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An Abuse By A Stakeholder Overlooked By President Obama’s Healthcare Team

February 15, 2009
inDisinformation and the healthcare system, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests
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Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare stimulus package only has provisions for money to create new bureaucracies and provide money for old systems. It does not fund the creation of incentives to address systemic problems in the healthcare system. The needed systemic changes would increase efficiency of care and decrease waste.

“A report from the Internal Revenue Service found that a small minority of nonprofit hospitals provide the bulk of uncompensated care for the poor, rekindling concerns about the tax-exempt industry at a time when government aid to corporations is drawing fire.”

All the nonprofit hospital systems in America receive an estimated $12.6 billion of annual tax exemptions from the federal government. The tax benefit given to most hospital systems does not add any value to the care of most indigent patients. The majority of these hospital systems do not provide care commensurate with the tax benefit received. Yet charity hospital systems in major cities and counties (safety net hospital systems) are not receiving appropriate funding and are going bankrupt.

“On average, the study found, the 489 hospitals studied spent 9% of their revenue on community benefit. Overall, 58% of the hospitals reported uncompensated care amounts of less than or equal to 5% of total revenue. A little more than one-fifth of the hospitals reported aggregate community benefit expenditures of less than 2% of total revenue.”

When a nonprofit hospital system opens a new hospital in a suburb it maintains its nonprofit status in that new hospital without adding value to the care of the poor. This results in an increase in profit.

The entire nonprofit hospital industry receives an additional $32 billion in federal, state and local subsidies each year. The money received is a result of accounting losses reported by the hospital systems on reimbursement shortfalls according to a 2006 report by the Congressional Budget Office.

“Some hospitals provided the IRS their data based on charges, rather than costs, which could significantly skew results since hospital charges are inflated list prices that are negotiated down sharply by the government and private insurers.”

The devil is in the details. The accounting details are not transparent. Few people are interested in studying the details.

“The IRS also found that the top executives at a group of 20 hospitals it examined more closely earned an average of $1.4 million a year. At least one of the 20 hospitals was compensating its top executive excessively, the agency said. It declined to name any of the hospitals in the report.”

I know from private communications that many top executives of nonprofit hospital systems earn much more than $1.4 million dollars per year. When I started in practice in 1970 there were very few hospital administrators in the hospital. Now I there seems to be more hospital administrators in a hospital system than there are hospital beds. All this adds to the hospital systems’ overhead and the subsequent hospital subsidy.

“The IRS report may renew efforts in Congress to develop firm rules about how much community benefit nonprofit hospitals must provide to maintain their tax exemptions. Nonprofit hospitals account for the majority of hospitals in the U.S. In return for not paying taxes, they are expected to provide benefits to their communities, including charity care.”

Senator Charles Grassley the high ranking Republican on the Senate Finance Committee is the only Senator who has discussed this systemic defect in the healthcare system.

I have pointed out many abuses in the healthcare system that would save billions of dollars. These savings would generate enough funds to repair the healthcare system.

Senator Charles Grassely is considering introducing legislation that would require non profit hospital to spend a minimum amount on free care for the poor and set curbs on executive compensation and conflicts of interest for it to maintain its nonprofit status.

President Obama’s healthcare team is not focused on these problems. Right now President Obama is throwing money at the healthcare system much of which will be wasted because he is not focusing on curing the abuses.

"For the hospital sector, it’s really unfortunate, the timing of this report, because this gets dropped into a real toxic environment," said Michael Peregrine, an attorney for nonprofit hospitals at McDermott Will & Emery. "You’ve got people really upset about government subsidies to organizations," he said, noting that many consider tax exemptions a form of subsidy.”

What a meaningless statement. The hospital sector is receiving an undeserved subsidy. This subsidy is one of the reasons for the huge profits of the nonprofit hospital systems. The hospital system profits have resulted in huge hospital building programs. Hospital system must spend some of the profits in a visible manner. This is happening when medical innovation is making the brick and mortar hospital buildings obsolete.

One can say the taxpayer is subsidizing the expansion of obsolescence. Let’s see if the treasury department does anything about the Congressional Budget Office Report that surveyed only 489 hospitals. Only 20% of the hospitals accounted for 78% of the community benefit.

"There are good reasons for real variation in how hospitals meet their community benefit obligations," the AHA said. "A hospital in rural Iowa serves a very different community than one in New York City, and the programs and services they offer should be different."

This is another meaningless statement by a lobbying group for the hospital sector.

The tax exemption and other subsidies accounted for a much greater percentage of revenue than the total expenditure on community care. Clearly the rules have to be changed. If they are, hospitals will be forced to exhibit price transparency and become more efficient, and competitive.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • JAMES JOYCE • March 11, 2009

    Million of dollars are “tied up” in the abuse of tax exempt status within the health care system.
    How is it that so many corporations in the health service industry are not for profit, yet very profitable for certain interests, and also tax exempt???
    For decades Americans have subsidized this tax exempt not for profit industry, and yet inflation cost still rise. The use of tax liabilities as mechanism for controlling cost is rendered ineffective when dealing with tax exempt corporations WITH TAX EXEMPT CORPS LIKE BLUE CROSS BLUE SHIELD AND THE LIKE!!!!!
    MANDATED HEALTH CARE IS A SCAM. IT USES THE TAX CODE TO PENALIZE PEOPLE WHO CANNOT AFFORD TO BE RAPED BY HIGH PREMIUMS, WHILE THE VERY CORPS WE ARE COMPELLED TO HAND OUR LIBERTY TO ENJOY TAX EXEMPT STATUS???? GO FIGURE!!!

