Health care cost containment experiments: policy, individual rights, and the law.

Journal of Health Politics, Policy and Law

Health Care Cost Containment Experiments: Policy, Individual Rights, and the Law* Trudi W . Galblum, Health Care Financing Administration

Abstract. In a climate of increasing pressure to contain health care costs, legislators and health services researchers from time to time have proposed experiments involving reductions in benefits currently authorized under the Medicare and Medicaid programs. This paper examines three court challenges to the conduct of such experiments in California, New York, and Georgia. The rulings on the California and New York cases were in favor of continuing the experiments on the grounds that the Secretary of Health, Education, and Welfare had judged the projects to be helpful in promoting the objectives of Titles XIX and IV-A, respectively, of the Social Security Act. In the Georgia case, however, the plaintiffs contended that federal regulations protecting human subjects were applicable to the experiment at issue. While the precedent of past cases upholding the Secretary’s authority to approve benefit-reducing experiments was not overturned in Georgia, the Court held that the human subjects regulations were applicable and, consequently, that such experiments must be reviewed prior to implementation by an Institutional Review Board. If the experiment places human subjects at risk, the regulations require that informed consent be obtained from participating subjects. The paper concludes by examining the implications of the Georgia ruling in terms of future efforts to contain health care costs while ensuring that the rights of individual beneficiaries are adequately safeguarded.

‘‘Social science research can be prostituted to the narrow political aims of the State in ways reminiscent of the prostitution of medical science to the political interests of the state of Nazi Germany.”’ So concluded the Director of Medical Care Research of the Kaiser Foundation Hospitals in Portland, Oregon, upon reviewing the published results of the California Medi-Cal Copayment Experiment. What was the copayment experiment and why did it engender such a hostile reaction? Briefly, the experiment was designed to determine whether requiring Medicaid beneficiaries to make a token payment for physician services and prescriptions would *The opinions and conclusions expressed in this article are solely those of the author and should not be construed as representing the opinion or policy of any agency of the federal government.

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deter the inappropriate or unnecessary use of services by providers and beneficiaries. In California, it was hoped that the imposition of a nominal copayment would help to slow the pace of health care cost inflation. Between 1967 and 1970, the costs of the California Medicaid program nearly doubledfrom $507 million to over $I billion. The copayment experiment ran from January. 1972, through June, 1973, and was authorized under section 1115 of the Social Security Act. Section 1 I15 grants very broad discretionary powers to the Secretary of the Department of Health, Education, and Welfare to conduct research: In the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of title I, VI, X, XIV, XVI, XIX, or XX, or Part A of title IV, in a State or States(a) the Secretary may waive compliance with any of the requirements of section 2, 402, 602, 1002, 1402, 1602, 1902, 2002, 2003 or 2004, as the case may be, to the extent and for the period he finds necessary to enable such State or States to carry out such projects. . . . Copayment experiments are sensitive politically because they reduce, or take away, statutorily entitled benefits. Section 1902(a)( 14)(A)(i) of the Social Security Act specifically bans the imposition of copayments on the categorically needy. However, the section 11 15 waiver authority enables the Secretary to lift restrictions such as those in section 1902. Thus, states facing Medicaid program cost escalations have sought and obtained section 1115 waivers to clear the way for the imposition of copayments. Because section 1902 prohibits states from exacting copayments from the categorically needy, copayment demonstrations such as those implemented via 1 I 15 waivers are viewed by some as tantamount to disentitlement without due process. Moreover, states which have implemented or attempted to implement demonstrations involving benefit reductions have appeared to have had as their primary objective not the conduct of controlled social experiments but rather the realization of program cost savings in ways not permissible under federal program statutes. At least in their inception, few of these experiments have posited experimental objectives, tested clear-cut hypotheses, or specified control groups. In the 196Os, Congress entitled the poor and the elderly to a broad scope of health care benefits. In fiscal year 1966, the first year of the Medicaid and Medicare programs, federal expenditures for health care were over $7.9 billion; by fiscal year 1976, they had increased nearly seven times to $48.4 b i l l i ~ n .Although ~ federal health programs were expected to be



