Let’s You Sue Medicare

Posted on November 26, 2007
Filed Under Wonkonian Rationing |

A post on this site last week provoked an enlightening discussion, which DrRich will now summarize for you, following which he will solicit a volunteer for a noble but dangerous mission.

The issue at hand is the contracts that insurance companies and Medicare present to doctors, which, while their terms are remarkably unfavorable, doctors sign with nary a peep of protest, often without even reading them. DrRich’s original point was that doctors have no choice but to sign, as their only other alternative would be to become florists (or concierge physicians).

In the ensuing discussion, a physician reader indicated that indeed, doctors have no leverage in the relationship with insurance companies and thus no choice about signing the contracts. Dr. Poses (who started this whole thing with a post on Health Care Renewal) seemed a bit scandalized by this notion. He responded,

. . .if physicians are really being forced to sign contracts under these circumstances, wouldn’t that be a national scandal? And aren’t you actually charging that crimes were committed, on a national scale, perhaps involving national conspiracies?

DrRich, wanting no part of accusing UnitedHealth Group or Medicare of criminal conspiracy, soothed,

It is not a crime, nor is it really a conspiracy. The health insurance companies and the feds are really just doing what we (i.e., society) have deputized them to do - to covertly ration our healthcare. To do that, they absolutely must gain control over the behavior of physicians. Accordingly these “contracts” are merely tokens of the authority insurance plans have gained over physicians, authority that has been sanctioned by society, legislated by Congress, and upheld by the Supreme Court.

At this point a high-powered attorney specializing in negotiation and dispute resolution - Vickie Pynchon (check her credentials for yourself here) - offered a very provocative comment suggesting that, while such contracts (which she termed as adhesion contracts) are not criminal, they may indeed be unenforceable.

Although the law generally frowns on these non-negotiable agreements, it will enforce them. . .unless they are BOTH procedurally “unconscionable”(i.e., one-sided and “offered” on a take it or leave it basis to someone with very little or no bargaining power) AND substantively unconscionable (i.e., so unfair that it shocks the conscience).

She then went on to say that, in California at least, several adhesion contracts have been found to be unenforceable by the state Supreme Court.

This information set DrRich’s mind aflutter. If the only criteria needed to deem a non-negotiable contract unenforceable were that it had to be both procedurally and substantively unconscionable, well then, let’s have a look at Medicare.

Is the agreement between Medicare and physicians procedurally unconscionable, that is, offered on a take-it-or-leave-it basis? Why, most certainly.

There is virtually no choice for the average primary care doctor to opt out of Medicare, since the vast majority of his/her patients are enrolled in Medicare, and without those patients medical practice would be nearly impossible.

Is the Medicare agreement signed by physicians also substantively unconscionable? That is, is it so unfair as to shock the conscience? Here, too, the answer seems plain.

Physicians accepting Medicare have their pay rate determined not by market forces, but arbitrarily, by acts of Congress. Congress has famously been dialing back physician fees lately, so that, to make ends meet, doctors have to make it up with volume, moving from patient to patient every 7.5 minutes. Further, Medicare has fallen in love with something called Pay For Performance, whereby the feds get to script for the doctor exactly what he/she must spend those 7.5 minutes doing “for” the patient (no matter what the patient’s actual medical priorities). Medicare has in addition promulgated thousands of pages of arcane rules, regulations, guidelines and hints for proper medical behavior that are far less clear than, say, the IRS code. And it has launched a major Fraud Reduction program such that any minor violation of any of those impossible-to-interpret rules, regulations, etc., etc. are regarded as Healthcare Fraud, which (Congress has ruled) is now a federal crime, punishable by triple damages, $10,000 per “violation” and jail time. One form of such Healthcare Fraud would be to offer a patient a medical service that the doctor thinks the patient needs, but that Medicare has decided not to cover. Giving the Medicare patient the means to purchase desired medical services with his/her own money, in other words, is a barred and punishable activity (See Section 4507 of the Balanced Budget Act of 1997). Medicare has not come after huge numbers of doctors for fraud, but it seems to have done so arbitrarily, and when it points its fickle finger at you, well, given the tangled web of regs, you’re always guilty of something.