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More Medicaid: Is This What We Want For Our Healthcare System?: Part 2

February 11, 2009
inDisinformation and the healthcare system, Medicaid, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

There are always problems with federally funded programs. They are bureaucratic, inefficient, and always seem to contain loopholes that can be taken advantage of by stakeholders.

Most states are desperate for additional funding this budget year. They have large budget deficits despite increasing state tax rate. States raising taxes do not seem to be the solution. People move out of the state as in California. President Obama providing an additional 100 billion dollars to the states for Medicaid bailout is not the solution to Medicaid’s problems or the uninsured problem. .

“The federal and state governments are equally culpable for the program’s troubles. The federal government matches state Medicaid spending, paying an average of 57% of costs. States expand enrollment in order to qualify for more federal aid.

The barriers to medical care listed in Part 1 have resulted in extreme shortfalls in physician coverage for Medicaid patients.

a. A government survey in 2002 for the Medicare Payment Advisory Committee found that "approximately 40% of physicians restricted access for Medicaid patients" because reimbursement rates are so low.

b. Only about half of U.S. physicians accept new Medicaid patients, compared with more than 70% who accept new Medicare patients.

c. Several recent studies trace the difficulty in getting Medicaid patients seen by specialists to low fees and payment delays.

d. Technologies are also restricted. Many expensive but important drugs aren’t paid for under various state drug formularies.

Newspaper headlines continue to point out Medicaid fraud by various stakeholders.

“ James Mehmet, New York’s former chief Medicaid investigator, was quoted in the New York Times as believing that at least 10% of state Medicaid dollars were spent on fraudulent claims, while 20% or 30% more was siphoned off by what he termed "abuse."”

Think about this. The implication is that physicians are at fault but the states are the entities siphoning off large amounts of money for “other uses” and not for medical care.

40% of physicians did not accept Medicaid patients in their practices in 2002. I am sure the percentage is higher today. 50% of the 60% remaining physicians who have Medicaid patients in their practices do not take new patients. Medicaid patients do not have the choice of their physicians. Their choice is limited to the remaining 35% of the physician workforce. This workforce is overburdened with Medicaid patients.

Some of these physicians see many patients a day or restrict access to care. A small percentage of these physicians have figured out how to leverage their practice. They see an unserviceable number of patients a day. Many call these practices are called Medicaid mills by healthcare policy wonks. In some locations they are the only practices available to service Medicaid patients.

Newt Gingrich has complained about these physicians. He has called them fraudulent. My guess is that less than 10% of the 35% (3.5%) might be fraudulent. Newt’s solution is force all physicians have an EMR so the government can capture “fraud” instantaneously.

“ Even if the federal government wanted to hold states more accountable for peoples’ health, Medicaid claims data is poorly gathered in most states, making meaningful oversight hard.”

I would suggest that the states get better electronic data systems. I believe EMR’s are essential in physicians’ practices but not for the punitive reason expressed by Mr. Gingrich.

“Barack Obama’s team and Democratic leaders plan to change the federal matching rate to reduce the amount of state funding that is required for maintaining a given level of federal Medicaid spending.”

The issue of states receiving increased funding for Medicaid is very complicated. Some states are trying to change the definition of poverty to include people earning up to 63,000 dollars a year. The rationale is the states need to encourage low paid workers to stay in their state. Other states are keeping the 1955 definition of poverty and siphoning money that should be spent on Medicaid care for “other uses”.

If someone had the desire to do it right, the government would change the criteria for the definition of poverty. President Bush was uninterested. He wanted to eliminate Medicaid as a federal entitlement and put the burden on the states.

“ Mr. Obama would give Medicaid tens of billions more in federal dollars as part of the fiscal stimulus bill. And he wants to extend Medicaid to some unemployed workers, with the federal government paying the entire cost — a watershed expansion of the program.”

President Obama,s healthcare advisors do not understand that throwing money at the Medicaid system will not fix the system. It will reduce the number of uninsured. It will increase the number of people who have inadequate healthcare insurance..

The “stimulus” will not increase the quality of medical care delivered. I fear the biggest accomplishment will be to increase the incentive for the misuse of more taxpayers’ dollars. Medicaid’s open ended funding must stop.

a. The states must be held accountable for their healthcare subsidy spending .

b. The states must be held accountable for providing incentives for patients to sign up for this healthcare insurance.

c. The states must be accountable for providing incentives for patients to become responsible for their own healthcare.

d. The states must be accountable for decreasing environmental risks to their citizens (stop developing coal burning plants).

e. The states must be accountable for giving physicians incentives to participate in the system.

The ideal medical savings account in the Medicaid system would be effective. It would put patients in charge of their healthcare dollar and their health care. The states and federal government would be responsible for helping patients be responsible purchasers of their medical care.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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More Medicaid: Is This What We Want For Our Healthcare System?: Part 1

February 8, 2009
inMedicaid, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests
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Stanley Feld M.D.,FACP,MACE

As the recession deepens and more people are unemployed, the Medicaid roles are increasing. President Obama has promised the states that he will increase federal subsides to the states to cover this increase in participants.
I refer you back to Moises’ story and his inability to qualify for Medicaid because he earns more than $900 per month ($2200 per month). Texas’ poverty level is defined as earnings of $900 per month

Medicaid is supposed to provide coverage to the poor. The Medicaid program is probably better than being uninsured in case of an emergency.

