July 8th, 2009 by AlanDappenMD in Primary Care Wednesdays
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We often are asked in our practice, “Why don’t you accept Medicare?” The immediate answer is simple: we cannot afford to. We opted out of Medicare because the service won’t pay for phone consultations, won’t pay for email consultations, barely pays for an office visit, and does not pay nearly enough to cover a house call.
All of these services are critical to our medical practice. Medicare would require us to hire too many staff, as well as require us to do too much paper work and administration. I cannot afford to invest in either and still manage to operate in the black. Medicare has too many regulations and rules; we can’t understand a lot of them, and frankly, Medicare doesn’t seem to understand them most of the time either. If I would accepte Medicare, then they have the right to audit our notes and then fine us for non-compliance for infractions that are not readily clear. Their external auditors get paid for every infraction they find which means the temptations for fining doctors are irresistible.
Yet the truest answer as to why we do not accept Medicare is that the service does not focus on what we feel is paramount: practicing effective and efficient medicine in order to ultimately achieve and maintain the good health of our patients. The service’s paltry reimbursement structure coupled with its impossible to-adhere-to regulations doesn’t allow us to offer a complete service to our patients. This complete service includes wellness care as well as the ability to take the time to understand each patient’s unique medical needs and circumstances.
The crux of the issue is that Medicare worries about the forest, in other words, the internal process, money management, reimbursement and policing agreements, data mining, and organizing dozens of internal bureaucracies. These agendas and policing policies help the Medicare service to manage the forest, however these are often in direct conflict with what we feel is key to effective healthcare: taking care of the individual, or each tree.
I do want to make clear that being afraid of audits, punitive actions and the vagaries of no one understanding all the rules is never a reason to leave Medicare — after all, patient care is filled with risk. However, it became clear to me that I, a single doctor voice, dealing with the collective frustration almost all doctors feel when dealing with Medicare (and most insurance companies) had three divergent paths to choose from:
- Do nothing. Ignore the conflicts of interest and the lack of patient-centered care and swallow frustration for a paycheck. Just do your best or what Medicare tells you to do.
- Work towards reforming Medicare from within through involvement in the process and by working with your professional associations.
- Ignore the payers altogether. Work outside the system, returning to the roots of primary care, reforming the business of primary care one person at a time.
Personally, I had to reject Option 1. I was witnessing too many wrongs among my colleagues and for patients. Primary care, a profession I am passionate about and believe in fully, would never have a future under this model. Hoping that things would work out if we just worked harder and harder while blindly submitting to Medicare’s interests and demands meant surrendering my patients’ trust, primary health care’s future, and my soul for a salary. There had to be a better way of making a living.
Working towards Option 2, trying to create reform from within the Medicare system, was nothing but futility on immediate analysis. The ability for me personally to influence the debate for what needs to be done in Medicare for primary care would be a David v. Goliath story without the biblical ending.
In the end I am just one family doctor, that’s what I know, that’s what I’ve spent my life doing and studying. Option 3 chose me. Opting out is financially the riskiest since it requires patients to do something that they have been socialized against for three generations, which is to pay directly for medical services (as they do with nearly everything else in our capitalistic economy). Doctors are well aware that 95% of patients will fire any doctor who refuses to accept Medicare.
This decision meant I might lose my shirt and put my home and small life savings at risk, something thousands of Americans in other professions do everyday. If they could take the risk, then my risk is nothing less than a trivial American story.
The United States was built on this: a country of immigrants fleeing an “old establishment” to build something new. It’s a group of people declaring: “You can’t tax us without representation!” It’s a government that permits us to challenge established norms, challenge power without being jailed or shot. The question today in health care for all of us as patients is will we stampede towards the utopian ideal of “free care” while ignoring the predictable consequences that nothing is free.
The question put to primary care doctors by Medicare is clear at the moment: Will you let us at Medicare regulate care, dictate “best” treatments and control individual health and choices since we know what’s best. Can you, doctor, be our “yes man?”
Eight years ago I cast my vote and opted out of Medicare. Predictably my journey has not been easy but I have never regretted the decision.
Until next week, I remain yours in primary care,
Alan Dappen, MD
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 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 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*
July 3rd, 2009 by admin in Better Health Network, Health Policy, Opinion
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[This post was written by Charlie Baker, President and CEO of Harvard Pilgrim Health Care, Inc., one of New England’s leading non-profit health plans.]
I heard this idea promoted at a luncheon I was at last week — that the best way to fix health care in the U.S. would be to move to a “Medicare-For-All” system. Needless to say, I find this odd — since I think many of the things people hate most about our existing system — too procedure driven, doesn’t support primary care and prevention, favors technology over face-to-face interaction, doesn’t support multi-disciplinary approaches to care delivery, etc. — derive from the rules of the game set up and enforced by…Medicare!!! Yikes!
But aside from that, the two things I always hear about why it’s a good idea are — Medicare has lower Administrative costs than private health plans and they’re a ”better” payer than the private plans. Hmmm…Let’s take the first one. What I’ve heard before is that Medicare only spends 4% of its money on a per beneficiary basis on administration, while the plans spend 14% per member on administration — a big difference. This is interesting, but misleading.
Medicare beneficiaries are over the age of 65. They spend almost three times as much money on health care as a typical private plan member — most of whom are under the age of 65. If the Medicare member typically spends $800 per month on health care, and 4% of that is spent on administration, that’s $32 a month on administration. If the private health plan member typically spends $300 per month on health care, and 14% of that is spent on administration, that’s $42 a month — a much smaller difference. But we’re not done yet. Medicare is part of the federal government, so its capital costs (buildings, IT, etc.) and benefit costs (health insurance for its employees and retirees (!), pension benefits, etc.) are funded somewhere else in the federal budget, not in the Medicare administrative budget.
Private plans have to pay for these items themselves. That’s worth about $5-6 per member per month, and needs to come out of the health plan number for a fair comparison. Now we’re almost even. And finally, Medicare doesn’t actually process and pay claims for all of its beneficiaries. It contracts with health plans around the country to do much of this for them. That’s not in their administrative number, either — and it is, needless to say, in the private health plan number.
People push and pull these numbers all the time, and there may be “some” difference between Medicare and the private health plans on administrative spending as a percent of total spending. But it’s not huge, if you try to compare apples to apples.
On the payment issue, the numbers I’ve seen suggest that nationwide, private plans — on average — pay somewhere between 120 and 125 percent of what Medicare pays for hospital and physician services. In other words, private plans pay MORE than Medicare pays, not less! If people want Medicare For All, they need to be prepared to either dramatically raise Medicare rates and payment — and therefore, Medicare costs — by a lot of money — 20 to 25% by this estimate — or kick the bejeebers out of the physician and hospital communities and make them eat the difference.
Medicare-For-All is not as simple as it seems.
*This blog post was originally featured at the Let’s Talk Healthcare blog.*