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costly, few legislators and administrative policymakers foresaw or planned for such unprecedented inflation. Thus, both federal and state governments are placing increased emphasis upon program cost containment. Only two years after the implementation of Medicaid, states were using section 1115 as a vehicle for experimental cutbacks under Aid to Families with Dependent Children (AFDC).5 In addition to the wide-ranging research authority of section 1115, the Socia1 Security Amendments of 1972 authorized experiments and demonstration projects specifically aimed at cost control. Section 222(a) of these amendments provided for prospective reimbursement experiments and demonstration projects under title XVIII and under state plans approved under titles XIX and V. Section 222(b), which amended section 402(a) of the Social Security Amendments of 1967, authorized: (1) experiments and demonstration projects to test negotiated rates and other alternative reimbursement methods; (2) state ratesetting; (3) fixed-price or performance incentive contracting with intermediaries or carriers; and (4) reimbursement for clinical psychologists, physician extenders, and other noncovered services. Neither section 222 nor 1115 explicitly authorizes the reduction of benefits (even for a limited time) to which beneficiaries are statutorily entitled. However, if the government’s objective is to contain costs, what more rational way to proceed that to deter use (or to substitute less costly services and facilities) in a defined geographical area, observe the results, and generalize those results to the larger population. By experimenting in this way, many believe that policymakers can learn what works best before changing the law or ordering new programs on a large scale. Questions of equity always arise when a scarce resource is allocated or eliminated by random selection or other sampling method. For example, in 1954, when the Salk polio vaccine was first tested on a sample population, parents of those children who were not to receive the vaccine found it difficult to perceive the arrangement as fair. It is perhaps equally difficult to justify taking away something upon which people may have come to depend; i.e., health care benefits which the law mandates shall be provided free of charge. At present, no projects have been implemented under section 222 which take away benefits; in fact, section 222 experiments to date have tested only alternative reimbursement methods or the effects of adding or expanding benefits. But with cost containment so clearly a goal, experimental reduction of benefits as a strategy to slow program cost escalation cannot be considered merely a hypothetical possibility. The judicial history of cases where beneficiaries have legally challenged the Secretary’s authority to approve section 1115 waivers involving reductions of benefits adheres, at least implicitly, to the philosophy that government-



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financed benefits are privileges which are subject to revocation at the government’s pleasure. Several months after the California Medi-Cal Copayment Experiment went into effect, the California Welfare Rights Organization brought action against Secretary Mathews , contending: (1) that the provisions of section 1115 do not authorize the Secretary to approve any project which results in a lowering of benefits from the level established by the requirements of section 1902; (2) that approval of the project conflicts with objectives of title XIX, particularly section 1902; (3) that the decision was an expedient of policy; and (4) that even if the Secretary had acted within his authority, this was abused under section 11 15 because the approved project could not be a valid experiment. Since the wording of section 11 15 implies no requirement limiting experiments to the provisions of section 1902, the Court held the first contention without merit. Second, the Court determined that the objectives of title XIX that would be relevant in conjunction with section 1115 are set forth in sections 1902 and 1903 of the Act.’ The objective stated in section 1901 is to furnish medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the cost of necessary medical services. The Court said that section 1901 would “limit experimental projects to some extent,” but apparently did not believe the limits applied to the copayment experiment because the Court’s opinion contained no further discussion of section 1901 objectives. Section 1903(e), repealed in 1972, required states to move toward a broadening of services and coverage. The Court allowed that the experiment did not “directly advance the objective of comprehensive care derived from section 1903(e),” but that it did “not impede progress of that goal either.” In fact, the Court suggested that it might be fiscally possible to move toward the goal of comprehensive care only by imposing some control on utilization. Furthermore, the Court maintained that the Secretary could rationally approve a section 1 115 project that promoted “one of several objectives, even if another objective would suffer. . . .” The third issue, whether the Secretary’s decision was an expedient of policy, was held to be a nonjudicial question. Concerning the validity of the experiment, the fourth allegation, the Court ruled that the Secretary could not be held to standards of scientific precision in carrying out “real world” experiments under section 1 1 15. The outcome of the case, as is apparent, was in favor of the government. The Court’s opinion on the plaintiffs’ first and third allegations appears relatively uncontestable. However, the second proposition that the section 1903(e) objective to broaden services and coverage might only be possible by deterring use fails to recognize that by requiring a copayment, coverage is reduced, not broadened. Although funds might




