July 6th, 2009 by Shadowfax in Better Health Network, Health Policy
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Oh, man, I picked a fight with Ezra and he got all wonky on me, even with a chart. Oh Noes! Not a chart! And … it’s actually a pretty interesting chart. Here it is:
First of all, just for the record, let it be noted that my previous post was entirely about Medicare’s under-reimbursement of physicians, and Ezra’s clearly going all Willie Sutton and going where the real dollars are: facility reimbursement. Fair enough, though I’ll disclaim that I’m not nearly as well-versed in hospital reimbursement as I am in the professional side of the Medicare fee schedule.
The above graph would seem to disprove Ezra’s original thesis, that hospitals continue to participate in Medicare because it is profitable for them to continue to do so. As you can see, there’s rampant cost shifting, as Medicare pays only 92% of the actual costs of inpatient care whereas the commercial payers are in the high 120s%. Right?
Well, yes and no. The lifeline in this case is some very interesting testimony by the head of MedPac regarding a small subset of hospitals (about 12% of all hospitals) who were actually able to eke out a positive margin (0.5%) on Medicare payments in 2004-2006. The contention is that since these hospitals were able to do so, and with higher quality than the other 88% of hospitals, that the hospital industry in general is inefficient and if they were only able to get their act together Medicare payments would be sufficient to support a viable hospital industry.
The key factor which Ezra glides over is that these hospitals are in the “financially pressured” category. There doesn’t seem to be a definition or cross-tabs on what exactly “financially pressured” means, but these hospitals actually have a worse operating margin on their non-medicare business (-2.4%). Given that, it’s fairly safe to conclude that this means hospitals with crummy payer mixes — high medicaid and uninsured, low numbers of commercially insured patients. This occurs most commonly in rural and inner-city markets — underserved areas in which there is usually one hospital at best. These undesirable markets do not encourage other providers to enter and compete for customers and so the hospitals there tend to undercapitalize, willfully or no, and offer bare-bones services. That some fraction of “financially pressured” over-perform on outcomes is not explained in the testimony. It could be a statistical aberration, or cherry-picked data; giving credit to the integrity of MedPac, it might be due to the exceptional leadership that some of these financially stressed hospitals have developed. The testimony does not reveal what fraction of “financially pressured” hospitals outperform on quality measures — if less than 50% of “financially pressured” hospitals outperform on quality, it would imply that the under-funding of these facilities harms quality of care more than it helps. Note that those that outperform have substantially worse margins (0.5% vs 4.2) on Medicare payments, implying that there is some linkage between higher expenditures and better outcomes.
I am gallant, however, and I will concede the key point here: hospitals which are well-funded do tend to be inefficient. Specifically, areas with enviable payer mixes are generally served by multiple hospitals and those hospitals compete for patients and revenue by over-capitalizing and improving amenities and customer service. This is just another example of the perversion of the market in which patients do not directly bear the costs of their health care decisions.
Coming back to the original point: if Medicare were such a lousy payer, hospitals would opt out, yet this never occurs. Interestingly, the well-heeled suburban hospitals who lose the most money on Medicare patients are the least likely to opt out of Medicare. They have such high margins on their commercial patients that they can view Medicare as their charity contribution to the community. On the other hand, the financially pressured hospitals do better on Medicare than the rest of their payers, so Medicare is their economic lifeline. Or, more formally, the value of Medicare patients to a hospital varies inversely with the number of commercial patients in their payer mix.
Ezra’s conclusion here is that we need to cut costs, hospitals are in many cases inefficient, and so we should just reduce payments to them until they feel the pain and dial it way back. As my old medical director used to say, “We’re building a Buick, not a Cadillac.” But there are many problems with such a strategy. For one, the hospitals most dependent on Medicare would be harmed most by reductions in payments. While workarounds could be crafted for financially stressed hospitals, it’s unclear what effect reductions in payments would have in quality, but it would be hard to imagine that quality in general would improve. And it’s not clear to me that this really addresses the key drivers of cost: wasteful and redundant care, as opposed to more-expensive-than-it-needs-to-be inefficient care. Given the volume incentive of the fee-for-service game, reductions in compensation usually just drive increases in utilization, not the other way around.
Ultimately on this point, I have to concede ignorance. I know that the Medicare Professional Fee Schedule for phyicians is woefully inadequate and needs to be increased. I do not know if the same applies to the hospital fee schedule — I’m just not well-enough versed in the economics of that game. I should point out that while medicare payments to physicians have been essentially frozen since 2001, the facility fees, unconstrained by the SGR, have risen year over year to keep pace with inflation. I never did see any disagreement with my original points, by the way, that for professional services, the underfunding of Medicare is leading to decreased access as physicians close their practices to new Medicare patients, and that hospital-based physicians are unable to opt out due to the nature of their relationships with the hospitals who employ them.
