MICH. ACAD. OF FAM. PHYSICIANS v. BLUE CROSS, ETC., Civ. A. No. 76-72082.

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Writing for the CourtRalph D. Gilpin, Detroit, Mich., for defendant Blue Cross and Blue Shield of Michigan
Citation502 F. Supp. 751
PartiesMICHIGAN ACADEMY OF FAMILY PHYSICIANS, a Non-Profit Association, Charles Farber, M. D., Glenn W. House, M. D., Lester Webb, M. D. and Carol A. Diedrich, Plaintiffs, v. BLUE CROSS AND BLUE SHIELD OF MICHIGAN, and Patricia Harris, Secretary of Health and Human Services, Defendants.
Decision Date30 December 1980
Docket NumberCiv. A. No. 76-72082.

502 F. Supp. 751

MICHIGAN ACADEMY OF FAMILY PHYSICIANS, a Non-Profit Association, Charles Farber, M. D., Glenn W. House, M. D., Lester Webb, M. D. and Carol A. Diedrich, Plaintiffs,
v.
BLUE CROSS AND BLUE SHIELD OF MICHIGAN, and Patricia Harris, Secretary of Health and Human Services, Defendants.

Civ. A. No. 76-72082.

United States District Court, E. D. Michigan, S. D.

December 30, 1980.


502 F. Supp. 752

Frimet, Bellamy, Gilchrist & Jehle, P. C. by Alan G. Gilchrist, James R. Lites, Southfield, Mich., for plaintiffs.

James K. Robinson, U. S. Atty. by Michele Coleman Mayes, Asst. U. S. Atty., Detroit, Mich., for defendant HHS.

Ralph D. Gilpin, Detroit, Mich., for defendant Blue Cross and Blue Shield of Michigan.

OPINION

GILMORE, District Judge.

This is an action by plaintiffs seeking judicial review of the action of the Secretary of Health and Human Services in setting reimbursement rates at different levels for certain groups of physicians under Title XVIII of the Social Security Act, Part B, 42 U.S.C. §§ 1395 et seq.

Plaintiffs are the Michigan Academy of Family Physicians, a voluntary non-profit association of family physicians, three individual family practitioners, and a Medicaid beneficiary.

Defendants are Blue Cross/Blue Shield of Michigan (BC/BSM) a Michigan non-profit corporation which has been designated as the fiscal intermediary and carrier under the Medicare Act for the State of Michigan and the Secretary of Health and Human Services, the Administrator of the Medicare Program (The Secretary).

At issue is the legality of treating certain family physicians differently from all other physicians in reimbursing them for medical services under Medicare. Such discrimination is illegal for the reasons stated below.

The American Board of Family Practice was established in 1969, and from 1969 until mid-1978 a physician could be qualified to sit for examination by the American Board of Family Practice if he or she had completed a three-year residency program, or if he or she had practiced for a period of six years and completed a minimum of 50 hours continuing education for each of the six years. Effective July 1, 1978, a physician, to be qualified to sit for examination by the American Board of Family Practice, had to have completed a three-year residency program, and, in addition, take the certification examination. To continue to be board certified, one must retake the examination every six years, and to be either board certified or board eligible one must pursue 50 hours of continuing medical education.

Federal health insurance for the aged, popularly known as Medicare, was enacted by the Congress in 1965, and amended in 1970. The system contains two substantially distinct parts, one providing insurance for hospital and related post-hospital services, known as Part A, 42 U.S.C. §§ 1395c-1395i-2 (Supp. V), the other providing insurance for supplementary medical services, primarily physicians' services, known as Part B. This litigation concerns only Part B of the Medicare Act.

Part B of the Medicare Act is a voluntary health insurance program which operates in a manner similar to private health insurance programs. Eligible individuals enroll in the program and agree to pay a monthly premium established by the Secretary. 42 U.S.C. § 1395r(b) and (c). The premiums, together with amounts contributed by the federal government, are deposited in the Federal Supplementary Medical Insurance Trust Fund, which is wholly distinct from the Fund established for Part A. 42 U.S.C. 1395t.

The Medicare Statute provides that Medicare beneficiaries are entitled to reimbursement for medical services provided in the amount of 80 percent of the physician's reasonable charge for covered health services. 48 U.S.C. § 1395l(a)(1)(b). 42 U.S.C. § 1395u defines "reasonable charge" as the lower of the charges a physician customarily charges for the same service, and the prevailing charge in the community for that service. The prevailing charge is statutorily defined as an amount which is equal to the seventy fifth (75th) percentile of the charges for the same service by other physicians in the same locality.