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have been saved by deterring utilization and later redistributing the saved funds to cover additional services, coverage of entitled beneficiaries has been decreased. The Court stated that an experiment could rationally be approved if it promoted one objective at the expense of another. However, one might argue that in this case, the experiment’s promotion of one objective actually violated another. With regard to the fourth issue raised by the plaintiffs, it also might be argued that while the exigencies of the “real world’’ cannot be ignored in designing social research, there are certain minimum sicentific standards which ought to apply if, indeed, what is being done is meant to produce valid and reliable data for evaluation. For example, in the California copayment experiment, no definition of “over-utilization” was established in advance of the project, thereby rendering any later conclusions about the impact of the copayment on over-utilization of debatable meaning. A second case held in favor of the government which dealt with the issue of reducing entitlements was Aguayo, et al., v. Richardson (1972). The benefit of concern there was welfare under AFDC. Plaintiffs challenged Secretary Richardson’s approval of two demonstration project applications submitted by the New York State Department of Social Services whereby “employable” members of families receiving AFDC in selected social service districts statewide would be required to register for training and employment. As in the California copayment experiment, one issue was whether the demonstrations were likely to promote the objectives of the pertinent title, title IV-A of the Social Security Act. The project was authorized under section 1115. Basing the scope of judicial review upon section 706 of the Administrative Procedure Act, the Court held that the Secretary’s action was not arbitrary, capricious, in abuse of his discretion, contrary to constitutional right or in excess of statutory jurisdiction. But the judge’s decision essentially turned upon his application of the objectives of title IV-A. Judge Bauman stated: Among the objectives of the Act, and the AFDC program in particular, are the strengthening of family life and the attainment of ‘‘maximum self-support and personal independence consistent with the maintenance of continuing parental care.” [section 4011 Although other objectives of the title could be cited which do not so nearly parallel the project’s goals,git is clear that the objectives quoted by Judge Bauman are congruent with the goals of the demonstration. One month earlier, the dictum of the District Court for the Northern District of California stated that a project could rationally be approved if it promoted one of several objectives, even if another objective would suffer. This precedent may have influenced Judge Bauman, although he does not so state.



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In June 1976, the Secretary’s broad authority to approve demonstration projects under section 1115 was again upheld, this time by the District Court for the Northern District of Georgia, Atlanta Division. In a case very similar to California Welfare Rights Organization v . Richardson, plaintiffs sought to enjoin a Department of Health, Education and Welfare (HEW) funded copayment project administered by the Georgia Medicaid agency, Fannie Crane, et al., v . Mathews (1976). Relying by implication on earlier decisions such as California and Aguayo, the Court stated: Given the large degree of judgment vested in the Secretary with respect to the approval of section 1115 projects, it is not for the Courts to deny the Secretary the right to approve a project merely because the Court might in certain situations disagree with his judgment. . . . And, as the case law shows, the only prerequisite to the exercise of that authority is that in the Secretary’s judgment the demonstration or experiment furthers the objectives of the appropriate title of the Act. . . . The Secretary has made that judgment with respect to the Georgia project. In this case, the Court did not even specify any objectives of the title relevant to the case. It simply stated that “Congress has entrusted this judgment to the Secretary and not to the courts.’’ Through this decision, we can discern the emergence of a consolidation of the case law concerning benefit-reducing experiments: such experiments are approvable so long as the Secretary has judged the project to be one which is likely to assist in promoting the objectives of the applicable title; if there are several objectives, it is within the Secretary’s discretion to approve an experiment which will promote one of the objectives even though another may suffer. Despite the development and approval foreshadowed by these cases of many new demonstration projects designed to contain costs by reducing benefits, the Georgia copayment case introduced a controlling difference which will likely alter this trend. In addition to challenging the Secretary’s waiver authority, the plaintiffs in that case contended that the provisions of 45 CFR section 46, concerning the protection of human subjects, were applicable to the copayment experiment. Prior to that time, federal regulations protecting human subjects had been invoked almost exclusively with regard to medical experiments. According to 45 CFR section 46: it is the policy of DHEW that no activity involving human subjects to be supported by DHEW grants or contracts shall be undertaken unless an Institutional Review Board has reviewed and approved