*This blog post was originally published at Movin' Meat*
July 6th, 2009 by MotherJonesRN in Better Health Network, Health Policy
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My apologies to James Carville. I plagiarized his tagline because the insurance industry has forgotten about sick people during our national healthcare debate.
I remember when nurses and insurance companies use to get along with each other. Back in the 1960s, these nurses even took time out of their busy schedules to pose for one of their ads. We took care of patients at the bedside, and the insurance companies paid the hospital bill. It was as simple as that, but then things started to change. It began with three little letters—HMO.
Insurance companies are spending a lot of time and money trying to scare people into opposing President Barack Obama’s ideas on health care reform. They are especially working hard to torpedo the public option plan. That plan would allow you to keep your own private health insurance policy or buy affordable health insurance through a public plan. Insurers are going all out to make you hate this idea by making claims that aren’t true. They are saying that the government is going to ration health care by dictating which doctor you can see, and by making you wait weeks to see a specialist. Ironic isn’t it? The insurance industry is already doing these things to patients everyday via their HMOs. We wouldn’t even be having this debate if they were playing fair in the first place.
Insurance companies make their money a couple of different ways. They rack in the bucks by not insuring people who are sick, a practice known as cherry picking, and by not paying out claims. They also make money by cutting out competition. This is the real reason why insurers are trying to muscle Uncle Sam out of the insurance business. Medicare administrative costs are equal to about 2 percent of what it pays out to providers. For private insurers the ratio over expenses to payments is typically over 15 percent. Why the big difference? Insurance companies have high overhead. Their CEOs take home mega-million dollar paychecks, they have to take care of their shareholders, and they have to pay for fancy ads that convince consumers that they will have health coverage when they really need it. They need those fancy ads. Insurance companies are always looking for ways to deny our claims, but I digress. Competition between private companies and a public plan would hit insurance companies right where it hurts—in their wallets. Fewer customers in private plans means less profits, and less profits, up to 20 to 30 percent by some estimates, means fewer martini lunches for those at the top of the corporate food chain. To make matters worse, those greedy folks who make money by NOT paying for care would have to lower their profit margin on the customers they do keep in order to compete with the government.
I’ll never forget the day that I learned about HMOs. I came into work and found red dots on the side of a few patient charts. My head nurse told me that the dots were put there to prompt doctors to discharge patients as soon as possible so that the hospital and the insurance company could make more money. That was twenty-five years ago and the system has been in freefall ever since. Year after year, nurses are voted as the most trusted profession in America in Gallup’s annual survey of professions for their honesty and ethical standards. We are patient advocates, and we never put anything above what’s best for our patients. That’s why I’m putting my seal of approval on President Obama’s public health insurance plan, and so are the American Nurses Association (ANA) and the SEIU. The insurance companies want your money. Nurses want to take care of their patients. We want all Americans to have affordable, high-quality healthcare.
*This blog post was originally published at Nurse Ratched's Place*
July 6th, 2009 by KevinMD in Better Health Network, Health Policy
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Contrary to what you may have been led to believe, the United States has already tried its hand at a pseudo-single-payer system. The VA is one example. Another, albeit less highly publicized, is the Indian Health Service. (via WhiteCoat)
Based on an agreement in 1787, the government is responsible to provide free health care to Native Indians on reservations. And, as you can see from this scathing story from the Associated Press, that promise has not been kept.
The numbers don’t lie:
American Indians have an infant death rate that is 40 percent higher than the rate for whites. They are twice as likely to die from diabetes, 60 percent more likely to have a stroke, 30 percent more likely to have high blood pressure and 20 percent more likely to have heart disease.American Indians have disproportionately high death rates from unintentional injuries and suicide, and a high prevalence of risk factors for obesity, substance abuse, sudden infant death syndrome, teenage pregnancy, liver disease and hepatitis.
And, after Haiti, where in the Western hemisphere do men have the lowest life expectancy? It’s on Indian reservations in South Dakota.
The primary reason, not surprisingly, is lack of money, compounded by a difficult time recruiting physicians and other clinicians. Indeed, many Indian health clinics cannot “deal with such high rates of disease, and poor clinics do not have enough money to focus on preventive care.”
So, if you’re in the camp that supports a Medicare-for-all-type solution to our health care woes, consider how that same government, whom you’re entrusting to be the single-payer, has neglected the Indian Health Service.
*This blog post was originally published at KevinMD.com*
July 5th, 2009 by RamonaBatesMD in Better Health Network, News
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As we move towards EMR’s, the ability to know who has looked at the medical record may get more and more people in trouble. While we are all curious about our friends, neighbors, and celebrities (local or global), it is important to respect each others privacy. This local Arkansas story shows the importance of this respect.
