The First Post: What’s Wrong with Medicare?


So The Health Care Blog  (which I like to think of as the first proper health care blog whatever Jacob Reider says about his Docnotes which started in 1999!) is 15 yrs old this month.  This is the start of our little anniversary celebration. We are going to be running some of the earlier classic posts. The very first post on “What’s wrong with Medicare” still rings true- Matthew Holt

For the first post, don’t expect a big essay despite that subject line. It came up because while I was away from the US for the first part of this year, yet another incarnation of NME or HCA — the two original for profit hospital chains of the 1970s that amalgamated into Columbia (now calling itself HCA again!) and Tenet — got caught with its hand in the cookie jar.  You’ll remember NME getting bad press and worse in the 1980s for imposing unwanted inpatient stays on “psychiatric patients”. After that NME morphed into Tenet. Columbia of course said that “health care had never worked like this before” and they were right — to the extent of the upcoding and fraudulent billing going on in its hospitals in the mid 1990s.  I remember one cover of Modern Healthcare in which Tenet’s strategy was encapsulated as “We’re not Columbia”.  Apparently only slogan deep. Last week they settled with the state and feds in California due to massive amounts of upcoding and worse at Redding Medical Center. Several other settlements are pending.

The New York Times’ description (registration req’d) of the level of unnecessary surgery at the Redding Medical Center is quite shocking. But I do recall Alain Enthoven at Stanford telling me in 1991 that one third of carotid andarterectomies in California were found to be counter-indicated after chart review.  Why were they done?  Well everyone — surgeons, hospitals, supplier– made money by doing them. Given the imbalance in knowledge between a patient and a doctor, it’s not too surprising that a very aggressive surgeon can do way more than he or she should.  Medicare is still basically a fee-for-service program with very little oversight, and so this type of thing is going to go on and on. And it has been going on for a while, as this partial list of whistlebower suits shows. Enthoven’s view was that everyone should be put into competing managed care plans which would act as patient (and payer) sponsors, and look after the money better than the government could.  It didn’t happen that way, and the backlash against managed care’s ham-fisted attempts to do so ensured that most health plans gave up on trying to control what providers did.  Medicare never really ever tried, as all its internal review cases were co-opted by providers.  Its only weapons were inquisitions and indictments from the FBI and others well after the fact. Eventually Medicare will have to have more controls, but that will need reform as well as more money. I’ll talk more about this when I get to drug coverage later this week.  Suffice it to say, don’t hold your breath.

Meanwhile, Uwe Reinhardt says in the NY Times article that (despite Wall Street’s desires) hospitals “can’t be a growth industry like some Internet company”. Well maybe not a “growth” sector, Uwe, but look at Yahoo’s stock price in 2000, Tenet’s this year, and tell me that you’re not getting some of that Internet fever coming back!

Matthew Holt is the Founder of THCB.

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  2. Medicare is going broke because it wasn’t supposed to finance the healthcare of nearly one third of the populace, that’s where are at over 65, and I’m seeing blind 88 year olds getting new hips because they need to walk and they live alone and none of their kids will take them in, and so the nursing home won’t take them with a broken hip. The medical Medicare rules and elder care are at odds with each other and us doctors are stuck in the middle with unsustainable and heartbreaking social nightmares of people who are out living their bodies. You can’t give grandpa percocet forever because “opioids are bad” and no titanium hips because “surgery and Medicare is bad”so what do we do? put them on the ice floe and tell them their time is up? Upcoding is basically word salad at the micro level of the coding world. itemize every cough, sneeze, blip, and you can generate a code. I’ve seen summary sheets of 87 year olds with literally 140 ICD 10 codes and every single one can generate a CPT code. So it’s a deal with the devil, this little bargain with the AMA and CPT codes is costing everyone trillions and there’s no end in sight. There’s no political will to touch Medicare, ever. It will implode eventually and become only a Part A benefit (hospital only) catering to the terminally ill only. Everything else will be outpatient and cash/private pay. I actually think with no government regs and no gamesmanship coding, it could be a lot better!

  3. How significant an issue is upcoding in Canada, UK, Western Europe, Japan and Australia? Could it be that Americans are culturally more entrepreneurial than people in other countries? Even in Canada, doctors have to submit billing codes to get paid by the Provincial payer. Why isn’t upcoding a significant problem there too?

    • “Why isn’t upcoding a significant problem there too?”

      Their incomes are compared and monitored. For the outliers the government does audits. Toronto Star newspaper recently won a court case to publish the top 100 doc billers/earners – hows that for medical transparency.

      There is still abuse, but docs are prohibited from owning labs and other businesses they could self refer to.

      My nurse wife used to see some docs abuse the system – for instance one in particular would pop into the patients rooms and say good morning, then bill for consult.

      • Peter, as of a few years ago, information is now available about Medicare’s highest billers too. Some, though, may be large group practices all billing under the same Medicare number. Doctors and hospitals are also subject to audits by private firms called Recovery Audit Contractors (RAC’s) hired by Medicare.

        Imaging capability right in the office is a convenience for the patient as opposed to an imaging center across town that the doctor happens to have an ownership interest in. Those who order too many tests compared to peers can be flagged by payers as “high utilizers” and placed in a non-preferred tier on patients’ insurance plans.

        As for doctors on hospital rounds, I’ve been a hospital inpatient on four separate occasions over the years following surgery. Post-surgery visits by doctors to check on my progress, pain level, etc. rarely last more than about five minutes at most. Since numerous patients are in close proximity within the hospital, doctors can easily see 10 or more patients in an hour and bill each one for a consult that would probably pay him more than a 30 minute consult in his office.

        Medicare Advantage insurers, for their part, also benefit from upcoding because it helps to drive individual patient risk scores up because the risk scores are largely based on claims history. The higher the risk score, the higher the premium Medicare pays the following year to insure that patient.

        I think an entrepreneurial mentality is far more common in the U.S. which is yet another cultural trait that drives medical costs per person and as a percentage of GDP higher than they are elsewhere. Other cultural characteristics are defensive medicine driven by our overly litigious society and patient and family demand for lots of marginally useful or even futile care at the end of life. People in other developed countries are more accepting of death when their time comes. None of these cultural issues are likely to be solved or even addressed by a Medicare for all system or any other single payer scheme.

        • “Imaging capability right in the office is a convenience for the patient as opposed to an imaging center across town that the doctor happens to have an ownership interest in. Those who order too many tests compared to peers can be flagged by payers as “high utilizers” and placed in a non-preferred tier on patients’ insurance plans.”

          There was a nice paper in Health Affairs, will try to find it if I have time later, showing that this convenience factor is mostly not true. The imaging centers are run to maximize revenue, not to provide convenience. Patients seeing a doc in facility that had its own imaging on site were just as likely to have to wait for a study as those seen in a facility that did not have on site imaging.

          The question about upcoding is interesting. Will look into it.


      • How in the world did your wife have access to detailed information about that physician’s billing patterns?

        You do know that billing for hospital E&M codes includes everything done on the floor – reviewing chart, reading reports, coordinating with other physicians, etc. Particularly with consultants, the face-to-face time with the patient may be the least of what they are doing.

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