The poor have a very high incidence of chronic disease. Prevention of chronic diseases and its complications are the biggest burden to the healthcare system. Eighty percent of the healthcare dollars are spent on the complications of chronic diseases.

Providing Medicaid for more people is not going to solve our healthcare problems. Preventing chronic diseases and its complications will. Unfortunately the Medicaid system presents barriers to appropriate and timely medical care.

Here are some of the barriers;

1. Reimbursement rates are very low.

2. Billing Medicaid is complicated.

3. Access to specialized care is difficult.

4. Permission for timely interventions is difficult to obtain.

5. Medicaid is replete with paperwork for both patients and physicians.

6. Regulations, rules and rejections are common.

7. Qualifying for Medicaid is difficult.

President Obama’s economic stimulus package is going to supplement Medicaid with about 100 billion dollars to the states. The states are not under any obligation to do anything to improve delivery of care or remove the barriers to care.

There are many reports of poor medical outcomes for chronic diseases by Medicaid recipients. The poor medical outcomes are a function of both the severity of the chronic diseases, patients’ compliance and the difficulty in accessing medical care in the Medicaid program.

Chronic diseases need early diagnosis, treatment, patient education and appropriate follow-up to avoid complications. The patients need to be taught to be the “professor of their chronic disease” so they can avoid the complications of their chronic disease.

It is my belief that most patients who are afflicted with a chronic disease would love to understand their disease process. They would love to know how they can avoid complications no matter what their socioeconomic group. The treatment of Diabetes Mellitus has taught us that lesson.

Do patients on Medicaid have better or worse medical outcomes than patients on Medicare or private insurance?

“One study published in the Journal of the American College of Cardiology (2005) found that Medicaid patients were almost 50% more likely to die after coronary artery bypass surgery than patients with private coverage or Medicare. The authors suggest this may be a result of poorer long-term, follow-up care.”

“Another study in the journal Ethnicity and Disease (2006) showed that elderly Medicaid patients with unstable angina had worse care, partly because they were less likely to get timely interventions or be treated at higher quality hospitals.”

“Three other recent studies showed that Medicaid patients presenting with heart attacks or unstable angina received cardiac catheterization less often than Medicare or private paying patients.”

Coronary stents to open blocked coronary arteries has become the standard of care. There is a large body of evidence proving improved outcomes. Coronary stents have come under attack lately. The argument against stents is they are overused. This could be true but under use of coronary stents would certainly result in poorer medical outcomes.

“A study of adults with cancer published in the journal Cancer (2005) found that patients on Medicaid were two to three times more likely to die from the disease even after researchers corrected for differences in the location of the tumor and its stage when diagnosed.”

President Obama’s notion that expanding Medicaid will improve medical care for the uninsured is faulty. Increasing the quality of care is the key. The incentives in the healthcare system for all stakeholders must be changed. This can only be accomplished by patients’ ownership of their healthcare dollar as well as responsibility for their care and not expanding defective government plans such as Medicaid.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Dear President Barack Obama: Part 7

February 3, 2009
inMedicare, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests
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Stanley Feld M.D.,FACP,MACE.

You should disqualify Tom Daschle and his entire healthcare team. Their policies are a rerun of the 1993 Clinton healthcare plan in a different cloth. They are policies of the past that will fail. You have only to look at the state of Massachusetts to see the impending failure.

Please reread my previous letters to you to see what should be done.

In your book “The Audacity of Hope, Thoughts on Reclaiming the America Dream” you said “perhaps more than any other time in our recent history, we need a new kind of politics, one that can excavate and build upon those shared understandings that pull us together as Americans. That’s the topic of this book: how we might begin the process of changing our politics and our civic life.”

In your inaugural address and your first couple of weeks in office you have set expectations consistent with your philosophy in “The Audacity of Hope”. America is rooting for you.

The inequities between the haves and have not are wider than ever. Business cannot continue as usual. It is time for America to show its compassion. This explains the principle reason you were elected. You have given America hope.

You have spoken of the importance of ethics in your administration and set up rules against influence peddling that are admirable.

The issue is not that Tom Daschle should be confirmed because you have confidence in him. The issue is can America maintain its confidence in you if Mr. Daschle is confirmed.

Your continued support for Daschle would be a slap in the face to Americans who are counting on you to help change the culture of self-entitlement in Washington.

I hope you can stick to the expectations you have set and the hope you have given us.

Last week it was revealed that Tom Daschle survived your vetting process even though he did not pay $128,000 in income tax.

“Today Senate Democrats rushed to save the nomination of Mr. Daschle, their former leader” “and the White House spent the day trying to explain how he survived its vetting process despite his failure to pay $128,000 in taxes. “

In my view his confirmation process should have ended at that moment.

“Tom Daschle, was aware as early as last June that he might have to pay back taxes for the use of a car and driver provided by a private equity firm, but did not inform the Obama transition team until weeks after Mr. Obama named him to the health secretary’s post, senior administration officials said Saturday.”

There are several issues in the financial disclosures that have avoided discussion.

  1. Financial Disclosures

a. $128,000 in back taxes for a car and driver computes at a 35% tax level to earned income of $426.666.

“ Daschle used the Cadillac and driver around Washington while working as a consultant to a New York City private equity firm, InterMedia Advisors. He used the limo 80 percent for personal use – resulting in unreported income of more than $255,000 for the three years.”

b. The numbers do not match even if you add the unreported income of $83,333. There is also the discrepancy between Mr. Daschle’s financial disclosure forms stating InterMedia paid $2 million dollars since 2005 and InterMedia’s claim of payment for consulting fees at a rate of $1 million per year for the last four years. This amount alone adds up to almost $5 million dollars Mr. Daschle claims to have earned since leaving the Senate

“Senate Finance Committee documents show. InterMedia paid Daschle consulting fees at a rate of $1 million a year – or $83,333 a month. Daschle’s financial disclosure forms put his income from InterMedia at more than $2 million since 2005.”

