Recently, a Public Broadcasting Station (Channel 9) featured a story on a for-profit hospital group which was using obscure diagnostic codes to achieve higher Medicare payments. The level of unethical and fraudulent activity was so egregious that more than one of their billing coders quit their jobs and testified against their former employer. The Wall Street Journal has also reported on fraudulent Medicare billing, including requisitioning public records from CMS(Medicare) and identifying abusive billing practices by multiple clinicians. For example, the New York City osteopath who billed Medicare 2 million for family medicine, when this was not the nature of her medical practice. WSJ staffers examined the Medicare database and uncovered 25 billing codes for an array of expensive medical tests which were regularly performed by 20 other clinicians in the country. Of that group, 33% have already been convicted of fraud, have undergone professional ethics investigations, or worked in the same firm as the convicted physicians. It is safe to say that this high correlation of billing blips is no accident. Unfortunately, because the American Medical Association prohibits the government from disclosing clinician compensation, even if billing practices are fraudulent, those physicians are not publicly named. Basically, this means a lot of people are still getting away with fraud. This article reviews how profit-taking motives distort the U.S. health care system and does not contribute to health care improvement.
First of all, it is legal to deliver health care services and make a profit in the United States, but it is not legal to defraud the government or private sector insurance companies by making false claims to incur higher reimbursements. In plain language, this is known as stealing and this article will show how the incentives to steal are so high in the current U.S. health care system that despite penalties, including jail sentences, the phenomena continues to rob money from all U.S. health care payers. The payers are the individuals who must obtain health care services at inflated prices to subsidize excessive profiteering and fraudulent activities in many sectors of the national health care milieu.
By focusing on changing the alignment of reimbursements for many health care providers from a volume-based principle to outcome-linked measures we will be able to identify the outliers in the shell game of medical monopoly. Several aspects of the 2010 health care reforms seek to address the abuses of health care reimbursement in the country, including more stringent requirements for health insurance company financial reporting of premium payment utilization. Additionally, there are financial incentives for clinicians who achieve better outcomes for targeted medical conditions under the Shared Savings Rules. And finally, the systemic review of medical supplier over-charging is also included in the reform provisions.
Accountable Care & Incentives for Health Care Outcomes
Accountable Care rules for hospitals and integrated health care organizations include Shared Savings methodology or a bonus if you will, for those medical groups which produce desirable clinical outcomes. This realignment in Medicare & Medicaid reimbursements will ultimately save U.S. taxpayers money for federally funded health care programs. In other words this changes the equation from paying for volume to actually paying for clinical performance, and the best performers will receive more money than those who have poorer clinical quality. For example, if your facility has more hospital re-admissions for a specific procedure than the evidence shows is desirable, that will impact your reimbursement. This is a good thing for the country, although I am sure some health care providers are concerned about the ramifications for their practices. Clinics and hospitals are not required to become designated as Accountable Care Organizations at this time, but the pay-for-performance methodology will ultimately be spread throughout the country as organizations respond to this trend.
Creating Efficiencies System-wide
As previously reported in 2010, the establishment of the Comparative Research Institute seeks to review system-wide data on medical equipment suppliers and clinician practices, in order to optimize value for U.S. taxpayers who fund federal health care programs like Medicare. Though this has been criticized as just another government agency, the purpose is to look across the health care system of disparate providers including; medical equipment suppliers, purveyors of high-tech devices, and clinics to find ways to save money for the entire system. Certainly not everyone will be happy with this process, but one wonders how many of them are in fact the excessive profiteers.
Like it or not, several components of the 2010 landmark health care legislation are here to stay because they profoundly impact Medicare and Medicaid programs, which consumes 32% of the 2011 federal budget. We do need to spend taxpayer money more wisely and part of that process includes scrutinizing all of the components of health care delivery. The government oversight is necessary to curtail cheating and other criminal activities.
A Clinical Case: How America’s Private Health Care System Is Not Producing Best Practice Results for Kidney Dialysis
A basic tenant of a capitalist economic system creates a disproportionate incentive towards money making activities which often fall short of optimal patient care. A good example of this capitalist infusion is the kidney dialysis system in the United States, which sprang up because of the congressional ruling to cover end-stage-renal-disease under the Medicare umbrella in the 1960’s. The entities that seized this “new market” were largely for-profit corporations. For those of you who do not know, kidney dialysis is a mechanical cleansing process which is lifesaving for those whose kidneys have ceased to support their renal systems. International data on dialysis treatment shows that Americans on dialysis do not survive as long as patients in other industrialized countries and also experience more clinical complications. This should come as no surprise when the corresponding American health care incentives are based only on providing the dialysis procedure, not optimizing patient health.
For the profitable dialysis centers, like DaVita, business has been brisk as the American population undergoing dialysis has grown from 11,000 people at inception to over 300,000 people today. Each patient on dialysis brings in about $72,000 just for that procedure, so the industry is worth billions. Examples of how the maximization of profit has impaired clinical processes include the dialysis center protocols which discourage the use of fresh kidney processing devices for each patient and thereby greatly increase the chance of infection. So some MBA figured out they could save their organization money by reusing artificial kidneys on a critically ill population and this has become a standard of practice.
Another example of a U.S. renal failure outcome which differs from other global practices is the limited number of dialysis patients who use the peritoneal process, which can improve the individual’s the quality of life. Clinicians have suggested that American patients are often too ill to be eligible for the home-based peritoneal process. As a society which is paying for this treatment, we need to be asking what we can do to treat these people earlier in their disease progress, so they may become eligible for less taxing treatments(and less expensive). Too often the U.S. health care system steps in literally at the “end-stage-of-treatment” because our system of economic reinforcements only assures payment at that time. This dichotomy is what needs to change.
Evidence-based planning which I have previously written about (and continues to be one of the most popular articles for this readership) is all about reviewing appropriate scientific data to discern the optimal blend of clinical intervention and patient outcomes to benefit a population. This process is what we need to be doing as a nation in order to optimize health care services for the entire population.
Since 2012 is an election year, when you start to hear the rhetoric of “getting the government off our backs” remember that doesn’t mean you will pay less for your health care premiums or services. In our blended system of public and private health care services, we must have an external audit and enforcement arm and the government does this for us all. Like it or not, our government does perform essential services which benefit the average American
Anyone who has taken basic economics coursework knows that government intervention occurs when there is a failure-to-perform in the private sector. Certainly, the executives at Premera Blue Cross understand this principle, which also explains that entity’s rush to embraces some changes in their health insurance model. The old insurance company model was a paternalistic one where insurers dictated what they would cover, but the new model requires further explanation and reporting of clinical results, because of government requirements. Reporting results is a good thing for the health care consumer and the edict to explain them in an understandable transparent manner is a victory for health care consumers. This transparency also includes the disclosure of the commissions your insurance agent makes and there is nothing to be ashamed of there, if your agent or broker is working on your behalf and is not over charging (group insurance commissions are negotiated for experience-rated groups). In the truest sense of an open market, price information is available to the consumer who is then empowered to choose an agent or service provider for both the price and the value. Hopefully the disclosure will extend to voluntary health and accident programs as well, as some of the greatest abuses of value occur in that area.
The healthpolicymaven will be speaking at the Northwest Women’s Show March 2nd, 3rd, and 4th on the U.S. Health Care System and How to Optimize Your Health Care Outcomes in the Face of Reforms.
This article was written by Roberta E. Winter, MHA, MPA and may be reprinted with her permission.