Hospital emergency room coordinator Candida Griffin, patient account representative Sarah Elizabeth Miller and Dr. Jay Holland, a family doctor who worked part time at the hospital, each face up to a year in prison and $50,000 fine if convicted of the misdemeanor charge.
I would hope that all three of the people listed above would have “known better.” When this story broke earlier this week, the staff in the OR and I had a nice discussion on who gets HIPAA training and how much each get.
I think as part of their punishment, they and perhaps the facility (St Vincent Health System) should have to do refresher courses on HIPAA privacy rules.
The hospital said in November that it fired up to six people for looking at Pressly’s records after a routine patient-privacy audit showed that as many as eight people gained access to them.
It was not immediately clear whether others fired from the hospital would face charges. U.S. Attorney Jane Duke declined to comment about the charges Tuesday.
With paper charts, there isn’t a trail proving you or I accessed the chart without need to do so. With EMR’s there is but this trail is not fool-proof. If I haven’t logged off and you look over my shoulder, then ….
If you haven’t logged off and I ask for a quick look at patient 007’s lab work and you do me a “favor” of checking quickly. See, not perfect. No harm was intended and patient 007’s info may never be “leaked” to the press, but someone who perhaps had no need to access it did so.
My circulating nurse in the OR during the discussion revealed that she had heard a lot of talk about the Ann Pressly case which she admits she should not have. She didn’t access the chart. She was working in another hospital’s ER. It was the police and EMT’s doing the talking. There is no trail to “prove” those violations of patient privacy trust.
We need to be more careful in discussing patients and cases. We still need to be able to discuss difficult or unusual cases, but this can be done without breaking a patient’s trust or privacy. Names and identifiers don’t have to be used when stumped by a rash or odd presentation.
Dr Holland had no malicious intent, just curiosity. Be careful.
Arkansas Democrat Gazette article Doctor, ex-hospital employees charged over Pressly records (subscription required) written by Linda Satter
3 charged with getting TV anchor’s medical records by Jon Gambrell (no subscription required)
*This blog post was originally published at Suture for a Living*
July 5th, 2009 by Happy Hospitalist in Better Health Network, Health Policy
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Out of the Federal Reserve Bank of Dallas, comes this excellent presentation by its President and CEO, Richard Fisher about the fiscal disaster we currently find ourselves living in. Found (Via Grand Rants)
Happy’s summary. We are all screwed. Every last one of us. Unless a massive shift of policy is instituted today, we leave no future for ourselves or our children. The entitlements we currently support are ponzi schemes a thousand times larger than Madoff and his thieves.
Tonight, I want to talk about a different matter. In keeping with Bill Martin’s advice, I have been scanning the horizon for danger signals even as we continue working to recover from the recent turmoil. In the distance, I see a frightful storm brewing in the form of untethered government debt. I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct.
Stating the obvious, we are screwed. But how is Social Security you ask?
Now, fast forward 70 or so years and ask this question: What is the mathematical predicament of Social Security today? Answer: The amount of money the Social Security system would need today to cover all unfunded liabilities from now on—what fiscal economists call the “infinite horizon discounted value” of what has already been promised recipients but has no funding mechanism currently in place—is $13.6 trillion, an amount slightly less than the annual gross domestic product of the United States.
Sounds like a lot of money, but that’s the good news. Read on:
The good news is this Social Security shortfall might be manageable. While the issues regarding Social Security reform are complex, it is at least possible to imagine how Congress might find, within a $14 trillion economy, ways to wrestle with a $13 trillion unfunded liability. The bad news is that Social Security is the lesser of our entitlement worries. It is but the tip of the unfunded liability iceberg. The much bigger concern is Medicare, a program established in 1965, the same prosperous year that Bill Martin cautioned his Columbia University audience to be wary of complacency and storms on the horizon.
You should be afraid, very afraid of where we are heading.
Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.
And how much is that for you and me?
Let’s say you and I and Bruce Ericson and every U.S. citizen who is alive today decided to fully address this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household’s income.
What would you have to do to get the unfunded mandates funded?
- Either increase federal tax revenue 68% starting today, and continue it forever. Good luck with that. When you tax something, anything, you will get less of it. Nobody knows what tax rate could support that without destroying the economy in the process.
- Or cut discretionary spending 97% (that includes defense, education, environment and everything else under the sun), forever.
The issue isn’t not enough taxes. The issue is a government that cannot say no to its constituents. Now, I know some of you view Obama as your messiah, but I’m sure even he knows he can’t generate 99 trillion dollars on the backs of the rich. So the question is, does he have the guts to tell you no before it’s too late? It takes a real leader to tell his followers no. Right now, our leaders are promising everything and they will ultimately be able to deliver on nothing.
*This blog post was originally published at A Happy Hospitalist*
