The High Price of Nickel-and-Diming Doctors
businessweek.com
businessweek.com
And absolutely nowhere in the article does it talk about how the cost of preventing fraud by single practitioners is the similar to the cost of investigating a single hospital. [1]
Trying to administer a national system to individual providers leaves gaping holes which crooks drive dump trucks through to load up on 'free' taxpayer dollars. So fix that problem and payments can get normalized.
The actual bottom line is that Medicare doesn't make "bizarre" rules, they make rules to try to minimize fraud and maximize patient benefit, if a rule seems "bizarre" you need to then go back and figure out what the motivations for that rule are.
Watching the UK Parliment tear into the tech guys for using legal ways to avoid paying taxes in the UK is an example of legislative bodies turning their sights from the 'easier' (but now nearly tapped out) tax payers to the less easy ones.
This paradox rests on the most elementary common sense. The gate or fence did not grow there. It was not set up by somnambulists who built it in their sleep. It is highly improbable that it was put there by escaped lunatics who were for some reason loose in the street. Some person had some reason for thinking it would be a good thing for somebody. And until we know what the reason was, we really cannot judge whether the reason was reasonable. It is extremely probable that we have overlooked some whole aspect of the question, if something set up by human beings like ourselves seems to be entirely meaningless and mysterious. There are reformers who get over this difficulty by assuming that all their fathers were fools; but if that be so, we can only say that folly appears to be a hereditary disease. But the truth is that nobody has any business to destroy a social institution until he has really seen it as an historical institution. If he knows how it arose, and what purposes it was supposed to serve, he may really be able to say that they were bad purposes, that they have since become bad purposes, or that they are purposes which are no longer served. But if he simply stares at the thing as a senseless monstrosity that has somehow sprung up in his path, it is he and not the traditionalist who is suffering from an illusion."
- G.K. Chesterton
My inclination is to believe that anything that comes out of government, including Medicare, is going to have a lot of bizarre rules whose actual purpose is to make a lobbyist happy.
This is not even remotely plausible. Forensic accounting and investigation has a cost roughly proportional to the number of transactions. Transactions do not become magically cheaper to investigate merely by conducting them on the same real estate.
Hospitals tend toward either 'having fraud' or 'not having fraud' so the one investigator ($S) covering a hospital can decrease the at risk transactions by Nh*$D where 'n' is the number of Doctors at the hospital.
To investigate a private practice you have a small number of doctors "Ns" and busting them recovers a much smaller 'transactions per investigator' value. So an investigator looking into one doctor doesn't have an impact on the other doctors that have private practice in the same building.
As the cost of investigation is part of the budget (as are the payouts) you can afford to give more of the budget payout to Hospitals because your your per doctor investigator cost is lower. (zero sum game here).
It sounds like they need good automated analytics to find suspicious cases for deeper review.
[0] : http://www.thedoctors.com/ecm/groups/public/@tdc/@web/docume...
The worst part is that some of my friends are doctors and are the nicest people who really care about helping and healing others, and I know will never ever strike since that would hurt their patients :(.
I can say first hand that there is an extremely lucrative business-opportunity for physicians to go full time in billing - using domain knowledge and a careful study of the billing schemes to increase financial returns.
For exemple, what if you could identify the patient cases where manual recoding has the highest probable financial return, and compare individual returns to the cost of the human resources you have at hand (from medical coders to physicians) - to assign the best human resource to each case?
In a highly complex case, recoding by a physician who perfectly knows the coding and billing rules can easily double the value billed.
So for a >200k case, it can be worth having a physician spend 20 minutes carefully studying every aspect of the file, aided by specific software modelling the possible billing scenarios.
If you add some programming knowledge and statistical knowledge, all this can be easily automatized, and make even more lucrative.
A full industry is created, based on exploiting the arcane artificial rules imposed on the system - just like for taxes.
The real problem here it that it takes doctors, for which the next best alternative use would have been doing clinical work on patients.
I guess a society only gets what it pays for.
The reason is the difference in financial gain if for some reason (domain knowledge) a doctor can perform the same job more efficiently - which is usually the case in medical coding, where a doctor usually know better which complications are linked with which diseases, and which procedures must have been performed and thus, if they don't appear, have usually been done but for some reason the coding didn't happen.
That's just 2 quick examples - a physician can "dig" in the file for supporting evidence to back the claim. Some are quite good at it, and with the numbers at hand, tiny differences in productivity make huge financial gains.
Say that worker 1, anyone with good training, can make 2x returns, while worker 2, a doctor, can make 2.2x returns.
Depending on the volume, you hire both and give the common files to worker 1, and big profile cases to worker 2.
Each worker is usually paid at the marginal value of labor.
When the marginal value of billing improvements become greater than the marginal value of clinical care, labor do arbitrage and moves to the higher paying sector - in this case, doctors are going for clinical practice to billing.