  1. Conflict of Interest for the Secretary of Health and Human Services

a. Mr. Daschle was hired by the lobbying arm of Alston&Bird as a “special policy adviser” of the firm because the law prohibits elected officials from lobbying for one year after leaving the Senate. Among his advisees were CVS Caremark, Abbott Laboratories, HealthSouth and the National Association for Home Care and Hospice, all healthcare related organizations with a vested interest in the healthcare system.

“The firm was paid $5.8 million between January and September 2008 to represent companies and associations before Congress and the executive branch, with 60 percent of that money coming from the health industry “Daschle’s salary from Alston & Bird for the year 2008 was reportedly $2 million”.[“\4]

I could not find how much Alston&Bird paid Mr. Daschle between 2005 and 2007.

b. Mr. Daschle also received at least $220,000 for speeches to health care, pharmaceutical and insurance companies. He also received nearly $100,000 from health-related companies affected by federal regulation.’

c. The conflict of interest that bothers me the most is Mr. Daschle’s association with United Healthcare. I have not been kind to United Healthcare because of its abuse in both the private insurance and Medicare arenas.

“Another client paying for his policy advice was UnitedHealth, a giant insurance company with many issues pending before the Department of Health and Human Services. About a third of its $81 billion in revenue last year came from federally regulated sales of Medicare Advantage and Medicare supplement and prescription drug plans.

The company boasted in its annual report that “one in five Medicare recipients participates in a UnitedHealth Group Medicare program.” (Mr. Daschle has said he will recuse himself from matters involving former clients.)”

President Obama, the issue is not about Mr. Daschle. The Democratic Senators (with and approval rating of 30%) boast that he is a highly respected person. The issue is your credibility. You made a promise that you would change the way Washington does business.

“Senate Majority Leader Harry Reid says he’s confident Daschle would survive a vote by his old colleagues.”

The sheen will be off Mr. Clean. It will be bad for the hope you have instilled in the country’s psyche.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Healthcare Leaders In Massachusetts Told To Rein In Costs: Wake Up America!

February 1, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Universal Healthcare
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Stanley Feld M.D.,FACP,MACE

It was obvious to me at the onset that the Romney Massachusetts universal healthcare plan would fail. The healthcare insurance industry has remained in control of the healthcare dollars. The state of Massachusetts, rather than the individuals, would become victim to the rising costs. There was no evidence in the Romney plan that the quality of medical care would increase. The plan was not designed to provide incentives to improve the behavior, patients or hospitals. Massachusetts has already received an 8 billion dollar federal bailout and is seeking an additional 2 billion dollars to stay afloat.

“Governor Deval Patrick yesterday asked the state’s most prominent hospital and health insurance leaders to take quick action to hold down rapidly rising healthcare costs, suggesting that if they did not take steps on their own, they might face new government regulation.”

The state did not alter the healthcare insurance industry’s control of the healthcare dollar in the healthcare system. It generated more insured patients for the healthcare insurance industry. It did not lower the premiums as predicted. The premiums continue to increase. A lack of real price transparency is the reason for this. The state’s universal healthcare plan did not alter patients’ or physicians’ behavior. It lacks patients’, physicians’ and hospital systems’ incentives to change behavior. The Massachusetts plan provides a guarantee for universal coverage but did not improve coverage, or quality or decrease costs.

“Governor Patrick said he is considering holding hearings on health insurance premiums and the primary driver of premium increases – the rates hospitals charge insurers for members’ medical care.”

The governor knows exactly who the primary driver of the costs is. It is the healthcare insurance industry with hospital system collusion. However, he will never be able to prove it without a requirement for real price transparency.

" “ Insurance executives at a meeting said they would welcome such an investigation", according to Charles D. Baker, chief executive of Harvard Pilgrim Health Care, the state’s second-largest health insurer.”

The inspector general (Mr. Sullivan) asked the healthcare insurance executives to refrain from signing new contracts that cover patient care beyond this year until the government has time to consider potential reform measures.

Mr. Sullivan singled out the largest private contract in Massachusetts, the state’s dominant provider, Partners HealthCare, and its largest insurer, Blue Cross and Blue Shield of Massachusetts. The Boston Globe has had multiple stories exposing the abuse to the state and patients by these providers.

“The two agreed last summer to a multiyear contract that calls for annual rate increases of about 5 to 6 percent. Spokesmen for Partners and Blue Cross said yesterday the agreement was final.”

Got cha, tough luck.

The state of Massachusetts response has been to set up a reform payment commission. The commission will examine alternatives to the traditional payment model in healthcare. In Massachusetts the large hospital systems hire most physicians and pay a salary. Physicians have little control over their charges and salaries. I suspect the hospital systems are profiting from physicians intellectual property.

Partner’s healthcare executives and healthcare insurance executives are trying to distract the state from the real issue which is inflated charges.

“ Many insurance executives and healthcare reformers argue that providers should be paid for healthy outcomes, not as they are now – based on the number of tests and procedures they perform on patients.”

“Dr. James J. Mongan, chief executive of Partners, said Patrick "understands [healthcare costs] are national issues, but the state of Massachusetts showed it could lead on national issues with [healthcare] coverage and it’s going to try and lead on national issues with costs."

