1601 N. Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 59, No. 3 March 2003
CLAWBACK, AMERICAN STYLE
In grade school, we called it "Indian giving."
In Europe, the U.K., and outposts of the erstwhile British Empire, it is called a "clawback." When government promises more than it can deliver, or makes an error in calculation, it simply takes the largesse back from the beneficiaries, be they retirees, provincial taxpayers, recipients of the Australian Baby Bonus, or Atlantic fishermen. If there is excessive demand for their services, Canadian physicians are expected to work without pay. Ontario physicians can have thousands of dollars in fees clawed back for "not doing enough paperwork to justify billing"; if they appeal and lose, they must pay the cost of the audit and the appeal (Saturday Sun 11/16/02).
In the U.S., attempts to delay the bankruptcy of Medicare involve fee cuts for physicians' future services. But the retroactive "recovery" of payments made for services rendered years previously is far more vicious than the dreaded clawback.
The limit on shifting costs to private payers has been reached. However, as columnist Debra Saunders has pointed out, "when you get to the point where you can't pass on costs, you can still pass on the blame" (Az Daily Star 12/20/02).
The penalties in the False Claims Act (FCA) treble damages plus up to $11,000 per "false claim" offer large cash infusions without the political hurdle of a benefit cut or tax increase. Doctors can be targeted one at a time and they can expect little support from organized medicine, and usually less-than-competent help from their attorneys.
The best targets are highly productive physicians over the age of 50, who practiced during the golden years of open-ended payments from both Medicare and commercial insurers. They have assets to pay huge settlements and are terrified of spending years in prison with racketeers and thugs under such criminal statutes as mail fraud or money laundering.
From FCA suits, the Dept. of Justice claims to have collected $10 billion since 1986, including $1.2 billion in 2002 of which almost $1.1 billion resulted from qui tam actions. The Office of Inspector General (IG) in the Dept. of Health and Human Services (HHS) claims to have saved $21 billion in 2002 through audit disallowances, monetary penalties, and IG cost-saving recommendations (BNA's HCFR 1/8/03).
If a "pattern of overpayments" extends a single month past the 6-year statute of limitations, the government can demand repayment for the entire period in which overpayments occurred, a tactic that has been upheld in both criminal and civil law. Moreover, if a provider discovers overpayments that stopped before the six-year mark, failure to disclose could lead to a charge of fraudulent concealment. A creative prosecutor could parley that into a conspiracy charge under the FCA. Since the criminal statute of limitations runs 5 years, a provider would be vulnerable until 2007 for not disclosing overpayments made from 1992-1996 (Medicare Compliance Alert 5/20/02).
The District of Columbia and 13 states now have FCA-like statutes, including Arkansas, California, Delaware, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, Tennessee, Texas, Utah, and Virginia. Pennsylvania and Connecticut could pass such laws in 2003. Prosecutors in California have collected hundreds of millions of dollars through the State FCA. The "best" statutes allow recoveries for fraud against private insurers as well as Medicaid (Medicare Compliance Alert 12/9/02).
It is impossible to say what percentage of recoveries is for true fraud, and what for inadvertent violations of rules.
Watch for Stark II (see p. 3), which creates crimes of "referral," to be an additional trigger for FCA penalties.
While the clawback of physicians' lifetime accumulation of assets could devastate the profession, it could not possibly save the Medicare program. Using government figures, Tom Miller of the Cato Institute states that "the net present value of negative cash flow (the funds needed to cover projected shortfalls) over the next 75 years for Medicare under current law is $12.8 trillion. That's $12,800,000,000,000 if you paid off the intergeneration balloon note today" ( www.cato.org/dailys/01-28-03-2.html). If an average net of $1 million could be extracted from each of the 841,298 physicians who bill Medicare, it would cover only about 6% of that note.
Price controls and the mere threat of prosecutions and fines are resulting in a different type of clawback: withdrawal of services. Others are now reporting what AAPS biannual Medicare surveys have shown for years (www.aapsonline.org, search for "Medicare survey"). The ACP/ASIM, for example, states that fewer than two-thirds of participating physicians plan to renew their Medicare contracts for 2003, and only one in five physicians who now accept new Medicare patients will continue to do so (White House Bull 1/21/03). In the Portland, OR, metropolitan area, 60% of internists and family physicians are not accepting new Medicare patients (Neurol Today 10/02). An AMA study showed that nearly half the surveyed physicians will begin to limit, or limit further, the number of Medicare beneficiaries they treat. By 2005, Medicare patients may have access to little more than half of American physicians (NCPA Brief Analysis 421, 10/22/02).
As independent physicians retire early, and younger physicians are saddled with student debt and increasingly costly regulations, more medical care will be under centralized control, facilitating acceptance of "practice guidelines" and explicit rationing.
As financial pressures build, the only way to offer, or to maintain access to optimal care, is by escaping government dependence, HIPAA rules, and third-party overhead: that is, by implementing the Non-Participation Policy that AAPS has advocated since its founding, and by remaining, becoming, or seeking care from HIPAA non-covered entities.