Someone with basic training - or even algorithm - can be efficient, and provide a first line of coding. But domain knowledge still rules and brings in big bucks.
Trust me - my job is to bill patients/insurance as much as we are legally allowed to, using any mean necessary, in a way that will stand in court if challenged.
We're long past data-mining for potential missing codes - we now run simulations to isolate which coding is the most probable and the most lucrative, and divert the file to the right person according to the potential financial gains. Any loophole in the coding rules is exploited big time !
A quick example - several years ago there was no consequence if you "forgot" codes, however simulations figured out in 10% of the case this resulted in greater gains.
Consequently, after a matching legal advice, codes were forgotten 10% of the time - of course, the right times, until forgetting code was disincentivized thought legal changes.
Maybe that's happening?
OTOH, fraud is easy to catch - if the case repartition suddenly changes, or of there are some mistakes, something must be happening.
But the present incentives are for making rock solid, court-proof claim cases.
It induces all kind of interesting changes- like making sure 5 different health professionals all considered the patient was in end-of-life to qualify for a more lucrative palliative care.
As long as there are the 5 signatures on the paper (and in a 2nd line of defence, proof they saw the patient - like signatures, agendas, etc) it's as good as printing money.
One would have to be really really dumb or overtly greedy to engage in fraud.
Someone I knew, would optimize the billing codes so that she could "write-off" non-covered items, and maximize patient care. Her salary was still quite low compared to other doctors in executive roles.
To quote, http://www.kevinmd.com/blog/2009/02/are-days-of-independent-...
`These trends will ensure that the consolidation of doctors into larger groups will continue. Whether this definitively benefits patient care is still unclear, but I suspect that patient outcomes will likely improve as this movement continues.`
See http://chronicle.com/article/Medical-School-Applications/129... Medical-School Applications Hit Record High Despite Worries Over Federal Spending
Incidentally, the hospitals' liability cap is several orders of magnitude lower than doctors' in many cases (tens of thousands vs. millions). This makes no sense when you take into account the fact that the hospitals, not the doctors, are often the ones setting policies as to which procedures will or won't be done in response to a different result on a test, etc.
So, the hospitals get to set policies to keep their costs low, shielded by the benefit of a ridiculously low (corporate) liability cap, shifting the liability instead to the doctors who will be performing the operations, at significant (personal) liability and for a significantly lower payment than what the hospitals receive.
Consider the possibilities that the payment structure hampers. Could the doctor instead go into partnership with other doctors? Or rent space in a complex that has lots of specialists in it giving some kind of equipment pool? Or contract out scans to a nearby hospital? Or have a nearby hospital refer some matters to the doctor? Equipment could be rented per day. Or maybe fancy equipment isn't justified, and unit cost is lower.
Having government anoint winners and losers streamlines industries away from innovation. It reduces price competition, delivers reduced patient choice, and creates environments more friendly to rent-seeking behaviour.
Nope. Cardiologists maintain waiting lists weeks in advance to keep equipment utilization a close to 100% as practical. The large number of support staff are used to keep a pipeline of patients on standby so that when equipment becomes idle the next patient is standing there ready to begin. The patient experience is a lot like a car zipping through a Toyota factory. The steady stream of test results keeps the cardiologist busy analyzing and dictating results.
Moving this to a hospital gains very little efficiency. What it does is pay for hospital lobbyists.
This will be the single greatest cause behind the looming physician shortage and subsequent decline in standard of care. How much harder do you work, for yourself, in a startup - versus for someone else, as an employee? It's NO DIFFERENT for doctors.
That's quite an assumption you're making there. Aside from the fact that most doctors are not wealthy beyond belief (contrary to popular opinion), the insurance structure has changed so much in recent years that many literally cannot work any longer.
Medicare reimbursements, for example, have been cut so much that doctors operate at a loss for certain procedures - for specialists, this may even cover the bulk of what you do, so the choice is whether to spend your savings to pay for your "hobby" or to retire.
Certainly true.
Cardiologists, on the other hand?
Median salary: $362,000 (with 10th% at $247,000, 90th% at $502,000).
In terms of procedure costs, Medicare pays a hospital nearly $40 for an ECG (and if you're paying privately, you'll be paying a lot more) - for a procedure that takes an assistant an average of 60-90 seconds to apply 10 pads, acquire a 10-15 second graph of heart activity, and interpret (though any ECG machine in the last decade does rhythm analysis of its own accord). In the field, paramedics routinely run the ECG process in 3-5 minutes.
The same is true of programmers, of course. Although it can be hard to remember when reading startup-soaked HN stories, most programmers are happily employed by other people and aren't off founding startups.
Presumably this is not accidental but is instead a manifestation of an intentional policy. The details of this policy are left unaddressed by the article, as are its pros and cons.