An individual under Part B who obtains a covered service can pay for this service and request reimbursement at the rate of 80

502 F. Supp. 753
percent of the "reasonable charge," or assign the right to reimbursement to the person providing this service, who can collect as an assignee of the beneficiary, 42 U.S.C. § 1395u(b)(3)(B)(ii). By accepting assignment, a physician agrees to demand no more of a patient that the reasonable charge determined by the Secretary. Accordingly, the patient is only responsible for the 20 percent of the reasonable charge not paid for by Medicare. A physician who does not accept assignment has no statutory limitation on the amount he or she may charge a Medicare beneficiary. However, the physician may not bill Medicare directly, but rather must recover directly from the beneficiary for the services performed

Upon the inception of the Medicare program, and to this day, BC/BSM has neither developed a procedure to determine what types of professional services are similar to others for purposes of establishing prevailing charges in accordance with 42 U.S.C. § 1595u(b)(3), nor carried out a statistical study to determine different types of providers' actual charge patterns for particular services, pursuant to 42 C.F.R. § 405.504(b). Instead, BC/BSM in 1966 established three "screens" to determine the prevailing fee calculations for Medicare "reasonable charge" determination in Michigan. One screen contained board certified and board eligible internists for hospital visits; another screen contained board certified and board eligible specialists, and board certified and board eligible internists for services other than inpatient hospital visits; and the third screen consisted of board certified and board eligible family physicians, non-board eligible family physicians and various non-physician groups, such as podiatrists, chiropractors, and dentists.

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3 practice notes
  • Bowen v. Michigan Academy of Family Physicians, No. 85-225
    • United States
    • United States Supreme Court
    • June 9, 1986
    ...determining Medicare reimbursement defies all reason." Michigan Academy of Family Physicians v. Blue Cross and Blue Shield of Michigan, 502 F.Supp. 751, 755 (E.D.Mich.1980). Because it ruled in favor of respondents on statutory grounds, the District Court did not reach their constitutional ......
  • Michigan Academy of Family Physicians v. Blue Cross and Blue Shield of Michigan, No. 81-1202
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • February 23, 1984
    ...the Medicare Act, Secs. 1395u(b)(3) & 1395a, and ordered the Secretary to include all family physicians with other medical doctors. 502 F.Supp. 751 (E.D.Mich.1980). BC/BSM and the Secretary The Medicare Act consists of two programs. Part A provides insurance for hospitalization and post-hos......
  • 660 LINDBERG, INC. v. City of Atlanta, Civ. A. No. 80-1009.
    • United States
    • U.S. District Court — Northern District of Georgia
    • December 30, 1980
    ...to the pending motions indicates that abstention is inappropriate as to the three plaintiffs against whom there are no pending state 502 F. Supp. 751 prosecutions. Abstention as to the other six plaintiffs might or might not be appropriate, depending upon whether there is substance to the c......
3 cases
  • Bowen v. Michigan Academy of Family Physicians, No. 85-225
    • United States
    • United States Supreme Court
    • June 9, 1986
    ...determining Medicare reimbursement defies all reason." Michigan Academy of Family Physicians v. Blue Cross and Blue Shield of Michigan, 502 F.Supp. 751, 755 (E.D.Mich.1980). Because it ruled in favor of respondents on statutory grounds, the District Court did not reach their constitutional ......
  • Michigan Academy of Family Physicians v. Blue Cross and Blue Shield of Michigan, No. 81-1202
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • February 23, 1984
    ...the Medicare Act, Secs. 1395u(b)(3) & 1395a, and ordered the Secretary to include all family physicians with other medical doctors. 502 F.Supp. 751 (E.D.Mich.1980). BC/BSM and the Secretary The Medicare Act consists of two programs. Part A provides insurance for hospitalization and post-hos......
  • 660 LINDBERG, INC. v. City of Atlanta, Civ. A. No. 80-1009.
    • United States
    • U.S. District Court — Northern District of Georgia
    • December 30, 1980
    ...to the pending motions indicates that abstention is inappropriate as to the three plaintiffs against whom there are no pending state 502 F. Supp. 751 prosecutions. Abstention as to the other six plaintiffs might or might not be appropriate, depending upon whether there is substance to the c......

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