkowski’s legislative counsel.

HCFA insurance carriers and fiscal intermediaries would be required to work with health care associations to educate physicians about what information should be included to file for reimbursement. Eighty percent of physicians said in an AMA survey that Medicare carriers do not give them clear guidance about the rules and requirements, according to an AMA press release.

Fiscal intermediaries and carriers would be required to respond within 30 days to physicians’ questions about billing, documentation, coding, and cost reporting. The responses would have legal standing in the event of an audit, according to Gilbertson’s legislative analysis.

The AMA’s immediate past president, Thomas Reardon, M.D., said at the briefing, "A primary goal of MERFA is to rein in the unfair tactics used by Medicare when it pursues alleged overpayments to physicians and providers."

MERFA would prohibit Medicare officials from using the extrapolation method in first-time audits to determine how much a physician owes the government. Once Medicare officials find a small number of billing errors, they assume that the same errors were made on all other claims submitted by the physician. Doctors can be told to repay tens of thousands of dollars, said Reardon.

"This is similar to the IRS identifying an error on a recent tax return and assuming that every return you have filed had the same error and then requesting back taxes for every return," said Reardon.

Under the current system, once physicians are notified by Medicare of the alleged overpayments, they are required to repay the amount within 30 to 60 days regardless of any appeals.

Under MERFA, HCFA could not require repayment until after a final determination is made that the physician did in fact commit billing errors. The legislation would also give physicians the choice of repaying the amount over three years or having the amount deducted from future Medicare payments, Gilbertson told Psychiatric News.

Physicians who discover they have been overpaid by HCFA and voluntarily disclose that information would have up to a year to repay the amount owed. They would not be investigated or audited unless fraud was alleged to have occurred, according to Gilbertson.


The bill’s sponsors said at the briefing that HCFA has replaced the Internal Revenue Service as the agency about which they receive the most complaints, especially regarding its auditing practices.

John Hoyt, M.D., a critical care physician in a small group practice in Pittsburgh, described his audit by a Medicare carrier "as the most painful experience of my life. It challenges your professional validity in critical care practice."

He was audited in 1997 because he allegedly billed for services that were not medically necessary. Hoyt said it was confusing to hear the same Medicare carrier praise the group’s high quality of care, which resulted in reduced lengths of stay in the intensive care unit.

In 1998 the carrier ordered him to repay $340,000, extrapolated from a review of 29 patients seen between 1995 and 1996, said Hoyt.

"Paying that amount of money would have put us out of business and left no ICU physician at St. Francis Hospital, where we work," said Hoyt.

Although Hoyt appealed the allegations, "it took two years to get a fair hearing. The following year, I learned that the hearing officer quit without making a decision."

While Hoyt waited for a hearing, the Medicare carrier audited another 299 of his patient charts, "which took hours of my time away from my ICU practice."

Although the amount of his repayment has been reduced to $220,000, "the carrier failed again in its audit to use the Medicare critical care billing standards in place in 1995 when the claims were submitted," said Hoyt.

"I strongly support MERFA because it would prohibit the arbitrary and unfair practices I have been subjected to by Medicare the last few years," said Hoyt.

Reforming HCFA’s administration of Medicare is certainly a hot issue for members of Congress and the Bush administration. At press time, the House Ways and Means Committee and the Senate Finance Committee were holding hearings on improving the Medicare system.

Secretary of Health and Human Services Tommy Thompson testified before the House Ways and Means Committee last month that his department is undertaking a comprehensive review of HCFA to decide what problems to fix. Thompson noted that the agency uses five separate accounting systems and that the President has requested funds in his 2002 proposed budget to update and unify the system and provide new information technology.

A summary and the full text of MERFA are available on the Web at www.thomas.loc.gov by searching on bill number S 452 or HR 868. ▪

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