This rhetoric has not fooled Governor Patrick. However, he seems to be powerless to do anything about it because Partners and Blue Cross control his work force.

“Governor Patrick "made clear that this is sort of a today issue, not a tomorrow issue.”

A state sponsored Spotlight team reported a deal made by Partners and Blue Cross in 2000. Blue Cross would pay for services of Brigham and Women’s and Mass General Hospital (Partners) in exchange Partners would insist on receiving payments from other insurers that were at least equal.

“Healthcare costs have risen dramatically since that time.” Healthcare coverage has also decreased

Tufts Medical Center announced it would stop accepting Blue cross insurance company patients because Blue Cross is paying Tufts 32% less than they are paying Mass General and the Brigham.

“Blue Cross says demands for higher payments by Tufts would increase healthcare costs.”

The state of Massachusetts wanted to do the right thing (universal coverage). It became the victim rather than the cure. In the words of Yogi Berra it is “Deja vue” all over again.

Please listen carefully to Tom Daschle’s proposals for healthcare reform. It is similar to the failing Massachusetts plan.

Wake Up America!!

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Obama Will Ration Health Care! Wake Up America: Part 3

January 28, 2009
inConsumer Driven Health Care, Healthcare Insurance Industry, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System
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Stanley Feld M.D., FACP, MACE

 

Dr. Tom Price, a Republican member of Congress from Georgia, the new chairman of the Republican Study Committee wrote an article in the Wall Street Journal that mimics my proposal for repairing the healthcare system. Someone should start listening to physicians.

During the last eight years the Republican Party has had a great opportunity to repair the healthcare system. I believe many Republicans in the House and Senate know what needs to be done. No one has taken a leadership position to do.

Now we have leadership that wants to do the right thing. Unfortunately the present leadership does not know the right way to do the right thing.

Consumer driven healthcare with the consumers owning their healthcare dollar is the way to repair the healthcare system. Personal responsibility for one’s health has been labeled conservative idea.

The concept is neither right wing nor left wing. It is simply logical. Self responsibility is the engine of American progress. Very bright liberal thinkers have advocated self responsibility. President Obama strikes me as one who can solve problems using logic and not right or left wing ideology.

I have pointed out the therapeutic magic of positive physician patient relationships. The government’s goal should be to nurture these relationships. It should provide a system that allows access to affordable, quality health care for all Americans. It should not nurture government dependency. It should also ensure that medical decisions are made in doctors’ offices, not in Washington or some by “independent “board (Federal Health Advisory Board) removed from the bedside. It should help educate both patients and physicians about best practices of medicine. Patients should make the decisions for their healthcare.

Dr. Price points out; “Atop the list of worrisome ideas proposed by Mr. Daschle is the creation of an innocently termed "Federal Health Advisory Board." (FHAB)

“This board would offer recommendations to private insurers and create a single standard of care for all public programs, including which procedures doctors may perform, which drugs patients may take, and how many diagnostic machines hospitals really need. As with Medicare, for any care provided outside the board’s guidelines, patients and physicians would not be reimbursed.”

All the stakeholders have been villains in the never ending escalation of costs to the healthcare system. I have blamed the healthcare insurance industry for being the worst villain. Its administrative service cost and waste as well as inflated overhead and excess executive compensation add 150 billion dollars to the healthcare system. It has lead to unaffordable premium costs, increased deductibles and co-pays, decreased patient access to care as well decreased reimbursement to physicians and hospitals. The reason everyone is “gaming” the system is the system reimburses waste and penalizes best practices. .

As Winston Churchill once said; “ Never has so much been paid to so many for so little” in the way of value added service to patient care.

I am presently reading John Bogles book “Enough”. In his book he describes the reason for rise and the fall of the financial sector. He could easily substitute the healthcare sector for the financial sector.

“That any endeavor that extract value from its clients may, in times more troubled than these, find that it has been hoist by its own petard”- proved not only eerily prophetic, but surprisingly timely. The industry has been blown up by its own dynamite.”

I said it less well when I said the healthcare insurance industry is killing the goose that laid its golden egg.

Tom Daschle has stated that the FHAB’s standards would serve only as a suggestion to the private market. Dr. Price points out the impeding results of Tom Daschle’s proposal.

“He has proposed making the employer tax deduction for providing health insurance dependent on compliance with the board’s standards.

In an overtly political ruse, Democrats will claim they are dictating nothing to private providers, while whipping noncompliant insurers in place through the tax code.”

“To be sure, this strategy seeks to eliminate private providers completely. Forced into accepting rigid Washington rules and unsustainable financing mechanisms under Mr. Daschle’s plan, most private insurers would be quickly eradicated.”

I believe the healthcare insurance industry has resigned itself to this faith. It is focusing on generating its income as an outsourced administrative service provider for the government’s massive new healthcare federal bureaucracy. The healthcare insurance industry has done very well with the Medicare Advantage programs and Medicare Part D. They have also done very well in the state of Massachusetts. It is making excess amounts of money under government sanction by controlling the healthcare dollar.

Who losses? The primary stakeholders lose (Patients and Physicians). The government also loses because it has formed another inefficient bureaucracy. America cannot afford Medicare in its present form much less expand it.

Dr. Price goes on to say; “This patient-centered approach must be built upon two pillars: access to coverage for all Americans and coverage that is truly owned by patients.”

“Through positive changes in the tax code we can make health-care cost effective and create incentives so there is no reason to be uninsured. This way, care is purchased without government interference between you and your doctor.”

