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Why I worry about a government-sponsored universal coverage system

Within the past few years the Centers for Medicare and Medicaid Services (CMS) chose to enforce a rule (casually known as the “75% rule”) that resulted in denial of services to many heart, lung, and cancer patients requiring rehabilitation therapies.

CMS was looking for a way to cut costs in rehabilitation facilities, and decided to create a rule whereby these facilities would lose their approval status if they admitted too many patients with certain conditions. The CMS arbitrarily decided that 75% of all patients admitted to inpatient rehabilitation facilities had to have one of 13 diagnoses, or else the rehab facility would not qualify for Medicare reimbursement. Many important diagnoses were not included in those 13, including cancer, heart and lung disease, and many types of orthopedic injuries.

What does this mean? It means that getting admitted to a rehabilitation facility is no longer based on need, but on diagnosis code. Because of the financial pressure exerted by CMS (Medicare is the primary payer for most facilities) these rehab centers cannot afford to be delisted. So they turn away patients in need, for patients who have the “right” diagnosis.

What has this rule done?

  1. Limited clinical decision making by doctors – a physician is no longer able to recommend patients for acute inpatient rehabilitation purely based on their need for it.
  2. Decreased choice for consumers – people recovering from heart attacks, cancer or COPD (to name a few) will generally not be offered the opportunity to be rehabilitated in an acute, inpatient setting.
  3. Reduced quality of care – rehabilitation facilities specializing in oncology or cardiopulmonary rehab will need to divest themselves of aggregated expertise. Since these centers would no longer qualify for Medicare funding, they can’t afford to remain centers of excellence in these fields of medicine. Instead, they will need to turn their attention to the 13 diagnoses that qualify for inpatient rehabilitation.
  4. Puts lives in danger – patients who are not admitted to acute rehab will be forced to recover in nursing homes (also known as “sub acute facilities”) that do not have the level of expertise to take care of them safely.

The 75% rule is one example of the kinds of decisions that a government sponsored universal healthcare system will make. When one payer (government or non-government) develops a monopoly, their decisions can single-handedly limit consumer choice, prevent physicians from exercising clinical judgment, and decrease quality and safety of care. What will Americans say when the decision to fund organ transplants for people over 65, for example, is denied across the board?

When medicine is no longer applied in a personalized (case by case) manner, and population-wide rules are in effect, we will face ethical dilemmas far surpassing those we already have. A system that serves the needs of many still fails the needs of some – and when we lose the flexibility to “bend the rules” for the exceptions we will lose the best of what American medicine has to offer.

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

Health insurance frustrations & awkward physician-patient interactions

This excerpt from the New Yorker (quoting a Dr. Parillo) captures physician frustration with the process of insurance reimbursements:

Doctors quickly learn that how much they make has little to do with how good they are. It largely depends on how they handle the business side of their practice. “A patient calls to schedule an appointment, and right there things can fall apart,” she said. If patients don’t have insurance, you have to see if they qualify for a state assistance program like Medicaid. If they do have insurance, you have to find out whether the insurer lists you as a valid physician. You have to make sure the insurer covers the service the patient is seeing you for and find out the stipulations that are made on that service. You have to make sure the patient has the appropriate referral number from his primary-care physician. You also have to find out if the patient has any outstanding deductibles or a co-payment to make, because patients are supposed to bring the money when they see you. “Patients find this extremely upsetting,” Parillo said. “ ‘I have insurance! Why do I have to pay for anything! I didn’t bring any money!’ Suddenly, you have to be a financial counselor. At the same time, you feel terrible telling them not to come in unless they bring cash, check, or credit card. So you see them anyway, and now you’re going to lose twenty per cent, which is more than your margin, right off the bat.”

Simplifying the process of insurance billing (and promoting more affordable plans) are important goals in healthcare. I hope that Revolution’s efforts will make things easier for physicians and patients alike. Otherwise we wind up in the unacceptable situation described in this article:

“If it’s not an emergency and you can’t pay for it, you don’t get care.”

Do you think that retail clinics will make basic healthcare more affordable and accessible to patients who are uninsured or underinsured?This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

US healthcare then and now: 1907-2007

We have met the enemy and he is us.

  • Walt Kelly

From an article published in JAMA on February 16, 1907:

It is strange that the hospitals and dispensaries of this country should be so shamelessly flooded with pseudo-charity patients, having no claim whatsoever to gratuitous service. It can be explained only on two hypotheses: First, the working of that innate trait of human nature which prompts to obtain something for nothing, and, second, the lack of good business discrimination on the part of the institutions whose benefits are thus abused.

This quote is almost 100 years old to the day. Does anyone see any similarities to today’s emergency department or medical practice?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

Why would price transparency be a good thing for health consumers?

One of my readers recently asked for some examples of how price transparency might improve his lot. A great question! The people who stand to benefit the most from price transparency are the uninsured and those with high deductible health savings accounts. Price transparency is globally valuable because it allows people to understand the true cost of healthcare, making them more informed consumers. It also promotes accountability of hospitals, healthcare providers, and insurance companies.

