In the words of Congressman Wilbur Mills, the architect of Medicare, “it is a program just to pay the bills for elderly folks to doctors and hospitals for health services.”
With the inclusion of Medicare Part A for hospital charges and Part B for doctor services, there was general support from the American Hospital Association, the American Medical Association, most of the medical specialist societies and from the designated health insurance agencies, Blue Cross, Blue Shield, and a growing number of insurance companies. Medicare was to take effect in the summer of 1966, 12 months after the law was passed. That was far from being enough time to design a totally new system. Instead, with the law specifying management by existing health insurance organizations, the federal Medicare agency told its contractors to treat payments for Medicare beneficiaries in the same procedures as they processed claims from their private customer groups. The acceptable level of fees for Medicare would be the same as the insurance companies had adapted for their customers. And, at first, the matter of what medical services were to be paid for also rested on the existing procedure.
For the most part, this was an acceptable start. Many new elderly Medicare beneficiaries had not had any health insurance previously. So doctors and hospitals had tended to old patients with no payments or the patchy efforts of a family supporting grandma. In reality, that created restraints on the part of doctors and hospitals that recognized that fancy medicine was no way to go. But now, the Medicare program would pay for more sophisticated modern medical technology. So volume increased.
Given the awkwardness for radiologists to adjust their financial relationships to hospitals, the Medicare insurance plans were not eager to follow the legal mandate and require a billing change separating radiologist fees from hospital technical x-ray costs.
As was noted, the American Hospital Association advised its members to resist the separation of radiology, pathology, and anesthesiology fees from their technical charges. Most hospitals refrained from prompt agreement to change. Many of them contended that their total payment to their radiologists covered the radiologists’ role as department managers, teachers of house officers, medical students, technologists, and other administrative responsibilities.
But, prompted by Wilbur Mills’s caution that radiologists needed to change their hospital billing contracts or risk a legislative amendment, the American College of Radiology (ACR) pushed its members to act for independent practice. This posed both the political struggle to change radiology group contracts with hospitals and the practical dilemmas of how to establish billing and collective systems on their own terms.
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