Consumer driven healthcare using an ideal Medical Savings Account is a healthcare system that will be able to align all the stakeholders’ vested interests.

I expect a great debate to start shortly.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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You Can’t Change The Practice Of Medicine With Demand-Side Reforms. Let Us Put An End To Pay For Performance (P4P) Initiatives: Part 1

January 25, 2009
inChronic Disese Management, Consumer Driven Health Care, Medicare, Medicine: Healthcare System, Pay for Performance (P4P), Quality medical care measures, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

I
have pointed out the folly of P4P initiatives as a methodology for improving the
quality of medical care.  Quality
medical care has not been adequately defined. One definition could be to
maintain health at the lowest cost. Physicians have classically been trained to
fix things that are broken. The paradigm shift has been to prevent things from
becoming broken.

Prevention
is a two way street. It is the  patient who needs to prevent disease from
occurring. It is the physician who must teach the patient how to prevent disease
and its complications.

Punitive
measures will not encourage behavior change. The economist, John Goodman,
stated: “You
can't change the practice of medicine with demand-side reforms.”  I have
said repeatedly it can only be changed with innovative and incentive driven
education for both patients and physicians. This will lead to behavior change
and a true increase in quality of care.

Quality medical care should not be judged on what tests are done for a
particular chronic disease in a given year. It should be judged on the basis of
maintenance of health of a patient with chronic disease. It should be evaluated
as a dual responsibility of both the patient and physician. If there is going to
be an increase reimbursement for performance, performance has to be judged
correctly and both physician and patient should be rewarded.

Quality medical care should be judged on the maintenance of health and
avoidance of the complications of chronic disease. The treatment of the
complications of chronic disease utilizes 80% of the healthcare dollar. If
complications of chronic disease are avoided the costs to the healthcare system
costs would be decreased to manageable levels and Americans would be healthier. 

Several readers have challenged me on the use of the term “socialized
medicine”. One reader said “our healthcare system is socialized already. The
government through Medicare and Medicaid controls 40% of the expenditures for
healthcare.” This is true.

The term “ socialized
medicine” has been demonized. I believe most physicians’ and patients’
objection to “socialized medicine” is rooted in experiences they have had. It
has restricted access to care and freedom of choice, and it has dictated
permissible care of physicians. It has also produced an added layer of
inefficient bureaucracy.

Medicare
premiums for patients are becoming expensive. The premium is determined by
means testing. It can be as high as $14,000 per year. The government subsidizes
that amount with an additional $6,600.  Medicare advantage costs the government
over $9,000 extra.  Yet there is a decrease in access to care as the costs of
the system are spinning out of control. 

The government has its heart in the right place in wanting to provide
universal care. Americans should have access to healthcare coverage. A few
changes in the tax rules can solve many problems. The self-employed should be
able to purchase healthcare insurance with the same pre tax dollars as
businesses. They should have the same negotiated price structure large companies
have. The self-employed should have the same guaranteed  insurability as those
working in a large company without a premium penalty.

The healthcare system’s costs rise each year. The Medicare premiums rise each
year and patient’s out of pocket expenses rise each year. Medicare is going to
bankrupt the country. It will only be accelerated by putting everyone on
Medicare.

In order to reign in expenses someone came up with the idea of pay for
performance. It is a reasonable concept if a system could be devised that could
evaluate performance accurately and encourage improvement.

In order to test validity of any concept the government subsidizes
initiatives at a great expense. These initiatives are costly because of the
bureaucratic evaluation of the requests for proposals and the measurement
mechanism. 

The list of government initiatives is long. The pilot studies are 3 to 5
years. There have been many cost overruns so that several outsourced study
vendors are dropping out of the management of the initiatives. Most initiatives
have been unsuccessful in proving cost savings.

The reason for lack of proof of cost saving to the healthcare system is
because of errors in design. The wrong questions are being asked and the imposed
bureaucracy is punitive to the healthcare entities. Below are initiatives that
are presently funded for pay for performance.

MEDICARE "PAY FOR PERFORMANCE (P4P)" INITIATIVES

“Medicare has various initiatives to encourage improved quality of care in
all health care settings where Medicare beneficiaries receive their health care
services, including physicians’ offices and ambulatory care facilities,
hospitals, nursing homes, home health care agencies and dialysis
facilities.”

HOSPITALS

1. Hospital Quality Initiative   (MMA section 501(b))

2. Premier Hospital Quality Incentive Demonstration

PHYSICIANS OR INTEGRATED HEALTH SYSTEMS

1. Physician Group Practice Demonstration (BIPA 2000)

2. Medicare Care Management Performance Demonstration (MMA section
649)

3. Medicare Health Care Quality Demonstration (MMA section 646)

DISEASE MANAGEMENT/CHRONIC CARE IMPROVEMENT

Chronic Care Improvement Program (MMA section 721)

ESRD Disease Management Demonstration (MMA section 623)

Disease Management Demonstration for Severely Chronically Ill Medicare
Beneficiaries (BIPA 2000)

Disease Management Demonstration for Chronically Ill Dual Eligible
Beneficiaries

Care Management For High Cost Beneficiaries

So far the chronic disease management initiative have not been proven to save
money.

The pilot initiatives are not directed by physician in private practice.
Physicians are the stakeholders that will make these initiatives work.  Nine
sites selected are either healthcare insurance companies or disease management
groups. Disease management groups can be successful facilitators of physician
care only if they are extensions of physicians care rather than physician
substitutes.