Naughty Hospitals

Arbitrary fees:

“The cost for a total hip replacement in the greater Seattle area varied between $13,996 at one local hospital and $46,758 at another. Furthermore, there wasn’t necessarily any correlation between the cost of the procedure and the hospital’s quality or experience doing it. …Why would anyone pay a higher price for lower quality and potentially more complications, especially when it concerns your health?”

Where does a non-profit put its profitsDr. Feld knows where:

“We are unable to know the hospital’s actual overhead. If we did, we could to find out what the hospital’s actual costs are. We could then calculate the hospital’s profit. These numbers are totally opaque.

Most hospitals are non profit hospitals. They can not post a profit at the end of the year. Therefore, they have to pour the extra money into something. Executive salaries and capital expenditures are a prime avenue for getting rid of their profit. A key question is how is the hospital’s overhead calculated? Maybe reducing costs to the consumer would be a good idea?”

Predatory hospital billing:”

Over the past year, aggressive billing practices have been exposed at a number of hospitals in the United States. Despite the fact that a widower had paid $16,000 of his late wife’s bill of $18,740, some 20 years after the incurrence of the bill a teaching hospital held a lien on his home for $40,000 in interest. Many years earlier the hospital had seized his bank account, and now the 77-year-old man was destitute. Only tremendous publicity caused the hospital to back down. In California, a patient was forced into bankruptcy in 2000 by a for-profit hospital from a day-and-a-half stay in the hospital that did not include any surgery but totaled $48,000 in hospital bills. These have become common stories as hospitals aggressively market, bill, collect, and foreclose, just like any other corporation. The uninsured are facing the brunt of the hospital industry’s billing practices.

Naughty Outpatient Facilities

“Mr. Smith needs to get an MRI. He has a high deductible HSA, with a $2000 deductible, much of which he has not yet spent. So he will likely have to pay for 100% of this service himself. Without access to cost information by facility, he would simply go to a convenient, local facility and might pay up to $1300 for this single test. If he had access to health care cost information on the web, he could look up the cost of his service across different facilities and choose to go to the one that only charges $450 – a very meaningful difference for Mr. Smith.”

“More than 3 million people have already signed up for HSAs, and 29 million are projected to do so by 2010. Forty percent of the people who bought HSAs have family incomes below $50,000. More than a third of those who bought HSAs on their own had previously been uninsured.”

Naughty Doctors

What happens when 2 procedures have been shown (through careful research) to have equal efficacy, but one is reimbursed at a much higher rate? Docs will choose to perform the more expensive one, of course.

“Prostate cancer patients’ biggest concerns — after cure — are the possible side effects of surgery, including urinary incontinence and sexual impotency. Data on these side effects from robotically assisted prostatectomy were sketchy at best, and no evidence was available to indicate that any surgical method emerged as better than another for these side effects… Open radical prostatectomy costs $487 less a case than non-robotic laparoscopy and $1,726 less than robot-assisted prostatectomy.”

Naughty Insurance Companies

Insurance companies don’t want to make their pricing public because they don’t want their competition to know how much (or how little) they’re compensating physicians. Therefore, consumers are prevented from seeing costs as well – which can hinder their ability to make informed decisions about their care.

I bet others can think of some excellent reasons why price transparency is beneficial to consumers. Care to contribute?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

Healthcare price transparency – a good common goal

In my last blog post, I unwittingly evoked vehemence on the part of those pro/con a single payer model for healthcare. And so in this post I’d like to offer some more food for thought (while attempting to dodge the high velocity tomatoes):

First of all, Dr. Reece summarizes things nicely, suggesting that this debate is not entirely resolvable:

Incompatible Mindsets

• If your mindset is that government’s moral duty is to redistribute resources to protect the health of all, and that health is directly related to the extent of health system coverage, you think and receive information in a certain way. You generally attribute superior health statistics of other nations to universal coverage, even if these other nations have more homogeneous, smaller populations, and different cultures.

• If your mindset is that private markets provide the best care for most of the people most of the time, provide better access to high technologies, give more health care choices to citizens, distribute resources more efficiently and that the health of the people is more related to cultural behaviors and a nation’s heterogeneous population, you receive information in completely different way.

The Unending Argument

The power and efficiency of government vis-à-vis the power and efficiency of markets is a never-ending argument – an argument unlikely to change mindsets. To progressives, it’s a moral argument: to conservatives, it’s an exercise in reality. You can marshal persuasive arguments on both sides, without convincing either side who is right.

An economics blogger explains why extending Medicare benefits to all would not succeed:

The dirty little secret behind Medicare is that it works only because it does not cover every American. Part of the reason for this is that Medicare’s payment structure is designed to pay doctors and hospitals in such a way as to limit total spending, rather than to ensure they can break even. Clearly, they have to do better than break even to stay in business, and the people running Medicare know that. Medicare depends on the fact that there are lots of non-Medicare patients out there who (through their private insurance) can pay enough to keep the doctors and hospitals in business. This is called “cost shifting.”

Whether pro/con single payer system, I think that we nearly all can agree on one thing: price transparency is morally right. It’s hard to fix a system if you don’t really know where the money is coming from or going to.  I think it would be nice to have people on both sides of the debate work together for that common goal first. Would you agree?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.

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