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Medicare Private Contracts:
What Happens if Medicare Pays for Rx Drugs?

June 4, 2001

While politicians from both major political parties are debating how much federal revenue to spend on a new prescription drug program under Medicare, no one seems to be paying attention to how that program would affect seniors' freedom to choose and pay privately for their drugs. Many people seem to have forgotten the prohibition that was placed on private contracts with Medicare participants a few years ago. That prohibition still exists!

Was Section 4507 Repealed?

Now is an important time to revisit Section 4507 of the Balanced Budget Act of 1997. Section 4507 says that before any doctor or other health-care provider can accept private payment from Medicare-participating seniors for Medicare-covered services, the provider must promise not to accept Medicare payments from all Medicare- participating seniors for two years. The United Seniors Association challenged this in federal court, but the court ducked the question of the section's constitutionality. The court ruled only that seniors are free to pay privately for services not covered by Medicare.

Rx Drugs and Section 4507

What will happen if Medicare covers prescription drugs? Will Section 4507 prohibit seniors from paying privately for Medicare-covered drugs? Congress and President Bush should clarify this important issue in any new Medicare law. American seniors have the right to know how a new Medicare program will affect their freedom to choose and pay privately for medicines.

This article was originally published in the March/April 2001 issue of Health Freedom Watch, the bimonthly watchdog report published by the Institute for Health Freedom.

American seniors have the right to know how a new Medicare program will affect their freedom to choose and pay privately for health care.
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