Help desks of the healthcare insurance companies do not work because they are
not an extension of the physicians care. Free standing chronic disease
management clinics do not work because they are not extensions of physicians
care. Many hospitals have tried to set up Diabetes Education Centers only to
have them close because physicians do not refer patients to the centers. The
center is not reimbursed adequately by the government or private insurers to be
profitable. The fees charged in hospitals are at least twice as much as the fees
the physicians charges. Once the physician knows the charges he is even more
hesitant to send the patients to the centers.

The following are the groups selected for the pilot phase: Humana in South
and Central Florida, XLHealth in Tennessee, Aetna in Illinois, LifeMasters in
Oklahoma, McKesson in Mississippi, CIGNA in Georgia, Health Dialog in
Pennsylvania, American Healthways in Washington, DC and Maryland, and Visiting
Nurse Service of NY and United Healthcare in Queens and Brooklyn, New York.

I believe we should give up on trying to produce a pay for performance system
that will reduce medical costs. The health policy wonks should concentrate on
something that will work.

The opinions expressed in the
blog “Repairing The Healthcare System” are, mine and mine alone.

  • Call CareNet • April 20, 2009

    I have always gone to Call a Nurse for all of my health concerns. Whenever I have a question I call Call a Nurse and they are always very polite and knowledgeable.

  • Rhinoplasty Beverly Hills • May 28, 2010

    This is quite a comprehensive and interesting posting on the approach to put an end to the system of Pay for Performance Initiatives. This approach may turn out to be effective in the end.

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Texas Medical Association Hits A Home Run

January 21, 2009
inUncategorized
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Stanley Feld M.D.,FACP,MACE

I have called for real price transparency from all the stakeholders. The healthcare insurance industry has stated that it will become more transparent. So far its pricing has been opaque. There are many levels of opacity to its pricing.

The Texas Medical Association (TMA) has taken a historic leadership position in defining what it thinks the healthcare insurance industry code of conduct should be in 2009. It is very complete. I hope it is adopted by the state of Texas and every other state in the nation. It will serve to lower the cost of healthcare insurance and increase the insurance coverage of many of our citizens.

“Health Insurance Code of Conduct 2009

“These measures would ensure transparency and accountability in the way health insurance companies conduct business:”

  • “Health Coverage Cancellations: Require an independent review of all decisions to cancel an individual health insurance policy prior to the actual cancellation.”

Each point in the TMA’s code of conduct peels off a level of price opacity. The TMA should call to abolish the healthcare insurance industry’s ability to cancel healthcare insurance.

  • “Calculation of Premium Quotes: Subject health insurers to “file and use” requirements at the Texas Department of Insurance (TDI), like other kinds of insurers.”

The Texas Department of Insurance (TDI) controls permits for the sale of insurance in the state of Texas. The TDI has never had the same pricing information from the healthcare insurance industry as they have from other insurance vehicles.

  • “Calculation of Medical Loss Ratio: Require health insurers disclose how they spend the patient’s premium dollar.”

The healthcare insurance company will not only have to disclose how they spend the patient’s premium dollar, they will have to prove it. This is an area in which expenses are inflated by the healthcare insurance industry.

  • “Unregulated Secondary Networks (Silent PPOs): Regulate how a physician’s contract information is sold, leased, or shared among health insurance companies.”

Unregulated secondary networks must be regulated because the healthcare insurance industry has long practiced price fixing. Price fixing does not work and leads to further system abuse and mistrust.

  • “Physician Rankings: Require health insurance companies to use scientifically valid criteria to evaluate physicians’ performance and disclose those criteria in advance.”

I do not believe physicians are afraid of being evaluated. I believe they are afraid of being judged by defective criteria leading to reimbursement penalties.

  • “Claims Processing: Prevent health insurance companies from reverting to their old, unethical ways of processing claims.”

I have pointed out abuses that have occurred in several states. Minimal monetary fines do not deter this abuse. It must be stopped. The healthcare insurance companies should lose their privileges to sell healthcare insurance in the state.

  • “Timely Health Insurance Information: TMA’s “Health Insurance Product Labeling Plan” would require health insurers and their brokers to use standardized reporting measures to help employers and individuals make direct, side-by-side product comparisons.
  • Once a plan has been selected, patients should have convenient access to benefit information when they are making their health care   decisions. Health insurers should make this information easily available. Almost every card in your wallet has some ability to provide data — except your health insurance card. There is absolutely no reason why health insurers cannot provide accurate, real-time information regarding the different benefits and exclusions.”

Buyers of healthcare insurance should have the ability to know the provisions of their insurance clearly and not be surprised by their lack of coverage when they get sick.

  • “ Routine Medical Care for Clinical Trials
    Texans participating in a clinical trial should be able to use their health insurance to pay for routine medical costs — especially when they are suffering from a life-threatening disease or condition.”

Many states have this provision. Texas does not. Patients have had to spend out of pocket expenses unexpectedly.

  • “ TDI needs authority to require health plans to disclose the methods and data they used to set “maximum allowable” amounts for out of network services.”

There is a tremendous burden place in our mobile society on citizens if they get sick while traveling for business or pleasure.

  • “TMA opposes health plans’ attempts to prohibit balance billing or to establish wholly inadequate payment rates for non-network physicians and hospitals.”

I disagree with the TMA balance billing position. We have to have total transparency from all stakeholders. I have maintained often that all stakeholders have to be subject to real price transparency including physicians

  • “ Regulation of Preferred Provider Organizations (PPOs)
    Currently the discounted rates physicians negotiate with health plans are being hijacked by unregulated PPOs. These entities, called “silent” and “rental” PPOs, shop around to find the lowest rate a physician has agreed to with any health plan. Then the PPO sells, resells, or leases that discounted rate to insurance companies, discount brokers, and other unregulated health care businesses without the physician’s knowledge or permission. Fourteen states outlaw these arrangements. Texas should, too.”