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such activity, and the institution has submitted to DHEW a certification of such review and approval. . . . Review is to determine whether these subjects will be placed at risk, and if at risk, whether: (1) The risks to the subject are so outweighed by the sum of the benefit to the subject and the importance of the knowledge to be gained as to warrant a decision to allow the subject to accept these risks; (2) The rights and welfare of any such subjects will be adequately protected; and (3) Legally effective informed consent will be obtained by adequate and appropriate methods in accordance with the provisions of this part.

In the Georgia case, the Court held that 45 CFR section 46 was applicable to a section 1115 project, and that in this specific case, human subjects were involved. As a result, a permanent injunction was issued unless the Institutional Review Board (IRB) of the State of Georgia reviewed the project and made recommendations which were acted upon by the Secretary within 45 days of the injunction date. Even though the Court’s determination that human subjects were involved is not synonymous with finding subjects at risk (that determination is left to the IRB), the reasoning of Judge Moye does suggest that evidence of potential risk was apparent to the Court: The Georgia copayment project has the effect of diminishing the amount of money that a family might have available for basic living needs and forces the family to make a determination whether to apply that money to basic living needs or to apply it to purchase medical care. Such an activity in which human beings, defined in the Social Security Act as the categorically needy, are required to pay for medical care in a situation in which they could not otherwise be statutorily required to pay for such care and would not otherwise have to apply income to that need, is an activity which “deliberately and personally imposes” upon those human beings. In speaking for the Court, Judge Moye has perceived a fundamental problem which often occurs when the government assumes economic responsibility for a group it defines as categorically needy; this responsibility can later be redefined to suit a different priority or policy objective (e.g., cost containment). As a result, large numbers of program beneficiaries are subjected to bureaucratic discretion, making their source of livelihood insecure by uncertain or changeable standards of eligibility. O Congress was silent about the permissibility of benefit-reducing experiments under section 1115 or 222 authority. After the court order which



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sent the Georgia case to the IRB, but prior to the IRB decision, Secretary Mathews published an “interpretation” of the “subjects at risk” provision of 45 CFR section 46 in the Federal Register. The Secretary stated: The regulations were not, and have never been, intended to protect individuals against the effects of research and development activities directed at social or economic changes, even though these changes might have an impact upon the individual. More particularly, they were not designed to protect against possible financial injury, which may result from alteration in the price, availability, or conditions of eligibility for benefits or services offered under a governmental program. The Secretary further claimed that the copayment experiment would not constitute a “departure from established and accepted methods for meeting [the individual’s] needs.” However, the statement issued by the Georgia Department of Human Resources Human Research Review Board pointed out that the Board was directed by the Court only to review the copayment as a procedure which was nor an established and accepted method. l 2 Consequently, the question of financial injury was never considered. The Board voted ten to two that the imposition of the copayment procedures would place human subjects at risk, stating that some Medicaid recipients would be prevented from seeking necessary medical care as a result of inability to pay the copayment. The Board voted nine to zero that the risks associated with the experiment were not outweighed by the benefits, mainly on the grounds that the research design was so seriously inadequate that it would not permit valid conclusions. It now appears that the Georgia District Court’s interpretation of the Georgia case may be construed to confine past cases (i.e., California and New York) since they did not consider the requirements of the regulations protecting human subjects. Consequently, future benefit-reducing experiments may prove infeasible. Two pending DHEW projects which could prove virtually impossible to implement, both being considered under section 222 authority, are the Medicare mental health benefits modification experiment and the mandatory second surgical opinion program for beneficiaries of federally financed health programs. The mental health experiment would involve the reduction of Medicare inpatient mental health benefits from 90 days to 40 days per benefit period. l 3 To counterbalance this reduction, the experiment would expand outpatient mental health benefits to cover twenty private psychiatric visits per year substituting for current coverage which pays only 50 percent of a beneficiary’s outpatient mental health service charges up to $250 per year. The stated goal of this design would be to determine