Any normal person - that is, a person who is not a politician or policymaker (who find this arrangement to represent the natural order) or physicians (many of whom seem to have become gradually inured, like frogs in a vat of gradually heated water, to such constraints on their professionalism and humanity) - would be shocked by a “business arrangement” like this, at least if you suggested it ought to apply to them.

Clearly, by its obvious procedural and substantial unconscionability, the Medicare agreement looks unenforceable. DrRich gently suggested as much to Ms. Pynchon: Looks like we have a case, huh?

It might not be that easy, she responded. It seems that determining whether a contract is substantially unconscionable (i.e., shocking to the conscience) depends on who is the shockee. It’s best, she indicated, if you are part of some group perceived as being relatively innocent or powerless.

Despite physicians’ reputation for general incompetence in their business and financial affairs (deserved or not) I do not believe the courts would treat them with special concern when it concerns their entry into contracts — adhesion or otherwise. They would, I presume, be treated as highly sophisticated “consumers” of insurance programs who could, if they wished, simply opt out of an insurance-based practice for a cash-on-the-barrel-head means of earning their compensation.

OK, so it’s not a slam dunk. There’s a slight possibility - despite all the evidence to the contrary - that the Medicare agreement with physicians is enforceable.

But look: Doctors can plausibly argue that they’re constitutionally lousy businesspersons (as Ms. Pynchon helpfully reminds us), that they were raised under a regime of “learned helplessness” (see Dr. Poses article), or that they’re just too damned busy doing P4P to read convoluted folios of legalese.

So what do you say. Any takers? Let’s you go ahead and sue Medicare on the unenforceability of the contract they make all doctors sign (in a procedurally unconscionable way) that places them in a substantively unconscionable position. DrRich would do it himself, but he’s still recovering from his last close encounter with the wrath of the Feds. Time for someone younger and less damaged to take up the cudgel.

DrRich will hold your coat.

Comments

5 Responses to “Let’s You Sue Medicare”

  1. Roy M. Poses MD on November 26th, 2007 5:07 pm

    Just to complicate things, from the perspective of the primary care or cognitive physician, the biggest problem is the RBRVS system and how it has been updated primarily under the influence of the RBRVS Update Committee (RUC).

    See these posts on Health Care Renewal and the articles to which they link:
    http://hcrenewal.blogspot.com/2007/05/more-on-disparities-between.html
    http://hcrenewal.blogspot.com/2007/03/on-disparities-between-reimbursement-of.html

    Also see this post on Retired Doc’s Thoughts blog and the articles to which it links:
    http://mdredux.blogspot.com/2007/11/pathophysiology-of-primary-care.html

    It looks like how the RUC has operated is mainly responsible for the poor and declining reimbursement for primary care and cognitive services.

    As I said in a comment on the latter post above:
    It seems very clear that 1) Medicare controls physician reimbursement for Medicare patients, and indirectly strongly influences all physician reimbursement, since managed care organizations and insurers tend to just go along. 2) The Medicare reimbursement rates in turn are heavily influenced by the RUC. CMS does not seem to get any other input on updating the RBRVS system. 3) The RUC is dominated by sub-specialist proceduralists. 4) The RUC seems to make no effort to get input from physicians in the trenches. As best as I can tell, the actual membership of the RUC is not published, although it is possible to figure who most of the members are.

    This appears to be a terrible, unfair system, and the RUC appears to be one of the missing links that explain why US health care is such a mess.

  2. Vickie Pynchon on November 27th, 2007 11:36 am

    Even though I made my living litigating (25 years worth of legal disputes)if my potential client’s potential damages were less than half a million dollars and the chances of victory less than 70%, I’d advise that they have a little more fun gambling.

    My general advice? Take my potential legal fee it to the roulette table at Vegas and put it all on red.