Few healthcare policy wonks know about this practice. It is a very effective practice by the healthcare insurance industry to create price controls. The results in further distortions in the healthcare system.

If the Texas legislature passes all these proposals it will make the state of Texas a more attractive state for large multinational corporations to set up corporate headquarters. Presently a powerful stimulus is our low tax rate.

I believe these proposals should be national for the benefit of all Americans. It will go a long way toward Repairing the Healthcare System.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Obama Will Ration Health Care!: Wake Up America: Part 2

January 18, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Mistrust, Universal Healthcare
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Stanley Feld M.D.,FACP, MACE

Mr. Obama has promised a quick, hard push to overhaul the healthcare system. Americans can expect a quick push to build a larger federal bureaucracy, impose price controls, restrict the use of new medications and technologies, boost taxes, mandate the purchase of health insurance, and expand government control of health care. This is the promise Mr. Daschle made in his book "Critical: What We Can Do About the Health-Care Crisis,"

If Mr. Obama continues on the present path the prognosis is horrible for patients, physicians and taxpayers. Tom Daschle’s excuse is the present system is an intolerable status quo. An intolerable status quo is not an excuse to destroy the healthcare system in America.

“In his book, Mr. Daschle proposes a National Health Board to regulate the way health care is provided. This board would have vast powers in regulating the massive federal health-care system — a system that includes Medicare, Medicaid, and other programs.”

Healthcare coverage will likely expand to greater government healthcare control. Businesses and corporations are anxious to get out of the business of providing healthcare coverage for their employees. They would rather pay the penalty proposed than provide unaffordable healthcare insurance for their employees. The result will be defacto socialized medicine before we know what hit us. Socialized medicine is Mr. Daschle’s plan for all Americans even though America can’t afford it. He is going to claim this is the plan the people want. I would add until the people realize the consequences of his plan.

“Given the opportunity, Mr. Daschle would likely charge the board with determining which treatments and drugs are cost effective and therefore permissible to use for patients covered by the government.”

“It is nearly certain that the process of determining which drugs and which treatments would be approved for use would be quickly politicized.”

The Federal Health Board will be made up of “expert clinicians” from academic centers who will determine what physicians can and cannot do. The enforcement of these rules will be impossible. The punitive weapon will be withdrawal of physician reimbursement. I have said over and over again that punitive measures do not work to force a workforce to comply.

“In his book, Mr. Daschle complains about overuse of new technology and praises the United Kingdom’s National Institute for Health and Clinical Excellence (NICE), a rationing system that controls government costs.”

Mr. Daschle believes that America needs to ration new technology and drugs because the cost of care is skyrocketing. Another reason is the government cannot afford to provide access to care. The result will be rationing of care rather than giving patients the freedom of choice. The British system is well known for restricting access to drugs and medical care.

He is ignoring the waste in administrative services outsourced to the healthcare insurance vendors. He is ignoring the inefficient billing practices of hospital systems. He is ignoring the responsibility patients have to adhere to treatment medications prescribed and the maintenance of their health. He is ignoring the fact that patients should be responsible for their health and their healthcare.

“Health care is personal and voters will pressure lawmakers on access to care. Americans will not put up with such limits, nor will our elected representatives.”

Mr. Daschle is claiming that through his community home meetings in December people are demanding the changes he is proposing. I believe once the voters realize what he is proposing the will voice the opposite opinion.

Managed care of the 1990’s was nothing more that managed cost. It provided the healthcare insurance industry with the opportunity to place restrictions on access to care and decrease reimbursement to vendors. It temporarily reduced the increase in the costs of care. However, managed care failed work because the public objected to the restrictions and it did not hold down costs. The HMO experiment failed for the same reason.

Tom Daschle has learned something from these lessons. He learned that he has to strike quickly and deflect the decisions about rationing of care to a “neutral board” and not the market. It is clear he does not respect the intelligence of the consumer. He does not understand the responsibility of the consumer. If he was doing this right he would be going after the abuses in the system and not the decision making engine in the system.

Tom Daschle is in the process of creating a giant HMO. It will fail as the Massachusetts experiment has failed.

“Mr. Daschle’s model is Massachusetts. But Massachusetts’s plan is an unfolding disaster and demonstrates how Mr. Daschle’s private/public model is merely a stalking horse for government-dominated health care.”

Massachusetts helped 442,000 people obtain healthcare insurance. However an additional 80,000 people were put on Medicaid. 176,000 people were put on government subsided healthcare insurance. The cost to taxpayers has exploded because the basic cause of increased cost of care has not been addressed. The healthcare insurance industry control over the healthcare dollar has to be reduced. The onset of chronic disease and the reduction of the complications of chronic disease must be attacked effectively.

“Costs have exploded, requiring additional tax hikes and the entire system is only possible due to sizable transfers from the federal government. The plans are so unaffordable that in 2007, 62,000 people were exempted from the individual mandate.

So much for universal coverage. It could work if the consumer controlled their healthcare dollars with the government protecting the consumer.

The only way the Massachusetts plan will survive is with continued and increasing federal subsidies -that is, tax revenue from the residents of other states.

Tom Daschle’s plan is going to follow the same misguided path. The problem is worse the healthcare system becomes the harder it will be to dig our way out.

Wake up America

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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