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whether the substitution of noncovered outpatient services would result in the more economical provision and more effective use of inpatient and outpatient mental health resources. Because it is less costly to provide outpatient as opposed to inpatient services, it is hypothesized that expanded coverage of the former will provide an incentive to obtain mental health care on an outpatient basis. The other proposed project involves requiring federal health program beneficiaries to obtain a second surgeon’s opinion on the advisability of undergoing elective surgery with a view to reducing unnecessary surgery.l4 Most of the so-called second opinion programs, sponsored by various third-party health insurance payers, encourage their members to obtain a second opinion under the program. A few programs, however, will not reimburse for the surgery unless the beneficiary has received a second opinion, and at least one program, ordered by the New York State legislature, tried to predicate reimbursement for surgery upon an affirmative second opinion.l5 The former type of program is termed “voluntary;” the two latter types are both considered “mandatory.”16A private health insurer is free to attach any stipulation it desires to the benefit package it sells. But whether Medicare and Medicaid may do the same, to circumscribe statutorily entitled benefits and possibly abridge personal physician rights, is problematic. It now appears that where such projects as the two described above are proposed, the provisions of 45 CFR section 46 will be considered by DHEW to apply, and the administering agency will be required to submit the proposed project to an IRB. If the agency fails to do so, it may face litigation. However, by submitting the project to an IRB, the agency runs the risk, so to speak, of having the experimental subjects found to be “at risk’’ as a result of the project. As a consequence of placing subjects at risk, the agency will have to obtain “informed consent,” defined by 45 CFR section 46.103 as: the knowing consent of an individual or his legally authorized representative, so situated as to be able to exercise free power or choice without undue inducement or any element of force, fraud, deceit, duress, or other form of constraint or coercion. The regulations also specify that, at minimum, information necessary to such consent includes: an explanation of procedures to be followed, their purpose, and identification of any procedures which are experimental; description of risks and benefits reasonably to be expected by the subject; disclosure of appropriate alternative procedures that might be advantageous to the subject; an offer to answer inquiries; and instructions that the person is free to withdraw consent and discontinue participation at any time without prejudice. When the Georgia case was heard, Judge Moye



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treated Secretary Mathews’ concern that the application of the regulations would preclude any projects which involved the diminution of benefits with the cursory comment that “it is not impossible to devise certain incentives to encourage the necessary number of individuals . . . to consent to participate. . . .” It is unlikely, however, that any beneficiary with minimum self-interest will consent to participate in a benefitreducing experiment merely to enable the government to test the efficacy of a cost-containment strategy unless the personal reward for participation is substantial. Furthermore, by obtaining informed consent, selfselection could operate and seriously bias the results of the experiment. The clamor for informed consent is most directly traceable to certain clinical experiments conducted in the early 1960s. For example, in 1963, three medical researchers injected live cancer cells into 22 chronically ill patients at a New York hospital with the approval of the institution’s director but without the fully informed consent of those injected. Another similarly controversial experiment, which occurred in 1963, was the Stanley Milgram study of obedience, in which subjects were assigned to “learners” to whom they were told to administer ever-higher levels of electric shock. Sixty-two percent of 1,OOO subjects obeyed commands to the extent of raising the pain stimuli to the highest point possible. The experiment received much notoriety, both due to its results and because of the feelings of shame, anxiety, and extreme tension expressed by the subjects during and after the experiment. A study in Tuskegee, Alabama, was recently uncovered in which patients suffering from syphilis went untreated for 20 years for research purposes. Despite the obvious breaches of ethics involved in the above experiments, one should be careful in drawing parallels between these kinds of experiments and the experiments which may occur under section 1115 or 222 authority. In benefitreducing experiments, subjects are deprived of economic resources, which conceivably could result in their inability to pay for needed health care, but does not necessarily preclude access to care. Opponents of informed consent may be accurate in their complaint that legitimate concern about surveillance and deception by political, police, and intelligence agencies has inappropriately diffused into the research context. l7 On the other hand, without the limitations imposed by informed consent requirements, states may freely institute benefit reductions under the guise of experimentation. What may be needed then is more serious attention at the policy-making levels of government to alternative modes of protecting the rights of experimental subjects. One possibility may be the promulgation of section 1115 and 222 regulations which would set specific parameters for benefit-reducing experiments. The effects of the regulations protecting human subjects on benefitreducing experimentation pose a serious dilemma which has not yet been



