Vowing to protect Medicare with “every ounce of strength,” President Donald Trump last week spoke to a cheering crowd in Florida. But his executive order released shortly afterward includes provisions that could significantly alter key pillars of the program by making it easier for beneficiaries and doctors to opt out.
The bottom line: The proposed changes might make it a bit simpler to find a doctor who takes new Medicare patients, but it could lead to higher costs for seniors and potentially expose some to surprise medical bills, a problem from which Medicare has traditionally protected consumers.
"Unless these policies are thought through very carefully, the potential for really bad unintended consequences is front and center," said economist Stephen Zuckerman, vice president for health policy at the Urban Institute.
While the executive order spells out few details, it calls for the removal of “unnecessary barriers” to private contracting, which allows patients and doctors to negotiate their own deals outside of Medicare. It’s an approach long supported by some conservatives, but critics fear it would lead to higher costs for patients. The order also seeks to ease rules that affect beneficiaries who want to opt out of the hospital portion of Medicare, known as Part A.
Both ideas have a long history, with proponents and opponents duking it out since at least 1997, even spawning a tongue-in-cheek legislative proposal that year titled, in part, the “Buck Naked Act.” More on that later.
"For a long time, people who don’t want or don’t like the idea of social insurance have been trying to find ways to opt out of Medicare, and doctors have been trying to find a way to opt out of Medicare payment," said Timothy Jost, emeritus professor at Washington and Lee University School of Law in Virginia.
The specifics will not emerge until the Department of Health and Human Services writes the rules to implement the executive order, which could take six months or longer. In the meantime, here are a few things you should know about the possible Medicare changes.
What are the current rules about what doctors can charge in Medicare?
Right now, the vast majority of physicians agree to accept what Medicare pays them and not charge patients for the rest of the bill, a practice known as balance billing. Physicians (and hospitals) have complained that Medicare doesn’t pay enough, but most participate anyway. Still, there is wiggle room.
Medicare limits balance billing. Physicians can charge patients the difference between their bill and what Medicare allows, but those charges are limited to 9.25% above Medicare’s regular rates. But partly because of the paperwork hassles for all involved, only a small percentage of doctors choose this option.
Alternatively, physicians can “opt out” of Medicare and charge whatever they want. But they can’t change their mind and try to get Medicare payments again for at least two years. Fewer than 1% of the nation’s physicians have currently opted out.
What would the executive order change?
That’s hard to know.
"It could mean a lot of things," said Joseph Antos at the American Enterprise Institute, including possibly letting seniors make a contract with an individual doctor or buy into something that isn’t traditional Medicare or the current private Medicare Advantage program. "Exactly what that looks like is not so obvious."
Others said eventual rules might result in lifting the 9.25% cap on the amount doctors can balance-bill some patients. Or the rules around fully "opting out" of Medicare might ease so physicians would not have to divorce themselves from the program or could stay in for some patients, but not others. That could leave some patients liable for the entire bill, which might lead to confusion among Medicare beneficiaries, critics of such a plan suggest.
The result may be that "it opens the door to surprise medical billing if people sign a contract with a doctor without realizing what they’re doing," said Jost.
Would patients get a bigger choice in physicians?
Proponents say allowing for more private contracts between patients and doctors would encourage doctors to accept more Medicare patients, partly because they could get higher payments. That was one argument made by supporters of several House and Senate bills in 2015 that included direct-contracting provisions. All failed, as did an earlier effort in the late 1990s backed by then-Sen. Jon Kyl, R-Ariz., who argued such contracting would give seniors more freedom to select doctors.
Then-Rep. Pete Stark, D-Calif., opposed such direct contracting, arguing that patients had less power in negotiations than doctors. To make that point, he introduced the "No Private Contracts To Be Negotiated When the Patient Is Buck Naked Act of 1997."
The bill was designed to illustrate how uneven the playing field is by prohibiting the discussion of or signing of private contracts at any time when "the patient is buck naked and the doctor is fully clothed (and conversely, to protect the rights of doctors, when the patient is fully clothed and the doctor is naked)." It, too, failed to pass.
Still, the current executive order might help counter a trend that "more physicians today are not taking new Medicare patients," said Robert Moffit, a senior fellow at the Heritage Foundation, a conservative think tank based in Washington, D.C.
It also might encourage boutique practices that operate outside of Medicare and are accessible primarily to the wealthy, said David Lipschutz, associate director of the Center for Medicare Advocacy.
“It is both a gift to the industry and to those beneficiaries who are well off,” he said. “It has questionable utility to the rest of us.”