    Physicians, however, do not need to see themselves as gamblers when they are united in purpose, well-funded and organized.

    Case in point:

    If you are a California physician whose negligence results in the quadraplegia of a 19-year old athlete, you cannot be required to compensate him for a lifetime of pain and suffering in excess of $250,000.

    If, on the other hand, you are a California homeowner who fails to warn her guests that her backyard pool is not deep enough for diving, the potential damages for diving-caused quadraplegia to the same athelete are limitless.

    Another case in point:

    If you are a physician whose insurance company wants to settle a malpractice case brought against you, you can “veto” any settlement you wish if you believe it will hurt your business or reputation or simply feel as if you’re being extorted.

    No other insured outside the health care professions has this right.

    Why do physicians have these special protections? Because they have a powerful lobby.

    If you want to change the law, and you have economic power, the surest way to do so is to use your political and economic resources to pressure politicians to change the laws you do not like.

    A single physician waging a legal battle against Medicare is David vs. Goliath. I can almost guarantee you that your sling shot will not save you.

    I love the enthusiasm expressed here for remedying a perceived injustice but suggest that there are more efficient and effective ways to skin this particular cat.

    (and remember — Judges were once lawyers and for reasons I’ve never quite understood, the relationship between these two groups of professionals has never been tip-top)

  3. anonymous on November 29th, 2007 8:00 pm

    You forgot to mention, in order to be found guilty of a felony, one must have intentionally decided to break a law or acted in a reckless manner, that is except in cases of Medicare “fraud”. It is the one felony you can be convicted of without intending to commit the crime.

  4. sam on December 7th, 2007 12:16 am

    Rationing by not rationing.

    I keep reading these OIG, HHS, CMMS “investigations” and have figured out why they perform them only after a long ill defined period of time.

    CMMS wants and needs you to provide the care.

    Physicians and medical organizations are not generally stupid, illegal, or ignorant. We became physicians by FOLLOWING THE RULES. If the regulations are in place, clear, posted, unequivocal, they will be followed by the overwhelming majority of providers and facillities. Who would perform tests, exams, procedures and code/submit them so incorrectly to incur huge insolvent incurring paybacks and possible jail time?

    NO ONE

    Allow the organization and physician to sustain/grow on the medicare or medicaid “diet” then start the process of extracting money back after a long period of time and after care/treatment has been provided. You dont harvest a tree until it has reached a mature size.

    Very clever and highly premeditated.

    If we knew or understood the planned subterfuge our business plan would not depend on reimbursement from medicare. [Excluding medicare from your practice would be the ultimate form of medical passive resistance.] Unfortunately, now the care has been given so the time for harvesting the money back is ripe. You cant take the service back. You cant reverse the patients diagnosis but on a technicality OIG, HHS, CMMS, and/or ACHA can take the money back plus penalty and send you to prison IF they determine and prove you committed FRAUD. A “bumper crop” indeed.

    Utilizing PRG-Schultz, http://www.prgx.com/, the Federales have even enlisted the aid of “bounty hunters” who get to keep a percentage of harvest. These activities appear to be bringing hospitals to their collective knees. “The increasing hospital anxiety has elevated the auditing program to a top agenda item of the American Hospital Association.”

    My mother a retired neurologist would intercede at this point and say “oh but the Feds only focus on people who are so egregiously fraudulent that you just need to be honest and document the diagnosis, justification and work that you did” I hope she is right.

    In the words of Kurt Vonnegut, “so it goes”.

    Someone will have to legally demonstrate that the Medicare provider agreement is an adhesion contract which is procedurally and substantively unconscionable.

    Sam

  5. The Covert Rationing Blog » Blog Archive » Covert Rationing Even Wrecks Socialism on December 11th, 2007 1:58 pm

    [...] in order to formulate the “guidelines” that inform P4P; coercing doctors to agree to egregious adhesion contracts that any sane person would find unconscionable; forcing doctors to practice under a set of coding [...]

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