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widely recognized. On the one hand, it seems morally appropriate to protect the right of individual beneficiaries by placing strict limitations on benefit-reducing experimentation. But the alternative to benefit-reducing experiments may be at least as undesirable as the experiments. If health care costs continue to rise as they have in the past several years, Congress and states may find themselves impelled to enact statutory cutbacks in benefits. Untested, these cutbacks may generate unanticipated deleterious effects, thereby offsetting any savings expected to be gained by the cutbacks. For example, the evaluators of the California copayment experiment found only small insignificant reductions in overall utilization which could be attributed to the copayment. But utilization of preventive care services was significantly reduced. After a brief time lag following the copayment period, hospitalization for the copayment cohort rose to levels higher than those of the noncopay cohort. Some health services analysts have contended that this sleeper effect was due to the deferral of preventive services and that the savings to the state from the reduction in use of preventive services was more than offset by later increased hospitalization.l 8 If the copayment had been enacted into law, rather than tested in an experiment for limited duration, the outcome may easily have been the same. But the copayment would have remained intact until the law was repealed or amended-a far more difficult process than terminating an experiment. The bottom line of the dilemma is a policy question complicated by moral considerations: which shall take precedence-the rights of the individual beneficiary who may be deprived of needed health care as a consequence of research, or the needs of a society which can afford limited financial and manpower resources to maintain health status and must determine how best to spend what it can afford. The Georgia District Court’s decision appears to mean that the regulations protecting human subjects in research projects apply to at least all 1115 projects. What remains unclear is whether the limits imposed by these regulations on future experimentation will result in needed protection of some beneficiaries’ rights or a missed opportunity to discover alternative health care financing strategies which might benefit all beneficiaries as a class, as well as taxpayers. Notes 1. “Letters to the Editor,” Medical Care 12 (December 1974): 1054. 2. Earl W. Brian and Stephen G. Gibbens, “California’s Medi-Cal Copayment Experiment,” Medical Cure 12, supplement (December 1974). 3. See Alexander Morgan Capron, “Social Experimentation and the Law,” in Ethical and Legal Issues of Social Experimentation, ed. Alice M. Rivlin and P. Michael Timpane (Washington, D.C.: The Brookings Institution, 1975), pp. 127-165.



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M.Gibson and Marjorie Smith Mueller, “National Health Expenditures, Fiscal Year 1976,” Social Security Bulletin 40 (April 1977): 3-22. 5. This 1115 experiment, which was implemented in August 1%8, provided for the elimination of certain allowances for special needs of AFDC recipients and substituted a flat grant of $100 per person. ?’he experiment was terminated with the passage of Section 131. Chapter 184 of the Session Laws, New York State, mandating a system fixing maximum allowances per family based on the number of individuals per household. The system ultimately resulted in nearly a $40 million decrease in benefits paid to New York City recipients. The legislation was overturned on April 6, 1970, in a Supreme Court judgment which held that the statute reduced both standards of need and levels of benefits in violation of section 402(a)(23) of the AFDC provisions of the Social Security Act, 90 S, Ct. 1207 (1970). 6. For an in depth discussion of the philosophical issues surrounding social experimentation, see articles by P. G. Brown. J. P. Newhouse, E. M. Gramlich, L. L. Orr, C. L. Schultze, A . M. Capron, and T. C. Schelling in Ethical and Legal Issues of Social Euperimentution, ed. Alice M. Rivlin and P. Michael Timpane (Washington, D.C.: The Brookings Institution. 1975). 7. The Court held that objectives are relevant only in conjunction with section 11 15 and it is section I 1 15 which explicitly attows section 1902 provisions to be waived. Moreover, if section 1902 were the only source of title XIX objectives, the Court probably never would have reviewed the case because there would have been no law to apply. 8. A curious aspect of this case worth noting was Judge Bauman’s narrow interpretation of standing. Relying on Sierra Club v. Morton, 405 U.S. 727 (1972), the Court ruled that plaintiff welfare organizations did not suffer requisite injury to be heard, and that the ruling of National Welfare Rights Organization v. Wyman, 394 F. Supp. 1346 (1968), in which standing was denied “because there was no showing of any injury . . . as distinct from the possible diminution of welfare benefits to its membership,” was also controlling. Only the City of New York was granted standing in view of the alleged administrative burden and possible financial loss which New York City claimed it would incur. Judge Baurnan’s interpretation of standing in this case seems contrary to the trend toward expanded reviewability prevalent in the late l%Os, and early 1970s; just one month earlier, in the California copayment case, standing was not even discussed as an issue. In Fannie Crane v. Mathews (1976). standing was readily granted to two named plaintiffs on behalf of themselves and all Georgia Medicaid recipients. 9. Other objectives of the title which might be applied are: (1) to encourage “the care of dependent children in their own homes or in the homes of relatives,” and (2) to “help maintain and strengthen family life.” 10. Charles A. Reich. “Individual Rights and Social Welfare,” The Yale Law Journal 74 (June 1%5): 1256. 11. U.S. Department of Health, Education, and Welfare, “Secretary’s Interpretation of ’Subjects at Risk,’” Federal Register 41, no. 125, June 28, 1976, 26572-3. 12. “Clarification Statement Regarding the Georgia Department of Human Resources Human Research Review Board’s Review of the Proposal Entitled ‘Recipient CostParticipation in Medicaid Reform,’ ” Russel J. Bent, Ph.D., Chairman. 13. U.S. Department of Health, Education, and Welfare. Public Health Service, Forward Plan f o r Health: FY 1978-82 (Washington. D.C.: Government Printing Office, August 1976). pp. 38-39. 14. U.S. Department of Health. Education, and Welfare, Health Care Financing Administration. Reseurch in Health Care Financing, SpringlSummer 1977, compiled by Trudi W . Galblum (Washington: Government Printing Office, 1978). IS. The New York second opinion program was mandated by Chapter 76 of the Laws of 1976. New York State, section 85.1,2. and 3 of the New York State Code of Rules and Regulations, Title 10, Health. The program was enjoined on January 25, 1977, by the U.S. District Court, Eastern District of New York, for falling short of providing the broad Medicaid coverage authorized by section 1861(r)(l) of the Social Security Act under the concept of “physicians’ services” (Medical Society of the State of New York, et al., v. Philip Toia, Commissioner New York State Department of Social Services, et 4. Robert




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al.). However, on August 8, 1977, the Federal Circuit Court of Appeals lifted the injunction. The State of New York, Department of Health, issued Hospital Memorandum 77-91 on October 19, 1977, indicating that the second opinion portions of the regulations would be implemented on January 1, 1978. The State of Massachusetts has enacted similar legislation (section 27 of Chapter 283, amended by section 10 of Chapter 480 of the Acts of 1976) requiring second surgical opinions for Medicaid beneficiaries, although payment is not to be affected so long as the beneficiary has had a consultation. There has been no legal challenge to the Massachusetts program, which began February 1 , 1977. 16. As a result of a competitive procurement, the Department of Health, Education, and Welfare, Health Care Financing Administration, awarded contracts on September 28, 1977, to Blue Cross and Blue Shield of Greater New York and Blue Cross and Blue Shield of Michigan to develop and implement voluntary second opinion program demonstrations for Medicare beneficiaries. 17. See Donald N. Bersoff, “Research and the Right of Privacy: Legal Doctrines and Ethical Considerations,” in Research for the Counseling Psychologist, ed. L. Goldman (New York: Wiley Press, forthcoming), and F. Kerlinger, “Report of the American Psychological Association Committee on Ethical Standards in Psychological Research: A Critical Reaction,” American Psychologist 27 (1972): 894-8%. 18. Milton I. Roemer, “Copayments for Ambulatory Care: Penny-wise and Pound Foolish,” Medical Care 13 (June 1975): 457-467.


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